Increasing Number of Sweatshops in the Context of Business Ethics - Literature review Example

In the past two decades, the level of competition in the local and international market has increased tremendously. This has resulted from the expansion of multinational companies which have been able to penetrate various markets across the world. The reason is that with the increasing levels of globalization which mainly emanate from the liberalization of markets, improved flow of information across the boundaries and the integration of economies, it has become easy to establish a business in any part of the world. As a result, in an attempt to reduce the risks and uncertainties associated with focusing on a single or few markets, the businesses are diversifying their operations to different markets across the world (Peng & Peng, 2014). However, the issue of sweatshops has arisen as organization try to produce cheap products that meet the tastes and presences of the target market. Therefore, this paper will discuss in detail the issue of sweatshop and the ethical aspect associated with the matter.

One of the main targets for any business is to make profits. However, the entry of multinational businesses in the market has threatened the existence of the local businesses. Therefore, some of these organizations have opted to outsource their operations to different parts of the world. This is to enable them take advantage of cheap labor, availability of raw materials, and qualified personnel. For instance, Apple Inc has outsourced its operations to China due to the country’s commitment to invest in technical education and technology at large (Wood, 2006). As a result, the subordinates are highly qualified and the raw materials are cheap and easily available. However, reports have emerged that the company is putting the employees under poor working conditions. Furthermore, the employees are poorly paid despite some of them having to work for long hours. Although the company has been able to retain its position in the global market, it has failed to observe the ethical guidelines when operating abroad. Reports by Daily Mail and BBC indicate that employees are paid as little as 1.12 pounds an hour (Bilton, 2014). Many of the employees work under very stressing conditions. This aspect has forced 18 employees to take their lives while working in the factories, thereby, forcing the company to install suicide nets as a measure of preventing more deaths. Nevertheless, the measures undertaken by the company are not geared towards improving the working conditions within its facilities (Brenkert & Beauchamp, 2010). According to deontology theory, organizations should act in the best way possible and according to the interests of the employees. However, Apple Inc has only focused on the interests of the target market and failed to address the internal issues which affect the employees. Poor pay couples with a number of challenges has seen the company lose its highly experienced employees to the competitors. However, despite the company remaining competitive, unethical issues must be addressed with speed before they tarnish the reputation of the business in the market. The reason is that with the entry of the social media and the internet, customers are able to communicate with each other more easily and their product or service choices are based on other clients’ reviews (Tricker, & Tricker, 2014).

In the past one decade, companies have shifted their focus to satisfying the interests of the customers. The reason is that customers have a variety of options to select from the market. Therefore, companies must keep on innovating in order to retain their competitive advantage in the market. Multinational firms such as IBM have opted to collaborate with institutions of higher learning in order to identify students who depict signs of becoming innovators (O'Sullivan, Smith & Esposito, 2012). The firm nurtures them, sponsor their education, and train them before they are incorporated into the workforce. However, other companies are opting to move to developing countries in search for highly qualified employees who can spearhead the growth and development of the firm. Nevertheless, they are not willing to pay them well or even commit themselves to offer them with an ideal working environment. In extreme cases, such companies are using underage children to complete some tasks that do not require technical skills (Vilcox & Mohan, 2007). In developing countries, the governments are willing to use any means possible to attract the attention of the investors. Global businesses are taking advantage of this situation to collude with corrupt government officials. This is to enable the business not to be subjected to frequent audit. The move is enabling them to pay low salaries and even children as part of their workforce (Paliwal, 2006). For instance, Wal-Mart has been accused of employing children in some of the factories in Bangladesh. In this country, parents are forcing their children to work in an attempt to deal with tough economic conditions. Despite the company selling the products using the same pricing strategy set by other companies in the market, its only little money that reaches the employees in factories.

The changes in the business environment should not force businesses to engage in unethical activities. Employees are part of the larger population. They interact directly with the customers and share their experiences with the target market (Gaspar, 2014). According to Egoism theory, self-interests of the business and its employees should take the center stage and become the basis of morality. As a result, any activities within the business should aim at serving the varying needs of the society. Therefore, businesses have an obligation of taking care of the society. Through corporate social responsibility, businesses should give out part of their profits in order to improve the economic and social standards of the society that sustains its operations. However, currently, social responsibility has become a new marketing strategy. With the changing perceptions of the customers towards companies engaging in corporate social responsibility, companies are using all means possible to accumulate money that will be used in CRR (Cooper, 2013). However, it is unethical for businesses to pretend to be doing well to the community while paying the employees poorly and subjecting them to very poor working conditions. According to care ethics, businesses have a role of caring for all stakeholders irrespective of their positions within or outside the organization. However, this cannot be achieved when the business fails to observe the ethical guidelines (Miles, Scott & Miles, 2005).

