(Solution Download) 1 Do companies have an ethical obligation to keep jobs

1. Do companies have an ethical obligation to keep jobs in their home country? Why or why not?
2. In what ways, if at all, were Scovill's ethical obligations to its U.S. and Chinese workers different?
3. Scovill moved a sizable part of its operations to China, planning to move more, but workers accepted pay cuts, and Scovill moved back home.
How would you rate the fairness of this situation from management's point of view? As a human resource manager, how would you communicate the decision to the workers?

A chief reason companies cite for locating operations in low-wage areas is to save money so they can meet customers' demands for low-priced products. That's what took Scovill Fasteners from Clarksville, Georgia, to China. Several years ago, management saw that customers who bought its snaps for baby clothes were making the clothes in China, and they expected that customers who bought its snaps to make blue jeans would soon be there as well. The company decided it would have to join them.
Scovill opened a factory in Shenzhen China, where it paid 500 workers an average of $2.20 per hour. The private equity firm that owns Scovill decided to keep all the profits instead of forming a partnership with Chinese business owners. To find English-speaking managers, it hired them in Hong Kong. The Shenzhen workers and Hong Kong managers distrusted each other, and no one could relate to the owners back in the United States.
With the difficult relationships came difficulty overseeing the work. Management back in the United States was unsure whether the factory's relationship with the Chinese government was proper. And when the lunar new year holiday occurred, headquarters was unprepared to see the Chinese workers leave en masse, many of them never to return.
Eventually, management concluded that the moneysaving effort was actually expensive. The company considered setting up shop in a country where wages were even lower, but employees in Clarksville had agreed to cut their pay by 10 percent, and operations at home began looking like the most productive alternative. Scovill decided to keep 170 Georgia jobs on its payroll instead of outsourcing production.


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