Ethical Issues

Whenever a location of a company’s manufacturing plant is being sought, two things come in mind: labor and raw materials. It is sometimes difficult to find both at the same location cheaply. In that case, decisions have to made to ensure that the cost of production goes as far down as possible. It is, however, also important to compare the ethical standards required in the countries being considered to ensure that there is no conflict between the company values and the federal law. This paper seeks to identify factors that are most important in the selection of a location for a new manufacturing plant.

The availability of labor is one important factor to consider when selecting the location of a manufacturing plant. The guidelines to the employment system should be closely followed so as to avoid conflicting with the authorities. The country should also have both cheap and educated workforce. This is because the manufacturing plant nowadays requires expertise in the fields of web technology, accounting, as well as other fields. The ability of the locals to communicate in a language that is understandable to you and for which you have literature or are able to print new literature. Security and reliability of the law should also be factored in (Langvardt, 2012). It would be advisable to locate the company n a location such as China or other countries in Asia where labor is cheap.

Ethical issues may arise in this case if the company chooses to employ the locals at costs that are lower than allowed. Some countries also sometimes choose locations for their manufacturing plants where they can oppress their workers with illegal overtime hours forced and inappropriate labor. A good example of this situation is the Apple manufacturing plant in China. Apple Inc. is said to produce its products in such a way that it makes 20 times more profit that their production cost (Eisenbrey, 2014). Companies that meet such challenges have a hard time working with the authorities and their products meet a lot of resistance.

Another factor to consider when selecting a location for setting up a manufacturing plant is the availability of raw materials. Raw materials should be obtainable at the lowest costs possible. The cost of raw materials is affected by several factors including the supply, the quality of raw materials, the demand and the effort required to gather them. The quality of raw materials cannot be compromised. The other factors differ between locations. The demand of raw materials is influenced by the number of companies that require the same raw materials. The supply is dependent only on the availability of the raw materials. If a country has a lot of any raw materials, it becomes a suitable location for the plant. In most cases the cost of raw materials will be highly reduced by the lower transport cost and if there are no other companies which require it, it drops further. A company that requires steel in large scale may be located in steel producing countries like India, China, Japan, or the United States.

However, there are many ways a company can fail in terms of ethics when choosing a location in regard to raw materials. Some companies pay very low fees for the raw materials especially when they have a command on the cost. Other times, companies may be caught in the middle of scandals that involve the sourcing of raw materials. Hershey’s Company, for example, has had problems with the way they obtain their raw material. It has been accused of sourcing cocoa from areas which encouraged child abuse (Hoffman, 2014). Legal suits may result in big problems in any industry. To avoid such problems, it is necessary for companies to understand everything about how their raw materials are obtained.

Of course these measures cannot be solely employed at the company headquarters. It is necessary for a company to make sure that ethical issues are observed at all levels. This can be done best by analyzing both the company’s ethical standards and the required operation standards within the company of operation. The two sets of laws should then be integrated to ensure that the company does not get into troubles with the law (Reynolds, 1999).

I would also advise the management on the ground to ensure they ensure stable working conditions. Unstable working conditions could lead to problems with both the workforce and the authorities (Terrell and Rosenbusch, 2013). I would also advice the company to, preferably, employ from the country as much of the leadership as possible. This leadership from within the country understands the culture of the people. Understanding the culture of people gives the leaders an advantage in leadership. This advantage could help in the company to stand above its competitors (Svensson and Wood, 2007).

In conclusion, when a company is expanding to other countries, it foots the risk of ethical conflicts. The company should however, make sure it understands the environment in which they are expanding. Weighing the benefits that arise from expanding in the specific countries is a factor that should not be ignored. Among those issues that may arise from conflicting ethical standards are child abuse and exploitation of human labor.

Bibliography

Eisenbrey, R. (2014). Apple’s iPhone profits dwarf its labor costs. [online] Economic Policy Institute. Available at: http://www.epi.org/blog/apple-iphone-profits-dwarf-labor-costs/ [Accessed 6 Jun. 2014].

Hoffman, B. (2014). How Can We End Child Labor In The Fields? Pay Farmers Better.

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Forbes. Available at: http://www.forbes.com/sites/bethhoffman/2014/04/08/how-can-we-end-child-labor-in-the-fields-pay-farmers-better/ [Accessed 6 Jun. 2014].

Langvardt, A. (2012). Ethical leadership and the dual roles of examples. Business Horizons, 55(4), pp.373–384.

Reynolds, s. (1999). A single framework for the ethical and strategic global manager. 1999(1), pp.1–6.

Svensson, G. and Wood, G. (2007). Sustainable leadership ethics: a continuous and iterative process. Leadership \& Organization Development Journal, 28(3), pp.251–268.

Terrell, R. and Rosenbusch, K. (2013). How global leaders develop. Journal of Management Development, 32(10), pp.1056–1079.