Enterprise Strategy
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BKAM3073 ES INDIVIDUAL ASSIGNMENT 1
CASE 1
KISDA is a multi-national oil palm plantation company registered in Malaysia. In 2007, KISDA was granted a license to plant oil palm and manufacture palm oil by the National government of Makasa, a small African country whose economy is mainly based on agriculture. The National government of Makasa was very keen to develop its economy and saw oil palm plantation as an important aspect of this. The area where KISDA was granted the license is very remote and has no towns or cities nearby. There are small villages near the site of the oil palm farm. One of the conditions of the license is that KISDA would employ local people wherever possible, which it has done. KISDA is entitled under the terms of the license to dispose of the waste from the palm oil manufacturing wherever is convenient for it.
The terms of the license granted a payment by KISDA to the National government of Makasa, payable in US dollars, which in 2012 totaled USD50 million. This is a significant amount of foreign exchange for Makasa’s economy. Similar levels of payment by KISDA to the National government are likely to continue annually for the foreseeable future. The plant has operated profitably since it began.
KISDA’s farm and plant are in an area controlled by the Local government. The Local government was not involved in the negotiations to bring KISDA to Makasa and is not entitled to any payment from KISDA. However, Makasa’s National government granted the Local government RM1 million in 2008 from the payments which it received from KISDA. The Local government discovered that KISDA’s proposed manufacturing techniques produce a liquid waste of brownish color and stinking smell. The cheapest way for KISDA to dispose of this liquid manufacturing waste is to dispose of it in a river near the plant and it intends to do this. KISDA
BKAM3073 ES INDIVIDUAL ASSIGNMENT 1
CASE 1
KISDA is a multi-national oil palm plantation company registered in Malaysia. In 2007, KISDA was granted a license to plant oil palm and manufacture palm oil by the National government of Makasa, a small African country whose economy is mainly based on agriculture. The National government of Makasa was very keen to develop its economy and saw oil palm plantation as an important aspect of this. The area where KISDA was granted the license is very remote and has no towns or cities nearby. There are small villages near the site of the oil palm farm. One of the conditions of the license is that KISDA would employ local people wherever possible, which it has done. KISDA is entitled under the terms of the license to dispose of the waste from the palm oil manufacturing wherever is convenient for it.
The terms of the license granted a payment by KISDA to the National government of Makasa, payable in US dollars, which in 2012 totaled USD50 million. This is a significant amount of foreign exchange for Makasa’s economy. Similar levels of payment by KISDA to the National government are likely to continue annually for the foreseeable future. The plant has operated profitably since it began.
KISDA’s farm and plant are in an area controlled by the Local government. The Local government was not involved in the negotiations to bring KISDA to Makasa and is not entitled to any payment from KISDA. However, Makasa’s National government granted the Local government RM1 million in 2008 from the payments which it received from KISDA. The Local government discovered that KISDA’s proposed manufacturing techniques produce a liquid waste of brownish color and stinking smell. The cheapest way for KISDA to dispose of this liquid manufacturing waste is to dispose of it in a river near the plant and it intends to do this. KISDA