Answer: Ohio Art Company’s Decision Essay

Most of you did well on questions 3 and 4, so here I post only sample answers to questions 1(a) & (b) and 2:

1(a) & 1(b): Question on whether moving production to China is ethical; Question on the economic and social costs and benefits of such a move.

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Answer: Ohio Art Company’s Decision Essay
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Sample Answer (A)

Note: this student earned high grades for looking at the issue from multiple perspectives, for looking at the benefits and costs to all major stakeholders, and for acknowledging that moving productions overseas is a controversial topic.

Excellent use of facts to support his/her claim.

1. Whether or not Ohio Art Company’s decision to shift production offshore was ethically wrong is a controversial topic. In strictly business terms, Ohio Art Company (OAC) did not break any laws or perform an illicit act; OAC’s decision to offshore was one that had few other options – if the company did not find ways to lower production costs, the company would have eventually gone bankrupt.

If production had not been moved, OAC would have been unable to lower production costs, and would therefore be unable to generate enough profits to continue business. Either way, OAC employees would have suffered job losses. Furthermore, OAC’s decision benefited shareholders, which is one element of judging an ethical decision; there are no standards that prohibit off shoring. However, OAC’s obligations to its employees are something that must be considered as well. The company, which is perceived as a family, should not just abandon its employees; it this sense, the company holds moral obligations and employment practices which complicate the question of whether outsourcing is ethical.

Sample Answer (B)

Note: This student combined 1(a) and 1(b) but made it perfectly clear. Again, the student considered the question of ethics from multiple perspectives, and weighed the benefits and costs to various stakeholders and clearly defined what standards (s)he adopted.

1. The question asked is the one about social responsibilities of corporations. Nevertheless, before making an ethical judgement, one has to look at the decision from at least three perspectives: economic, social and macro-level. On the one hand, it is possible to enumerate a lot of economic benefits for both the US and China. American consumers gained lower prices (an increase in wealth) and poor Chinese villagers were able to move from the impoverished countryside and start a new life in cities[1]. Furthermore, Ohia Art did not go bankrupt, which means that the company and its owners are still a source of revenue for the federal and state government.

As to social costs (here the social responsibility of an employer comes into discussion), the closing of a factory resulted in the collapse of the local community. Furthermore, 100 workers lost their jobs and this number is big if we take into account that Bryan has only 8,000 inhabitants. Such a conduct of a company can be considered a violation of ethical obligations springing from the position of the company. Nevertheless, the company did not make any abrupt changes. Moving out of Bryan was gradual and most workers were probably able to find new jobs[2]. Moreover, even though the company does have social obligations, the Friedman Doctrine is at least partly relevant: a company has to seek profits in order to survive. Summing up, in order for the decision to be ethical, the company should seek profits, but also minimise social and this is what Ohio Art surely did.

Question 2: Whether it is ethical for Ohio Art to continue employing Kinki

Answer A

Note: This student acknowledges that there are many ethical standards, not all of which lead to the same conclusion. S(he) clearly shows how the same set of facts can lead to divergent conclusions.

This issue can be analysed from multiple perspectives. From the cultural relativist point of view, the fact that the Chinese authorities turn a blind eye to such practices means that the company should do the same. According to the righteous moralist perspective, the company should desist cooperating because doing so would be applying double standards. The proponents of the naïve immoralist views would claim that since the Chinese businessmen have problems with property rights or keeping the RMB undervalued, western employers should not comply with ethical standards in China. Nevertheless, since the view that human rights are undeniable rights of every human being is now widespread (judging on the number of NGOs and governments supporting such a view), it seems to be reasonable to assume that human rights are a benchmark of what constitutes business ethics. From this follows that the Ohio Art should desist cooperating with Kin Ki, because the contractor violates basic rights of the workers as enshrined in the United Nations Universal Declaration of Human Rights (e.g. the right to just and favourable remuneration).

Answer B
Note: Very thoughtful analysis that considers the different economic situations in different countries.

Assuming that the dismal working conditions of Kin Ki employees is true, it seems unethical for Ohio Art Company to continue manufacturing with Kin Ki. Again the clear line between what is ethical and acceptable is hazy. However, Ohio Art Company secured a contract on the grounds that employment practices were acceptable, and human rights were enforced. The living conditions of Kin Ki employees are far from decent living conditions – employees are exploited, work long hours, paid below standard requirement, and live in impoverished conditions. It also seems as if labor unions are implicitly forbidden (though not formally stated). The question of “how much divergence is acceptable” between living conditions between the U.S and China still exists, however, it seems that basic human living conditions are being denied at Kin Ki. ———————–

[1] In general, outsourcing seems to be a general trend of globalisation. The division of labour is one of the greatest inventions of humanity and now it is rapidly spreading into the international area. As the Ricardian model of trade predicts, the division of labour will benefit all sides in the long term [2] The other question is whether the company should provide their employees with a training so that they can find new jobs, or whether training programmes should be financed by the state as in a Dutch-Danish flexicurity model. I would say that a company having financial problems (which is the reason for outsourcing) should not be forced to incur further costs.

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