The existing price wars should be a basis for innovation. The employees have become a critical component towards the success of any company in the market. With the liberalization of markets, it has become easy for people to move across the borders (Frey & Wellman, 2003). In an attempt to deal with the challenge emanating from dealing with a diverse market, companies are employing subordinates that come from different culture, religion, and racial background. However, the issue of exploitation of some people has a major impact on the performance of the employees. For instance, Wal-Mart had to deal with frequent go-slows by its employees who stood in solidarity with their counterparts working in the factories. This indicates that in the modern world, companies should streamline their operations or risk being exposed (Audi, 2009). Currently, the company is trying to deal with the tarnished brand name. Various attempts to clear its name have become futile as more people shift their loyalty towards its competitors. Therefore, it’s important for the business to operate ethically and focus on satisfying the interests of all parties.

The second major unethical issues in the world are related to dumping of cheap product in developing countries. Companies play a significant role in an economy (Malachowski, 2001). This is through the creation of employment, payment of taxes, and strengthening of the currencies through foreign exchange. With liberalization of market and the integration of economies, countries across the world have been forced to open up their markets for external products. However, the move has a devastating effect on developing countries (Carroll & Buchholtz, 2012). The poverty levels in these countries are very high. Furthermore, majority of the young people are unemployed. Businesses are taking an advantage of poor structures in these countries to export substandard products. For instance, the Chinese products influx in Africa and other poor countries have been blamed for the current trade imbalance (Rossouw, 2006). Although businesses have the freedom to exploit new opportunities, they have an obligation to ensure that the products meet the required quality standards. According to Kantianism; business should strive to do the ultimate good to all people irrespective of their social and economic background. Therefore, they should ensure that goods provided to them meet the required standards. Furthermore, their actions should be in accordance with the maxim principle. Recently, Chinese businesses have started to export foods to these countries. China has invested heavily in the modern technologies (Shaw, 2016). As a result, businesses are able to produce cheap products. Reports have emerged that some of the businesses are producing two levels of products i.e. poor and high quality products. Poor products are replica of the high-quality products. As a result, the end customers cannot be able to differentiate the two. The substandard products target the developing countries. In some cases, rogue business people are selling fake products at the same price as that of the original products (Al-Shammari & Masri, 2016). However, in these countries, there are no structures to measure the quality of the products. However, according to Utilitarianism theory, moral action is the one that maximizes value. Business should be guided by the moral principle which is to serve the people and satisfy their interests without having to focus on the profits only. Therefore, a business should not take advantage of the market due to high demand. On the contrary, it should act within the ethical boundary and ensure that while making profits, it is satisfying the interests of the customers.

Modern slavery that is being propagated by the pressure to produce cheap but high-quality products should not be allowed to continue. Although the market has become dynamic, businesses have an ethical obligation of ensuring that all parties benefits from their existence (Crane & Matten, 2010). Some of the businesses are outsourcing their operations to tax havens with the aim of reducing the amount paid to the authority. For instance, Apple Inc has established its subsidiaries in Singapore and other tax havens in order to reduce the amount paid to the government in form of taxes. Businesses do not operate in a vacuum. Taxes are used by the authority to improve the lives of the people who support the operations of the businesses by purchasing their products (Ahner, 2007). As a result, organizations should be willing to follow the taxation rules and regulations rather than exploiting people and later send the money to other countries.

In conclusion, the rising levels of competition in the market have forced many businesses to outsource some of the operations to other countries. However, this has resulted to an increase in the number of sweatshops. On the other hand, cases of companies subjecting their employees to heavy work, low pay, and in poor working conditions have surfaced. Furthermore, companies are taking advantage of the current trade balance between developed and less developed countries by producing low quality products. Nevertheless, business should operate ethically and ensure that the interests of all parties are adhered to either within or outside the company.