Introduction
In the year 2012, a fire tragedy in a clothing factory in Bangladesh killed more than 110 people and maimed hundreds of other employees (The Accord, 2012). The plant was part of clothing factories managed by Tazreen Fashions Ltd. Tazreen Fashions is among the largest Bangladeshi clothing supplier in Europe and North America. The plant began its operations in May 2010. Ever since then, it had offered more than 1500 jobs to the residents.
It had sales of about $35 million annually. Following the accident, it was revealed that the employees were working in unfavorable conditions. As such, the plant was poorly lit and congested. In the aftermath of the tragedy, queries arose as to who was to be answerable for the disaster.
One month after the disaster, western clothing businesses and the international organizations came up with two measures to enhance the safety of the factory workers (The Accord, 2012). In the accord and the alliance adopted, the similarities are that the two measures are aimed at improving the working conditions of the Bangladeshi factory workers.
Analysis
Retail companies doing business in emerging economies such as Bangladesh face major social, ethical, and political risks (Daniels & Radebaugh, 2012). Therefore, awareness regarding social risks in emerging countries is the major factor in international business. Several social factors affect international business in emerging economies.
Some of the factors are demography, literacy levels, varying women’s roles, and varying lifestyles (Daniels & Radebaugh, 2012). The above factors play a huge role in determining businesses’ roles and functions. For instance, literacy levels in a society determine the preferences and classiness of clients. In emerging economies such as Bangladesh, literacy levels are still very low compared to those in developed nations.
In this regard, Bangladeshi society’s preferences are not as complex as those exhibited in the western world are. When setting up a business in such countries, the international business should consider social risks, as they will determine how businesses will perform in the countries’ markets.
Political risk refers to aspects such as legal regulations and political instabilities, which affects the day-to-day activities of the business. Currently, most of the world largest retailing companies have opened their stores in third world countries (Daniels & Radebaugh, 2012).
Because of this, it is necessary for the firms to abide by the laws of these countries. The laws stipulate the lowest wage, the maximum working hours, and health and safety regulations (Daniels & Radebaugh, 2012). Similarly, the sector has to be watchful for political instabilities. Any political disagreements in any of these nations could have disastrous impacts on the retail companies.
Ethical values are usually based on a country’s culture. Thus, the differences in ethics from one country to another in the emerging economies are a challenge to international businesses. Ethical decision-making processes are usually difficult for international corporations than local corporations (Daniels & Radebaugh, 2012).
As such, it is very hard for managers to stick to a firm code of ethics in each country. Owing to this, international corporations’ managers should understand how to tackle dissimilarities in ethical values in different nations.
There are many legal risks faced by international business in countries where there are no rules whatsoever that cannot be bent. As such, in these countries, the ruling governments formulate laws that suppress individual freedom (Daniels & Radebaugh, 2012). Such governments control the total power over organizations, individuals, and business under their jurisdiction. Through this, they manage to have total control over their economies.
Based on the above illustrations, it is apparent that such countries pose a lot of legal risks, both local and international businesses. Owing to the nature of administrations in these countries, business laws are usually absent, imperfect, or changed subjectively without any transparent process (Daniels & Radebaugh, 2012).
Similarly, senior government officials may interpret business laws to fit their motives. Due to the inherent risk of operating business in such counties, clients should always consider their possibilities of expanding their business to such nations. If need be, the client should become familiar with the regimes’ organizations, higher administration leaders, and the countries’ due processes.
More often, when doing business in emerging countries, employees are often faced with local expectations of a payoff and bribery (Daniels & Radebaugh, 2012). Concerning my employees, I would advise them not to engage in such acts. Usually, in the emerging economies, cases of payoff and bribery are very common.
The cases have been worsened by international businesses competing for local contracts. Despite its widespread practice, it should be noted that the acts are prohibited in such countries. The fact that a hurtful act is widespread does not imply that it is suitable. Therefore, I would advise my staff to work hand in hand with those fighting against corruption in those countries.
If some of my staff members are among those engaging in bribery or any other form of corruption, I will form a disciplinary committee to look at the issue. I would inform my staff members that engaging in such acts may put the company and the involved individuals in jeopardy.
Engaging in such practices may be repugnant to them on an ethical basis. Similarly, the acts may expose them to threats of legal charges and deregistration from their professional bodies.
