How you structure the follow is up to you. Instructions: • Compare and contrast the following two case studies. • Discuss and comment upon the different attitudes the two companies had towards the idea of offshoring. • Evaluate the plans of action both companies took and argue for which company you think was the most ethical and/or ‘smart.’ • What important points do you feel that future businesses can learn from these case studies? • Be sure to use at least two economic theories along the way for support. Perhaps you will want to use contrasting theories, such as Shareholder vs Stakeholder, or perhaps Social Darwinism vs. Ethic of Care. • Since this is an essay, try to have a central point that you are developing along the way, which will be important to your conclusion.
How you structure the follow is up to you. Instructions: • Compare and contrast the following two case studies. • Discuss and comment upon the different attitudes the two companies had towards the idea of offshoring. • Evaluate the plans of action both companies took and argue for which company you think was the most ethical and/or ‘smart.’ • What important points do you feel that future businesses can learn from these case studies? • Be sure to use at least two economic theories along the way for support. Perhaps you will want to use contrasting theories, such as Shareholder vs Stakeholder, or perhaps Social Darwinism vs. Ethic of Care. • Since this is an essay, try to have a central point that you are developing along the way, which will be important to your conclusion.
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Question
How you structure the follow is up to you. Instructions:
• Compare and contrast the following two case studies.
• Discuss and comment upon the different attitudes the two companies had towards the idea of offshoring.
• Evaluate the plans of action both companies took and argue for which company you think was the most ethical and/or ‘smart.’
• What important points do you feel that future businesses can learn from these case studies?
• Be sure to use at least two economic theories along the way for support. Perhaps you will want to use contrasting theories, such as Shareholder vs Stakeholder, or perhaps Social Darwinism vs. Ethic of Care.
• Since this is an essay, try to have a central point that you are developing along the way, which will be important to your conclusion.
![The second one involves Malden Mills, a textile company
(fabrics and clothing) in Lawrence, Massachusetts, near the city
of Boston in the USA. In the 80s, other textile companies in the
region had closed their Boston area factories to relocate to where
labor was cheaper, often to Asia and Mexico, but Malden Mills
decided to stay. During the 80s they survived near-bankruptcy
and decided to gamble and re-focus their production on high-
end, high-priced specialty fabrics, especially Polartec, a
lightweight, fleecy material that turned out to be very popular
with brands like L. L. Bean and Ralph Lauren. The gamble paid
off and the Polartec profits rose from $5 million in 1982 to $200
million in 1995.
The company was quite strong and successful when a crisis hit
in December of 1995–an accidental industrial fire completely
destroyed the factory. Everyone in the industry expected Malden
Mills to do the only 'smart' thing at this point and take the $100
million insurance money and reopen in a developing country
where labor would be cheaper. But they shocked everyone by
announcing that they would rebuild in Lawrence, and also they
would pay full salaries to their 3,000 employees for 3 months
and continued health insurance for 6 months.
Rebuilding in Lawrence ended up costing the company around
$450 million and keeping the laid-off workers on salary and
health benefits cost $20 million more, but the company gained a
national reputation as a business 'with a heart' and enjoyed a
very positive boost to their brand. They reopened in 1996, and
most of the original employees were hired back, as their jobs
were held for them.
As the years went by, however, the
times. Perhaps due to the amount of money they spent on
rebuilding, or perhaps it was mostly due to changes in the
marketplace, but Malden Mills had to declare bankruptcy in
2007. The family that had run the plant for generations was
forced out as another company took over, changed the name to
Polartec, reduced the staff to 800, and moved most of the
operations to other countries.
company
fell
upon
hard](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7c7b14be-49be-4193-952a-a6d3f4a18290%2F14004117-8059-492d-94ce-7c03ac7599d0%2Fog8b5z_processed.jpeg&w=3840&q=75)
Transcribed Image Text:The second one involves Malden Mills, a textile company
(fabrics and clothing) in Lawrence, Massachusetts, near the city
of Boston in the USA. In the 80s, other textile companies in the
region had closed their Boston area factories to relocate to where
labor was cheaper, often to Asia and Mexico, but Malden Mills
decided to stay. During the 80s they survived near-bankruptcy
and decided to gamble and re-focus their production on high-
end, high-priced specialty fabrics, especially Polartec, a
lightweight, fleecy material that turned out to be very popular
with brands like L. L. Bean and Ralph Lauren. The gamble paid
off and the Polartec profits rose from $5 million in 1982 to $200
million in 1995.
