Business Ethics in the Garment Industry - Case Study Example

Garment industry Student’s Name: Instructor’s Name: Course Code: Date of Submission: Introduction Prato in Italy is a District which for a long time now has been well known for its quality of garments. It used to produce best garments long before the Chinese entered into the garment industry and started manufacturing garments with affordable prices. Many business people migrated from China to the Prato province with the aim of exploiting the market opportunities of which they thought had not been fully exploited (Union Industriale Pratese 2011). The Chinese people started entering into Prato as workers but finally came in large numbers and invested in the garment industry. The Chinese were using the Italian slogan that made in Italy to sell their products in the market which were slightly less costly. The current study shows that in Prato District there are 10.7% people of foreign origin. As a result competition increased in this industry there came up many ethical issues which affected the garment industry in Prato (Union Industriale Pratese 2011). In this essay therefore I will discuss the major ethical issues for stakeholders in the garment industry and specifically businesses in Prato. I will also identify most important stakeholders in these markets and why they are most important and finally I will discuss how the welfare of the migrant workers will be protected and by whom. I will also give the conclusion based on the findings of this paper. There are many unethical issues that came as a result of the Chinese entrance into the market of Prato and started manufacturing garments. The first major issue is that most of the Chinese people did their best to evade from paying tax. In any business this is unethical behavior because is mandatory and should be paid (Rachel 2010). . The Chinese businesses did this by opening a new shop which they operate for a short while before they are caught with tax evasion police. They change the name of the business and the code so that it looks like a new shop but is a tricky of not wanting to pay the tax. There was also illegal importation of fabrics. Some of the Chinese businesses imported fabrics from their country to Prato and they pretended that they were made in Italy. This is unfair business practice and it is against the business law as well the country law (Danielle 2006). It seriously affects the garment industry because the garments maybe of poor quality but because they are claimed to be made in Italy, customers can buy but they will not be satisfied and will develop a negative attitude towards the Italy made items. The consequence is to be sued in the court of law for illegal importation of fabrics. Moreover, there was high development of sweatshops. This greatly affected the performance of the national factories as many of the services were outsourced. This was a practice of the Chinese people to subcontract (Montero 2011). Sweatshops lead to low quality products in the garment industry although it increased the quantity of fabrics to meet the customers’ demand. This came up as a result of high competition from the Chinese people. Furthermore, there was human trafficking. The Chinese people started massive migration to Prato and they transported people from their country by force to provide labor in their factories. This is against the labor laws which state that there should be no forced labor (Dunford 2006). The Chinese business people went as far as transporting underage people to provide labor for their industries. Through forced labor, many businesses did not perform well because the workers did not give their best skills in accomplishing tasks thus poor quality of products being manufactured because of lack of motivation. Unfair competition was also practiced. The Chinese people upon their entrance in the garment industry in Prato, they started manufacturing quantity but not quality products which attracted slightly lower prices than the original Italy made garments so that they can gain competitive advantage (Montero 2011). This forced other factories to lower their prices so as to cope with competition from the Chinese business people. It also led to Chinese businesses excelling in Prato which they wired back to their country daily hence the businesses did not develop the District of Prato instead the Chinese people. There also developed Fashion propaganda. In order for the Italy factories to cope with competition from the Chinese business people, they had to develop some fabrics which could resemble the Chinese ones which came up with high demand (Jayanth et al 2006). This is not a good idea in the business because the customer will not be satisfied with the product and will develop a negative attitude towards the manufacturer and could not do any subsequent purchases with the company’s products. This greatly affects the sales of the company due to poor public image because of the poor quality products which does not satisfy the customers’ demands. Another unethical issue among stakeholders is deceptive labeling. Most of the Chinese business people labeled their fabrics that they were made in Italy but in the real sense they imported the garments. Chinese businesses were majorly concerned with quantity and not quality and the customers were deceived that the products could be of high quality because they were made in Italy (Ferrera & Gualmini 2000). This is an unfair trade practice as it does not help the customer to satisfy his or her demands from the limited income and at the same time it destroys the good image of Italian made fabrics thus it became hard to sell the garments internationally. There came up unfair working conditions among the workers. This is because there was forced labor by the Chinese businesses and therefore they did regard their employees with respect. For instance employees worked for long hours with little because their employers were concerned with profits and not the employees’ welfare (Linda et al 2001). This greatly promoted unfair practices