Ethics of Plant Relocation to 3rd World Case Study
- Length: 4 pages
- Sources: 5
- Subject: Business
- Type: Case Study
- Paper: #75819725
Excerpt from Case Study :
Ethical Dilemma and Corporate Responsibility
Board of Directors
RE: Response to Ethical dilemma created by the relocation program
I am writing this memo to inform the directors that this company is faced by an ethical dilemma. The ethical dilemma presented in this report is based on challenges of balancing corporate loyalty and corporate responsibility. This report advises the Project Management office (PMO) on the possibility of applying Workers Adjustment and Retaining Notification (WARN) as part of the large corporate responsibility plan. The report will identify employees as the worst affected stakeholders by the relocation program. To achieve ethical corporate responsibility, the report will identify a bailout program extended to five months from the date of declaration.
Rising production costs in the U.S. have forced Electrocorp to explore the options of relocating its production plan to Mexico, Philippines, and South Africa. The three nations offer diverse conditions to the company that may make its relocation prospects to thrive. It is shown that in case the company opts to relocate to Mexico, it will benefit from low labor costs of $3/day and the not-so-stringent environmental laws. Philippines on the other hand may be favorable because of the low wages of $1/day and possible labor from children of up to sixteen years. Concerns of health challenges arising from a company's operations are so pronounced in Mexico and Philippines. The third option of relocating to South Africa may be challenging for the company. There are strong worker's unions in the country and the wage rate is $10/day. It is projected that unrests will arise from the company's operations in relation to environmental concerns.
Following the industrial expansion of 1970s, it was necessary to exercise consistent corporate responsibilities. Ethical responsibilities include primary morals that a business practices in its day-to-day activities. Some of them honesty, integrity, truthfulness, and transparency. In any case, ethical corporate responsibility stretches valiantly inside the business and outside it. In business, ambition, competition, prosperity, and innovation are vital considerations. However, their application should be regulated and contained appropriately in order to avoid insensitive business practices.
In any event, regulations entail the proper application of modesty principles in minimizing the problem associated with their negativity. Any business must focus beyond maximizing profits. To this effect, corporate responsibility should focus on the collective formulation of policies, which looks up to the general good of the society. Ethical responsibility integrates stakeholders (investors, executives, employees and the community) into a collective business prospects. A collective business prospects are one that respects issues related to environmental laws and morality.
Corporate executives are obliged to construct social, political, and economic issues of justification, application and interpretive corporate decisions (Horrigan, 2010). Even with its expansion prospect and the intent to maximize profits, it is appropriate for Electrocorp to respect the law. The law is always set up to ensure that issues related to friendly business practices are observed. This company should not seek to apply the law as a weapon to exercise corporate brutality. Instead, the law should be applied reexamine the necessity of truthiness and justice. For instance, a business entity should not apply the law loopholes to minimize the tax threshold that is obliged to pay. In any case, taxpaying should be an inherent activity. Therefore, in analyzing facts revolving Electrocorp reallocation, it is important to note that CSR should be voluntary and not mandatory.
Electrocorp is looking into the possibility of exploring three distinctive offshore investments courtesy of Mexico, Philippines, and South Africa. Therefore, fundamental reflections should be taken into account. Firstly, Mexico, Philippines, and South Africa have diverse laws relating to labor, labor, and fiscal policy. Therefore, it is necessary to abide by the laws by enabling local investment pursue a customized corporate responsibility program. Secondly, Electrocorp intends to relocate its plants entirely to the three countries and setting them up in industrial parks. This means a significant number of employees will be declared redundant and later unemployed. The question examines the ethical measures that this company is planning to explore.
Loyalty choice often mars the collective spirit of corporate responsibility. The question that Electrocorp should consider is whether right will / triumphs over right thinking. The debate of morality does not welcome the law in its application. Ethical dilemmas affecting Electrocorp include short-term goals against the long-term, justice against truth, and the company against the society. Primarily, the law in most cases applies justice and not truth. Electrocorp should not pursue this consideration in its upcoming overseas investments. In the debate of consequential theories, it is apparent that utilitarianism should be paramount in every venture. Therefore, utilitarianism will maximize social good to minimize harms. This letter proposes the extension of seventy percent of repayable wages until the termination of employees' contracts.
The company faces the issues of continuing its operations in the U.S. (costly) or moving to the third world countries. Relocation to Mexico and Philippines appear to offer solutions to the company's financial woes. However, it faces the ethical dilemma of polluting the environment with its operations and using child labor in the case of the Philippines. The issue of morality is critical at this point. South Africa appears to be expensive among the three locations. Workers also appear to be enlightened about their rights and possible worker uprising is obvious. The company also faces the issue of abandoning its loyal and long time employees for its cheap ones in the new locations. Is disregarding the employees' loyalty worth the gamble?
1. South African vs. Mexico/Philippines: Although South Africa appears to be expensive; the company should choose to relocate to this country. By doing so, the company will avoid the ethical dilemma of using child labor or polluting the environment. By relocating the operations to SA, the company will only have to follow the laid down laws relating to workers' treatment in the workplace. The company's morals of safeguarding the environment will also be enhanced by its relocation to SA.
2. Moving to South Africa (overseas) vs. staying in the U.S.: The company is facing serious financial challenges and is trying to cut down the cost of operations. The only option in this case is for the company to look for ways of compensating the employees and moving its plants to South Africa. The WARN Program is a viable option.
Based on the cost of doing business and the triumphs competitors, it is appropriate for the company to come up with viable options. Alternative options will seek to look into the necessity of appreciating the societal needs promptly. The paradox created here is the validity and feasibility of each pursuit. The application of value theory in listing alternatives is essential in integrating empirical philosophies to determine the necessity of each venture, objective, and ideas (Ferrell & Fraedrich, 2014). The objectives of this company are based on sublimation question. Does this company respect the economic destiny of other stakeholders? Close stakeholder include customers, employees, investors and local / foreign societies.
The theory of utilitarianism suggested in the report will seek to provide resounding roles of this company in its endeavor to absorb all stakeholders to the relocation schedule. Essentially, employees are most affected negatively while investors will benefit from the relocation. It is suggested that the wages of the company's traditional employees be maintained. Besides, the extension of their contracts should be reinstated. For feasibility purposes, local employees who are willing to be reallocated to foreign plants should be given first priority as expatriates (Quatro, & Sims, 2008). This is pragmatic as Electrocorp attempts to enter foreign industrial ventures; there is a need of exporting ideas and vision of the group by expatriating local employees.
The second alternative -- notification- seems to appeal especially in the way it is applied. The Office of the Federal Register requires the supreme protection of employees, their families, and communities in an event of relocation of the plant (Office of the Federal Register, 2012). The office requires the workers to provide a notification in the company sixty-calendar days before the first day of relocation. This is powered by the WARN program. In the letter, the company executive will express dissatisfaction in the nature of onshore manufacturing. The letter will encourage employees to look for alternative jobs before the sixty-day allocation elapses. Additionally, the letter will extend the wages and remuneration program after the elapse of the sixty days. This bailout plan will last an extra ninety days after which remuneration will cease.
The relocation program is essentially structured to minimize the aggregate cost of operations. As a result, it is important for the company executives to pursue the WARN program option unlike the periodic compensation plan. Primarily, the WARN program addresses the substantial possibility of integrating a rational responsibility while addressing the financial loyalty of the company. This plan looks into the broader sense of retaining employees wage plan for five months, three of which are not part based on the concept of corporate responsibility. This system will offset…