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American Mining Company

The U.S based coal company AMC, is a true giant in the world coal industry.Though AMC was successful, it was having difficulties regarding labour rules andcost in U.S. so, seeing some bright future in Colombia which is a beautifulcountry located in the resource richSouth American continent and is famous forproducing coal, oil and coffee. As expected, AMC was achieving its goals, whenthings were going perfect for AMC, the political conditions of Colombia and thewar between the rebels and the paramilitaries was increasing difficulties for AMCand harming AMC in every possible way. The situation was turning so adversethat AMCs existence became a matter of doubt.

About the AMERICAN MINING COMPANY

AMC was one of the most successful and largest coal mining companies in thehistory of the United States. It had a massive coal holding capacity of over 1.3billion short tons and staggering revenue of US $ 1 billion. It had a worldwidereputation of providing premium quality coal with excellent service andtrustworthy delivery methods. It even diversified and started expanding itsoperations in the real estate sector on both the US east and west coasts.

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About Colombia

Colombia is a beautiful country located in the resource richSouth American

continent. The country is famous for producing coal, oil and coffee. It has theworlds third largest coal reserves. Colombia has the capability to producePremium Quality of coal which is famous all over the world. The coal has asurprising heat value of 11,000 BTU per pound which is a characteristic ofsuperior quality coal.

Problems faced by AMC

Despite of the success of AMC it had to suffer through problems regarding thestrict rules in the American mining sector and the taxing wage rate. They had to

pay an average US mine worker a salary of over $ 3,000 per month with extrabenefits which was higher compared to any other coal mining company of theworld Besides there were restrictions like limited working hours, mandatorysafety conditions etc.

Even though AMC promised its workers that it would never shift its operations inanywhere else, AMC was looking forward to operating its business in a more costeffective condition with higher efficiency and also where it can get superiorquality coal, convenient transportation service at a lower labor cost.

Economic Conditions in Colombia

The economic situation of Colombia was in a severe down turn in the mid 1990s.The unemployment level and inflation rates reached their peaks. As a result theGovernment had no other option but to privatize the national industries andattract foreign investments in order to alleviate the deteriorating economicsituation. It was also to comply with IMF (International Monetary Fund) loanconditions as the economy had huge amounts of national debts. The governmentstarted offering numerous advantages just to attract foreign companies investing

in the country.

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Benefits for the foreign companiesin Colombia and possible reasons for AMC to shift in Colombia

At this point of time, both Colombia and AMC found mutual benefits in developingan agreement between them where Colombia would get lucrative foreigninvestment and AMC would get high quality coal with cheaper labor costs.

Due to high unemployment rate of about 20% it was easy to find workers inreasonable price in Colombia .Besides workers there are willing to work forlonger hours and in risky surrounding .The wage rate of Colombian mine workersranged hardly from $500 to $1,000 per month whereas the US workers wagewas $3,000 per month along with additional benefits. Other than that the laborrules in Colombia were much more flexible and easy to comply with. A possibleshift in AMCs operation from USA to Colombia would significantly reduce laborcosts, increase efficiency and productivity and generate higher profits.

Colombia, with its ongoing economic recession unemployment and inflation ratesand IMF restrictions, was eager to offer its coal mines to any well establishedforeign company and AMC was certainly an attractive option for them.

Colombia offered so many attractive investment benefits to AMC which included

tax free operations for the first 10 years, very cheap lands holding Colombiasbest coal reserves and subsidized infrastructure development. It would alsoconstruct a modern sea port on the Caribbean coast which would allow theshipping of coal exports to the United States within just two days .The seaportwith a capacity to move 10 million tons of coal per year was for the exclusive useof AMC. Moreover a new 200 km rail link which would connect the mine to thecoast was also supposed to be build in joint venture by the Colombiangovernment and AMC. In addition, for the protection and security of AMCsoperations and its workers, around 500 soldiers of the Colombian army would becontinuously posted. Getting all these lucrative benefits from the Colombiangovernment, AMC decided to shift its operation there and began construction on

its Colombian mines in 1994.

The transfer of AMC operations

Within the year 2000, AMC had shifted almost all of its operation from thesouthern United States to North East Colombia. Over a time span of five yearsAMC had shut down nine mines, which made at least 5000 US workers

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unemployed. Only two mines were left operational in the United States and eventhose two were planned to be closed by 2003.

Initially AMC started its operation successfully in Colombia. The initial productioncapacity was 3 million tons per year. AMC was in charge of everything there,even a portion of the rail link was owned by AMC. After processing the coalcompletely it was loaded on trains for transportation to the port, and theprocessing facility had a capacity to store over 200,000 tons of coal.

It planned to expand its operations by the year 2004, which would help toincrease AMCs production to over 10 million tons per year. The moderntechnologies of AMCs and efficient operational logistics provided reliable sourceof exports worldwide. It had sufficient amount of resources which helped andsupported AMCs expansion plans significantly. The administration policy of theAmerican president George W. Bushs was more focused on coal and as a resultAMC had bright prospects in this sector. Since the Colombian units proved to bemore profitable, AMC gradually closed down its US units and emphasized moreon its plan Colombia.

Colombian Business Environment

The Colombian business environment was apparently friendly to AMC, anAmerican origin company which started its operations for the first time there. TheColombian president Andres Pastrana was in favor of US investment in hiscountry. Moreover, very few restrictions were applied to foreign companiesoperating in Colombia, such as, both foreign and national investments had tofollow the same legal and administrative policies. According to Colombian law80% of a companys employees should be the local ones of Colombia. AMCcomplied with this rule and rotated its high and mid level executives between itsUS headquarters and its Colombian operations, however, all lower level workerswere all Colombians. However, 100 percent foreign ownership was permittedexcept for a few situations. More and more organizations were being privatized inthe country, reorganization in accounting and legal procedures were taking place,all these making the business transactions in the country more transparent.

Coal was the third largest export of Colombia followed by oil and coffeerespectively. As AMC started its successful operations in Colombia, the countryscoal exports were expected to double by the year 2005. To make it US $2 billionby 2006, the government encouraged private investments within the coalindustry.The major portion of the countrys coal deposits was within the Guajira

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Peninsula on the Caribbean coast. The largest state owned coal company,Carbocol, was to be fully privatized by 2006 and AMC wanted to acquire its 50%equity. Carbocol had a 50% stake in the Cerrejon Norte project which was Latin

Americas largest pit mining operation and one of the largest in the world.Overall, AMCs future seemed bright and promising.

Colombian Political environment:

Colombias political environment, unlike its business environment was goingthrough a period of instability and unrest. In the years 1970 to 2000, Colombiasuffered severe civil war between various rebel groups tremendously spreadthroughout the country. The Colombian president Andres Pastrana who waselected in 1998 with the expectation to control this situation, gave his best effortsto bring an end to the civil war but failed to do so. Despite the intense effort of thePastrana administration to negotiate with the rebel groups, different crimes andterrorisms like kidnappings and assassinations were continuously taking place.Colombia had the highest kidnapping rates compared to any other country in theworld. Both local workers and foreign executives were frequently kidnapped formoney which was a big discouragement and drawback for foreign investors.Different rebel guerilla groups were engaged in Colombias drug trafficking andkidnapping activities. There were two major factions among these groups,commonly known as the FARC and the ELN. Over 40% of the countrys territorywas under their control, mostly the remote areas which were near the

Venezuelan and Brazilian borders. These rebel groups main activities weredealing with drugs and kidnapping foreign executives for high amount of ransom.