among the employers which are against the human rights. The employees were also affected physiologically and therefore they not motivated to improve their performance instead they worked so that they can sustain themselves and their families. On the other hand, there was also unfair pricing of the products. Because the Chinese products were of poor quality and made deceptive labeling, their prices were slightly lower attracting many customers than the Italian firms which manufactured quality but not quantity fabrics (Montero 2011). This led to Italian firms making little profits because most customers are quality and price oriented thus they purchased more of the affordable fabrics as they were labeled made in Italy. Some of the less competitive Italian firms were driven out of the market and the Chinese firms became the major shareholders in the Prato market and outside. Most important stakeholders In any organization there are major and minor stakeholders. Among the most important stakeholders in any garment company include the top management, customers, employees, shareholders and suppliers (Anita et al 2006). Without these stakeholders, the organization will not be complete and will not be able to perform better in the business environment. To begin with, the top management is the pillar in the organization. The management as a stakeholder is important because they are responsible for implementing the policies of the organization (Grant et al 2001). After the company’s policies have been drafted by the board of directors, they are handed over to the top management to interpret and implement. The top management also conducts various management operations in the company like staffing to ensure it runs smoothly. Another importance of the top management is to ensure that the company’s resources are utilized effectively towards achieving the set goals and objectives. They develop strategies with which they will implement to enable the company to remain competitive in the market. These strategies should be able to develop and motivate the employees for example through training. The management is also important because they do planning for the organization. They come up with ideas and formulating actions plans for implementing various strategies (Montero 2011). The management is also responsible for planning what is to be done in the future and how. Without these plans the company can be at a standstill without any focus. The management is also responsible for controlling the company. They conduct comparison between the planned targets and the achievement. If the expected outcome has not been met, they design strategies for achieving the target and encourage other stakeholders to works hard towards achieving the goals. On the other hand, the customers are most important stakeholders of a company. They determine the progress of the company and how it is being managed. The customers provide feedback to the company concerning their products in terms of quality, quantity and designs (Orhan 2011). The customers are important because without them, there will be no selling of any fabric and there could be no need of the company being in the market. They buy the company’s products and ensure continuity of the company through the profits they make. The customers further keep the company on track and help the company to practice continues improvement in the quality of their products and services. This is in the context that customers who are not satisfied with the company’s products will move a way to another company’s products and this sends an alarm that the quality of the products is being compromised (Tara 2002). Therefore, any company will try to be innovative always so as to meet the customer demands in the market. In this regard, the customers enable the company to be innovative always. Another important stakeholder in a company is the employees. The employees are important because they are the ones who manufacture the products and deliver them to the customers. They help the company to grow because if they are motivated they can offer their best skills and manufacture quality products which will attract and retain many customers (Tara 2002). But if they are not motivated, they may not be interested in improving quality and thus the company’s products may not be competitive leading to decline in profits. Therefore, the employees are most important because they enable the company to remain competitive or not through the products being manufactured. Without the employees there will be no production in the company. Shareholders are also important stakeholders of the company. They are represented by the board of directors. They are the policy makers of the company therefore are very important in the company because they make policies for the company hence they are the leaders. Without the policies, the company cannot have the objectives and targets to achieve. The shareholders also are responsible for hiring or dismissing the chief executive officer of the company (Orhan 2011). When the performance of the manager if not good, the shareholders through the board of directors can dismiss him or her and hire another one. The success of any other company entirely depends on the policies made by the board of directors. Qualified and competent board of directors can design good policies to help the organization excel but without good policies the company will fail. Therefore the stakeholders are important because they determine the success of the company though designing competitive and achievable policies. Finally, the suppliers are also among the most important stakeholders of the company. Effective manufacturing process depend the ability of the suppliers to supply materials in good time and in required specifications (Anita et al 2006). Without reliable suppliers, there be stoppages in production hence the customers’ demands cannot be met. In this regard, suppliers are very important in a company because without them manufacturing process could be interrupted. How to protect the welfare of migrant workers