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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
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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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
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%.
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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