One of the ways a firm can improve its profit picture is by reconsidering its location. Different locations affect the cost of labor, the regulatory environment in which the firm must function, the tax burden imposed as a cost of doing business in a particular locale, and consequently, the value of the firm to existing and prospective owners.
CONCEPT REVIEW: Having a clear resource that spelled out the correct ethical behaviors for a business would be ideal. Unfortunately, no such guide exists for the hypothetical tire company, Smooth Ride. Instead, we need a practical method for thinking carefully about business ethics. Study the WH framework for business ethics, focusing especially on the role of values and the classical ethical guidelines that activate this framework.
Mini-Case: Use the decision making process taught in this chapter to create a socially responsible ethical decision for Smooth Ride. They know that whatever they do, they will displease people they do not wish to disappoint. Yet as with all tough ethical decisions, they have little choice but to make a decision that will allow them to thrive, while being true to their ethical vision.
Smooth Ride Tires is experiencing economic hard times. Their current revenue stream is simply not covering their costs. Although the management of Smooth Ride has not made a definite commitment yet, they are leaning toward moving their facilities to Honduras. The reasons are many. The labor force in Honduras, while not as well-trained as the American workforce, is almost half as expensive. In addition, the Honduran government has promised that soldiers will be used to stop any effort by the Honduran workforce to organize a union. Finally, the weak environmental protection laws in Honduras will provide a much friendlier production environment for a manufacturing process that is often “dirty.” The daughter of a major stockholder is threatening to go to the press to “expose” the motivations of management. How should management respond if it is going to live up to its image as “one of the most ethical firms in the modern marketplace?”