FARC- the Fuerzas Armadas Revolucionarias de Colombia

This was Colombias most dangerous and largest rebel group. They had almost15,000 well trained troops. FARC was mainly involved in the persuasion of itsMarxist philosophy through violent actions. They were against the idea of foreigninvestments in Colombia and preached their doctrine regarding re-distribution ofwealth, land reforms etc through aggressive measures. They used to make largeprofits from kidnapping and drug trafficking all over Colombia which motivatedthem even more, and as a result, they were able to keep highly trained wellequipped and motivated soldiers who were more powerful than their governmentcounterparts. A massive area measuring 42,000 sq km was allocated to thisgroup by president Pastrana in order to initiate peace negotiations. The area wasdeclared de-militarized zone with no government intervention and thus wasliterally a safe shelter for the FARC to carry out their illegal operations includingcocaine cultivation, training of its soldiers etc. FARC even forced the local people

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to take part in the cocaine production and persecuted those who didnt complywith them. Cocaine production brought in more than $700 million annually andwas mainly exported to USA. Many multinational companies operations were to

be carried out in this FARC ruled area and AMC was one of them. AMCs mainColombian mine was within a territory that was contested by the FARC the ELNand the paramilitary.

ELN-The Ejerciti de Liberacion Nacional

The Ejerciti de Liberacion Nacional (ELN) was Colombias second largest andinfluential rebel group. It had almost 5,000 armed and well-trained soldiers. ELNhad a similar Marxist ideology to the FARC but its activities were more focusedon kidnappings and attacking the countrys energy and petroleum infrastructures.They used their guerilla tactics to attack and demolish pipelines and power lines.They also used to blackmail multinationals by different activities. ELN was alsoprovided with an area of 5,000 sq km by the government in order to initiate peacetalks and bring a stable situation. The group was involved in severe terroristactivities time to time such as hijacking a domestic airliner in 1999, kidnapping100 church going people, etc. ELN was in clash with FARC and the paramilitarygroup AUC.

AUC-Autodefensas Unidas de Colombia

Unlike the two terrorist rebel groups, Autodefensas Unidas de Colombia (AUC)was Colombias renegade paramilitary faction. Its activities were highlycontroversial as it used violent and brutal techniques to combat the Marxist rebelgroups and any of their suspected accomplices. They use to violate human rightsto a large extent. Three quarters of the politically motivated killings in Colombiawas carried out by this group. The group had members ranging from 5,000 to11,000 in number. They were highly trained and disciplined and led by thevindictive leader Carlos Castano. The group had unofficial ties with theColombian army and together they used to annihilate the Marxist rebels. ThoughAUC didnt directly harm AMCs operations, continous clashes between AUC andthe rebel groups had negative impacts. AUC depended to a large extent on thetax imposed on the cocaine producers, which was used in their war against therebels.

US Plan Colombia

In order to combat the rebel groups in Colombia and deal with problems like drugtrafficking and kidnapping, the US congress allocated a$1.3 billion aid package toColombia. The condition of US congress was that the Colombian Government

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has to control the cocaine production and help the US companies in Colombiadirectly with this aid. AMC played active role behind convincing the USgovernment regarding this aid. AMC top officials heavily lobbied the US congress

to increase military shipments, including helicopters and training. This course ofaction was also influenced by the Colombian president Pastrana, who convincedthe US government that such aid would benefit USAs interest and promised tohelp the US companies operating in such hostile conditions of Colombia.

Because of this direct interference by USA, and AMC consciousness raising forit, FARC was severely discontented at them. They planned a series of attacksagainst US assets in Colombia and AMC, being an American company was theirprimary target.

The hurdles faced by AMC

AMCs success stories in Colombia started to be hampered within a few years.Its operations were frequently in the trouble between the battling Marxist rebels(FARC and ELN) and the paramilitaries (AUC). AMCs railroad structures wereattacked by the FARC guerillas very frequently. One severe attack devastated anentire train and its shipment. The mine pits of AMC were not left alone. AMC hadto suffer a lot regarding its establishments and operations and was forced to stopits night operations as they were too much risky.

Besides a 10% tax was imposed on AMC by FARC as its operating area wasincluded in the FARC controlled territory. AMC denied paying any such taxes,which further aggravated the FARC authority. It resulted in increased number ofattacks on AMC establishments. FARC even decided to make strategic plans forAMC as a penalty of supporting US and its aid against them known as PlanColombia. ELN imposed similar taxes on AMC and other foreign companiesand those who refused to pay were severely targeted. Kidnapping was anothermajor problem faced by AMC besides the guerilla attacks. Despite of 400Colombian Army soldiers being employed for its protection, and AMC having itsown airport, incidents of kidnapping continued. In such situation AMCs demandof having more security was not fulfilled by Colombian Government due to lack ofproperly trained soldiers.

The activities of the AUC paramilitaries were another barrier for AMC. Althoughthey did not attack AMC directly, their clashes with the rebel groups and theirtargeting of the companys Marxist employees did hurt them much. Within a 3year period, 6 AMC union leaders were killed by AUC paramilitaries. They

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demanded their accommodation at the mines at night as most of the killings tookplace at night time while returning home but it was refused by AMC. In October2001, AUC killed 2 more union leaders by stop a bus and dragging them out of it

through which workers used to travel from home to work. It stopped AMCproduction due to a strike held by over 1200 workers, in order to protest and indemand for a safe working condition.

These incidents and AMCs refusal to house its workers created negative impacton the relation between AMC and the Union workers. Things were getting worsefor AMC gradually. The United Mine Workers of America publicly condemnedAMC for failing to give protection to its workers. It even advised them to withdrawcompletely from Colombia saying that human rights were violated by the killings

caused by AMCs lack of safety measures.

The recent ongoing incidents in the neighboring country Venezuela were yetanother threat to AMC. Venezuelas president Hugo Chavez, a vastly popularperson among the poor, general people, announced a new legislation in hiscountry. It stated that all the private oil industries of the country would be takenover or controlled by the government. He said that the foreign owned companieswere making staggering profits without giving any single benefit to the generaland poor people. Thus taxes and royalties were to be increased. Private industryofficials protested against the new law stating that it would discourage foreign

investments. But their protest did not work that much as the general people werein favor of the proposal. AMC had to deeply consider this situation in theneighboring country as the mottos of FARC and ELN were similar to that ofChavezs and it would be of no wonder that the Colombian people would supporttheir Marxist doctrine of land redistribution and opposition of foreign settlementstoo.

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Throughout the journey of American Mining Company known as AMC, thecompany has gone through a number of obstacles and tough situations;however, it has wisely handled the difficulties and continued its path of success.Those trouble causing barriers for AMC are mentioned here. Initially, the highlabor cost in U.S was cutting AMCs profit, which compelled AMC to downsizeworkers and later became one major reason for AMC to shift to Colombia. Whenthings were going right for AMC, the war between the Rebels like FARC and theParamilitaries like AUC created barriers for AMC, because the union workerswhom the AUC believed to be Marxist sympathizers or indirectly the FARCfollowers were included in the targeted list of attack for the AUC. With time, thisturned out to be one of the major problems as the paramilitaries were well armedand used to kill the workers openly. Then the government of Colombia allocatedhuge areas of land to the rebels in order to establish peace but it became safehaven for them and the situation became extremely dangerous for companieslocated in those areas and it was quite unfortunate for AMC to be one of thosecompanies. The rebels created various obligations and obstacles for thosecompanies, like imposing 10% tax on those companies, attack the transportscarrying coal, harm the workers, kidnap the executives, etc. Next comes theGovernment provided improper security facilities due to lack of trained and wellequipped and motivated soldiers. Thus it was difficult to preserve the minerals,provide safe working environment and transportation system to the workers. Thenext problem caused by this was the demand for accommodation overnight bythe workers due to lack of safe transport which was denied by AMC, and theresult was the crucial relation between AMC and union workers, thus as a resultof continued attacks on workers, they started strike and stopped AMCproductions for days. The situation was already complicated when neighboringcountry Venezuelas President Hugo Chavez declared to keep strategic decisionmaking authorities of industries like oil industry, nationalizes most privateindustries and imposed higher royalty. This became bigger threat when Chavezsdecision was supported by the general people.

