Palmeri, C&Rupp, L 2013, May 3, Disney Bangladesh Exit Pressure on Clothes makers Who Stay, Retrieved from http://www.bloomberg.com/news/2013-05-03/disney-bangladesh-exit-puts-pressure-on-those-who-may-stay-1-.html
The work of Palmeri and Rupp (2013) is focused on highlighting the issues faced by the multinational organizations while operating in developing markets. It is highly likely for large organizations to develop their overseas presence. However the economically developing markets a number of issues including environmental, infrastructural, and compliance with health and safety standards according to internationally acceptable norms. The research is about the decisions of multinational corporations including Disney, Wal-Mart, and J.C. Penney initiating a closure of their manufacturing sub-contracts with multiple suppliers present in Bangladesh. However Gap and Children's Place Retail Stores Inc. (PLCE) are reported as continuing their operations in the country and providing assistance to improve working conditions.
The incidents of carrying risks for health and safety regarding workers in the Bangladesh market have instigated the concerns of large organizations. Two notable incidents are reported as causing 501 casualties during a building collapse as well as the building fire incident causing 112 deaths. These incidents raised international community concerns about the safety standards followed in the country. It is also noted that the country's economy has gained a growth momentum after governments facilitated international investments.
The corporations are not only informing the consumers of their products that their products were not being manufactured at the incident sites. The contrary view of organizational leaders is based on the principles of providing assistance to the country as well as placing their weights behind the efforts for improving the health and safety standards in the market. It is also argued that while working closely with corporate leaders, pressure groups and other stakeholders it can be an effective approach to mobilize support and as a result the government and local manufactures taking appropriate measures to improve the situation. It is required to understand the implications of these risks on business as well as the communities within the country. The ethical business practices, cost of these initiatives, labor regulation concerns, and recommendations for improvements are described as following.
The identified issues are concerning corporate social reasonability and ethical business practices. It is evident that the country has gained a large portion of internal investment through various corporations after the government announced facilities for businesses. It has not only provided growth and economic development to the country. The employment rate has also risen, however the measures required to sustain the influx of investment were not adequately addressed. The country has a loose regulatory structure in terms of health and safety systems for manufacturing industry. The factories buildings and manufacturing units lack basic necessities to ensure workforce safety and health. It is also observed that the industrial developments are also found in the residential areas as a result the adequacy of safety regulations cannot be ensured.
The issues of ethical consideration are also highlighted in terms of the western businesses liable for providing the products to their customers that are manufactured according to high ethical standards. The presence of large manufacturing facilities of organizations in countries with inadequate infrastructure and health and safety regulations carries multiple risks (Lund & Marriott2011).
It may result into effects on business performance, delayed supply of products, and consumer mistrust in business following ethical practices. The large corporations are emphasizing on the needs to improve country's regulatory system to comply with the international standards of health and safety of the workforce as well as the workplace environment.The need for adequate safety infrastructure is also highlightedafter the events causing large number of deaths and injuries in the reported events. The businesses following global souring solutions should also consider the ethical issues faced while being present in the developing markets including Bangladesh, Belarus, Ecuador, and Pakistan that are taken off the supplier's list for not following the health and safety standards.
The economies offering low cost procurement solutions should also adhere to the required standards required by the consumers of International markets. According to Ferrell (2012) the regulatory agencies should ensure that ethical business practices are followed through the industrialized markets. The western players have adopted a route to low cost manufacturing through establishing their presence in emerging markets. There are multiple differences in the cultures, environment, and standards of these markets. The business following a different manufacturing facility is in perusal of reducing cost as well as improving the business performance through offering low cost products to its target markets. It is also observed that sustainability is also compromised through using unethical practices in business.
The business has also adopted various models to adopt features of corporate social reasonability. Initially it was only seen as efforts to adopt environment as a concern, later the labor laws, health and safety, as well as usage of organic materials came into consideration. The issues of sustainable growth are linked with the adoption and degree of accuracy in practicing the ethical considerations. The businesses adopt multiple approaches including the manufacturing in environmentally and labor safe manufacturing facilities. One of the significant factors in adopting such operations is associated with cost of production. The products produced using organicmaterials and implementing health and safety standards costs a business. This cost is transferred to the customers through increased price of products. The businesses like Wal-Mart and J.C. Penney have a large stake in the country as a large number of their products are coming from these countries. They are willing to work on multiple fronts to improve situations causing such accidents (Patwary, O'Hare&Sarker2012). The large giants are joining their hands to develop a comprehensive framework for the country's government and regulatory agencies to follow in order to ensure that the issues are addressed adequately. The organizations like Gap and PLCE are reported as not willing to neglect the industry in country and they are proposing a close collaboration with suppliers and manufactures to improve health and safety conditions within the country.
The shareholders of business are affected through various implications of ethical issues. The issues are resolved through adopting proven techniques and models. The situation of labor health and safety are also categorized as a response to ethical considerations as well as the requirements of corporate social responsibility. The business involved in global souring through emerging markets cannot abstain from taking reasonability of the actions and practices adopted by original equipment manufacturers (OEM) and subcontractors for manufacturing. The argument is also supported by the fact that the effect of practices followed to manufacture products is transferred to clients.
The changes required in improving similar stations can be implemented through comprehensive coordination with the concerned authorities of the country. It is the duty of the government in the country to make laws regulating the situation of health and safety through manufacturers. The regulatory authorities along with the international notifying agencies can play a vital role in developing infrastructure as well as implementation of practices to bring the country's industry in line with the global requirements.
It is also important to consider the responsibility of the multinational organizations to seek subcontractors and OEM suppliers that are following ethical practices. The issue can also be resolved through setting up a requirement for supplier evaluation according to the international standards of health and safety. The second approach could be to require a certification from notifying bodies that the ethical practices are followed by the supplier seeking agreement with the multinational corporations. The country's economic growth and manufacturing facilities can suffer in case the situation is not corrected it should be highlighted in developing a coordinated approach towards mechanism for improvements. The strict implementation of health and safety regulations can also be ensured through regular periodic audits according to the requirements of international organizations.
The industry is engaged in a number of practices to increase their business appeal. These efforts include a variety of initiatives taken in the form of corporate social responsibilities. The corporate social responsibility initiatives are also taken with multiple intentions including improving product and services appeal for target markets. It is also observed that corporate social responsibility initiatives are also taken to increase market value of the products. However there are multiple factors influencing the cost of products and as a result the appropriate mix of price is disturbed. The cost of products is dependent on the direct and indirect costs associated with the manufacturing process. The role of raw materials and ethical practices followed during the manufacturing process creates a leverage point for the business. The businesses advertise these key elements to enhance customer appeal.
The technological developments and globalizations have changed traditional business practices. It is also the case that the adoption of technological solutions especially supplies chain management enhances the business prospects for securing raw materials from international market, manufacturing from emerging markets, and placement of stocks ate various strategic locations. The markets are also different from each other in terms of consumer trends and buying patrons. The customers of one market might not be willing to pay extra cost of product manufactured through…