2-1 Case Studies_ Incident E_Shay Rogers

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Southern New Hampshire University INT-400-H1646 International Business Project 2-1 Case Studies: Environmental, Economic, and Social Risks Professor Ed Jarvis Shay Rogers

AllStar has made the decision to establish a factory in Peru after conducting an analysis of the relative costs of production, distribution, and tariffs. Prices in Peru are much cheaper than at the company's home plant in the United States (for example, it costs 20% less to produce a small economy tube of toothpaste in Peru). In the past, the production facility in the United States (also known as the "home plant") was responsible for producing 200 million units for Latin America. Nevertheless, once the factory in Peru is finished being constructed, AllStar will begin servicing all of Latin America from the plant in Peru itself. Because of this, it is no longer necessary for the facility in the United States to create the 200 million units. Due to the fact that AllStar now has an excessive amount of excess capacity in the United States, the company has made the decision to shut down one of its manufacturing facilities located in the United States. While you have hired hundreds of people to work in manufacturing in Peru, you have let go of nearly the same number of people in the United States (Deresky & Miller, 2020). Explain All Star’s responsibilities in the United States when shifting production overseas The idea of international social responsibility, or what is more commonly referred to in the business world as CSR, or corporate social responsibility, includes the expectation that multinational corporations (MNCs) should be concerned about the social and economic effects of their decisions on activities in other countries, and that they should build appropriate provisions into their strategic plans to deal with any effects that may be caused by those decisions (Deresky & Miller, 2020). AllStar should give considerable thought to its obligations and the potential consequences before making a decision to move manufacturing overseas. AllStar's responsibilities and operations in the United States and Peru, along with any unforeseen outcomes, are outlined here. MNCs must balance their responsibility to various stakeholders,

such as owners, creditors, consumers, employees, suppliers, governments, and societies. Firms with a long-term perspective recognize the need to consider all of their stakeholders in their business plans (Deresky & Miller, 2020). As the plant shutdown will have repercussions on the surrounding community, AllStar must take such effects into account. When a firm closes, it can cause economic hardship in the surrounding area. To alleviate this, the company may explore retraining programs, local business support, and community development activities to help the people around recover. AllStar is responsible to its American workers during the workforce transition. Workers should be given sufficient time to locate new employment, and the company may provide severance pay or retraining opportunities to help them through the process. Also, make sure we’re following all the rules when it comes to closing a facility or laying off employees, including notifying any applicable government organizations or labor unions. Lastly, AllStar should protect the company’s good name by keeping an open line of communication with staff, government officials, and the general public as the company undergoes this change (Deresky & Miller, 2020). Detail how AllStar should manage its community relations in Peru AllStar should make locals its top employment priority if it wants to boost the economy and have a negligible effect on society. Respect local environmental laws and put money into eco-friendly production methods to keep our planet habitable. Participate in the community to learn about its problems and needs. Think about CSR programs like helping out with local healthcare, education, and infrastructure efforts. Be aware of, and respectful of, the cultural norms of the communities in which you do business. Build trust and a good name in the neighborhood by

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keeping lines of communication open with local officials and interested parties (Deresky & Miller, 2020). Describe what might be the unintended consequences of moving production overseas Maintaining high standards of quality and uniformity when manufacturing is outsourced to other countries can be difficult, which can lead to unhappy customers and product recalls. Despite the fact that lowering manufacturing costs is a main motivator for expanding overseas, the company's bottom line might be negatively impacted by economic swings or changes in tariff legislation(Deresky & Miller, 2020). The morale of the surviving employees may take a hit if a large number of people were laid off in the United States, which could have repercussions for both productivity and business culture. Disruption of company operations is possible if AllStar is unable to access the Latin American market as a result of political or commercial concerns in Peru (Deresky & Miller, 2020). To guarantee long-term success, AllStar must thoroughly evaluate these obligations and their potential outcomes, develop efficient risk management measures, and maintain a firm dedication to ethical, sustainable, and responsible business practices in both the United States and Peru.

References: Deresky, H., & Miller, S. R. (2020). International Management: Managing Across Borders and Cultures, Text and Cases (10th ed.). Pearson Education (US). https://mbsdirect.vitalsource.com/books/9780135898048

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