Question

What are the pros and cons of current labor practices in international locations? Are such practices ethical?

Answer 1

Solution:

Pros:

• The cost of labor in international locations is very low, this makes the businesses save their labor costs and hence it directly impacts their profit and results in improved profits because of cost reduction due to cheap labor from international locations.
  
• The cost of doing business in international locations is very low, apart from labor, the other factors such as raw materials, manufacturing are very much cheap and hence pose for a lucrative option for businesses.
  
• Most of the international locations with low-cost labor are in developing economies which also have a strongly growing economy, hence Exp[adding operations in such countries becomes easy because of already resistant cheap labor options.

Cons:

• Supply chain issues arise because of manufacturing operations or service operations in international locations. This can have adverse effects on the business if the supply chain of the business is disturbed because of external factors affecting the business operations in international locations.
  
• Most companies fail to follow adequate safety standards in such international locations which may also result in loss of life in many situations. For example the Adidas case in Bangladesh. This can attract social workers and the UN and can damage the brand.
  
• The quality of the labor may not be in our control because of international operations. Also, there can be many legal and regulatory obligations that need to be cleared before the company can invest in the international location to avail of the cheap labor.

These practices are ethical or unethical is a question that has different answers based on the business we are concerned with. Many companies do follow strict ethical practices in international locations however it is not necessary that all the companies follow the ethical standards that are required by the business. Because of poor regulations, businesses may sometimes exploit such international operations for their own benefits. Hence, whether the companies are ethical or unethical depends on individual businesses.