Motivation of Oliver Cabell’s commitment to transparency
Oliver Cabell’s commitment to transparency is motivated by morality. The start-up’s founder, Gabrielson, spent time learning about the scandal that led to the collapse of the Bangladesh factory in 2013 (Kline). The factor collapsed after its deplorable working conditions were exposed. Additionally, Gabrielson found out that the majority of big designer brands were producing their bags under the same inhuman conditions.
He also visited a factory in Asia and witnessed in person the disgraceful working conditions that workers had to operate within while making unprecedented profits for companies in the West. Based on this experience, Gabrielson decided to start a company that would employ different production strategies to ensure better working conditions. In this new model, Oliver Cabell would produce high-quality bags and sell at affordable prices by sourcing materials directly and selling directly to the consumers. Therefore, given this information, it suffices to argue that Oliver Cabell’s commitment to transparency is motivated by morality, not profits.
‘Good’ and ‘bad’ profit in business
One of the main reasons why businesses are established is to maximize shareholders’ value and make money. However, for the achievement of this goal, various aspects are involved. The difference between ‘good’ and ‘bad’ profits is the social and human costs involved in business operations. If organizations meet their full social and human cost obligations, their earnings could be considered ‘good’. For instance, in the case of the Bangladesh factory, meeting the human cost would require the management to ensure proper and decent working conditions. Human dignity should not be lost in the quest to make money.
Workers should be remunerated reasonably in tandem with the returns that they generate. If a company is making millions in earnings, even the junior employees should feel the effects, by getting bonuses or better salaries. However, if organizations do not meet these requirements, the profits made therein are considered ‘bad’. Making unusually high net income at the expense of exploited human beings (workers) is unethical. For example, the companies profiting from the Bangladesh factory situation were making ‘bad’ profits.
Similarly, organizations need to pay the social cost of doing business. Social costs include environmental pollution and any other activity that affects society negatively. Therefore, for companies to make ‘good’ profits, they should pay for the damages.
For example, if an organization’s operations cause pollution, it should pay to clean it up. The money generated after being socially responsible is ‘good’ profits. On the other hand, a liquor company may decide to sell its products to a community with alcoholism problems. Such business actions would lead to family strife and social instability among other associated issues. Such a company could be said to make ‘bad’ profits.
Morality of the large profit margins commanded by the high-end brands
From the perspective of ‘good’ and ‘bad’ profits, the large earnings commanded by the high-end brands are immoral. The majority of these companies employ unethical business processes, such as exposing workers to deplorable work conditions. For instance, when Gabrielson visited Asia in 2014, he discovered that workers were operating under inhumane conditions to produce bags at less than $100 only for the same items to be sold for over $1200 in the US (Kline).
For such high returns to become moral, they should trickle down to the factory workers, who will have improved working conditions and better pay. Nevertheless, these high-end brands justify their prices and profits by arguing that they incur huge costs in rent and other related expenses including marketing to create and maintain brand awareness. However, this position does not justify such huge earnings. Businesses should not operate with the sole purpose of making money. Other factors like the welfare of the involved parties and the ultimate social good should be considered.
Oliver Cabell’s relationship with its customers and suppliers
Oliver Cabell is concerned with both suppliers and customers. In most cases, companies focus on customer satisfaction at the expense of all other stakeholders. However, Oliver Cabell seeks to ensure the ethical production of its products, and the management is sharing this information with customers for informed buying decisions. Consumers are becoming conscious of how companies source their raw materials.
For instance, ethical consumers would not want to purchase goods where child labor is involved in the production process. Most companies do not share this information with their customers. However, Oliver Cabell is transparent with its operations, and this aspect strengthens its relationship with customers and suppliers. The start-up is likely to have loyal customers because they can make the right purchase decisions based on the information provided to them.
Oliver Cabell’s pricing
Oliver Cabell’s pricing is lower as compared to other high-end traditional brands in the industry. The adopted business model determines the company’s price point. First, operational costs have been reduced significantly by using an e-commerce business model. As such, the firm does not need to pay for expensive showroom space. Additionally, the company is selling directly to consumers, and thus it eliminates distribution costs and fees for retailers. Oliver Cabell is also sourcing its materials and working directly with factories. As such, the start-up is in a position to produce high-quality items and sell them at an affordable price, while making ‘good’ profits in the process.
Work Cited
Kline, Kenny. How This Fashion Startup is Blending Ethics with Profit. 2016. Web.