Need by 9:30 p.m. TONIGHT
Scenrio:
You are the controller at a medium sized sports apparel company. Your sales manager has just signed a contract with the US Olympic committee to produce warm weather clothing for the downhill ski team. This contract would increase your revenues by 20% for next year as well as create exposure for your name and brand. In short, you think it would bring in future business. Your business model focuses on American Made products as well as quality.
As you investigate the sales manager’s proposal to the Olympic committee you find that the mark-up on the products is just 10% of total costs. This concerns you because on average, your mark-up percent is 40% of total costs. This means if anything unexpected happens with production, this contract could quickly go from being profitable to losing money for the company.
As you gather a team to discuss the risks and opportunities associated with this project, the sales manager is strongly pushing to accept the contract and to “let production deal with the risks”. The Vice President (VP) of Production states that if the cutting and sewing were outsourced to an emerging market producer, the labor costs could be reduced and the risk of the project losing money would be greatly reduced. He reasoned that the materials are still American made; just the assembly is done in another country. The VP of Production has a country in mind. The wages paid in this foreign country are one fifth those paid in the US and there are no benefits attached to those wages. This country does not impose any tariffs so shipping and importing costs would be very low. The VP’s knowledge is coming from his brother-in-law who works in this country. He could take care of any government fees, setting up the factory and finding workers. The VP has never seen the workers who would be hired or the working conditions in the factory.
Questions to be answered:
- What are the ethical responsibilities of the organization, and you as an employee, in this case?
- What would an ethical egoist do in this situation? Why?
- What would a utilitarian do in this situation? Why?
- What would you do in this situation? Why?
