Ask Operation Management Expert

Henry Goldstone, head of Human Resources for African Gold, Inc. in South Africa, examined the stack of newspaper and business magazine clippings on his desk.  In the last few weeks, there had been numerous stories about the company's decision not to continue paying transport, coffin, and funeral costs form employees dying from non-mining causes.  The decision was linked to the depletion of the funding source normally used to cover these costs.  In the last two years, the fund had decreased rapidly because of the increasing number of HIV/AIDS deaths among the miners working for African Gold.  The company planned to continue its education programs on HIV\AIDS for employees.

Although African Gold did not have exact figures of the prevalence of HIV/AIDS among its present labour force, recent company data indicated that, country-wide, there was an average of 20 funerals a month for workers who had succumbed to the disease.  The average cost of a funeral is 10,000 rand (about $1250).  Additionally, the costs of the company's medical aid and disability programs were also skyrocketing because of HIV/AIDS-related diseases (e.g. tuberculosis, pneumonia).  Goldstone also realized that these amounts would be even higher if the costs of absenteeism, productivity losses, recruitment and training were calculated.  The increased costs were coming at a time when the profits of many gold-mining companies were failing because of the growing strength of the South African currency (i.e. the rand).  The price of gold in real terms fell 6 percent over the last few quarters.  Decreasing profits hit smaller mining companies like African Gold greater than the largest companies.

The number of HIV/AIDS-related deaths as a proportion of total deaths in South Africa had virtually doubled from 4.6 percent to 8.7 percent between 1997 and 2001.  South Africa has one of he fastest growing HIV epidemics in the world with an estimated 1700 new infections diagnosed daily.  Additionally, the mining industry in South Africa has the highest prevalence of HIV/AIDS infections compared with other industries.  It is estimated that 24 percent of underground miners have HIV, compared with 19.9 percent of the remainder of the South African working population.

The change in policy holds potentially devastating financial implications for families of mine workers, many of whom live hundreds of miles away from African Gold's mining operations.  Historically, and even today, the mining industry in South Africa relies heavily upon migrant labour coming from neighbouring countries, such as Lesotho, Botswana, Malawi, Zimbabwe, Swaziland, and Mozambique,  Because of its reliance on inexpensive migrant labour, many of the workers live in housing at the mine site and spend months away from their families.  Some health experts believe that this may contribute to the higher incidence of HIV/AIDS among mine workers.  Most families cannot afford to pay for the funerals, since the average mine worker earns about 2000 rand per month (about $250). 

In addition to the negative media coverage, Goldstone was also faced with challenges from the National Union of Mine Workers.  In a memorandum sent to Goldstone, the union accused the company of hiding behind excuses to avoid dealing with the problem of HIVAIDS in the workplace.  They argued that the company's decision was unethical and that African Gold could well afford to continue the funeral benefits for its workforce.  In the memorandum, the union threatened further action if the company did not reinstate the benefits.

Questions

1. What aspects of the external environment is African Gold, Inc. confronted with? Give specific details for each one from the case.

2. Which parts of the internal environment of the company are most affected by the external environment?  Give details from the case to back up your choices.

3. Did African Gold make the right decision?  Should an organization be expected to go beyond legally mandated benefits to help workers with a devastating illness like HIV/AIDS?  Defend your answer.

4. What responsibility, if any, does African Gold have to its employees?  Why or why not?

5. What human resource challenges might a Canadian company face when operating globally?

Operation Management, Management Studies

  • Category:- Operation Management
  • Reference No.:- M9523743

Have any Question?


Related Questions in Operation Management

Conflictdefine functional versus dysfunctional conflict in

Conflict Define functional versus dysfunctional conflict in a work group and explain how you can increase functional conflict and decrease dysfunctional conflict. Develop a response that includes examples and evidence to ...

For this assignment you will need to find 2 articles in

For this assignment, you will need to find 2 articles in business that can help describe what are IT strategic initiative being undertaken by an organization are like. Choose a different organization for each of the arti ...

Coping with problems joe is a little nervous he has just

Coping With Problems Joe is a little nervous. He has just been transferred from another plant to take over a production line. Production is down and there is a serious problem with absenteeism. To make matters worse, the ...

Over 30 years ago michael porter identified a holistic

Over 30 years ago Michael Porter identified a holistic approach to understanding how competitive forces shape strategy. He posited that the only way to truly insulate an organization from underlying economic volatility i ...

You are the contracting officer for an air-to-ground

You are the contracting officer for an air-to-ground missile development program. A contract for pre-production models of the missile was awarded by your predecessor and the contractor is behind schedule. In a program me ...

The ikea case provides an excellent opportunity to apply

The IKEA case provides an excellent opportunity to apply strategic management concepts to a large privately-held company that is expanding into India. IKEA is a Netherlands-based Swedish company with a presence in 44 cou ...

Can you answer for me the following questions about social

Can you answer for me the following questions about social loafing and the three main causes of free-riding. 1. Give a description of the phenomenon of social loafing. 2. Give a description of the phenomenon of free-ridi ...

1 analyzing the bridgestonefirestone and ford motor company

1. Analyzing the Bridgestone/Firestone and Ford motor company, is it sufficient to use the ISO/QS 9000 standards as the main basis of vendor/product selection? 2. What position to these cars company ( 1. Volkswagen, 2. F ...

Research the effect of primary and secondary seat belt laws

Research the effect of primary and secondary seat belt laws on the occurrence of motor-vehicle injuries and fatalities. Explain how epidemiologic studies influenced the development of current seat belt laws. Describe how ...

Please provide a brief paragrap of the key takaways from

Please provide a brief paragrap of the key takaways from each of the following topics: Designing Clear Visuals in business reports Designing Successful Documents and Websites Writing Winning Proposals

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As