Ethics case
Nowadays’ a business environment is moving with a faster pace than ever before, acting globally can become almost a requirement if an enterprise wants to be successful in its industry. This does not compulsively mean that foreign markets are targeted but that any part of the supply chain is located abroad. In the particular case of the represented sensor company an offshore manufacturer is hired.
For the consequent analysis several assumptions were postulated, as the following:
- The company is one of the major players leading on the sensor market due to its promise of quality, well-known and appreciated by its customers
- Current domestic production cannot satisfy increasing demand
- Demand increases recognizably and permanently …show more content…
This ethical dilemma is based on the difficulty to do the right thing, namely not to give further commission considering the current supplier's condition. However the company still has to be profit oriented so it would be harmful to not produce abroad and benefit of cheaper production costs although outsourcing is always connected to risks.
Even though the dilemma seems to be contrary there is not only a "black and white" way of thinking but various solutions occur. The most obvious one is to request more capacity from the offshore supplier without consideration of further restrictions, auditing or consequences of the violating behavior. This opportunity holds the potential of a three percent increase of legal cost if government finds out about the supplier breaking the law.
The opposite would be not to distribute additional capacity to the manufacturer because of the listed ethical doubts. Although it implies that the company cannot meet the increasing demand and has to expect a sales loss of about five …show more content…
Also conceivable as a single solution, both possibilities include training costs, increased labor cost and a production lag of about six months due to training followed by a sales loss for that period of time. Moreover additional risks as the new supplier also shifting to unethical behavior or a potentially worse culture and language barrier could occur, leading to the same problem as faced currently.
To avoid the additional threats and costs with a new offshore manufacturer the regular auditing process could be resumed again. Nonetheless a half a year monitoring as envisaged does not guarantee the supplier’s law observance due to the risk of distorting the reality. Thus the risk of legal cost cannot be fully eliminated and additionally labor cost would increase by five percent.
Although there are several possibilities the easiest and most inexpensive one, considering the opportunity cost since the absolute value of the sales loss is higher than the combination of legal cost and increased labor cost as well as by avoiding training cost for new suppliers, would be the first
Nowadays’ a business environment is moving with a faster pace than ever before, acting globally can become almost a requirement if an enterprise wants to be successful in its industry. This does not compulsively mean that foreign markets are targeted but that any part of the supply chain is located abroad. In the particular case of the represented sensor company an offshore manufacturer is hired.
For the consequent analysis several assumptions were postulated, as the following:
- The company is one of the major players leading on the sensor market due to its promise of quality, well-known and appreciated by its customers
- Current domestic production cannot satisfy increasing demand
- Demand increases recognizably and permanently …show more content…
This ethical dilemma is based on the difficulty to do the right thing, namely not to give further commission considering the current supplier's condition. However the company still has to be profit oriented so it would be harmful to not produce abroad and benefit of cheaper production costs although outsourcing is always connected to risks.
Even though the dilemma seems to be contrary there is not only a "black and white" way of thinking but various solutions occur. The most obvious one is to request more capacity from the offshore supplier without consideration of further restrictions, auditing or consequences of the violating behavior. This opportunity holds the potential of a three percent increase of legal cost if government finds out about the supplier breaking the law.
The opposite would be not to distribute additional capacity to the manufacturer because of the listed ethical doubts. Although it implies that the company cannot meet the increasing demand and has to expect a sales loss of about five …show more content…
Also conceivable as a single solution, both possibilities include training costs, increased labor cost and a production lag of about six months due to training followed by a sales loss for that period of time. Moreover additional risks as the new supplier also shifting to unethical behavior or a potentially worse culture and language barrier could occur, leading to the same problem as faced currently.
To avoid the additional threats and costs with a new offshore manufacturer the regular auditing process could be resumed again. Nonetheless a half a year monitoring as envisaged does not guarantee the supplier’s law observance due to the risk of distorting the reality. Thus the risk of legal cost cannot be fully eliminated and additionally labor cost would increase by five percent.
Although there are several possibilities the easiest and most inexpensive one, considering the opportunity cost since the absolute value of the sales loss is higher than the combination of legal cost and increased labor cost as well as by avoiding training cost for new suppliers, would be the first