Most often, employees may find themselves in difficult situations when they refuse to participate in bribery in corrupt countries. Declining to take part in the practices may put their career at risks. During such times, I would seek guidance from the outside my organization.
For instance, counsel from professional bodies would come in handy during such times. In the absence of guidance, I will advise my staff to abide by the existing regulations on bribery or corruption. If my staffs distance themselves from corruption issues, they may suffer in the short term.
However, in the long term, their initiatives will attract the attention of those fighting the vice. Through this, they will be rewarded. Equally, the organization will gain loyal customers and non-corrupt organizations to work with.
The international customers of Tazreen Fashion LTD have the liability to ensure that the company’s employees have a safe working environment. Of late American clothing, companies have shifted their factories to emerging countries to exploit the cheap labor in the region. Based on the Tazreen Fashion LTD case study, it is apparent that employees in emerging countries are working in an unsafe environment.
Given that we in the western world are the consumers of these clothes, we should force the factory owners to improve the working conditions of these employees. If they refuse to obey our demands, we have a right to boycott their products. Consumers should mind about the welfare of those who toil to produce their products. We should not enjoy from the miseries of others.
The most essential of all measures is to force clothing companies to release to the public all the information regarding Bangladeshi clothing factories. Through this, the public can evaluate whether purchasing a low-cost piece of clothing is more significant than safeguarding the welfare of the factory employees.
After the disaster, western clothing businesses and international organizations came up with two measures to enhance the safety of the factory workers (The Accord, 2012). In the accord and the alliance adopted, the similarities are that the two measures are aimed at improving the working conditions of the Bangladeshi factory workers. There are a number of differences between the two measures.
The Alliance comprises of a number of companies from North America (The Alliance, 2012). Through the Alliance, the companies have vowed to undertake comprehensive initiatives to ensure that the welfare and working conditions of Bangladeshi factory workers are enhanced.
The initiatives will be implemented within a period of five years. The Alliance offers clothing companies and vendors the extraordinary chance to unite and implement comprehensive answers to matters that affect the international attire and retail industries.
On the other hand, the Accord is a lawfully binding treaty. Two international trade unions, Bangladeshi workers’ unions, NGOs, and international clothing companies in North America, Australia, Asia, and Australia signed the agreement (The Accord, 2012). Based on the Accord and the Alliance’s mandate, I believe that the Alliance would be more successful in achieving its goals.
Unlike the Accord, the Alliance is made up of more members from both the factory owners, unions and NGOs. The NGOs and the unions would put pressure on the Alliance to ensure that the goals are met within the stipulated time.
On the other hand, the Accord may not achieve its goals because it is only made up of clothing companies. The companies might not meet its goals because the companies would work towards safeguarding their business interests first.
Based on the debate on the New York Times, I am convinced that State capitalism will alter the functions of free markets and eventually change globalization. In the past few years, governments of emerging countries have become cautious of letting international companies into their territories (Daniels & Radebaugh, 2012). Through this, they are protecting their local businesses and interests from competition from local companies.
As such, these countries select the nations that they want to do business with, choose the zones to allow capital investment, and pick the home or the state-owned businesses they want to endorse — the above initiatives harm globalization.
I will not stay or operate in a State Capitalism market. The market will be unfair for my business operations because the government might put in place measure to disadvantage international companies. In such a situation, my company will make huge losses that might affect its stability in the future.
Conclusion
Globalization has made it possible for international companies to expand their business worldwide (Daniels & Radebaugh, 2012). The experience has been exciting and frustrating for some companies. Some companies have found it very hard to establish a business in emerging markets due to the social, ethical, and political risks in the regions.
As a manager, through the analysis, I have learned that to venture into such markets, the above risks should be evaluated to determine how they would influence business.
Because of this, it is necessary for my companies to abide by the laws of the host countries. Such laws stipulate the lowest wage, the maximum working hours, and health and safety regulations. Similarly, my companies should be watchful for political instabilities in the countries they operate.
References
Daniels, J. D., & Radebaugh, L. H. (2012). International business: environments and operations (14th ed.). Reading, Mass.: Addison-Wesley.
The Accord. (2012).The Bangladesh Accord on Fire and Building Safety. Web.
The Alliance. (2012). Alliance for Bangladesh Worker Safety ât Home.