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Mba 590 Business Regulatio

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Alumina Inc. is a $4 billion aluminum maker, based in the United States, which operates in eight countries around the world. The United States market constitutes 70% of its sales. Alumina manufactures automotive components, alumina refining, bauxite mining and aluminum smelting. The situation is based on a simulation for the course of the University of Phoenix (Legal Environment of Business Simulation UOP, 2006). In this paper, I will identify the key facts, regulations, and legal issues. Discuss the conflicts among competing stakeholders, the organizational reaction to the regulatory issue. I will identify and analysis the risks involved in the simulation, along with the ethical dilemmas and how they align with the overall values of the organization.

Key Facts, Regulations and Legal Issues

Alumina has worked hard to keep in compliance with the Environmental Protection Agency (EPA) and all the regulations of the cities, counties, states and countries its divisions are located. The board and management of Alumina place great importance on the preservation of the environment and the regulations governing it. It was a surprise when the management was approached with a potential lawsuit because of a violation that happened over five years ago. Business managers of divisions of large corporations such as Alumina need to realize the many issues facing corporations when in violation of EPA governed regulations. The involvement in maintaining the highest quality and compliance of EPA standards job is taken very seriously and is a responsibility not only to Alumina but to the community.

Five years ago the Alumina division based on Erehwon, during a routine EPA audit was found to be in violation of environmental discharge of polycyclic aromatic hydrocarbons (PAH). A concentration of PAH found to be above the EPA limits were released into Lake Dira. Alumina repaired the discharge station, paid the fine and was in compliance with the EPA regulations. Alumina has since been to be found in compliance and the levels of PAH are well below the limits for all hydrocarbons.

Polycyclic Aromatic Hydrocarbons

What is PAH? Polycyclic aromatic hydrocarbons are a group of chemical compounds formed during incomplete burning of coal, oil, gas, wood, garbage or organic substances such as tobacco and charbroiled meat. PAHs can be odorless, colorless and with a faint, pleasant odor. PAHs are used in dyes, perfumes, plastics, medicines and pesticides. They can be found in crude oil and tars. PAHs can also attach themselves to dust particles, solids, soil or sediment (ATSDR, 1995). Where or how do they enter the environment? PAHs enter the environment as exhaust from automobiles, forest fires, wood burning, waste treatment plants and hazardous waste sites. A person can be exposed to PAHs throughout the environment, in your house, car, and workplace.


Alumina has the latest technology and systems in place to protect their employees, the environment and the community. Realizing how embarrassing Alumina was five years ago, the CEO does not want to revisit those days. Even though they are not violating any EPA rules and regulations and the facts aren’t in as to if Aluminas discharge is the only cause of Kelly Bates daughters leukemia has not been found.

The request by Kelly Bates and The Erehwon Reporter for access to certain records as allowed by the Freedom of Information Act (FOIA), 5 U.S.C. Section 552 allowing access had been granted by Alumina. Alumina management wanted to settle this situation as quietly and quickly as possible. Despite supplying Bates and The Reporter this information, Bates wanted to proceed with an injury lawsuit against Alumina, Inc. for compensatory and punitive damages. She claims that Alumina, Incs negligent conduct from five years ago is the cause of her daughters’ leukemia today. Alumina is taking advice on how to handle this situation.

When looking into a trial case of this type, businesses need to realize all the factors involved. One factor is the negativity of going to court against a person having a serious disease similar to Kelly Bates daughter. Time that is lost and a reputation shattered as a business in the favor of the community. Finally, with a trial the possibility is there of proprietary and confidential information being made public.

The damages as a business entity going through a public trial could be far greater than using and Alternative Dispute Resolution (ADR). There are several advantages of using an ADR. One is the costs involved, another is an ADR is less time consuming and advantageous to all parties. Going through arbitration keeps the outcome has to be kept confidential, private and it can not be revisited by the same party.

Alumina decided to use the arbitration resolution after mediation failed and Bates was still under the resolve to have a trial. With most of the evidence stacked against Bates the most beneficial route was arbitration. Both sides presented their point of view and in the end an award was reached by both parties. The settlement was confidential and both sides came out winners. Bates received medical expenses for the treatment of her daughter and a lump sum for future medical care her daughter might have as well as other monies set aside for college. Alumina was please because a confidential statement ends the litigation, cannot be a negative in the public eye and the case won’t go to trail.

Conflicts among Competing Stakeholders

The chairman Roger Lloyd and Diane Richards, public relations, have competing conflicts in regard to how to first handle Ms. Bates issues. Roger Lloyd would like to gather more information and then make a decision based on the new evidence. Ms. Richards would like to investigate Ms. Bates, which could bring up issue of invasion of privacy. Ms. Richardss ethical standards may be based on the Consequentialism approach. This approach concerns itself with the moral consequences of actions rather than with the morality of the actions themselves (Reed, Shedd, Morehead and Corley, 2004, p.32). This approach could be summed up as; the end justifies the means. Both individuals want what is best for the company; they are just doing not agree what methods are the best.

Mr. Todd, legal counsel, for Alumina believes that the company has done nothing wrong and has scientific evidence to support their position. He also believes the new findings in regard to increased traffic helps Aluminas case and they should proceed to trial. Mr. Todd’s ethical concerns are based on a Formalism approach, and he feels that either the company is right or wrong



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