Summary of Ethical Scenario
Andrews is a sensor manufacturer in the market. While the company has been unable to develop a straightforward competitive advantage over the course of the past three years, the competitive landscape of the market has become a significant source of concern for the company’s leadership. There are other companies out there who produce better products, or are able to compete strictly based on price cuts. It came to the CEO’s attention that there is an opportunity for Andrews to shift a large portion of its production to an offshore location. This decision will not only allow Andrews to reduce its labour and material costs, but will also allow for improved distribution practices.
When you are the smallest manufacturer
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The only reason Andrews seems to be doing well in the current round is because one of the major market player, Ferris, went bankrupt. It was easier to acquire a portion of Ferris’s usual sales and customers, and that has made Andrews more secure in terms of its cash position. However, this relatively profitable position will not be easily sustained. During some harder rounds, Andrews had to compromise on major R&D investments and marketing budgets to finance other important decisions. This placed the company in a serious disadvantage for the rounds to come. And as the CEO of the company wrote in the email exchange regarding the issue, if Andrews is unable to meet production goals at a cheaper price, it will be unable to compete with its competitors in the years to come.
So this is where option 1 comes in. If there is an opportunity for Andrews to reduce costs, increase production to meet increased demand, then that should be quickly taken advantage of. It’s that simple.
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It will strictly follow the offshore labour laws. This was why Andrews decided to cut ties with the previous supplier. The risk of being associated with a supplier that violated labour laws would put Andrews under constant threat of legal problems and negative press. This condition would eliminate that risk to a great extent.
2. It will help Andrews reduce manufacturing costs and overall labour costs in the long-run. As acquiring a new supplier will take time and hinder manufacturing processes for a while, it will, ultimately, however, help Andrews reduce its costs once everything has settled down. The advantage of this offshore location is the lower labour costs and manufacturing costs.
3. In general, will help reduce the risk of getting into legal problems. As mentioned earlier, Andrews will be facing a profitability concern in the market. Competition is on a rise and the only way Andrews can compete in the market besides developing a competitive advantage in business ethics, would be to reduce costs. However, if Andrews continued its business operations with the previous supplier, there will definitely be more risk of legal issues as that supplier has a bad track
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This implies Primark is not rely on one particular supplier. The company is capable switch to another supplier easily if the costs increase. Hence, Primark can control the costs as well as improve its margins in the long term.
Option 2 has long term sustainability. It involves a one term expense, and provides revenues for the foreseeable future.
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Shao, Benjamin B. M., and Julie Smith David. "The Impact of Offshore Outsourcing on IT
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