Throughout the journey of American Mining Company known as AMC,

the company has gone through a number of obstacles and tough

situations; however, it has wisely handled the difficulties and

continued its path of success. Those trouble causing barriers for AMCare mentioned here. Initially, the high labor cost in U.S was cutting

AMCs profit, which compelled AMC to downsize workers and later

became one major reason for AMC to shift to Colombia. When things

were going right for AMC, the war between the Rebels like FARC and

the Paramilitaries like AUC created barriers for AMC, because the

union workers whom the AUC believed to be Marxist sympathizers or

indirectly the FARC followers were included in the targeted list of

attack for the AUC. With time, this turned out to be one of the major

problems as the paras were well armed and used to kill the workers

openly. Then the government of Colombia allocated huge areas ofland to the rebels in order to establish peace but it became safe

haven for them and the situation became extremely dangerous for

companies located in those areas and it was quite unfortunate for

AMC to be one of those companies. The rebels created various

obligations and obstacles for those companies, like imposing 10% tax

on those companies, attack the transports carrying coal, harm the

workers, kidnap the executives, etc. Next, comes the Government

provided improper security facilities due to lack of trained and well

equipped and motivated soldiers. Thus it was difficult to preserve theminerals, provide safe working environment and transportation

system to the workers. The next problem caused by this was the

demand for accommodation overnight by the workers due to lack of

safe transport which was denied by AMC, and the result was the

crucial relation between AMC and union workers, thus as a result of

continued attacks on workers, they started strike and stopped AMC

productions for days. The situation was already complicated when

neighboring country Venezuelas President Hugo Chavez declared to

keep strategic decision making authorities of industries like oil

industry, nationalize most private industries and imposed higherroyalty. This became bigger threat when Chavezs decision was

supported by the general people.

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Will American Mining Company be able to strategically counter the HR andsecurity issues that they are facing while operating in Colombia, for theiremployees to operate efficiently and save their billion dollar project from gettingto a halt and thus expand AMC to higher grounds for the purpose of futuregrowth?

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SWOT analysis

SWOT analysis is a strategic planning method used to evaluate the Strengths,Weaknesses, Opportunities, and Threats involved in a project or in a business venture. Itinvolves specifying the objective of the business venture or project and identifying the

internal and external factors that are favorable and unfavorable to achieve that objective.The technique is credited to Albert Humphrey, who led a convention at StanfordUniversity in the 1960s and 1970s using data from Fortune 500 companies.

Strengths: characteristics of the business or team that give it an advantage overothers in the industry.

Weaknesses: are characteristics that place the firm at a disadvantage relative toothers.

Opportunities: external chances to make greater sales or profits in the

environment.

Threats: external elements in the environment that could cause trouble for thebusiness.

Identification of SWOTs is essential because subsequent steps in the process ofplanning for achievement of the selected objective may be derived from theSWOTs. First, the decision makers have to determine whether the objective isattainable, given the SWOTs. If the objective is NOT attainable a differentobjective must be selected and the process repeated. The aim of any SWOTanalysis is to identify the key internal and external factors that are important toachieving the objective. These come from within the company's unique valuechain. SWOT analysis groups key pieces of information into two main categories:

Internal factors The strengths and weaknesses internal to theorganization.

External factors The opportunities and threats presented by the externalenvironment to the organization.

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The internal factors may be viewed as strengths or weaknesses depending upon theirimpact on the organization's objectives. What may represent strengths with respect toone objective may be weaknesses for another objective. The factors may include all of

the 4Ps; as well as personnel, finance, manufacturing capabilities, and so on. Theexternal factors may include macroeconomic matters, technological change, legislation,and socio-cultural changes, as well as changes in the marketplace or competitiveposition. The results are often presented in the form of a matrix.

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STRENGTH:

Strategic planning to Expand would increase production by morethan 10 million tons.

American mining companys production would increases significantly by 2004 ifthey expanded according to their plan. With modern technology and moreefficient operational logistic they could provide coal more efficiently to the worldmarket.

If a renowned company like American Mining Corporation would be able to

provide such huge amount with modern equipment and efficiency they will beable to create new markets and catch a bigger market share and attain moregrowth.

American mining company was one of the largest privately ownedcompanies in United States.

In the previous half century American Mining Corporation was one of the biggestcompany in America, with coal holding of over 1.3 billion short tons and revenuesof almost US $1 billion, it was one of the top 300 largest private companies in the

United States.

American Mining Corporation had one of the biggest asset and investmentcapability out of all their competitions. Not only did they earn a huge profit theyalso had a huge amount of resource which allowed them to gain an advantageover others. They had only 6 mines previously in United States which later theyclosed down to cut cost and enter into the Columbian market.

They provided the highest quality coal with reliable delivery andextraordinary service which set them apart.

Columbia has the finest natural coal with the best thermal output in the world.The average composite of Columbian coal had a heat value of eleven thousandeight hundred BTU per pound.

Their coal provided the highest heat value; since their quality was the bestamongst all the other mining companies in the world they could charge a higherprice. And considering demand for coal is very high, their high price would earn

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them more revenue which would give them better advantage over othercompanies and further investment ability.

They owned their own private air strip near their main office.

American mining corporation owned and maintained a private air strip near itsinland mine and on the coast to maintain more security for the higher executives.As kidnapping was a major threat during that time because of different rebelgroups.

They were in a very volatile country with unstable political conditions and rebelgroups threatening them in every step, their executives were constantly on therisk of being kidnapped by the rebel groups for ransom money hence their private

plane provided them with security benefit for the company.

They over saw and directed every single process of the miningproduction.

After the company started its production it reached 3 million tons per year by1995 directing every step which was mining and then transporting by a truck to astorage facility few miles away where it was processed and crushed and

transported by a train.

Due to instability of the government and harsh condition of the country, Columbiawas going through and economic down turn, they had very little regulations forthe foreign investment in their country. So American Mining Corporation took theopportunity to seize the benefit and took complete control over all the processfrom mining to storing to transporting of the coals.

Owned a portion of rail link

American mining corporation owned a portion of the whole rail way which wasused for the purpose of transporting coals to the port from the storage facilitywhich in turn increased the control of the American mining corporation on theshifting process.

American Mining Corporation owned a part of the rail way that transported theircoal. Owning their own rail link made sure they always had a passage to theirstorage facility. And as they always had passage to the rail way it allowed them

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to transport the coal through the sea port to the United States very quickly withintwo days.

Had a capacity to store over 200,000 tons of coal

American mining company had an exuberant storage capacity of 200,000 tons ofcoal and the facility was capable of successfully loading 1700 tons of coal inevery hour on to rail cars. And the rail cars had an impressive 50 ton capacity.

American Mining Corporation had a very large storage facility which ensuredthem to have a stable supply of coal to the United States. This amazing facilitywas very efficient and elevated the transportation of the coal.

Weakness:

The union leaders were dissatisfied by the company management.

