Etch – a – Sketch Ethics

Topics: Wage, Minimum wage, Employment Pages: 3 (1178 words) Published: February 17, 2013
Bing Liu
Written Report
Case: Etch – A – Sketch Ethics
1. Was it ethical of the Ohio Art Company to move production to China? What were the economic and social costs and benefits of this decision? What would have happened if production had not been moved? The term ethics refers to accepted principals of right or wrong that govern the conduct of a person, the members of a profession, or the actions of an organization. Here, it refers to action of the Ohio Art Company. It was ethical of the Ohio Art Company to move production to China. The company had a glorious time that it was a top-selling toys since 1960, but in late 1990s, it confronted a trouble time that the toy sales were lagged because the higher labor cost and overhead cost, also the competition from other big retailers, such as “Walmart”, and “Toys ‘R’ Us” (these companies are famous of cheaper products because of their lower cost). If the company could not lower the cost, it would lose, even bankruptcy. Therefore, they decided to move its production line to China where has a lower cost. First, the company’s sole responsibility is to maximize profit within legal constraints. Moving to China was a good decision for the company, they utilized the lower labor and overhead cost in China to get more profits (Sales – Cost = Profits). Moreover, the company would capable to compete in the marketplace, it makes the company become more competitive with lower cost. Second, the company would have gone bankrupt if they had not moved, it would have hurt community anyway. Hiring more people would cost the company more, the company cannot pay the $1500 per month to all labors, thus, they laid off 100 US makers to lower their cost. However, in China, one labor only received $75 per month, it was a pretty low wage compared with US workers. Also, this decision provides jobs to people who are in worse conditions than American workers. It is a good for China to acquire this opportunity; more people can get...
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