Reference no: EM132928516

CASE STUDY GLOBAL ETHICS AND THE SWEATSHOP INDUSTRY

Donamarka is a leading retailer in the shoe and garment industry but manufactures nothing at all directly in its US operation. The company uses global outsourcing to minimise its labour and manufacturing costs and instead concentrates on its core competence of strategic marketing, product design, finance and global distribution. Its staff of 2,500 are concentrated in the US but it has located 75,000 jobs in Asia in sports goods production. Many of Donamarka's subcontractors are located in Pakistan, Indonesia and China. In the Bogor plant (Indonesia), in 1998, the daily wage was half a dollar and a glass of milk while the 13 members of Donamarka's board of directors were earning an annual income over 5 million $ each, twice the overall annual wage bill of 6,600 workers employed to produce for Donamarka trademark in the Djakarta area. The Sialkot assembly line of soccer balls (Pakistan) was sadly infamous and publicised for resorting to mass child labour (Riddle, 1997). Labour costs amount to only 4% of the price of Donamarka sports goods due to low unit labour cost in Pakistan, Indonesia, China, etc., where they are produced on the one hand and, on the other hand, because marketing, advertising and distribution costs are proportionally high in the sports goods industry (Andreff, 2006). Donamarka's strategy is not without its problems. Donamarka attempted to protect itself from criticism saying that accountability falls on its subcontractors and their decision to use certain working conditions and practices that are normal in their countries. These include the use of (child labour, forced labour, low wages, excessive length of working days, limited or no rights of unionisation and so on.

REQUIRED

A. Distinguish between the terms 'ethical relativism' and 'ethical absolutism.'

B. Which term identified in (A.) above was Donamarka using in its business practices? Justify your choice using examples from the case.

C. Explain the significance of any TWO (2) international organisations in improving human rights and labour standards for companies involved in global manufacturing.

D. Identify FOUR (4) guidelines a MNE can follow when designing its code of conduct.

Note: Please use as much as your own words and responses as possible, this assignment will be uploaded through turnitin.com