American Mining Corporation despite being requested by their union leaders to

let them reside in the mining facility during the evening as it was dangerous toreturn home after dark because rebels ran raids were refused even after some ofthem were killed.

There was a very hostile situation going on and very risky to travel by night sothe workers wanted to reside in the mine during evening after their shift for whichthey requested permission again and again. But American Mining Corporationdenied them that permission for which many union leaders died when their buswas stopped and raided by the rebel group.

The government did not have a structured compensation plan.

Unlike United States Columbia did not have mandatory compensation law for theworkers. Columbian mine workers were compensated on a fixed basis salarywithout any further benefits or bonus.

To attract and retain the foreign investors Columbia did not have any structuredcompensation plan because of strict regulation or pressure on the foreigninvestors would discourage them to invest. But Columbia going through the

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middle of an economic depression was badly in need of foreign investment to fixits economy.

The workers were given very low motivation for their work.

Taking the advantage of 20% unemployment in Columbia, American miningcompany only compensated the employee for their work rather than building arelationship or motivating them further.

Unlike American workers, Columbian workers did not have a choice andAmerican Mining Corporation took this opportunity and paid them with minimumwage rather than compensating them properly in order to motivate them to be apart of the organization. They did not even pay them proper overtime pay or

compensation for their lack of security.

Destruction of the locomotive which hinders the shipment as well asthe business

When the locomotive of American mining company was damaged by the rebel

attacks it slowed down the transportation of coal to the mainland significantlythus causing damage to the further production of coal supply.

Transportation was the heart of the mining company. When the locomotive ofthe company was destroyed and the transportation of the coal slowed down,American Mining Corporation could not get their coal 200 km away to the seaport for the purpose of exporting them to United States timely.

Opportunity:

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American Mining Corporation was diversifying into real estatebusiness.

Rather than solely focusing on coal mining American mining company diversifiedin various sorts of business to reduce their business risk. For that purpose theyinvested in real estate.

Due to availability of cheap and good quality coal mining facility in Columbia,American Mining Corporation stopped its production of coal mining in Americaand closed down the mines to diversify in to real estate business to reduce theirbusiness risk and increase profitability.

Columbian labors were willing to work longer hours in dangerouscondition with the same pay.

Due to adverse economic conditions in Columbia and high unemployment ratethe workers were willing to do their jobs in harsh conditions for the same paywithout any extra benefits or security.

The economic condition of Columbia was very bad with a 20% unemploymentrate which means there was a supply of workers but not so much demand forthem hence they were being forced to work in the mining company underpaidwith out over time pay and being worked for long hours.

Easy availability of vast resource of Columbia.

Columbia was going through a harsh economic downturn with bad politicalcondition so with the given condition of IMF and the pressure from privatizationthey had very little to ask for and their vast resources ware easily available forthe private corporations.

American Mining Corporation took the opportunity to take full advantage of themassive resources of Columbia, which was the worlds third largest coal reservoiras well as oil and coffee. These huge resources were easily available due to lack

of regulation of foreign investment by the Columbian government.

Got an opportunity to hold the business without TAX, develop theinfrastructure because of its renowned reputation

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Being a massive corporation American mining company took advantage of 100%foreign ownership and tax rebate further more they did not have to pay tax for thefirst ten years and got the land at a very cheap price and received subsidy for the

development of the infrastructure.

To follow the terms given by IMF, Columbian government offered variouslucrative offers to American Mining Corporation; including a ten year tax freepass and cheap land. It also agreed to subsidize infrastructural development forAmerican Mining Corporation.

Having approximately 400 Colombian army soldiers to guard theoperation to increase protection.

For the purpose of security of the production of the company American miningcompany received 400 armed men from the Columbian army who were deputedaround the facility to make sure the company employee were safe from the rebel.

Columbian government agreed to provide 400 armed soldiers from its army toAmerican Mining Corporation for their security. In order to protect the facility andthe executives from the rebels who were wide spread and kidnapped executivesfor ransom money.

American Mining Corporation had to ensure 80% of the employeeswere Columbian citizens.

Under Columbian law minimum 80% of any companies operating in Columbianland were required to be a citizen of Columbia. This could be a barrier for theother companies but to AMC it was an advantage over others.

If this was any other company it would have been a barrier for them becausemaintaining 80 percent foreign employee will usually be tough but since AMC hasthe leverage by rotating its high executives it vitally use the local workforce, theyhad competitive advantage over other businesses.

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Threat:

Unfamiliar with the rebel group

Even though American mining company had good liaison with Columbiangovernment they did not have an understanding with the rebels. So when theyimplemented plan Columbia the plan back fired.

There was four rebel forces present in Columbia, so the government wasineffective in providing security against all of them to the American miningcompany. And they were so in adequate at their work that they were becoming

obsolete so this were being problematic for American mining company as therebel force began to see them as their enemy.

Faced threats of kidnapping, assassination and other acts ofterrorism

Being a foreign company in Columbia, American mining company was not safe inColumbia. There was imminent threat to kidnap their executives and payunofficial tax to the rebel groups.

If the senior executives and employees were kidnapped or killed by the rebels,not only the running of the facility will stop but the workers will also be terrorizedand the other foreign officials will also stop working for American miningcompany and return back home. And without the skilled and experiencedexecutives from United States, AMC could not run profitably.

Increasing number of rivals in terrorism was a big trouble for thecompany

American mining company had to face different groups of rebels, who haddifferent core beliefs so even if they wanted to negotiate, it wouldnt have beenpossible and they would face the hostile behaviors from the rebel groups.

It would not have been possible because siding with any party was not possibleas it would upset the other groups. Because with different beliefs none of them

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will be happy of AMCs actions at the same time, and the innocent workers willhave to pay the price.

More motivated and better equipped rebel group compare to thegovernment soldiers

The rebel groups were well funded from the drug business and they were betterequipped and more motivated in regard to fighting in the jungle compared to thegovernment army who did not even bother to fight the rebels sometimes.

The rebel groups were better trained, better funded and better equipped. They

had better ability to fight in the jungle and knew the territory better unlike thegovernment soldiers. So the government could not help the American miningcompany in providing them with security for the business.

Using the territory of the rebel groups provided by government

In a controversial decision, president pastrama of Columbia authorized safehaven for rebel groups by giving them a large piece of the jungle the size ofSwitzerland which in turn increased the growth of their terrorist activity.

In order to make some sort of peace with the rebel groups the government hadgiven them a large piece of land which was demilitarized so the rebel groupscould do whatever they wanted in there. This land consisting of resources thatAmerican mining company used or needed was a big threat on the life of theworkers who had to go to get them.

Frequent attack on the company supply chain if the company did notabide by their demand.

It was regular activity for the rebels to attack the mining or petroleum

corporations; they would terrorize and demand tax from the corporations. Theyclaimed large percentage of tax on the profit.

The rebel groups demanded heavy demands upon the companies working onColumbian lands. If the companies refused to comply by the rebel groups wishesthey raided their supply chains regularly to hamper their production andtransportation. Regular extortion caused heavy problems for the American miningcompany.

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The union workers went on strike and pressurized the management

of Colombia to withdraw from Columbia.

After the deaths of too many union leaders the Columbian workers of Americanmining company decided to go on a strike demanding the adequate security forthe workers working in dangerous area or withdraw their operation fromColumbia.

With the union leaders being executed by the rebels, the workers refused to workwithout the assurance of their security by the American mineral company andpermission to sleep in the mines after they have done their work in the evening.

With this unsatisfied workers in strike there would be no production.

Venezuela making new nationalization policies might inspireColumbia to change its policies too in the same way.

