The CEO of ShafferFashion has recently become aware of reports that workers in overseas factories work in unsafe, unhealthy conditions without adequate compensation. A worker’s rights NGO has purchased shares of ShafferFashion stock and has introduced a shareholder resolution to the Board of Directors demanding a response to the situation, insisting that ShafferFashion treat all workers in the whole supply chain responsibly. The Board of Directors tasked the CEO to come back with an action plan to address these concerns.
ShafferFashion hired a consultant to provide an analysis of the situation. The report said that since the overseas factories are owned and operated by independent companies, and because oversight is so weak in those countries, even if ShafferFashion was willing to pay more for the garments, there is no assurance that the extra money would go to safer working conditions or higher pay. The consultant identified a US company that has the capacity to make ShafferFashionâ€™s clothing. However, using this company and paying â€œliving wagesâ€ under US labor requirements such as overtime and safety would add approximately 25% to the goods’ cost. If ShafferFashion moved to natural or recycled fibers and not petroleum-based synthetics, it would add another 25% to the cost.
You have been hired as the Director of Ethics, Corporate Social Responsibility, and Government Relations for ShafferFashion. The CEO has asked you to come up with an action plan to respond to the Board.
Specifically, the CEO asked you to answer these questions:
1-Can you think of a way to continue to use overseas factories, but under improved working conditions? Are there other entities you might work with to make this happen?
2-Is there a way to expand or change our business strategy to make up for the increased cost of better working conditions (whether overseas or domestically) to be able to continue serving the low-income communities?
3- If you canâ€™t find a win-win-win solution that satisfies all the key stakeholders, who do you think deserves priority, and what message would you recommend for those whose interests might not be satisfied in the plan you propose?