Problem: USMNC has just purchased Latin America Metallurgy Company (LAMC) from a competitor. LAMC is located near Managua, Nicaragua. There has been rapid growth in worldwide demand for the sheet metal and coil that LAMC makes. The acquisition substantially bolsters USMNC's capacity to meet this new demand. For the acquisition of LAMC by USMNC to succeed, USMNC has to be able to move LAMC's products out of the door quickly. With worldwide demand soaring, it cannot afford delays in production.
USMNC management feels that all the company's facilities worldwide must meet or exceed the state-of-the-art U.S. standards for health, safety, and the environment. This policy was developed after the chemical release in the Philippines described in Case 8.1. After that event, the CEO called for a safety audit of all the companies' facilities worldwide. The audit showed that the company's global safety, health, and environmental practices were not as strong as they should have been. Whereas before the Philippines event the company granted USMNC's far-flung global subsidiaries substantial discretion to follow local practice, since the event, the company has tried to centralize control of safety, health, and environmental policies. In addition, it conducts regular audits to bring local affiliates into compliance with corporate policies and practices.