The new president of Chavez, took the decision to nationalize all the privatelyowned industries into public companies with the belief of land distribution to thepoor and have high royalty payment and operational decision of the companies.

Columbia being Venezuelas neighboring country might follow into their footstep

soon considering both have similar type of economy and political condition. If thisoccurred than American mining company would have to pay a large number ofmoney to the government in terms of royalty and lose its operating decisionpower which would further increase its operating costs.

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Human resource is like the heart of the organization. Human Resource is an

essential part of an organization. An organization will feel helpless without a

Human Resource Department. The main agenda of this department is to

acquiring, hiring, training and compensating employees. It helps companies to

deal with the fast changing business environment and help employers to deal

with the situation. HR is also important for maintaining good quality for longperiod. It also explains how a company can retain and satisfy good employee by

giving incentives, bonuses, reward, and great compensation to sustain its quality

service.

After going through the case we have found out that American Mining Company

is a very successful company in their business. American Mining Companys coal

has great quality and its market has for a number of years. It was a growing

company in a rising market. AMC has an intention of retaining the larger portion

of coal market by capturing more of Colombias vast resources. Expanding the

business right now is very important for the purpose of keeping AMCs growthupwards.

Higher salary expected by the US mine workers caused AMC to shiftabroad:

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By the year 2000 American Mining Company had ended al of its operation inUnited States and moved them to Colombia. They actually were forced to do this,due the legislation and labor laws in USA. In United States they had to pay

minimum 3000 dollars to every worker, and then again compensate them furtheron several different benefits.

But, even though they told the workers that American Mining Company would notshift operation but they did it to take advantage of cost cutting and their image inthe US mine workers union was less now.

Uncertain about their job security of US workers:

AMC closed down nine mines and fired almost 5,000 United Mine Workers overa five year period, without giving prior notifications- despite telling its workers thatthe company would not transfer its operations abroad.

So, no matter how much they were providing the workers now in Colombia, theworkers union knew that they can not believe anything that the HR departmentwas telling them because American Mining Companys HR did not have a brighthistory dealing with workers.

Compensation and benefits packages:

AMC paid $500 to $1000 a month to Colombian workers, while US mine workersreceived over $3,000 monthly plus benefits. Thus the company deprivedColombian mine workers by giving lower wages.

So, even though they were getting enough employees to work for them due tothe downward economy in Colombia, but they were not building relationship withthem and employees knew they were not being properly compensated andAmerican Mining Company was taking advantage of them.

Unstable political and economical conditions:

In Colombia there is less labor restrictions and government encourage to dobusiness in here. Moreover in Colombia there is abundant number of labor in

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cheap wages but no matter how good the conditions seemed the truth iscompletely different.

Colombia had very unstable political and economic conditions that are the onlyreason why they would offer cheap labor and investment. Because, if anythinggoes wrong and the government loose total control over the nation, AMCs billiondollar investment will become a waste and they would be captive to the otherrebel forces.

Harsh work environment:

In Colombia rebel groups, kidnapping, assassinations and other acts ofterrorisms are very common. It maintained the highest kidnapping rates of any

country in the world. Both foreign executives and local factory workers werefrequently held for ransom, often up to years at time.Violent and disruptive acts on companies operations were common place and asignificant discouragement to foreign investments. And, considering the strengthof the government it is very likely that they wouldnt be able to help during theworst days.

Aggression of rebel groups caused AMC to pay more:

FARC, ELN, AUC were the different large rebel groups which dominatedColombias drug trafficking and kidnapping business. They were so powerful,

well rained, and well equipped that even the government army will not dare tofight them sometimes.

Thus AMC had to attract the employees by offering higher salary to work in theirdangerous environment, because none will be willing to work in a hostileenvironment without extra compensation, but they couldnt assure safety workenvironment.

Labor Union suffered greatly:

AUC killed six union leaders within three years and for this reason union leadersheld one of the most occupations in Colombia. Two leaders of AMCs mine unionwere taken off the bus and killed execution style. The assassinated leaders hadpreviously requested that AMC should allow employees to spend the night at themine, due to the dangerous traveling conditions after dark.

And, due to this, the workers were dissatisfied, worried, and began to worryabout their own lives.

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Labor went on strike for not providing accommodation facility:

It was impossible for the employees to work after dark, because of the killing ofworkers by the rebel groups due to political reasons and their demands. So theworkers demanded that they want to reside at the mine after dark for their ownprotection, but the company declined the proposal.

Since AMC couldnt provide any accommodation facility to their workers, thecompanys employees went on strike for three days in protest and all productionceased, as a consequence. Moreover the United Mine Workers of Americapublicly condemned AMC for not taking the necessary precautions to protect itsworkers. It called for AMC to withdraw the company completely from Colombia,

stressing that the company was putting its employees in danger by operating insuch a volatile environment. They also mentioned that it violates the Colombiashuman rights

Social responsibility:

Under the Colombian law, 80% of a companys employees were required to beColombian nationals. AMC exceed this percentage and hired more Colombiancitizens.

But, the HR of American Mining Company took it as an advantage and in turnswitched mid and higher level employees from USA and thus exceeded the given80 percent limit of people required to be Colombian citizen.

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After analyzing the case and identifying the Human Resource issues effectively

in the previous part, it is now time for recommendation to American Mining

Company in order to solve the issues. To focus on some specific issues of great

concern retain the facility and keeping it working in Colombia. To capture the

growing market, and keeping the production stable in Colombia it is very

important to decide carefully so that the hostile environment in Colombia do notbecome a threat to the growth of American Mining Company. We already knew

from the case that AMC has already established itself as one of the worlds

largest company in their business. It has a superior strategy of quality. But, they

already started to have problem with the different rebel groups and the

government of the country where they are operating, Colombia. Due to hostility of

the rebel groups the worker leaders were assassinated and workers went on a

strike in demand for safety, so this had to be taken care of. Otherwise production

will be at halt, and the growth and the future of this company will be at risk.

By focusing on Human Resource related issues we have identified in the

previous part, now we can recommend some solutions that will support the

efforts of providing security and safety for the workers, keeping the company

production stable, add value and make the proper dealings with the rebel groups

and government. By adopting our suggested plans we believe that it can

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overcome from its security and workers strike problems and by taking the full

advantage of its facilities to earn a higher profit to operate their business

successfully in Colombia, and also to expand its production throughout the world.In the following section one by one, we will mention the specific problems we

have identified, our recommendation to solve these current problems, and the

justification of the successfulness of those solutions.

Problem 1:

The clash between the Marxist sympathizers and the Paramilitaries put AMC inthe middle of a war; also suspected Marxist sympathizers within the union werekilled by the AUC.

Solution:

The Company should be more careful while recruiting employees who arepolitically inclined to the Marxist ideology, they can also make sure thatemployees are not actively taking part in political issues for the sake of their ownsafety, and some of the territories in which AMC is present, should be acquired.

Justification:

As the Paramilitaries have killed those employees who have been supporting theMarxist, it is better and safe to have employees who are free from those groups.The employees should have not been involved in those matters because theunion leaders were killed before for that reason and having employees who arepolitically inactive are less likely to be a target.

Problem 2:

Sufficient weaponry, training and controllingability of the rebel groups were muchmore superior to the government army and guards, so the paramilitary createdapprehension and fear among the workers.

Solution:

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We urge that the government should not give them so much power in terms ofland and such resources and AMC can influence this by pressuring them by USauthority, because AMC had liaison with US government and President Pastrana

would listen to US authority because they were getting help from the USgovernment.

