Evaluation of Real-World Ethical Problems

CASE STUDY
Fabric Colour, Inc. (Fabric) is a textile company based in the United Kingdom.
For the past three years, Fabric has been in the news because of various
investigative reports by journalists alleging several legally questionable and
unethical practices. These controversies affected the share price of Fabric.
Investors pulled their investments, and a large number of shareholders with
substantial shareholdings started to sell their shares. Many of the
shareholders lamented the actions of Fabric in addressing the alleged
violations, with some complaining that such measures cost the company a
substantial amount of money and that dividends have not been declared
because resources were used for damage control. The shareholders argued
that the company should prioritise the distribution of profits and should simply
have hired public relations managers to put a lid on the reports.
When Jenny was still a student at university, her interest in the textile and
clothing industry was sparked by one of the classes she took. Now, as a new
entrepreneur, Jenny has been looking to invest in a company in that industry.
Before the crisis that it is experiencing, Fabric was one of the top companies
delivering quality products to its consumers in the market. Now, with low
share price and a substantial block of shares being sold by individual
shareholders, Jenny sees an opportunity to buy in and help in rehabilitating
Fabric. Jenny decided to buy the shares, which, in the end, put her as the
majority shareholder of the company.
One of the conditions of the acquisition was that Jenny would become part
of the board of directors of Fabric. In her first week as a member of the
board, she discovered the following:
1. Fabric had been manufacturing some of the textiles and similar products
in factories in the Philippines and Vietnam that had been employing children.
Further, the operations of the factories exposed the children to hazardous
chemicals.
2. The manufacturing of certain textiles, particularly in the colouring of some
of the products, requires the use of a certain plant imported from Thailand.
It was discovered that the plant had already been declared endangered by
the Ministry of Environment.
3. The waste materials from the sweatshops were dumped in a water system
that flowed into the nearby rivers without the wastewater being treated first.
4. The president and CEO of Fabric had been informed of the potential
violations in the operations of factories and the dumping of waste into the
rivers, but the CEO told the employees who flagged the issue to keep it under
the radar, as closing the factories would mean astronomical costs for the
company, which would, in turn, affect the salaries of the employees and the
multi-million dollar salary of the CEO.
Upon learning of this situation, Jenny has resolved, as member of the board
and majority shareholder, to overhaul the practices of the company based on
a report of the problem areas of the company.
Knowing you from graduate school as one of her brilliant classmates, Jenny
has hired you to conduct an investigation of the company and its practices,
its decision-making process, and the ethical and legal issues it is now involved
in. Further, you were also hired to recommend a way forward for Fabric,
including what changes should be made or instituted so that no crisis of this
character will ever happen to the company again.
Your Task
Read the case study and write an essay following the guidelines below.
1. Identify the ethical and legal issues that Fabric is facing and explain how
these issues arose. Assess whether the issues flow from one governance
framework or the absence of it.
2. Thereafter, choose ONE strategic framework or one of the key theories
discussed in the module (including feminism, CRT, CLS, utilitarianism,
categorical imperative, Drucker, or organisational behaviour) and provide:
• A description of the existing organisational culture and aspects of the
culture which need to be changed, together with a definition of the company
framework and its objectives
• The definition of the key theoretical and philosophical ideas and tasks which
should be measured, with priorities
• Specific issues that the executives and accounting teams at the
organisation need to take into account
• An analysis of current trends and objectives in the literature
• A proposal for the business in the case study based on the strategic
framework
• Strategic recommendations to the business for improving its culture and
structure based on the questions above
• A rationale for your decisions using academic research
• Identification of key current business issues that can be monitored and
addressed, with a clear rationale for why this should be undertaken
Further Notes
• You should make intensive use of academic texts, journal articles,
case studies, and peer-reviewed academic source materials. This is a research
project.
• You are expected to use the basic functions and outputs of the
philosophical framework you choose to work with.
• Use exhibits and appendices to provide succinct, relevant, and clear
information. Focus on the critical issues and the holistic framework rather
than minor detail.
Assessment Criteria
The value of your work will ultimately be assessed on its practical usefulness
and relevance to the business, and the demonstration of critical
understanding of ethical theories. The specific assessment criteria are:
• Demonstrated competence, critical understanding, and practical
business application (40 marks)
• Demonstrated identification, evaluation, and interpretation of
appropriate ethical techniques (15 marks)
• Ability to analyse a range of complex scenarios and data for decision
making (10 marks)
• Ability to determine and evaluate appropriate planning methods and
techniques (10 marks)
• Formulation of coherent strategies that are holistic in nature and
internally congruent in terms of the conceptual and operational requirements
(10 marks)
• Understanding of development, management, and tracking of
effective organisational behaviour and management concepts
(10 marks)
• Evidence of relevant background research, supported by examples,
citation, and a bibliography in Harvard format (5 marks)