Task 2: Decision making
Skills focus: creativity, individual and group decision making, listening, debating,
oral presentation
A rising brand faced with crisis
You are the co-owner and manager of a middle size garment factory producing
fashionable women garments for all seasons. It was your dream to start a
sustainable and responsible brand. After 10 years of corporate experience, you quit
your previous job and put all your savings into this new business. Your co-founder is
a very good friend of yours and you trust each other fully. You have started three
years ago with an on-line selling shop offering fashion designed locally. With your
enthusiastic fashion designers, who support ethical fashion, you have launched your
own line of clothes and started to develop your own brand - NUL. Your clothes are
simple, high quality and original, made mostly of linen and cotton. You founded the
company assuming a growing number of people are looking for original and ethical
fashion that cannot be found in popular chain stores. And you were right. Sales grew
very quickly.
One year ago, you have opened one store in the capital city and it has been a huge
success. Your label is recognized as new, niche, reliable and eco-friendly. Definitely
not a mass scale type of product. Your customers value that it is ethical, locally made
and socially responsible. And they are ready to pay premium prices for that.
However, launching direct retail sales has raised your operating costs significantly,
well beyond your predictions. The rent is very high, maintenance and employee
costs as well. Your company has been struggling financially. You do not want to raise
your prices. You are looking for ways to decrease costs. For this reason the
production of one collection of clothes has been subcontracted to a small garment
manufacturer in Bangladesh. His average price per batch (including shipping costs)
was only 40% of what you have to pay producing locally. You wanted to test the
quality and see if the quality of this subcontractor is as good as your was local
manufacturers.
You were not aware where specifically the clothes are manufactured in Bangladesh.
Your subcontractor assures you the quality will be even better than before and that
his factory is famous for top quality. “Leave everything to me”, he says.
A week ago you have heard on the news about the collapse of a multi-story factory
garment in Bangladesh. 1200 people were proclaimed dead and 2000 injured.
Yesterday you have received an email from your subcontractor and found out that
your new collection was being manufactured at Rana Plaza and you realize that NUL
labels might be found in the ruins.
In the first hours and days after the tragedy only one company has claimed
responsibility and offered compensation to the victims at $200 per family, based on
the DNA tests. This evoked protests. People demanded compensation from the
owners of the multiple brands manufactured at Rana Plaza. These giants, such as
Walmart, Timberland, Tchibo, GAP and LPP almost all issued statements declaring
that the workers’ safety is the responsibility of factory owners and Bangladesh
government agencies. They all condemned lack of safety control and poor working
standards in these factories and obliged their subcontractors to sign an Accord on
Factory and Building Safety in Bangladesh.
You have been following the debate in the news and the press is critical towards the
companies who have rejected to take responsibility. Your partner agues that it is not
your responsibility to inspect other firm’s work safety whether is it your country or
abroad. Yet you both had a suspicion that the low price of you were offered may be
associated with violation of labour and safety rights.
Now you must decide what to do. You cannot afford to claim responsibility and pay
compensation to the families of workers involved in manufacturing your line out of
your small budget. You have no idea which of the victims worked for NUL
subcontractor! It is impossible to establish. Your subcontractor cannot be reached.
News reports inform that all those acting as subcontractors for brands manufactured
in Rana Plaza have fled and are nowhere to be found. Thay face charges. The
survivors claim that for weeks they have been reporting cracks in the walls and have
refused to work. Some have been laid off in effect, others threatened to lose their
jobs.
Will you sit tight and hope your labels will not be found? But what if they will? The
risk is huge. You might also follow the industry standards and declare that you are
only responsible for employees you employ directly. What will your customers think?
Will they stay loyal to you? You are brainstorming these and other alternatives with
your business partner. You must reach a decision that will enable you to save your
business...
Preparation at home - make notes on the below points:
1. Make a list of facts. What do we know about NUL? Who are the customers
and what do they expect? What are the priorities of the firm right now?
2. Prepare your own decision. Apply the rational decision making framework.
What are your decision criteria? What are your realistic alternatives?
Develop and explain at least three. Reach your individual decision before
you come to class.
3. Feel free to ask for advice experienced managers.