Justification:

The rebel and the paramilitary groups were very much powerful and in manyaspects they exceeded the government army. It is not legal to allocate theterrorist any place for their training. Because, whatever they do is not legal and isharmful for the citizens. The government didnt fix any rigorous rules for the rebeland paramilitary group. And they also started using this power in their own wayswhich created a big problem. Government is taking tax from the company too.

Then why shouldnt it care for its security.Problem 3:

The rebel groups of Colombia started imposing tax on the company, even thoughAmerican Mining Company was paying a large amount of tax to the Colombiangovernment, the rebel groups were asking for a tax imposition. FARC askedAmerican Mining Company to pay a 10% tax.

Solution:

We recommend that the American Mining Company initiate talks with thegovernment so that it negotiates countering the illegal imposition of the tax byFARC. The government provided army, but that was obsolete. So, the AMCmanagement should pressure the government to ensure their safety issues andgradually try to come to an understanding with the rebel groups as well.

Justification:

A new place is very critical in many ways to start a business. Government wasunable to provide security, they were not well funded, and they were not welltrained or well equipped, so the right choice for the business would be to payrebel groups a lump sum amount, and come to an understanding.

Problem 4:

A huge area of 42,000 square kilometers was provided to the FARC and another5,000 square kilometers to the ELN which resulted in the places becoming safeshelters of the rebel groups.

Solution:

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We think that the government should take measures to take back some portionsof the lands from the rebels or at least declare regulations on what activities theycan perform there.

Justification:

The lands were used by the rebel groups for illegal activities like cocainecultivation, drug trafficking, training of the armed soldiers etc. Also they imposedan illegal 10% tax on companies operating in those areas and that includedAMC. AMC already paying taxes to the government is not supposed to pay anytaxes to any rebel group. So AMC should talk to the government and convincethem in implementing the above solution.

Problem 5:

AMC had lack of security in preserving and coals. American Mining Companyhad a huge storage facility, but their facility was not properly protected. In pastfew years AMCs facility has been attacked several times.

Solution:

Establishing CCTV cameras, more security guards, locking the systems could bethe solution of this problem. AMC could always hire private security and

negotiate with the rebels for the purpose of safety to their facility. They can alsoassign some Colombian armies to protect the companys assets from rebelattacks.

Justification:

To get rid of the threats they could have arranged some underground storeroomsto preserve their minerals but those holes should be secret. The CC camerasshould have been established everywhere inside the factory to look after what isgoing on.

Problem 6:

Lack of security in the coal transportation systems is a major issue for AmericanMining Company. AMC faced almost 5 or 6 attacks on their train and railroads;one of their locomotives was also destroyed during a fatal attack.

Solution:

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The Colombian armies should be assigned to keep the locomotives and othermeans of transportations of minerals safe. Otherwise it will be harmful for theirbusiness. The guards should be paid also to be sincere to their respective jobs

because as we read, sometimes guards even dont react much knowing they areless equipped and less trained.

Justification:

The Colombian armies should be assigned to keep the locomotives and othermeans of transportations of minerals safe. Otherwise it will be harmful for theirbusiness. The security guards should have been trained because the mineralsare the asset of the company; if it is not kept safe then it there is no mean tosustain the business. So to keep the environment free from risk, the companyshould hire employees who are free from any political biases.

Problem 7:

American Mining Company did not provide accommodation to the workers to stayovernight, as a result the union leaders were getting killed by paramilitary rebelsone by one and later the workers returning after dark was also a target by therebel groups in Colombia.

Solution:

The workers hours should have been fixed in two shifts which would minimize

the number of working hours at night and thus lessen the need ofaccommodation at night. And, if possible the HR should also try and mange toreside as much workers as possible to keep the workers safe.

Justification:

Half of the workers should work for 8 hours a day from 8.00 AM in the morning to4.00 PM in the afternoon. Then the next group will start working from 4.00 PM to12.00 AM in the night. The number of the second group would be less becausethe group was divided before. And also, it would take less accommodation aswell. So it will be easier for the company to provide minimum accommodation.

Problem 8:

Union mine workers (UMW) strikes to stop the business of AMC for not ensuringsecurity. The production, transportation work was at halt, this was a threat for thecompany. Three days they didnt work at all asking for residence after darkhours.

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Solution:

Providing good accommodation facilities to the night shift workers and also

providing overall security to the employees could be a solution. American MiningCompany has to ensure that their workers are given security and safety whichincludes residence at the mine both from the humanitarian point of view, and tokeep their business running.

Justification:

As the company was not providing any place to the workers to stay overnight andthe workers were killed by the groups, it was an emergency step which couldhave been taken at that time. Workers security is the main thing if you want toinvolve your workers in work. The strike could be eliminated if the companyprovided them accommodation. So we suggest the confirmation of it.

Problem 9:

The salary of the employeesin US was high because of the high demand of theworkers and the legislation related to labor laws.

Solution:

We advocate that the company could minimize the salary by diminishing thepressure and restriction which could stand as a solution for the company to trim

down the cost.

Justification:

They used to get $3000 monthly which is pretty high. The reason was therestriction among the workers. The workers couldnt work freely and the pressurewas too high that the workers charged more which was bad for the company too.

Problem 10:

Risk of the Colombian government adopting the concept ofHugo Chavez (thepresident of Venezuela) in nationalizing all the privatized companies andremoving all the multinational companies was also a great concern for AMC.

Solution:

Participating in CSR (Corporate Social Responsibility) activities can be onesolution for not converting it into nationalized company. AMC has to make arelationship with the people of the nation and its government.

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Justification:

Participating in CSR (Corporate Social Responsibility) activities could convince

the people and the government that it would be more beneficial for Colombiansto have a multinational company such as AMC in their country.

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By focusing on Human Resource related issues we have identified in theprevious part, now we can recommend some solutions that will support theefforts of providing security and safety for the workers, keeping the company

production stable, add value and make the proper dealings with the rebel groupsand government. By adopting our suggested plans we believe that it canovercome from its security and workers strike problems and by taking the fulladvantage of its facilities to earn a higher profit to operate their businesssuccessfully in Colombia, and also to expand its production throughout the world.In the following section one by one, we will mention the specific problems wehave identified, our recommendation to solve these current problems, and the

justification of the successfulness of those solutions.

Problem 1:

The clash between the Marxist sympathizers and the Paramilitaries put AMC inthe middle of a war; also suspected Marxist sympathizers within the union werekilled by the AUC.

Solution:

The Company should be more careful while recruiting employees who arepolitically inclined to the Marxist ideology, they can also make sure thatemployees are not actively taking part in political issues for the sake of their own

safety, and some of the territories in which AMC is present, should be acquired.

How to implement this:

Some territories in which AMCs principal Colombian mines are situated must bereacquired so that AMC does not fall in the middle of these clashes. So AMCshould give the responsibilities to the HR department, so that they can reassurethat the union leader is not related to any kind of Marxist ideology. As a result

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none of the rebel groups may declare with valid proof, that any employee is aMarxist sympathizer.

Who will implement it?

It will be implemented by:

AMC headquarter to give the responsibilities to the HR department.

The HR department is insuring that the workers or the person who will beunion leader is not related to Marxist ideology.

The accusation of land will be done by Colombian government in requestof AMC.

When to implement?

This should be done the next time recruitment is viable and the acquiring oflands should be done as quickly as possible. The acquiring of grounds must bedone as soon as it can be sanctioned by the government.

Where to Implement?

The recruitment process must be implemented within the company groundswhere security measures are taken. The acquiring of grounds must be done assoon as it can be sanctioned.

