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James Hardie Industries Managing Under Uncertainty

Identify and critically assess no more than three decisions made by James Hardie that you consider contributing to the company’s share price suffering badly (other than the decision to restructure and the decision in respect of the management of the media)

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The decisions that made James Hardie’s share price suffered badly were their dismissal of the evidence that their asbestos products contributed to health problems particularly the cause of the killer lung disease, mesothelioma, of their employees and customers, their decision to evade accountability of the said situation and their attempt to abandon victims by transferring their base from Australia to the Netherlands.

In the 1930s medical journals associated the dangers of lung diseases with asbestos. As early as 1957 a report by the Victorian State Health Department found 539 cases of lung damage which were caused by industries involving dust such as asbestos. In 1966 newspapers reported the damages of asbestos products. Despite all these evidences that asbestos products were harmful to the health of their customers and employees, James Hardie was in denial of such evidence and continued to operate acting or pretending that asbestos products have no adverse effect on health. The second decision was their evasion of accountability.

Many of the company’s employees and customers developed lung diseases because of the company’s asbestos products. The company avoided taking responsibility by paying the affected people. They created the Medical Research and Compensation Foundation to compensate victims but it was underfunded thus the complainants were not properly compensated. The last decision which contributed to the bad share price of the company is their decision to attempt to abandon their victims by moving their base to another country, the Netherland.

The company earned a bad reputation worldwide for attempting to abandon its victims and their responsibility for the matter. These three decisions made by the company contributed to the unfavorable share price of the company for it earned a bad reputation around the world thus it was difficult for management to improve the image of the company with the given liability being unsettled.

Critically assess the decisions relating to the management of the media in the face of the emerging public scandal using ethics and ethical practice in decision making.

In the face of the emerging public scandal, James Hardie accepted interviews with the media. Directors denied the facts regarding the harmful effects of asbestos products saying they were not aware of such. The top management of the company was more concerned about the profit they would be earning rather than the damages caused by their products to the people concerned. The company affirmed such intentions when they stated that the directors’ responsibility is to protect the interest of the company.

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They stated that it is not their obligation to spend on things that would affect the company’s assets. In terms of ethics, such a decision was immoral and unethical. It is the moral obligation of the company to care for the victims of their products. They are liable for what happened to the affected people and they cannot just state that they are not liable. The problem with the company is that they act ignorant to the facts and decided to pursue such ignorance to avoid accountability. The effects of their decisions already made their company suffer. If they had settled such liability the issue will no longer be prolonged.

It has been confirmed that ethically James Hardie is bankrupt as they left their foundation which catered to the complaints of the people affected underfunded. The Australian government and its taxpayers were the ones who compensated the victims of James Hardie. The way the company handed the issue was unethical as they denied the facts presented by countless studies. The company pretended that they did not know a thing about the effects of their products which is supposed to be their responsibility to protect their employees and clients from adverse effects of their products. They prioritized making money more than the damages brought about by their products. It is the responsibility of the company to protect people concerned but it had failed to do so.

Critically assess the set of corporate decisions culminating in the decision to restructure the group as effective strategic decision making.

The company decided to make critical changes that would guard their financial assets against the asbestos scandal. They decided to separate current operating businesses from their Australian asbestos liabilities and move their assets to a tax-efficient Dutch company named JHNV. They also decided to transfer James Hardie and Coy and Jsekarb to an Australian holding company the Medical Research and Compensation Foundation that would act as a trust and manage the claims made against the said companies.

Such decisions were strategically good but the company lack discretion that would have prevented their previous image from overshadowing their new ventures. They should also make a corporate social responsibility department to help uplift their new image. It would have been better if the management also instilled new procedures and priorities in terms of doing business. They should have learned some lessons from the suites and complaints brought about by employees and customers to the previous company.

The reason why the previous company had to move and change the name was that it already had a scandalous image thus the company lost more money than gain. It is essential that the company provide solutions first to the scandal and take responsibility before the new business would be successful. Image and branding is essential. People will not trust the company given its history. This should first be addressed before the company can fully operate.

You are a member of the current board of directors of James Hardie and you are advised at a recent board meeting that there are some questions being asked by some members of the American scientific community as to whether some of Hardie’s products being distributed in the USA have links to cancer. What would you be advising the company in terms of what should be done? Act in the best interest of the company.

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As a member of the board of directors of James Hardie, I would advise the company to honestly provide scientific studies and data with regards to the effects of Hardie’s products to the human health. If some products may lead to cancer then the company must honestly state that according to studies the said product may lead to cancer. We will indicate a warning note for every product produced and manufactured. This warning would be the same as those in cigarette packaging.

The company would not be liable for the health effects that would affect clients because they were already informed of the harmful effects of continuous exposure to the products. In terms of employee exposure to products, the staff working along close proximity to the products which may have harmful effects to the health of the person involved will be given a health insurance plan on top of the government health plan given.

Before commencement of work the company will state that the job would involve exposure to products that may be harmful to the employee’s health. The company should at all times inform every one of the dangers and it should state that they will not be liable with the decisions made by the employees or clients in terms of them being exposed to such chemicals. The company should be very open and honest in terms of its products so as to avoid suites and complaints from employees and customers.

Providing information before hand would lessen the impact of scandals to the company as they have already informed the people of the given facts and it is already in the concerned parties decision as to whether they wish to expose themselves on the harmful chemicals or not. The importance of such decision is that the company would be facing fewer complaints from clients and employees because they were already informed of the effects. My advice is to state the facts and be truthful. The company should leave the decision making to the employees and clients with regards to how they manage their health. The company has warned them so it is no longer the company’s decision in terms of their exposure.

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