The company was quite strong and successful when a crisis hit
in December of 1995–an accidental industrial fire completely
destroyed the factory. Everyone in the industry expected Malden
Mills to do the only 'smart' thing at this point and take the $100
million insurance money and reopen in a developing country
where labor would be cheaper. But they shocked everyone by
announcing that they would rebuild in Lawrence, and also they
would pay full salaries to their 3,000 employees for 3 months
and continued health insurance for 6 months.
Rebuilding in Lawrence ended up costing the company around
$450 million and keeping the laid-off workers on salary and
health benefits cost $20 million more, but the company gained a
national reputation as a business 'with a heart' and enjoyed a
very positive boost to their brand. They reopened in 1996, and
most of the original employees were hired back, as their jobs
were held for them.
As the years went by, however, the
times. Perhaps due to the amount of money they spent on
rebuilding, or perhaps it was mostly due to changes in the
marketplace, but Malden Mills had to declare bankruptcy in
2007. The family that had run the plant for generations was
forced out as another company took over, changed the name to
Polartec, reduced the staff to 800, and moved most of the
operations to other countries.
company
fell
upon
hard
![The first one we discussed in class, General Motors (GM),
which decided to offshore production from the USA to Mexico.
When GM began this in the late 70s, it was a relatively new idea
for a major American producer, and was highly controversial,
but the trend has grown over the decades, and nowadays other
major car companies, including European and Asian giants like
BMW and Honda, have followed the same strategy to close
plants in their homelands and reopen where labor is much
cheaper and regulations more loose. In 1978, there were 80,000
GM employees in the Flint, Michigan area, and today there are
around 7,000. As those plants closed, the consequences have
been very destructive for the surrounding towns, where
unemployment skyrocketed (and with it crime, gangs and
drugs), and areas have become like ghost towns where people
have been evicted from their homes, and apartment buildings
and businesses have been abandoned. As GM first began this
offshoring in the late 70s they were enjoying a 49% share of the
American car market, but changes in the market were showing
that they would soon be losing this high position. By the mid
80's they were down to 40% and this downward trend has
continued (not only for them but for other American car
manufacturers as well). Today, they stand at 15%.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7c7b14be-49be-4193-952a-a6d3f4a18290%2F14004117-8059-492d-94ce-7c03ac7599d0%2F6df2urd_processed.jpeg&w=3840&q=75)
Transcribed Image Text:The first one we discussed in class, General Motors (GM),
which decided to offshore production from the USA to Mexico.
When GM began this in the late 70s, it was a relatively new idea
for a major American producer, and was highly controversial,
but the trend has grown over the decades, and nowadays other
major car companies, including European and Asian giants like
BMW and Honda, have followed the same strategy to close
plants in their homelands and reopen where labor is much
cheaper and regulations more loose. In 1978, there were 80,000
GM employees in the Flint, Michigan area, and today there are
around 7,000. As those plants closed, the consequences have
been very destructive for the surrounding towns, where
unemployment skyrocketed (and with it crime, gangs and
drugs), and areas have become like ghost towns where people
have been evicted from their homes, and apartment buildings
and businesses have been abandoned. As GM first began this
offshoring in the late 70s they were enjoying a 49% share of the
American car market, but changes in the market were showing
that they would soon be losing this high position. By the mid
80's they were down to 40% and this downward trend has
continued (not only for them but for other American car
manufacturers as well). Today, they stand at 15%.
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