There are many ways in which the welfare of Chinese migrant workers can be protected by various institutions. First and foremost, the migrant workers should be given freedom to join any trade union of his or her choice (Montero 2011). The government should encourage all the migrant workers to join trade unions of their choice so that their welfare could be taken care of by the union. This is because the unions protect the rights and freedoms of the employees therefore they will be protected from any form of discrimination. The welfare of the migrant workers should be protected by the government. The constitution of Italy should develop fair labor standards so that all employees enjoy equal treatment. In this aspect, all the employees receive equal treatment privileges (Union Industriale Pratese 2011). For instance, there should be equal remuneration and other terms of employment like the overtime employment with equal pay. They should also be given equal opportunities to holidays like other employees. The factory owners should be able to develop recognizable labels of their products so that their products can be differentiated and distinguished. Through recognizable labels, the products of the migrant workers will not be categorized into other products (Rachel 2010). This will give the migrant workers the opportunity to sale their products. They will therefore be protected from exploitation by generalizing the products with all other products in the garment industry. The government should further be able to set laws which will reduce human trafficking. Through these laws, human trafficking of migrant workers will reduce which will help the government to safeguard the rights of people by eliminating forced labor (Castree 2007). There should be strict penalties for any person or employer involved in human trafficking because it will be against the laws of the human rights. There should be freedom for individuals to choose their employers and the kind of jobs to do. The government should help the migrant workers to always check their migration status. Through this checking, they will be renewing their migration status so that they will be found to be in the country illegally after their passports expired (Castree 2007). Therefore they will be protected against any embarrassments and mistreatment from some employers. When they are in Italy legally they will be treated as other nationals hence avoid exploitation. Conclusion Prato is a District in Italy which is well known for the manufacture of fabrics. The Chinese upon realizing the unexploited opportunities at Prato, they started migrating there as workers and later moved in large numbers and started to invest in the garment industry. They gave competition to the Italian firms. As a result of this competition in Prato, there came up many ethical issues which include tax evasion by the Chinese business people, unfair market competition, illegal importation of fabrics into Italy, there was propaganda for fashions so as to maintain the customer demands and there were unfair working conditions like working for long hours with little pay. Other ethical issues include human trafficking, forced labor, deceptive labeling. Te most important stakeholders of a company include the top management which is responsible for day to day running of the company, the customers, the suppliers, the employees and the shareholders who are represented by the board of directors. On the other hand, the parties involved in the protection of migrant workers are the government, trade unions and the employers. There should measures to avoid human trafficking, fair labor standards, recognizable labels and ensuring that the migrant workers check their migration status from time to time. References Anita, R. James E. Hunton, C. & Strand, N. (2006). A Postmodern Stakeholder Analysis Of Telework. Emerald publishing group. Ayres, I. (2001). Monetize labor practices. In J Cohen and J Rogers, Can we put and end To sweatshops? Boston: Beacon Press. Becattini, G. & Dei, O. (2006). The performance of Italian industrial districts And Large enterprise areas in the 1990s. European Planning Studies, 14(8), p. 1139-1162. Castree, N. (2007). Labor geography: A work in progress. International Journal of Urban and Regional Research, 31(4), p. 853-862. Danielle, E. W. (2006). Ethics Initiatives: The Problem of Ethical Subgroups, Oxford: Butterworth Heinemann. Dunford, M. (2006). Industrial districts, magic circles, and the restructuring of the Italian textile and clothing chain. Economic Geography, 82(1), p. 27-59. Ferrera, M. & Gualmini, E. (2000). Reforms guided by consensus: The welfare state in the Italian transition. West European Politics, 23(2), p. 187-208. Grant T. S. & Alison M. (2001). Integration as networks and systems: A strategic Stakeholder analysis, London: Emerald publishing group. Orhan, A. (2011). The Efficient Management of Shareholder Value and Stakeholder Theory: An Analysis of Emerging Market Economies, Thomson Learning. Jayanth, N. Sarah, R & Madan, M. (2006). Groups as Enablers of Unethical Behavior: The Role Of Cohesion on Group Member Actions, Thomson Learning. Linda, K. T, Kenneth, D. Butterfield, & McCabe, L. (2001). The ethical context in Organizations: Influences on employee attitudes and behaviors. London: Macmillan Business. Montero, J. (2011). Neoliberal fashion: The political economy of sweatshops in Europe and Latin America, Durham theses, Durham University. Retrieved on August 4th, 2013 at http://etheses.dur.ac.uk/3205/1/Montero._PhD_THESIS_FINAL.pdf Rachel, D. (2010). Chinese Remake the ‘Made in Italy’ Fashion Label. Retrieved on August 4, 2013 at http://www.nytimes.com/2010/09/13/world/europe/13prato.html?pagewanted=all&_r=0 Tara, J. (2002). From imagination to realization: A legal foundation for stakeholder Theory. London: Emerald publishing group. Union Industriale Pratese. (2011). Evolution of the Prato textile district: Retrieved on August 4, 2013 at http://www.ui.prato.it/unionedigitale/v2/english/presentazione%20distretto%20inglese.pdf Read More

