Question

In: Operations Management

In a capitalist society, it is the mission of private industry to make a profit. The...

In a capitalist society, it is the mission of private industry to make a profit. The more profit made; the better the company can establish competitive advantage. Those who do not pursue profit maximization usually fall out of competition and go out of business. In the apparel industry, approximately 60% of cost of goods sold is in labor. The manufacturing sector of the apparel industry began leaving the United States in pursuit of lower cost labor. They accomplished this by relocating some or all of their manufacturing base to low wage countries. With implementation of NAFTA and the Caribbean Basin Initiative, Mexico and the Dominican Republic were the beneficiaries of much of this production. As China and other areas in the Far East were opened to business ventures, much of the production moved from Mexico and the Dominican Republic to China, Viet Nam and a few other countries in that region. The difference in wages was dramatic. The range of hourly labor costs (indirect and direct) spanned from $13.00 in the U.S., to $2.25 - $2.50 in Mexico and the Dominican Republic, to $ .50 in the Far East, a 96% reduction in labor cost over domestic manufacturing. In the pursuit of lower labor costs and higher profits, the idea of social responsibility arises. Many workers were left jobless, and, especially in the developing countries, very little opportunity to find other employment. The apparel industry's defense has been that if it had never located to any of these areas, the people would be no better or worse than after the companies left.

In one concise, well-written paragraph of no more than 300 words, defend the apparel companies’ right to pursue profit as described. The object is for you to use information you learned in all of your Business courses to write this defense. Using business terminology and concepts is critically important. Do not include the above paragraph with your work.There is no need for a bibliography or references because this is not a research paper. It is an exercise in creative business writing. One-hundred percent of your paragraph must be your concept and writing. Think of yourself as the spokesperson for the apparel industry. The major networks are interviewing you and asking the above question. How do you answer?As a separate piece of advice, do not use excerpts from the problem set-up. You may use terms such as social responsibility but do not use whole thoughts from this paragraph.

Solutions

Expert Solution

solution-

As we all know that we Strive to give the Best of our Ability to our Customers, who are our King. You might well be aware that in the recent past the Apparel Industry as a whole Struggled to make ends meet and that resulted in the High cost of the Goods and subsequent burden to our Customers. And as the concept of Globalization grew, we were faced with heavy competition which further hurt our cost lines and the industry began to see a downturn. Now, as a Business, if we decide to continue the way it is today, we may not be relevant tomorrow in the industry.

There is a saying that, to gain something you need to loose something. On those lines we have decided to Outsource our Manufacturing process to Mexico and neighboring area owing to the availability of quality resources at economic price and due to our inability to continue the manufacturing at the existing units. However , our quality would never be compromised and we ensure that we deliver the same quality of apparels to our customers at an existing or a little lower rate so that we could make our customers happy and see a smile on their face.

Over the past few years we noticed that the Globalization and automation had took a toll on our strategy to manufacture in Mexico and it has again began bleeding into our cost lines. To keep up the promise we made to our customers, we had to undergo some litmus test and take bitter decisions to keep up the Promise. Thus we have, with a heavy heart, have decided to begin Manufacturing in China, which will provide us with the competitive advantage of cost and time and help us beat our competition, remain in business and serve our Customers in the same way we used to do.


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