In 2013, a garment factory in Dhaka, Bangladesh collapsed, killing more than 1,100 workers and injuring many more. This was the deadliest disaster in the history of the clothing manufacturing industry. The Rana Plaza building was known to have been built with substandard materials under faulty conditions, yet the factory remained very active up until the deadly collapse.

An investigation into the building after the collapse found that the mayor of the city wrongly granted approval for construction and allowed the owner to disregard construction codes. The building's owner, Sohel Rana, illegally constructed the upper floors of the building to house factories with several thousand workers and large power generators that shook the building whenever switched on. The day before the collapse, large cracks appeared in the building and an engineer who was called to inspect the building determined it was unsafe. Rana and the factory owners, however, ordered workers to return the next morning. When the generators were switched on that day, the building collapsed. Murder charges were brought against Rana and 37 others held responsible for the disaster. Three other people were charged with helping Rana flee after the collapse.

The scale of the Rana Plaza collapse brought greater global attention to the unsafe working conditions of many workers in the garment industry. The collapse also raised concerns over the responsibility of American and European companies and governments who employed labor in Bangladesh and other markets around the world. Companies that manufactured goods at Rana Plaza included Walmart, the Gap, Adidas, and dozens more. These companies faced growing pressure to act in the wake of the collapse.

Business as usual? Tots & Teens

Laura Cronenberg, the CEO of Tots & Teens, sipped her black tea in the lounge of Shahjalal International Airport and took some time to collect herself before her flight departed. The past few days had been a whirlwind, and she was still trying to make sense of how her work life had transitioned so abruptly from celebration to crisis.

On Monday she'd been feting T&T's employees in acknowledgment of the company's fiscal-year performance. The New Jersey-based children's clothing retailer had increased its profits by 5%, and Laura had gathered everyone at headquarters for a champagne toast. But then T&T's chief operating officer, Jim Zappa, had pulled her aside to tell her the shocking news: A garment factory in Bangladesh that produced and packaged merchandise for T&T and other retailers had collapsed in the middle of a workday. She and Jim booked flights right away, landed in Dhaka the following morning, and took a car to the disaster site.

It was a horrible scene. Bulldozers were clearing large debris, rescue workers were searching for survivors, and a group of mothers sobbed and held up pictures of their missing sons and daughters. The area looked like the aftermath of an earthquake. According to news reports, the building had been constructed quickly and cheaply with substandard materials on a filled-in pond. More than 2,000 workers had perished, and many more were injured.

Surveying the wreckage, Laura felt queasy. The human loss was devastating, and as a mother herself, she didn't want to imagine what the parents of the dead and injured workers were going through. But she had to stay strong; she had a job to do. The company would have to find a way to support the victims and their families and to tighten up oversight of its supply chain. Even more pressing, it needed to find a replacement facility. The fall line, which typically accounted for 80% of T&T's revenue, was scheduled to go into production in two weeks. Laura had to quickly decide if another Bangladesh contractor could do the work or if she should shift to a factory they were already using in China.

Pros and Cons

She and Jim spent the rest of the day touring other facilities, and the next morning they returned to Shahjalal, enroute to Shenzen, where they would visit one of their Chinese contractors.

"That was rough yesterday," Laura said. "I can't stop thinking about the rubbleand the sobbing."

"Yes," Jim replied, nodding.

"What's your view on keeping operations in Bangladesh? Can we be sure this will never happen again?"

"I'm not sure," he said. "Of course, there are pros and cons. A few years ago, when we decided to stop carrying other brands and create our own, we chose to manufacture in Bangladesh for the cost and convenience. Labor and transportation are cheap, quality is relatively good, and all the factories are clustered in a small area. The other pro is that Bangladesh has duty-free access to the European Union, which China and the African countries don't have."

Laura nodded. T&T's five-year strategic plan called for expansion into the United Kingdom, France, and Spain, and the tax breaks would be helpful. "What are the cons?"

