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Should Retailers Cut and Run from Bangladesh?

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Case Overview

Bangladesh is the second largest apparel exporter with $18 billion, 3.6 million garment
workers, and some of the lowest wages in the world

because of the unsafe working conditions in one of the apparel factory fire broke out that
killed 400 workers in May 2013 which put western apparel companies under tremendous
public scrutiny

After a factory fire 6 months ago, Disney had already announced a one-year phase-out of all
manufacturing in Bangladesh ending in March 2014

While other western retailers determine if they will follow Disneys example, labor groups are
urging them to stay and improve conditions as opposed to cutting their losses and running

Questions Remain

Do these retailers have an obligation to improve working conditions in Bangladesh once they
have used subcontractors there?

How ethical is it to walk away and source clothes in another low-cost location?

Is the problem instead that U.S. companies expect their clothes to be made at unrealistically
low prices?

The Utilitarian Approach

It strives to achieve the greatest good for the greatest number while creating the least
amount of harm or preventing the greatest amount of suffering
The major Retailers are Disney, Wal-Mart, GAP, Childrens Place, Benetton. But the number of
workers involved are 3.6 million
Labor groups are urging them to stay and improve conditions as opposed to cutting their
losses and running
According to Utilitarian approach Retailers have to stay at Bangladesh and help to improve the
conditions for greater good
And they must help in preventing the accidents in future for preventing the greatest amount
of harm
Even if they leaves the Bangladesh, The same situation may arise at the shifted location or
country of operation
So the Decision taken by the Disney to announce one-year phase-out of all manufacturing in
Bangladesh is not at all Ethical which is influencing the other retailers

The Rights
is Rights approach?
Ethical action is the one that best
protects and respects the moral rights
of those affected.
Each person has a fundamental right
to be respected and treated as a free
and equal rational person capable of
making his or her own decisions.
Even if not everyone gets all they
want, will everyone's rights and dignity
still be respected?

One can outsource

but they cannot
of production
Disney Case
outsource corporate responsibility.
Companies need to identify risks in their supply
chains and to try to prevent these risks from
materialising. If these do materialise, companies
should try to mitigate or remediate them.
Theaccordon factory safety signed by companies
operating in Bangladesh and the Alliance for
Bangladesh Worker Safety lifts responsible business
conduct to a new level, by making a voluntary but
binding agreement between companies and trade
unions to do due diligence on building security and
safety training..
If a breach of the OECD guidelines occurs,
companies should first use their influence to try to
improve the situation in their supply chain. If they
lack the leverage to do so, they should try to
increase their influence.
Improvement is the best solution. Disengagement is
the last resort.

The Justice Approach

What is Justice approach?

Analysis of Disney Case

It says that our actions should be such

that they are fair to everyone

As Western apparel companies had been taking the

advantage of cheap Bangladeshi laborers for so many
years and Bangladesh was the second largest apparel
exporter with $18 billion & 3.6 million garment
workers i.e. that was bread and butter for so many
families, they had an obligation upon them.
They cant leave the country without taking care of
the families i.e. Improving working conditions over
there, whom they had exploited for so many years.
There is no injustice that in order to increase profit,
companies would look for low cost area and laborers,
but that interest should not exacerbate others
conditions, i.e. if they leave without improving their
condition, it would be difficult for them to search for
an another option of livelihood.
Its not fair enough if any company takes advantage
of any familys poverty and exploits that family giving
lowest possible wage, as there is hardly any other
way for that family.

All ethical decisions must be based on

the principal of fairness
The ancient Greek philosopher
Aristotle, who said that "equals should
be treated equally and unequal
The basic moral question in this
approach is:
a) How fair is an action?
b) Does it treat everyone in the same
way, or
does it show favoritism and

What is our view?
We think that Disney did was not
Bangladesh is one of the poorest
country in the world.
Nearly 4 million people, mostly women
work in the factories for wage of less
than 80 INR per day
Closing down factories will stop their
means of livelihood which will further
deteriorate their living conditions and
drag them towards prostitution or
even suicide
It is not ethical to just exploit the
cheap labor and run when situation
demands some payback
When Disney leaves another retailer
will take its place to exploit the cost
structure and the problem will migrate
to the next low-cost region free of the

What should be done?

We believe instead of cut and run the western

retailer should
stay and improve
Companies often fail to realize that investment
towards employee welfare can benefit the company
in terms of employee retention and business
We think it's important for companies to make a long
term commitment to stay in countries like
Bangladesh, to work with each other and to recognize
that they can't keep running after the cheapest
labour cost.
Companies should come together and find out a way
to improve the condition as well as make profit.
For example, Twenty big companies like Adidas, Nike
along with the World Bank and the U.S. government
came together and built a stitching centre in Sialkot,
Pakistan to improve the living condition of children
employed there. This could serve as a model for
Western retailers invested in Bangladesh

Thank you