Manual for Azerbaijan companies Rena Safaralieva

Crisis management 

 

In the 1970’s and 1980’s a number of economic forces—soaring inflation, rising energy costs and 

expenses of compliance with legislation designed to reduce pollution and protect communities led 

Western businesses to re-examine social corporate responsibility principles as being too expensive. 

Milton Friedman, the voice of this sentiment, wrote that businesses should be allowed to go back to their 

basic function – to make money, while governments should take care of society’s needs, using the money 

paid by businesses in taxes.

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 In order to maximize profits, businesses cut back on labor safety, equipment 

and personnel. And the inevitable occurred.  

 

On 3 December 1984 a major leak of poisonous gas took place at the pesticide plant of Union Carbide, a 

U.S. chemical company operating in Bhopal, India. This accident took over 2,000 lives and seriously 

injured another 200,000 people. A subsequent investigation revealed that the management of the plant 

did not meet minimum safety standards: safety equipment was beyond repair, the night shift had only 

half the personnel required, the alarm system was out of order, and neither the local company staff nor 

the surrounding local community were aware of the  dangerous products being processed at the plant, to 

say nothing of any precautionary measures. Such a simple thing as a piece of wet cloth, covering mouth 

and nose, could have saved thousands of human lives. Financial losses amounted to $1.5 billion, and the 

company paid $470 million to settle court claims alone. Enormous amounts were also spent to modernize 

equipment and upgrade safety equipment. However, it was the U.S. financial market that dealt Union 

Carbide the most severe blow–shares dropped so low, that the company incurred $ 900 million in 

losses.

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This case forced many companies to design their own crisis management programs, as an integral 

constituent of managerial responsibilities that stressed importance of labor safety. Efficient crisis 

management implies that a company has a crisis management plan, is able to quickly identify a crisis and 

take urgent measures to bring the situation back to normal.    

 

Production process safety 

 

It goes without saying that it is impossible to foresee all accidents, however, every company can assess 

the probability of accidents, take basic precautionary measures, and assign employees specific roles to 

play in a crisis situation. It should be acknowledged that Azerbaijan  workers in many professions often 

do not adhere to basic rules of safety. It is still common to see a welder with protective glasses on his 

forehead, a driver smoking at a gas filling station, or even a surgeon operating without gloves. For 

example, how many offices, or even restaurant kitchens, have fire extinguishers? How many drivers carry 

iodine, bandages, and tourniquets in first aid kits? There are many easy steps a business or individual can 

take to ensure their own safety. 

 

We have deliberately offered the simplest cases, as at the stage of economic development Azerbaijan is 

now  it is difficult to talk of any serious crisis management plans, for example, in case of a fire at a grain 

field or an accident at a chemical plant. It should be stressed that the sad experience of some companies 

shows that violation of the production process safety considerably affects a company’s financial balance.  

 

Product safety 

 

CSR dictates that businesses should be liable for product quality and truthful advertising of their goods 

and services. Azerbaijan media often covers numerous cases of sales of falsified goods, especially in the 

pharmaceutical market.  

 

Recently many big drugstores and pharmaceutical wholesale warehouses announced  that they do not sell 

Azfarma products. This company sells products of several leading Turkish pharmaceutical companies 

and experts explain this boycott as an unfair, anti-competition trick, rather than the evidence of the poor 

quality of Azfarma products.  

                                                 

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 M. Friedman, Capitalism and Freedom, University of Chicago Press, 1963, p. 133  

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 St. Fink, Crisis Management, Amerıan Management Assocıatıon Press, 1986, pp. 168-189 

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Lately, the Union of Free Consumers  has been regularly informing consumers through the media of 

existence of various falsified goods in the market. However, Azerbaijan consumers face a huge 

challenges in the area of falsified goods.  

 

Environmental ethics 

 

In the 1970’s, the West saw a series of environmental accidents, especially in the oil sector, which 

elevated environmental protection from a grass roots movement to the national agenda. In particular, in 

the oil sector, this resulted in the establishment of the Oil Spill Fund of $1 billion and adoption by the 

U.S. Congress of Oil Spill Act in 1991. We deliberately stress the oil sector, as in our country we are 

particularly susceptible to environmental crimes due to the large oil and  gas extraction industry.  

 

Iran regularly raises allegations against Azerbaijan of environmental crimes in the Caspian, which have 

led to a drastic reduction of sturgeon.  

 

At the moment in Zagatala we are losing valuable trees, which take many years to grow. Tracts of land 

are being deforested due to a high market demand for expensive decorative materials made of wood. 

 

Impact of businesses on communities 

 

Codes of ethics contain provisions that regulate corporate behavior in local communities. Unfortunately, 

there are many instances of printing houses and restaurants located at residential houses, engaging in 

business behavior that is disruptive to the day-to-day life of their neighbors. 

 

Ethical attitude towards local culture and history 

 

Ideally, businesses should show respect for the cultural heritage of local people. Conversion of the 

historic center of Baku – Icheri Sheher into a business center in neo-Arabesque style speaks of disrespect 

of local and foreign companies towards our history. To be fair, we should mention that it is difficult to 

shift all of the blame onto foreigners. Two skyscrapers of metal and glass, housing the Radisson hotel and 

Azerbaijan International Bank, belong to Azerbaijan companies. These two building make a sharp 

contract with the turn of the 20th century architectural masterpieces in the Fountain Square.  

 

In planning for the Baku-Ceyhan pipeline, BP financed excavations by a group of Azerbaijan 

archaeologists, who managed in some cases to persuade BP to change the route of Baku-Ceyhan export 

pipeline, to by-pass ancient settlement sites near Gobustan.  

 

It is obvious that funding from an independent source and discussion of results of their findings in media, 

would have been much more feasible. We regret to state that neither SOCAR, nor the government nor 

Academy of Science displayed much interest in this issue. In contrast, in late 1960’s and early 1970’s, the 

government of Azerbaijan showed much more persistency on a similar issue and upon initiative of the 

academician Igrar Aliev forced the central Soviet government to bypass the excavation site of Gabala – 

the capital of an early medieval  state located in modern day Azerbaijan - Albania Caucasian, when the 

Gabala radar station, an important  Soviet military facility,  was built.  

 

Business and education 

 

Many companies either support educational programs or accept interns to train on-site, especially during 

summer vacations and holidays. This practice is mutually beneficial, as businesses obtain temporary 

employees for free and students get work experience. Some companies use educational elements very 

efficiently in their advertising, for example, the news program on ANS broadcasts weather forecasts 

against the background of music by Azerbaijan composers, with information about the piece running on 

the screen.  

 

Excessive consumption and hunger 

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