"Well, obviously, even though Bangladesh has established worker safety laws, standards, and regulations, they're often sidestepped or ignored. We had no idea this factory was in such bad condition, but clearly the owners didn't care, and the inspectors looked the other way for far too long. The facilities we saw today appear to be up to snuff. But there are no guaranteesespecially when we and other retailers create so much pressure for fast turnover. There's also a lot of corruption and chaos."

"Can we change things for the better? What about the effort that's under way to pull together an industry coalition for worker safety?"

"That won't be easy or quick," Jim said. "Moving everything to China would be more expedient and less risky. But I worry about what will happen if we just pack up and leave."

But Laura knew exactly what he meant. If T&T exited, and others followed, where would that leave Bangladesh and its workers? She'd seen the stats. Work from the fashion industry had helped cut poverty in the country by a third and now accounted for a third of its GDP. A mass exodus would be devastating to its economy. But what if T&T stayed, and nothing substantial changed? They might have to face another disaster.

When Laura had decided that T&T should launch its own clothing lines and engage more directly with the supply chain, she'd never imagined that anything like this could happen. In her five years as CEO, she'd successfully managed stock market crashes, layoffs, a recession, strikes, downsizingbut nothing had prepared her for this.

Costs and Risks

"We can expand operations, no problem," Kevin Chen, the owner of the Shenzen factory, told them. He'd been a great partner. Tots & Teens was currently producing 36% of its merchandise in China and had never had any problems there. The hangarlike factoryfull of humming sewing machines, was both pristine and efficient. Still, Laura wondered whether Kevin could execute on the promises he was making.

As she and Jim were chauffeured to their hotel in downtown Shenzhen, she picked Jim's brain again. "Kevin says they can ramp up their operations, but do you really think they can do it as fast as he says?"

"I have no reason to believe otherwise," Jim replied. "But I suppose there's no guarantee."

Laura wasn't satisfied. "I need more than that."

"We already use China for a large percentage of our manufacturing, and so far we've been happy," Jim said. "They've been doing this for a long time, and they're good at it."

"But with an increased production load, will they be able to handle quick turnarounds?"

This was a big issue for T&T. Formerly, it took about six months for the company to design a piece of clothing, send it into production, and get it into stores. But now, because of competition from fast-fashion retailers and the capricious demands of buyers, many T&T lines were restyled every four weeks. The Dhaka factory had manufactured those products.

"I think so," Jim said, but without his usual confidence.

Laura's phone pinged with new e-mails. She saw a note from T&T's head counsel, who was drafting language for the worker-safety coalition, and one from the company's communications chief to alert management that a protest group had announced plans to assemble outside T&T's headquarters the following afternoon.

She turned back to Jim. "What else do we need to consider?"

"The cost of labor in China is significantly higher and rising. But my main concern is risk. Right now we're spread out among China, Bangladesh, and, to a lesser extent, Vietnam, Cambodia, and a few other countries. If we move more of our manufacturing into China, we'll have 50% of our production there and we'll be..."

Laura finished his sentence: "Exposed."

Jim nodded. "I worry about what will happen if costs spike further. We can't afford to have the margins drop on half our merchandise. Even worse, there could be a worker strikeor a natural disasterwhich would mean half our goods delayed or destroyed." The same scenarios had already occurred to Laura.

Jim said" I know this isn't easy for you. But I am sure you'll make the right decision."

Laura smiled. Unfortunately, the "right decision" had never seemed so elusive. What would be best for the company? For T&T's employees and customers? For the people who made its dresses, shirts, and sweaters all over the world?

Questions

1. According to you what is the ethical dilemma that Laura is facing?
2. Imagine yourself in Laura's shoes what would be the "right decision" in this situation? Justify your answer.
3. According to you how many different stakeholder groups may get impacted by Laura's "right decision."
4. Are there any short- and long-term perspectives to be considered while making a decision in this situation.