Ethical Sourcing Case Study

Ethical Sourcing and the Supply Chain
As the world trends towards a more globalized marketplace, the need for a universal definition of suitable ethical standards and corporate social responsibility is imperative due to the recent upsurge in global welfare issues. If successful, every facet of the business and supply chain would concentrate on not only the maximization of wealth, but the well-being of all stakeholders. However, many multinational corporations (MNCs) are encountering human rights issues resulting from unethical actions from overseas suppliers that conflict with their own code of conduct. These adverse engagements have been shown to cause significant damage and guilt by association to MNCs even though they are not directly overseeing

For example, in 2012 a Bangladesh factory producing garments for American and European companies caught fire killing 117 factory workers (Cooper, 2014). Additionally, in 2013 another factory in Bangladesh collapsed killing 1,100 workers, which was caused by foundational issues from the upper floors being built without a permit (Cooper, 2014). These incidents ignited outrage over both unsafe and unfair working conditions as well as the exploitation from MNCs, who had extremely profitable contracts with these factories. Consequently, due to public outcry the formation of enhanced government regulations, oversight, business initiatives, and public efforts have surfaced (Cooper, 2014). Although these issues have not been completely resolved, the question over the extent of which MNCs are responsible for adequate workplace safety remains a controversial topic. However, strategic efforts from these companies indicate the importance and necessity of remaining proactive in a globalized economy. These efforts consist of the formation of minimum workforce standards, compliance regulations, financial support, and long-term contractual

Further investigations revealed that Foxconn had been guilty of unsafe and unfair working environments long before the incidents, which included the employment of extended working hours, discrimination, and military management techniques (Xu & Li, 2013). Due to Foxconn’s sole focus on maintaining businesses relationships by fulfilling Apple’s demand of technical products, their subsequent mistreatment of employees was exacerbated and generated 80-100 hours of forced overtime (Xu & Li, 2013). However, in an attempt to combat the negative publicity, each firm denied responsibility to the incidents, which ultimately added fuel to the media fire (Xu & Li, 2013). Since then, each firm has enacted superior regulations designed to maintain efficiency while recognizing limitations on labor hours and increased spending on compliance audits (Chandler & Werther, 2014). Yet, as Foxconn continues to sustain their global leadership and Apple’s profits remain unaffected, the disadvantages associated with the incidents at Foxconn have not transcended the outcomes. From a profit standpoint, the increase in spending and subsequent alterations of labor methods serve as the biggest disadvantage to each company’s