Texaco Case Analysis

Ethical culture problem in mid-1990s: Racism and Discrimination against AA employees; blatant use of racist language; documented instances of lower pay for minority employees; use of derogatory comments

Critical Issues of the Case

1. Protecting the corporate image

2. Improving stakeholder relations; especially in the African-American community

3. Improving the corporate culture; valuing diversity

4. Settling the pending discrimination lawsuits

5. Limiting media focus and dissuading further decline in the stock price

Stakeholder Perspectives Include:

Employees. Since the 1980s, the company had shed thousands of employees in an effort

to stay competitive. Due to the major layoffs over the recent years, employee morale is already low. In 1996, for the first time in almost a decade, Texaco’s payroll grew instead of shrinking. At this point, Texaco employed around 27,000 employees worldwide. The company appeared to have disproportionately lower levels of minorities in roles of authority, as compared to Caucasians.

African-American community at large/Customers. When the New York Times went to

press the public was outraged. Rev. Jesse Jackson immediately became the voice of the black community. He called for them to cut up Texaco credit cards, and boycott the independent Texaco dealers. The Texaco incident took on a greater public sentiment, which reflected a wider scope of discriminatory issues.

Investors. At the time of the case in 1996, Texaco ranked #11 on the Fortune 500 list.

The press caused the market analysts to recognize the potentially disastrous effects on the business. The company’s stock plummeted.

Government bodies. The Equal Employment Opportunity Commission (EEOC) had

reviewed the lawsuit against Texaco, and the company’s employment practices. It found that promotional opportunities for black workers were significantly lower than their non-black counterparts. The Department of Labor (DOL) also conducted a...