Ethical Analysis of Foreign Labor Use

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Gather the facts: The company utilizes cheap, foreign labor to produce its product. Up to this point the company has worked with a distributor and therefore has not been exposed to the production methods utilized in manufacture of their product. Felipe aims to save the company money by eliminating the distributor’s approximately 30% mark-up, and coordinating with the factories himself. In his travels to the South China factories Felipe sees working conditions that appear to be unsatisfactory according to basic human rights standards. The issues include, child labor, overly demanding work schedules, movement restrictions while working, and inadequate equipment to satisfy health and safety standards, non-regulated work environments, and depraved living conditions supported by the factory. Felipe’s peer group and management team have established a paradigm based on industry norms that accept the working conditions as typical and acceptable. In addressing his concerns, his supervisor makes it clear that while minor improvements were permissible, any changes jeopardizing profits were unacceptable.

Clarify Assumptions: The management must have some knowledge of the working conditions but due to financial pressures and industry norms does not consider the situation unethical. Or some do consider it unethical but do not feel confident in speaking up; either way no-one has insisted on re-evaluating the process due to ethical issues. The company could not make an equivalent profit margin if conditions were changed in the factory. For the workers this was a good work opportunity and wanted the work. The workers chose to live in the factory owned housing complex. The factory owned housing is provided for free or is at least provided at a rate below the worker’s income. So the assumption is that the factory workers are not paying back to the company in the form of rent the equivalent of what they are earning from the company in salary. Felipe does have some leverage and/or resources available to him. He is saving the company money and the company does fund a small charitable initiative. Define the Ethical Issue: Should the business continue to profit from a production process that jeopardizes the health and well-being of manufacturing employees. Identify Affected Parties

Primary Stakeholders: The primary stakeholders are the company, its shareholders and its employees and the factory and its employees (maybe its shareholders?) All primary stakeholders have a financial interest in this ethical situation. Obviously the company, shareholders and employees are benefitted financially from the low cost production of electronics. The Chinese factory, its employees and its shareholders are also receiving financial benefit from the current manufacturing method. The negative impacts are primarily focused on the factory workers, which may or may not see them as problematic depending on their impressions of alternative employment options. Secondary Stakeholders: The secondary stakeholders are the other companies that utilize the factory, the community surrounding the factory and the customers who purchase the company’s electronic goods. The other companies that contract with the factory to make electronics benefit financially from the factory conditions and would likely be negatively impacted if Felipe’s company demanded working conditions. The community surrounding the factory also likely benefits from the factory. The factory attracts workers which spend money in the community, supporting other local businesses and paying taxes. The customers of Felipe’s company benefit financially from the status quo. They are able to buy cheap electronic products and enjoy a more luxurious lifestyle than most of the world’s population. Identify Consequences

Positive: If the company continues to profit from the status quo operation they will enjoy prosperity, their shareholders and employees will enjoy continued security and customers will continue...
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