Question: Please respond fully but concisely to the following essay. Although there are no restrictions for the length of your response, most applicants use 1,000 words or fewer. Your response should be typed and double-spaced, with your name on each sheet. There is no right or wrong answer.

A well-known, multinational mining company has a long-term contract to extract precious metals in an impoverished region of a developing country. Over the past decade, the operation has proven very profitable to the company. Recently, there have been peaceful, but highly disruptive, protests by members of communities adjacent to the company's property. The ruling military dictatorship has been unresponsive in meeting the local communities' needs. The local communities are now demanding a share of the mining operation's profits in the form of approximately U.S. $8 million to provide clean water and basic sanitation for the surrounding villages.

You have recently been promoted and sent to this country as the expatriate general manager responsible for the operation. The mine is assessed U.S. $20 million in annual taxes by the local government. This year you will show a U.S. $50 million after-tax profit if you elect not to address the request of the local community. Your team has worked very hard this year. A U.S. $50 million profit is the minimum level to ensure that your team meets its bonus plan.

• Provide an analysis of your options.
• Describe what you would do.
• Discuss the rationale for your choice.

• Address your plan to communicate with any constituent af­fected by your decision.

Essay #1

"Argue for your limitations and they're yours." - Anonymous

A great leader possesses two indispensable traits: the ability to recognize his or her own limitations, and the ability to recognize the motivations and competencies of others that can help exceed these limitations. Coupled, these traits provide a powerful capacity for problem-solving. As the manager of a mining operation in a developing country, my problem-solving skills are now challenged.

MINING OPERATION—SITUATION ANALYSIS

Assumptions

To better define the parameters within which I am working, 1 make the following assumptions. My team is composed primarily of ex-patriates in management, with local citizens comprising the balance of the workforce. The bonus plan allows managerial participation only. The dictator is concerned with holding onto power, and maintaining his $20M tax revenue. We are ncaring the end of the fiscal year; therefore, I can forecast that the $50M minimum profit will be achieved, if unforeseen costs are not incurred. Finally, the $8M demanded by the community has been confirmed as the amount required in order to meet their priority needs, which are, in fact, basic sanitation and clean water,

Business Strengths

The operation is productive enough to achieve $50M in after-tax profit this year, al lowing us to benefit from the bonus plan, which enhances management's productivity incentive. Ties to the surrounding community exist through local employees. The government is a stake­holder via its tax revenue. My team possesses managerial and cultural experience specific to operating in this community.

Business Weaknesses

The community sees relatively little benefit from the operations of this profitable foreign corporation. This inequality, combined with government disinterest, has led to operational disruptions. The government is unconcerned with community needs, yet we pay $2()M in annual taxes. The bonus does not benefit most local workers, hence, they have little productivity incentive. Although they represent a tie to the community, this is not currently leveraged. A lack of clean water and sanitation results in chronic illness amongst employees, detracting from productivity. Finally, the company lacks technical knowledge and experi­ence in community development.

Opportunities

Several significant opportunities exist. Creation of a profit-sharing plan to include the local workers could create incentive and provide added economic benefit to the community. My company is also afforded the opportunity to exercise social leadership—by making a real difference in citizens' lives. This could conceivably increase productivity through improved employee health and morale. In addition, protecting the government's tax revenue could act as leverage to induce positive government action.

Protests grow in frequency and severity, disrupting business operations. Community illness continues to threaten productivity. Bad publicity surrounding the situation leads to poor employee morale and decreased value in the eyes of shareholders. A looming threat is the potential precedent set by paying the full $8M. In this scenario, the bonus plan goes untapped, and assuming full corporate responsibility leads to further demands, by the same communities, and by different ones—in my company and in others. My operation's potential profit would already have decreased by 16%. Similar events throughout my company and others would be financially unsustainable. It could present insurmountable obstacles to doing business in developing countries, that is, if limits are not set.

Resulting Elements of Plan

- Sustain and even increase productivity by:

• Rewarding management this year with the bonus.