AMC

Headquarte

r

HR

derpartment Request toGovernment

Recruitin

g process

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Problem 2:

Sufficient weaponry, training and controllingability of the rebel groups were muchmore superior to the government army and guards, so the rebels & paramilitary

created apprehension and fear among the workers.

Solution:

We urge that the government should not give them so much power in terms ofland and such resources and AMC can influence this by pressuring them by USauthority, because AMC had liaison with US government and President Pastranawould listen to US authority because they were getting help from the USgovernment.

How to implement this?

The government should try to fight these forces so that they may not get theupper hand and do not get the supply of arms and ammunition which they clearlymust be getting from some neighboring country since the government hasofficially cut down all ties with these groups. They must keep guards at checkposts at the border for any illegal arms or resource traded must be stopped if therebel groups are to be countered.

Who will implement this?

This will be implemented by the government of Colombia to stop the arms supplyof the rebel & paramilitary and seize the land which was given to them.

When to implement?

The government of Colombia should implement this as soon as possible, so thatthe rebels & the paramilitary cannot do any more harm to anyone.

Land

accusation

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Where to Implement?

This must be implemented at the borders of the FARC, ELN and the AUCterritories as well as the borders of Colombian territories.

Problem 3:

The rebel groups of Colombia started imposing tax on the company, the rebelgroups were asking for a tax imposition. FARC asked American Mining Companyto pay a 10% tax.

Solution:

We recommend that the American Mining Company initiate talks with thegovernment so that it negotiates countering the illegal imposition of the tax byFARC. The government provided army, but that was obsolete. So, the AMCmanagement should pressure the government to ensure their safety issues andgradually try to come to an understanding with the rebel groups as well.


AMC must try and convince the government to initiate a conference in whichthey may negotiate with the groups to stop the illegal imposition of tax, fighting,assassinations and unnecessary demands. AMC should also try to make theirplace more secure by hiring guards from outside of Colombia and make thembetter equipped with to protect the company.


This will be implemented by

The AMC to convince the Colombian government to help them tonegotiate with the rebels.

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The AMC should also give the responsibilities to the HR department tohire some of the trained guards from the outside with better arms &equipments.

When to implement?

They must do this as quickly as possible so that no more people are killed and sothat workers may work and travel safely without fear and apprehension. Theproductivity of the employees depends on how well the negotiations can becarried out.

Where to implement?

AMC should implement it in Colombia with the Colombian government to helpthem with the negotiation with the rebels. They should also hire well trained wellequipped guard from the outside like from America.

AMC

Headquarte

r

HR

department

Convince

Colombian

Government

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Problem 4:

AMC had lack of security in preserving and coals. American Mining Companyhad a huge storage facility, but their facility was not properly protected. In pastfew years AMCs facility has been attacked several times.

Solution:

Establishing CCTV cameras, more security guards, locking the systems could bethe solution of this problem. AMC could always hire private security and

negotiate with the rebels for the purpose of safety to their facility. They can alsoassign some Colombian armies to protect the companys assets from rebelattacks.


To protect themselves from being attacked by the rebel AMC should come upwith better security system. For that AMC should put some security cameras,better & well trained security guards and also talk to Colombian Government andtry to get as much help as they can.


These will be implemented by:

AMC to convince the Colombian Govt. to get as much help as they canget.

Give the responsibilities to the HR department to higher more trained andequipped security guards from outside.

Negotiate with

the rebels

Higher well

trainedguards from

outside

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When will it be implemented?

This should be implemented as soon as possible because day by day the

situation is getting worse than expected.

Where will it be implemented?

Most of this will be implicated in Colombia, where the factory is. But therecruitment of the outside guards can be in outside the country, and then sendthem to here.

Problem 5:

American Mining Company did not provide accommodation to the workers to stayovernight, as a result the union leaders were getting killed by paramilitary rebelsone by one and later the workers returning after dark was also a target by therebel groups in Colombia.

Solution:

The workers hours should have been fixed in two shifts which would minimizethe number of working hours at night and thus lessen the need ofaccommodation at night. And, if possible the HR should also try and mange toreside as much workers as possible to keep the workers safe.

Problem 6:

Union mine workers (UMW) strikes to stop the business of AMC for not ensuring

security. The production, transportation work was at halt, this was a threat for thecompany. Three days they didnt work at all asking for residence after darkhours.

Solution:

Providing good accommodation facilities to the night shift workers and alsoproviding overall security to the employees could be a solution. American Mining

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Company has to ensure that their workers are given security and safety whichincludes residence at the mine both from the humanitarian point of view, and tokeep their business running.

How to implement?

The top management of AMC should hold a meeting weather they could put ahouse close to the mining site so that the worker can stay there and be safe. Alsothey should give the responsibilities to the HR department to make the workerclam down and ensure their safety.

Who will implement?

It will be implemented by:

AMC top management to establish a house near the mining site.

HR department to calm down the workers & ensure their safety.

When will it be implemented?

It will be when the top management will have meeting about it as soon aspossible. to ensure the safety of the workers and to stop the strike HRdepartment should get to work as fast as possible.

Where will it be implemented?

It will be implemented at the factory in Colombia.

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AMC Top

management

HR

Build a

house

near

mine

site

Ensure

Worker

ssafety

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Problem 10:

Risk of the Colombian government adopting the concept ofHugo Chavez (thepresident of Venezuela) in nationalizing all the privatized companies andremoving all the multinational companies was also a great concern for AMC.

Solution:

Participating in CSR (Corporate Social Responsibility) activities can be onesolution for not converting it into nationalized company.

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Problem 1: The clash between the Marxist sympathizers and the Paras put AMCin the middle of a war, also suspected Marxist sympathizers within the unionwere also killed by the AUC.

Solution: The Company should be more careful while recruiting employees whoare politically inclined to the Marxist ideology, some of the territories in whichAMC is present, should be acquired.

Justification: As the Paras have killed those employees who have beensupporting the Marxist, it is better and safe to be free from those groups. Theemployees should have not been involved in those matters because the unionleaders were killed before for that reason.

How to implement this: Some territories in which AMCs principal Colombianmines are situated must be reacquired so that AMC does not fall in the middle ofthese clashes. The company may be discreet while recruiting people so that no

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rebel groups may declare with valid proof, that any employee is a Marxistsympathizer.

The acquiring of land is possible by convincing the government to do so. SinceAMC is getting battered in the middle of the fights and since it is making it difficultfor AMC to operate under such conditions we must urge the government. Since ifAMC leaves Colombia, it would not be able to cope with its national debts to theIMF (international Monetary Fund).

When to implement: This should be done the next time recruitment is viable andthe acquiring of lands should be done as quickly as possible. The acquiring of

grounds must be done as soon as it can be sanctioned by the government.

Where to Implement: The recruitment process must be implemented within thecompany grounds where security measures are taken. The acquiring of groundsmust be done as soon as it can be sanctioned.

Problem 2: Sufficient weaponry and controllingcapability of the rebel group andparamilitary created apprehension and fear among the workers.

Solution: We urge that the government should not give them so much power interms of land and such resources so that they may not have the upper hand.

Justification: The rebel and the paramilitary groups were very much powerfuland in many aspects they superseded the government army. It is not legal toallocate the terrorist any place for their training. Because, whatever they do is notlegal and is harmful for the citizens. The government didnt fix any rigorous rulesfor the rebel and paramilitary group. And they also started using this power intheir own ways which created a big problem. Government is taking tax from the

company too. Then why shouldnt it care for its security.

