Caltex Brand and Investment in South Africa


There are several reasons that determine decision-making by individuals or organizations. In most cases, a moral duty usually dominates the decisions. Moral responsibility is described in two theories namely deontology and utilitarianism. Some people base their decisions on perceived outcomes. This is in line with the concept of utilitarianism which asserts that individuals act or make decisions by considering the resultant utility. The decisions are sometimes very difficult when handling very sensitive issues that affect the autonomy of humanity and governance as in the case of apartheid in South Africa. In utilitarian theory, the alternative that offers the greatest benefit to the majority is usually considered the best and equally morally right decision. This means that utilitarianism considers the moral worth of a given action to be beneficial to the majority in society. Texaco and SoCal firms, which are the greatest shareholders in the oil business in South Africa, felt that they should pull out their Caltex Company, which they own jointly because of the injustices that the nation was facing. The minority whites oppressed the black South African population in what is termed as apartheid (racial segregation) resulting in poor living conditions for Black South Africans.

The Study Case

The governance system in place in South Africa was very cruel to blacks. However, with moral responsibility on their shoulders, the managers and owners of Caltex decided to comply with the “Sullivan Principles” that were set up to help fight for the rights of the black people who in fact were the majority in the country, as South Africa was their homeland (Magarrell, 1979). The principles are against segregation of races, fair and equal work conditions, equal payment to comparable duties, training, increasing number of blacks in management positions, and betterment of employee living standards The oil firms helped the country improve income by about 150%. However, the subject of human rights is very critical. Blacks are mistreated and Caltex cannot sustain the idea. Yet if they stay and supply the government with oil and offer a revenue source, they will be perceived to be supporting oppression (Velasquez, 2006). Pulling out its operation in South Africa in an effort to end apartheid is morally correct for the firm. The discussion of this paper entails an illustration of why Caltex should not pull out its operations from South Africa in an effort to end apartheid in the country.

Utilitarian Benefits of Caltex in South Africa

To a certain degree, it is obvious that the benefits that the oil firms have brought to South Africa are incredible; therefore choosing utilitarian benefits over humanitarian issues of segregation is a very good move. However, that should not be seen to imply in any way that the companies support oppression. The benefits are very important and to some extent, they outweigh the need to correct the moral injustices that racial segregation is doing to the South Africans. For example, Caltex had a plan to provide Black South Africans with jobs (Athanas, 2008). As many people work, they earn income to support families. This means they can afford decent housing, food, education, and other necessities. Many Black African families which depend on the company will go back to languish in abject poverty if Caltex pulls out, these benefits will be lost.

Racial segregation in any perspective is not permissible; neither can it be justified. Nonetheless, it is true that the employment that these plants offer could be among the best survival means that the Black South Africans can ever access in their effort to feed their families. However, attaining freedom and enjoying full civil rights is significantly essential to every person. For them to be able to attain their full capacity in life and claim their correct position on the globe there are some very fundamental necessities that have to be satisfied. It is only after satisfying these needs that they can start worrying about their intellectual, religious, or other personal rights and freedoms. In essence, It would not be so beneficial to offer people greater freedoms, good governance, legitimate rights when their families are sleeping on empty stomachs (Magarrell, 1979).

Caltex is a major company in South Africa and has the power to pressure the government through other means so that it can change the repressive laws. Nevertheless, it should not just change the laws or make little alterations, but rather engage in a complete restructuring of the oppressive laws (Kramer, 2009). Principally, this is in accordance with what Mr. Sullivan said, ‘freedom is not about easing the chains for a little relief but rather cutting them off!’ Actually, a financial investment is a powerful tool and means a lot to the government (Velasquez, 2006). Caltex ventured into a nation with repulsive laws to humankind but had the capacity to change these conditions. It is a strong reality that the living standards in the country were terrible. The inhabitants were experiencing the worst conditions characterized by inadequate foodstuffs, filthy homes, laughable education arrangements, and meager wages and denied certain important rights like voting or venturing into certain careers. The influence that Caltex had on the population and the government could be used to pressure the government to change the laws that were oppressive. Basically holding mediation negotiations, demonstrations, and mass actions can work out very well. As a business, however, meddling in government affairs can be a very bad idea considering that every nation has its sovereignty.

The work conditions in Caltex favored many individuals and affected the South Africans in a great way. The majority of South Africans who are outside their homeland took it into their own hands to air their grievances without permission. This is because they could not afford to sit back and watch as their fellow countrymen suffered. They also believed that Caltex should stay. They indicated that the South Africans could have wished to have simple jobs with Caltex. Caltex at least offered better pay that translated to better-living conditions. Considering some South Africans advocated for complete sovereignty and total freedom, which could not be a priority to the majority of the people who were average dwellers and poor residents. It is also disrespectful to make the assumptions that those advocating for absolute freedom were addressing the voice of the majority – what they desperately needed (Herman, 1968).

The utilitarian benefits of opening the Caltex firm in South Africa were much more than the benefits of pulling out just because of the human rights infringement. Caltex could decide to pull out, yes, as a sign of their stance with regard to social injustices of racism and discrimination, but what about the many black families that will be left without income sources? What about the children who depend on parents working in the company? At least if they chose to stay they could still achieve the same purpose in ways that are non-violent. This means that following important policies could defeat the evils (Herman, 1968).

