Question

You run a large corporation and you were recently approached by an outsourcing company that said it could manufacture your product for less money and the same quality using overseas labor. Based on our class discussion, what is an appropriate approach to making the decision from an ethical and business perspective?
1) Look in the United States Companies Guide to Behaving Ethically Guidebook and do.
what it says.
2) Consider the impact on the various stakeholders, review the law. consult with others, and then make the decision with your rationale firmly in place.
3) Use your leadership role and abilities to take charge and quickly and decisively make the decision without bothering others and getting stuck in committees.
4) Maximize the profits. If you make more money, do it without the need for further time wasted looking at other issues.

Answer 1

The answer to the question is 2

The main objective of any business is to create share holders wealth and add value to its stake holders. Though maximising profits are important, but they are short term objective. One must take into account the impact it has on the various stake holders of the organisation. Like the loss of jobs of the of the employees etc. more over out sourcing some work increases the risk of loss of quality control. Other important decisions should include the legality of the Transaction.

Taking a look at maximising profitability, if the outsourced company is involved in any illegal activities like Child Labour, this would lead to a public outrage and the future revenues may decline and it would lead to share holders wealth being eroded. (this happened with NIKE in 1995, 2006)