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22 Aug 2019
GS Paper 4
Case Studies
ABC Ltd. is a large transnational company having diversified business activities with a huge shareholder base. The company is continuously expanding and generating employment. The company, in its expansion and diversification programme, decides to establish a new plant at Vikaspuri, an area which is underdeveloped. The new plant is designed to use energy-efficient technology that will help the company to save production cost by 20%. The company’s decision goes well with the Government policy of attracting investment to develop such underdeveloped regions. The government has also announced a tax holiday for five years for the companies that invest in underdeveloped areas. However, the new plant may bring chaos for the inhabitants of Vikaspuri region, which is otherwise tranquil. The new plant may result in increased cost of living, aliens migrating to the region, disturbing the social and economic order. The company sensing the possible protest tried to educate the people of Vikaspuri region and the public in general that how its Corporate Social Responsibility (CSR) policy would help overcome the likely difficulties of the residents of Vikaspuri region. In spite of this, the protests begin and some of the residents decided to approach the judiciary as their plea before the Government did not yield any result.
(A) Identify the issues involved in the case.
(B) What can be suggested to satisfy the company’s goal and to address the residents’ concerns?
(A)The issues involved in the case.
Despite the ABC companies project being in concurrence with the government policy, the project is facing resistance from the local people of the area.
The following can be the reason for this:
- Trust-deficit between the people and the industrial sector.
- Xenophobia is a built-in psychological tendency of human.
- Unawareness or ignorance of people of Vikas puri despite being an underdeveloped region.
- Another issue is the fear among people of a rise in costs and changes in the social and economic order with the development.
(B) Steps to resolve the conflict between the company’s goal and the residents’ concerns.
- First and foremost there is a need to bring behavioural change in local people towards development.
- Use of Information, Communication and Education approach.
- The company needs to bring awareness about the growth and prospects of better returns for local people from the land, better education, healthcare and other benefits for the local people, due to the project.
- Use of Emotional Intelligence to bridge the trust deficit between the residents and company.
- Use of Information, Communication and Education approach.
- Develop local leadership and make them aware of government vision and schemes.
- Participation of locals in the decision-making, will create confidence and remove the fear of change in the social and economic order.
- Skill development programs should be made part of the CSR initiatives of the company.
- Though these may be short term measures to tackle the conflict between development vs community, its long term solution lies in Community-Driven Development (CDD) approach.
Note: According to World Bank CDD is an approach that gives control over planning decisions and investment resources for local development projects to community groups.