Sweatshops lead to low quality products in the garment industry although it increased the quantity of fabrics to meet the customers’ demand. This came up as a result of high competition from the Chinese people. Furthermore, there was human trafficking. The Chinese people started massive migration to Prato and they transported people from their country by force to provide labor in their factories. This is against the labor laws which state that there should be no forced labor (Dunford 2006).

The Chinese business people went as far as transporting underage people to provide labor for their industries. Through forced labor, many businesses did not perform well because the workers did not give their best skills in accomplishing tasks thus poor quality of products being manufactured because of lack of motivation. Unfair competition was also practiced. The Chinese people upon their entrance in the garment industry in Prato, they started manufacturing quantity but not quality products which attracted slightly lower prices than the original Italy made garments so that they can gain competitive advantage (Montero 2011).

This forced other factories to lower their prices so as to cope with competition from the Chinese business people. It also led to Chinese businesses excelling in Prato which they wired back to their country daily hence the businesses did not develop the District of Prato instead the Chinese people. There also developed Fashion propaganda. In order for the Italy factories to cope with competition from the Chinese business people, they had to develop some fabrics which could resemble the Chinese ones which came up with high demand (Jayanth et al 2006).

This is not a good idea in the business because the customer will not be satisfied with the product and will develop a negative attitude towards the manufacturer and could not do any subsequent purchases with the company’s products. This greatly affects the sales of the company due to poor public image because of the poor quality products which does not satisfy the customers’ demands. Another unethical issue among stakeholders is deceptive labeling. Most of the Chinese business people labeled their fabrics that they were made in Italy but in the real sense they imported the garments.

Chinese businesses were majorly concerned with quantity and not quality and the customers were deceived that the products could be of high quality because they were made in Italy (Ferrera & Gualmini 2000). This is an unfair trade practice as it does not help the customer to satisfy his or her demands from the limited income and at the same time it destroys the good image of Italian made fabrics thus it became hard to sell the garments internationally. There came up unfair working conditions among the workers.

This is because there was forced labor by the Chinese businesses and therefore they did regard their employees with respect. For instance employees worked for long hours with little because their employers were concerned with profits and not the employees’ welfare (Linda et al 2001). This greatly promoted unfair practices among the employers which are against the human rights. The employees were also affected physiologically and therefore they not motivated to improve their performance instead they worked so that they can sustain themselves and their families.

On the other hand, there was also unfair pricing of the products. Because the Chinese products were of poor quality and made deceptive labeling, their prices were slightly lower attracting many customers than the Italian firms which manufactured quality but not quantity fabrics (Montero 2011). This led to Italian firms making little profits because most customers are quality and price oriented thus they purchased more of the affordable fabrics as they were labeled made in Italy. Some of the less competitive Italian firms were driven out of the market and the Chinese firms became the major shareholders in the Prato market and outside.

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