Voting for Resolutions

The Caltex managers set up three basic conditions that would see the votes from the stockholders to determine the way out for the company. The first condition was to end Caltex operations in South Africa, second, to stop selling to army and police forces, and third, to implement Tutu’s opinions. The first condition would not have been the best decision for the company since it would not have put the interest of the workers at hand with such a move. Stockholders are required to vote according to their individual conscience.

Any reward like offering employment to the poor and discriminated South Africans is conscious enough considering the people that needed to be empowered (Herman, 1968). However, the government benefited by gaining revenue, there are other ways that we could addressed the problem, such as negotiations. Even looking at the hierarchy of needs, the people have to seek stronger and better governance, only when problems like poverty are not a major issue. On the other hand, continuing to operate in South Africa is not a sign that the company addresses discrimination. Making a stand is not a big deal; the issue is how to communicate the concerns. However, failing to oppose something wrong cannot bring any solution and oppression will continue (Magarrell, 1979).

On the second pledge, the company should not to sell to the military. The company has the right to say no after given the opportunity to determine this by a vote. Actually, selling oil and oil products to the military is doing more harm to the poor blacks. The company is seen as failing to act or question the regime. By selling to the police, the firm is propagating oppression for the blacks. This is due to the fact selling to the police and military would enhance their accessibility to the citizens thus committing crimes against humanity. As a result, the firm will be failing in acting in a social responsible manner by expressing the exploitation by police.

On the third choice, supporting the principles set up by Desmond Tutu would be the best option. These principles will help the company take up the active responsibility of eliminating apartheid and setting up a strong human rights foundation (Kramer, 2009). This could be attained by ensuring that blacks lived together as families; their labor unions are recognized; contest influx foreign control of labor and enhance fairness and equity in labor conditions. If the company could oppose the sale of its products to military, then they should be able support the majority Black South Africans. Though this would be interfering in politics, taking sides with Tutu’s objectives is a better way of supporting fair treatment for all South Africans.

Managers’ Responses

It is not the problem of business organizations to nose around in governmental points of view or question policies in foreign nations. The business together with the management has the right to make critical decisions, which according to their verdict, will be profitable to the company, and enhance its competiveness. It is not our business to oversee the operations of governments. The duty of the managers is to the shareholders and the investors (Herman, 1968).

Due to many advancements and increased awareness of the business environment, businesses have the corporate responsibilities to ensure that they promote environmental conservation and oppose any activities that are against humanity. This means that managers will only act in the interest of their business owners and give advice where necessary. If the legal decision is beneficial to the shareholders, then that is the way to go unless advised otherwise by the stockholders. The management acted properly in this case by allowing proposals but not supporting them. They did not act unprofessionally or block suggestions to the stockholders (Kramer, 2009).

Responsibilities of the Management of the company

The corporate managers have no big role other than assuring the stockholders the prosperity of the business. They are not employed by the business to act consciously but to be operational, oversee investment and manage the business. The business’ interest is not to fight for human rights or to impress the public or the world for that matter. It would be very appropriate if individuals took it upon themselves the collective responsibility of addressing what is good rather that having to be imposed upon such responsibilities (Velasquez, 2006).

Stockholders only hire management to run the business. They retain the right to make decisions. However if they feel that the management has to take a stance, they have the authority to do so when addressing political, ethical, and other social concerns. Through their votes, they can determine what the management would do. However, without that kind of gesture it is not right for the managers to act on their own conscience to deal with certain business interests (Velasquez, 2006).

Management should only make decisions when the issues concern the law and principles of venture. When there are two possible options that are legitimately equivalent will the management be required to consider moral responsibility. However, this is not the wish of stockholders. Nonetheless, no one should compel another person to ethical considerations (Herman, 1968).


The concept of utilitarian is very important in guiding decision making considering that it takes into accounts the outcomes of the action to be taken. In this case Caltex’s operations in South Africa helped the Black South Africans in great way by offering jobs. However as a legal and corporate entity, the firm bears a moral responsibility to the society. This means that it has to raise its concerns about issues taking place in the community. Apartheid being apparent in South Africa, a critical decision had to be made by the company. The company being a very critical player in the economy of the country, it had an opportunity to pressure the government to change the laws that were oppressive. One way is to pull out; however advising the firm to stay is logical and knowledgeable. The benefits of staying are many and the beneficiary is the entire society. Furthermore better ways to show solidarity in fighting apartheid can be done by better means such as dialogue and making agreements work really well.


Athanas, J. (2008). Apartheid in South Africa, Oil Investment and Fragile Mnc Operations Part. Web.

Herman N. (1968). “The Case for Doing Business in South Africa,” Fortune, p. Cape Town: Cape Town Publishing Press.

Kramer, M.R. (2009). Social Decision Making: Social Dilemmas, Social Values, and Ethical Judgments, Volume 2009. Social Decision Making: Social Dilemmas, Social Values, and Ethical Judgments. CRC Press. Boca Raton

Magarrell, J. (1979). U.S. Adopts Stand on Apartheid: Backed on Many Campuses,” New York: The Chronicle of Higher Education.

Velasquez, M.G. (2006). Business ethics: concepts & cases. New Jersey: Pearson Prentice Hall.

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