The government is having tax from these groups but we are not suggesting stoptaking tax from them because nobody wants loss. But as the government ishaving tax from AMC, it should have been careful for the company too. So they

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could promote this issue to general people, raise for help confidentially. Becauseit could charge them if discloses.

How to implement this : The government should try to fight these forces so thatthey may not get the upper hand and do not get the supply of arms andammunition which they clearly must be getting from some neighboring countrysince the government has officially cut down all ties with these groups. Theymust keep guards at check posts at the border for any illegal arms or resourcetraded must be stopped if the rebel groups are to be countered.

When to implement: This should be implemented as soon as possible.

Where to Implement: This must be implemented at the borders of the FARCELN and the AUC territories as well as the borders of Colombian territories.

Problem 3: The rebel groups of Colombia demanded to impose a 10% tax onthe company.

Solution: We recommend that the AMC initiate talks as soon as possible withthe government so that it negotiates countering the illegal imposition of the tax.

Justification: A new place is very critical in many ways to start a business. Noneof the business has started in the history without giving TAX to the gangsters.The company AMC had to too. The reason was the company used the territory ofthe rebel group. They could hire professionals from outside which could besupportive for the armed force.

How to implement this:AMC must try and convince the government to initiate aconference in which they may negotiate with the groups to stop the illegalimposition of tax, fighting, assassinations and unnecessary demands.

When to implement:They must do this as quickly as possible so that no morepeople are killed and so that workers may work and travel safely without fear and

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apprehension. The productivity of the employees depends on how well thenegotiations can be carried out.

Problem 4: A huge area of 42,000 square kilometers was provided to the FARCand another 5,000 square kilometers to the ELN which resulted in the placesbecoming safe shelters of the rebel groups.

Solution: We think that the government should take measures to take backsome portions of the lands from the rebels or at least declare regulations on whatactivities they can perform there.

Justification: The lands were used by the rebel groups for illegal activities likecocaine cultivation, drug trafficking, training of the armed soldiers etc. Also they

imposed an illegal 10% tax on companies operating in those areas and thatincluded AMC. AMC already paying taxes to the government is not supposed topay any taxes to any rebel group. So AMC should talk to the government andconvince them in implementing the above solution.

How to implement: This can be done by lobbying the Colombian government toget the US aid package to use it to reallocate the lands that are now under thecontrol of the rebel groups.

Where to Implement: This should be done where ever there are AMC propertiesor where ever their shipments pass through

Problem 5: Lack of security in preserving minerals.

Solution: Establishing CCTV cameras, more security guards, lock systems couldbe the solution of this problem.

Justification: To get rid of the threats they could have arranged some

underground storerooms to preserve their minerals but those holes should besecret. The CC cameras should have been established everywhere inside thefactory to look after what is going on.

The security guards should have been trained because the minerals are theasset of the company; if it is not kept safe then it there is no mean to sustain the

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business. So to keep the environment free from risk, the company should hireemployees who are free from any political biases.

How to implement this: To solve this problem AMC has to establish CCTVcameras everywhere inside and outside the corporation and there should besome stand by people who will look after what will happen around. They shouldhire some strict security guard who has proper weapon to save them. AMC canalso outsource the guards. It can establish a card reader lock system by whichonly the card holder can enter to the company.

When to implement:AMC should do this as quickly as possible so that no more

minerals are loose and so that company can achieve a huge success. Theproductivity the corporation then increases definitely.

Where to Implement: AMC can implement these steps to their factory to assurea safety work conditions.

Problem 6: Lack of security in the coal transportation systems.

Solution: Assign some Colombian armies to protect the companys assets fromrebel attacks.

Justification: The Colombian armies should be assigned to keep thelocomotives and other means of transportations of minerals safe. Otherwise it willbe harmful for their business. The guards should be paid also to be sincere totheir respective jobs.

How to implement this: AMC can solve this problem by hiring Colombianarmies to protect the companys valuable assets from the rebel attacks when the

company is ready for their coal shipment.

When to implement: AMC should resolve this problem very eagerly as it is avery serious issue for AMC, as one of the leading mining companies.

Where to Implement: The Colombian armies should be assigned to keep thelocomotives and other means of transportations of minerals safe.

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How to implement this: AMC can take preventive actions by providing their

workers accommodation facility and giving their employees a safety and securetransport service, so that the workers can reach their home safe and sound. Bydoing these company can rebuilt its trust to Union Mine Workers and this will helpthe company run their business further.

When to implement: It has to implement its elucidation as quickly as possible,so that the consequences cant spread.

Problem 9: Downsizing the US workers without informing them was one of theproblems.

Solution: Minimizing the salary of the US workers without firing could be asolution on a temporary basis.

Justification: Every action has a reason behind it. As the company AMC hadclosed nine mines and attempted to shift to Colombia, it had to reduce some ofits employees to minimize the cost. But the workers had suffered a lot for thisdecision. It is a companys responsibility to inform the workers before firing them.Because the workers need to find another job for them and it will take much timetoo.

We suggest if the company wouldnt have downsized the workers and minimizedthe salary from all of them then that could be a better decision for both companyand the workers as well. The boss could motivate the workers by making this rule

of giving salary temporary. Later on he could increment the salary and gavebonus which would definitely work as an aid for the workers.

How to implement: Implementation of this plan needs arranged meetings withthe US employees, listening to their grievances, explaining the companyssituation to them and trying to come to a mutually satisfactory conclusion.

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When to implement: This thing is necessary to be implemented as soon as

possible after the shifting to the Colombian mines so that the US workers do notget agitated and do something harmful for the company.

Where to implement: The implementation of these measures would take placein AMCs American coal mine units and offices.

Problem10: The salary of the employees in US was high because of the highwork pressures and demand of the workers.

Solution: We advocate that the company could curtail the salary by diminishingthe work loads, pressure and restriction which could stand as a solution for thecompany to trim down the cost.

Justification: They used to get $3000 monthly which is pretty high. The reasonwas the strict restrictions among the workers. The workers had to work longhours of hard jobs and automatically the salary went up.

How to implement: Salaries can be cut down by reducing the workloads of theworkers, imposing less firm restrictions and offering non-monitory benefits tothem such as transportation, food etc.

When to implement: AMC started its operations in its Colombian mines in 1994.By the year 2000, almost all of its mines were shifted from USA. So manyworkers had been fired. This led to resentment in the minds of the Americanworkers. It was an issue of AMCs goodwill too. So AMC should have taken thenecessary steps between this period of time in order not to upset its local

workers.

Where to implement: The implementation of these measures would take placein AMCs American coal mines.

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Problem 11: Risk of the Colombian government adopting the concept of HugoChavez (the president of Venezuela) in nationalizing all the privatized companiesand removing all the multinational companies.

Solution: Participating in CSR (Corporate Social Responsibility) activities canbe one solution for not being converted into a nationalized company.

Justification: Participating in CSR (Corporate Social Responsibility) activitiescould convince the people and the government that AMC does care about thelocal people and the society and it would be more beneficial for Colombians tohave a multinational company such as AMC in their country.

How to implement: AMC taking part in social activities which would make the

people and government believe that it is a welfare organization and would not doanything harmful for them. Such activities might include providing education tothe employees children, ensuring safe vicinity in the mine areas, providing reliefsto general people in times of natural disasters, working with the government tocombat terrorism etc.

When to implement: These measures should be implemented right afterChavezs declaration of the new legislation so as to create a positive perceptionin the minds of the people and government.

Where to implement: These actions need to be implemented not only in theColombian mine fields and neighboring areas, but also in different parts of thecountry so that a message of wide presence and sense of responsibility can beconveyed to the people and government.

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