• Creating a profit-sharing plan to provide added incentive for local workers (contingent on increased productivity and the resulting profits).

• Improving health and morale through community development efforts.

- Decrease the risk of further operational disruption.

- Share accountability for community development amongst different stake­holders, not solely the company.

A SUSTAINABLE SOLUTION
I propose a partnership of different parties that will share accountability for addressing community needs. A pilot program will be implemented, to identify and address the highest-priority need. The stakeholders in this program will be my operation, corporate headquarters, an NGO, and the government. The company will contribute funds, as will, if at all possible, the government. The NGO will provide technical expertise. My operation will aid in project management, in conjunction with community representatives and the NGO. The community will provide an in-kind labor contribution. In addition, a profit-sharing plan will be added for the employees, starting with the new budget cycle.

Importantly, the company's initial financial contribution should come from corporate, not the local branch. This is because the financial structure does not take into account these unforeseen costs, which are necessary to operate effectively in the country. A cost-benefit analysis should be provided, showing that this contribution can increase productivity and minimize costly risks such as operational disruptions, bad press, weak employee incentive, and poor morale—all of which lead to reduced operating margins. Another selling point is the publicity possible: our corporate collaboration with the social sector, working to improve lives in the communities in which we operate. This publicity could increase employee morale and shareholder value.

Corporate action takes time. The argument to decouple the "social costs" from the financial structure was made. If the change is not fast enough, my branch will provide the first installment for the pilot, from next year's budget. Any perceived time lapse will be made palatable to the community via the expansion of the bonus plan and through strong community engagement in planning for the pilot. Initial funds will also pay for NGO selection. Once identified, the NGO will be convinced to participate because of the benefit to the community, but also the unique partnership—an opportunity to tap into the private sector to accomplish its own goals.

My branch will act quickly on several fronts. Strong links to the community will be developed through local workers, who will act as community representatives, and help identify others from outside the company. Through these links the community will be engaged. With the NGO and branch management, they will prioritize what portion of the project should first be implemented and how. The sell to the community should be based on the fact that the pilot program is a necessary first step. The community will benefit from it and the proposed profit-sharing plan. If successful, further projects may be possible.

The government must be persuaded to provide partial funding. This should be presented as an opportunity to increase government popularity, e.g. security, and ensure its continued tax revenue. The story line: their lack of participation will make country operations increasingly difficult financially, and possibly unsustainable. Diplomacy (e.g. the local US ambassador) should be used to apply cautious pressure to the government using this stance.
In the long run corporate can decide whether to expand the program In this case, foundations and aid orgam/ations could be contacted as potential donors Implementing the pilot program gives corporate time to evaluate the issues, identify other donors, and reform the financial structure appropriately Insight will be gained from the pilot, aiding their decision making

This collaboration creates value beyond what I alone could have created Each constitu ency contributes different, but complementary abilities Corporate social responsibility is acknowledged, but limited by sharing accountability with other parties Profits are maxi­mized by quelling operational disruptions, maintaining and expanding worker incentives, and creating strong employee and community morale

CONCLUSION

The leaders of multinational corporations have the opportunity to enhance operations, and financial performance, by addressing social issues Partnering with social sector orga­nizations can be an effective model for doing so It is a way of exceeding corporations' own limitations and effecting positive social change Those who do not address social concerns will increasingly find their financial concerns are at risk Kofi Annan stated this eloquently, "Thriving markets and human security go hand in hand without one, we will not have the other "

Критика

В данном эссе проведен очень глубокий анализ ситуации, предложено несколько решений и ярко выражен именно творческий подход к рассмотрению заданной проблемы. Решение автора выражено в реалистичном подходе к работе с корпоративными клиентами, негосударственными организациями, правительством и отдельными гражданами. Чувствуется оптимистичное настроение всего эссе, в котором диллема представлена в виде понятия "оптимальная возможность выбора".

В нашей следующей статье мы продолжим анализировать вступительные эссе в бизнес-школу Tuck.

Продолжение следует!