If you were the vice president for supply chain management for a large manufacturer or retailer, what type of labor standards would you impose on suppliers from other countries, if any?
When doing business abroad, does a firm have social responsibilities to the host country beyond those required by the market and the law of that country? This issue has arisen in many contexts, including factory labor conditions. Not infrequently, corporations have been chastised for allowing working conditions in their foreign operations or in their suppliers’ plants that Western cultures consider substandard. Such sweatshops pose a host of commercial, economic, ethical, political, and social questions. For example, on April 24, 2013, 1,129 people died when a multistory building collapsed in a suburb of Dhaka, the capital of Bangladesh. Only a day earlier, cracks had been discovered in the building, which housed retailers on the lower floors and a number of clothing factories on the top floors. In response to the discovery, the retailers immediately closed, but the owners of the factories on the higher floors insisted their workers continue to produce the clothing that was destined for European and American consumers. As evidenced by the over 5,000 garment factories employing more than 3.2 million workers, low labor costs have attracted nearly every major clothing company to Bangladesh, where unsafe factory facilities have long been a problem. Only five months earlier, a fire in a similar factory killed 112 workers after which importers, including Walmart, pledged to do more to ensure worker safety, but little was achieved. The call for Western buyers to take effective action came loudly and immediately following the loss of life in April 2013. Despite the renewed outcry, real reform does not appear to be on the near horizon.14