Should Amy Go Offshore? Amy Johnson graduated two years ago from the business pr

Question

Should Amy Go Offshore?

Amy Johnson graduated two years ago from the business program at a well-known local university. Immediately after her graduation, the Seinfeld Textile Corporation in Truro hired her as a junior manager in the production department. Her boss is the Vice President for production, Tom Harris. She is mostly happy in her new job, but feels that her pay should be higher. She and her partner have recently become engaged to be married, and they would like to be able to buy a house. Amy would like to do a good job helping ST become more profitable and she would like very much to get a good year-end bonus and a promotion as soon as possible.

Amy is from Truro and knows many of the people who work at Seinfeld Textiles. She has made friends at the company, both with some of the managers and with some of the workers. She does find the other managers to be rather competitive, particularly the older and more senior ones. She worries about the demands of her work, about the sort of person she must become to compete in the company, and the effect of her time commitment to the company on her relationship.

The stockholders of Seinfeld Textiles are dissatisfied with the company’s returns. The Board of Directors has told the CEO that profits must improve. The CEO has told the VP in charge of production, Tom Harris, to cut costs, but has not said how. Tom has convened a cost-cutting committee to make a recommendation. Amy has thought about this problem and is wondering to herself, “Should I propose to the cost-cutting committee that our firm outsource the production of our most popular clothing item to an offshore contractor operating in a lower wage environment?”

From her research, she has identified a particular operator in Bangladesh, the Chittagong Clothing Company, which can do this sort of work well and cheaply. Amy also knows that this company, CCC, has had complaints against it for how it treats its workers, who are mostly young women. She knows that it pays its garment workers reasonably well by Bangladesh standards, but realizes that these wages are far less than they are in Truro. She has also found indications that CCC is rather lax about the safety standards in its factories. CCC’s factories are often shoddily constructed, and its supervisors often pressure its employees to work faster than is safe. However, Bangladesh sorely needs the new jobs that this contract will bring. Amy realizes that if the company implements her proposal, and the strategy works, then she will receive a handsome year-end bonus and possibly a promotion. Amy knows that if her firm implements her proposal, then it will fire many of its present employees. This will take jobs from members of the local community and give the jobs to people overseas. Amy also knows that CCC will pay the women sewing the clothing in a developing country much less than ST is paying its present employees for doing the same work. As well, moving production offshore will mean that ST will not renew contracts with its present suppliers.

Should Amy recommend that ST contract with CCC in Bangladesh to produce clothing? (500 words)

Explanation / Answer

Should Amy recommend that ST contract with CCC in Bangladesh to produce clothing? (500 words)

To take a decision Amy would need to see the pros and cons of shifting the production base to CCC, Bangaldesh.

So, the points in favor of moving to Bangladesh are:

The points against moving to Bangladesh are:

So with the above pros and cons of moving to Bangladesh for production it can be conclusively seen that the benefits are definitely more important for Amy’s personal and professional growth. But there are a lot of ethical considerations which she needs to overlook to opt for this option.

It will make her life very difficult if stays in the same place initially as she would be blamed for the loss of many jobs, she might have to deal with a lot of hostility and at the same time the Bangladesh establishment will never improve their facility and continue in the similar manner.

But the final call will be to shift the base to Bangladesh as it is the most logical decision for the time being, she might not save the worker’s jobs but several other will be spared and this will become evident if the company does well, and if the Bangladesh facility is used, they can in long run make it better. Otherwise others will surely use it and take advantage of the cost advantage and ST will eventually lose the advantage.

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.