In order to be able to make a sound and justified decision, I will fully disclose the situation, the events that have taken place, and my assumptions before elaborating the decision I would take as a Chief Executive Officer of the company involved.
My domestic sensor company is facing increasing demand, working capital limitations, and restricted manufacturing output at the beginning of the year 2011. The Vice President of Production recommends expanding capacity of our offshore location for the following reasons: increasing demand in certain regions, rising shipping costs which make it more profitable to produce overseas instead of domestically, and the offshore location has lower labor and material costs.
However, the offshore location has been …show more content…
Therefore productivity at the offshore location needs to be increased. I will direct to get the audit standard back on track for two reasons: assess the actual possible production capacity and to investigate the violation of labor laws. We are aware about this supplier’s violation of labor law and it is our responsibility to do our best to control and impede this. An increase in labor cost due the ordered audit is acceptable because we can avoid negative media attention which would very likely result in lower customer satisfaction and decreasing demand. At the same time, it is important that we look for alternatives for our existing offshore supplier. One that is not very distant is easier to oversee; in that way we can prevent similar things from happening again. This step also allows us to assure the public that we conduct business in an ethical way and do care about our employees, even the ones overseas. A plan needs to be elaborated to change the offshore location, this can be presented to the public any time if negative attention
My domestic sensor company is facing increasing demand, working capital limitations, and restricted manufacturing output at the beginning of the year 2011. The Vice President of Production recommends expanding capacity of our offshore location for the following reasons: increasing demand in certain regions, rising shipping costs which make it more profitable to produce overseas instead of domestically, and the offshore location has lower labor and material costs.
However, the offshore location has been …show more content…
Therefore productivity at the offshore location needs to be increased. I will direct to get the audit standard back on track for two reasons: assess the actual possible production capacity and to investigate the violation of labor laws. We are aware about this supplier’s violation of labor law and it is our responsibility to do our best to control and impede this. An increase in labor cost due the ordered audit is acceptable because we can avoid negative media attention which would very likely result in lower customer satisfaction and decreasing demand. At the same time, it is important that we look for alternatives for our existing offshore supplier. One that is not very distant is easier to oversee; in that way we can prevent similar things from happening again. This step also allows us to assure the public that we conduct business in an ethical way and do care about our employees, even the ones overseas. A plan needs to be elaborated to change the offshore location, this can be presented to the public any time if negative attention