INTERNATIONAL BUSINESS QUESTIONS

DISCUSSION 1

In December 2000 the Ohio Art Company, known for their all-time classic toy Etch-A-Sketch, maid the strategic decision to outsource the production of its toys to a China based company called Kin Ki factory (Hill , 2013). Outsourcing in America has been a longstanding 21st century problem with key talking points from both sides (Miranda , 2013). For example, some argue that outsourcing is a necessity for American business's to remain competitive while others argue that the outsourcing not only ships American jobs overseas but also sends those jobs to poverty stricken countries who take advantage of their citizens (Miranda , 2013). In the case the Ohio Art Company, I believe their business decision to outsource was necessary and their intent behind the transition was within ethical boundaries of standard business practice. However, while their intent may have been ethical the end result was not, according to the New York Times (Hill , 2013). In the end The Ohio Art Company position in their decision to outsource was re-active rather than proactive as they did not follow up with the working conditions within Kin Ki factory, conditions they said were within ethical and legal standards. There are five steps the Ohio Art Company can take to make sure they do not find the company profiled in The New York Times article again (Hill , 2013). These steps are, does the decision affect internal and external stake holders? Does it affect the fundamental rights of any stake holder? Do moral concerns take precedence over other concerns? Does the company that will be acquiring the outsourcing engage in ethical behavior? Did the company audit their decision and make the appropriate changes? In regards to the Ohio At company's decision to outsource, they did consider take into consideration the first two steps. For example, while the decision to outsource does affect both internal and external stakeholders, the decision not to outsource negatively affects both because without it they cannot survive financially (Hill , 2013). The second decision, does it affect the fundamental rights of any stake holder? does not apply as the decision to outsource did not violate any of their current stakeholder's fundamental rights. In closing, Step 3 thru 5 become problematic for the Ohio Art company because it doesn't seem like they thoroughly investigated the Kin Ki factory. For example, when asked to comment about the New York Times article, the Ohio Art company's CEO stated "he considered Kin Ki's executives to be honest" further commenting that he had no knowledge any labor issues associated with the company (Hill , 2013). If the Ohio Art company had effectively followed step four and five they could have prevented the New York Times article from taking place and more importantly ensured that ethical and moral practices were taking place, an ongoing issue that continues to plague outsourcing today (Miranda , 2013). After reviewing the information provided in our text, the Ohio Art Company did execute decisions 1 thru 3 however; decision 4 was not conducted thoroughly as the company just took Kin Ki factory's word for how employees were treated. Lastly, the Ohio Art company did not immediately follow through with the outsourcing decision, specifically the working conditions of the employees. Instead, they responded only after the New York Times article was released. References Hill , C. L. (2013). International Business . New York : McGraw-Hill Irwin. Miranda , K. (2013). Small Business . Retrieved July 09, 2013 , from Chron: htp://smallbusiness.chron.com/pros-cons-ouotsourcing-it-1773.html

DISCUSSION 2

Question #4 What Steps can executives at the Ohio Art Company take to make sure they do not find the company profiled in The New York Times again as an enterprise that benefits from sweatshop labor?

It seems that working conditions, hours worked, and wages seem to be a concern in many outsourced work. The textbook uses some examples of this; some were considered illegal practices in their country, while the others were not. I think it is a shame that these foreign companies would treat their own country members so badly for another country just for money. I feel that as globalization is reaching more countries, that there should be one currency and standard of living. This would prevent having to move to another country to save money. If everyone were on the same currency and same cost of living, this would not be a problem.

To solve question four, there are a couple options. The first option could be like Apple did with Hongfujin Precision Industries. You can perform an audit and make sure they are up to Ohio Art Company’s code, if they have even created a code for outsourcing (Hill, 2013). The problem with this is how often do you perform an audit, and do they know when the audit is. A lot of companies will make everything look good for the audit and then things go back to an unethical way. In the army, every time we knew a general was coming by, we made sure we acted completely by the book, even though that was not our normal actions.

Nike had issues with its subcontractors, even though it met all the laws of the country it was operating in (Hill, 2013). They still are having problems, in 2010 a subcontractor in Honduras laid off 1800 workers without notice. It appears that there was an issue when the workers tried to form a union. The workers claim that under Nike’s code of conduct, they should get severance pay. Nike only paid when they were pressured from students and universities who have their apparel produced from that factory (Bustillo, 2010).

The only way those executives can prevent this from happening from with Ohio Art Company is to start with a code for all their subcontractors. To enforce this code they must have an employee or team of their own that works with the subcontractor. This team will monitor the outsourcing companies and make sure all regulations are followed. This might cost a little more to hire an audit team, but a lawsuit will be more costly in the long run. If problems persist, I am sure there are ten other companies that would love this contract and perform them within the company’s codes.

Bustillo, M. (2010, July 26). Nike to pay some $2 million to workers fired by subcontractors. Wall Street Journal. Retrieved from http://online.wsj.com/article/SB10001424052748704700404575391551065295316.html

Hill, C. (2012). International business. (9th ed.). New York,NY: McGraw-Hill/Irwin.