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Outsourcing: ethics issues

Assume you are a manager of a large heavy equipment manufacturing company. Your company currently outsources the manufacturing of a specialized piece of equipment to a firm in another country. The outsourcing of this piece of equipment has saved your organization a considerable amount of money and has increased profits by 15%. A recent newspaper article has revealed that this firm is paying their employees only a few dollars a day and their employees often work long hours. While you are not the only company that uses this firm your company was specifically named in the newspaper article. You have been asked by your CEO to make a decision on whether or not to continue to do business with this firm.

1. Discuss the ethics of continuing to do business with this firm. In this discussion evaluate the economic, legal and ethical issues. Describe how a written code of ethics might impact your decision.

2. Describe any other factors you would consider in making a decision to continue or discontinue doing business with this organization.

3. State the process you would follow to make your decision, provide your decision, and explain the decision making style you have used.

4. Prepare A SWOT analysis of your decision.

Solution Preview

1. Discuss the ethics of continuing to do business with this firm. In this discussion evaluate the economic, legal and ethical issues. Describe how a written code of ethics might impact your decision.

From the deontological ethical perspective, it is the duty of the large heavy equipment manufacturing company to do business with suppliers that pay fair wages. If the supplier does not pay fair wages, the company should cease doing business with the supplier. From the economic perspective, if the large heavy equipment manufacturing company ceases to do business with this supplier the equipment firm will lose the increased profits of 15%. This will be the negative impact of the decision. From the legal perspective, it needs to be evaluated if the supplier is violating the wage law of that country. If the supplier is violating the wage laws of that country then the transaction is illegal. From the ethical perspective it is the duty of the large heavy equipment manufacturing company to ensure that its suppliers pay fair wages and provide good working conditions to its employees. From virtue ethics ...

Solution Summary

The answer to this problem explains the moral dilemma of outsourcing. The references related to the answer are also included.

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