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So here is the hypothetical scenario, I am a manager at company LHEM (Large Heavy Equipment Manufacturing). LHEM outsources the manufacturing of a specialized piece of equipment to a firm in another country. We will call this company FF (Foreign Firm). The outsourcing of this piece of equipment has saved LHEM a considerable amount of money and has increased profits by 15%. Although, a recent newspaper article has revealed that this firm is paying their employees only a few dollars a day and their employees often work long hours. Although LHEM is not the only company that uses this firm, LHEM was specifically named in the newspaper article. I, the manager, have been asked by my CEO to make a decision on whether or not to continue to do business with this firm.
From an economic stand point it makes sense to do business with FF because it saves FHEM a considerable amount of money. From a legal stand point, LHEM is within the fair trade international laws and is not doing anything illegal. From an ethical stand point, most people would not consider it ethical to do business with a company that treats its employees so poorly. To make your employees work long hours and only pay them a few dollars a day, is not far from slavery. This is unethical behavior, and even if your company is not doing anything unethical, the fact that you are doing business with a company that is, means you are fueling the fire from abroad.
If the media pushes this story and the customers and clients of LHEM learn that we are doing business with a company that is treading the employees so poorly, they may no longer want to do business with LHEM because our involvement with FF. This scenario of losing business could definitely impact the corporate profits.
“Corporate social responsibility (CSR) is management’s obligation to make choices and take actions that will contribute to the welfare and interests of society, not just the organization.” (Daft, 2013, p. 150) “The moral-rights approach asserts that human beings have fundamental rights and liberties that cannot be taken away by an individual’s decision. Thus, an ethically correct decision is one that best maintains the rights of those affected by it.” (Daft, 2013, p. 145-146) In the interest of being a socially responsible manager, I would utilize the moral-rights approach and inform my CEO that we should discontinue doing business with FF. I would also point out that by not doing so we would risk hurting the LHEM business reputation. I would seek another company that could do the same work for LHEM that FF has been doing for a similar fee, and has no record of doing anything unethical. Discontinuing business with FF and starting business with the new company would be the path I would like to take as manager at LHEM. I would also look at the possibility of doing the work in house instead of outsourcing. I would also recommend that LHEM come up with a written code of ethics that follows the triple bottom line philosophy. The triple bottom line refers to measuring an organization’s social performance, its environmental performance, and its financial performance. For short it is referred to as People, Planet, and Profit. (Daft, 2013, p. 154)
My SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis would be the following. Strengths, FF has helped strengthen LHEM, but now could become more of a liability. Weaknesses, It will weaken LHEM if we have to pay more to receive the same services FF has been providing, however LHEM could be weakened even further if it becomes viewed company that does business with human rights violators. Opportunities, There may be opportunities to do business with other companies other than FF for same services. Threats, LHEM could lose business and its reputation if it does not act.
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