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Case of the Plant Relocation

Autor:   •  July 12, 2012  •  Essay  •  1,032 Words (5 Pages)  •  2,443 Views

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Is there a poor public perception of companies that outsource their business operations internationally? Is it profitable to relocate business operations offshore? Is it ethical to lay off domestic employees in an attempt to pay lower wages to employees in another country? These are all important questions that need to be considered when a company makes a business decision as important as closing domestic operations and opening international facilities to take their place. According to Pitts (2008), "historically, business has located adjacent its raw materials to achieve the most cost efficient production," but with advances in communication and transportation technology that is no longer necessary (p. 57). Electrocorp has been consistently loosing profits domestically due to rising costs of production, Union concessions, and strict environmental regulations in the United States. (Masalo, 2010, para. 2-3) With further investigation and proper research, it will be possible to make the best decision for Electrocorp's financial future, while maintaining appropriate ethical considerations throughout the process. Three countries that were researched for a potential relocation internationally were: Mexico, the Philippines, and South Africa. In order to determine the best course of action regarding the question of transferring business operations to an offshore location or retaining domestic operations, it is important to consider the three main questions that will affect the business: public perception, company profits, and most importantly any ethical considerations.

The Question of Public Perception

Public perception may not be as important an issue to Electrocorp as to the automobile manufacturers, but it is always important to consider how the public will perceive a particular course of action initiated by any company, especially when that company is as closely tied to a high profile company as Electrocorp is to the automobile manufacturers. Bad publicity can give a company a poor public image and lead to a decrease in sales and profit. If Electrocorp were to move operations offshore, it could result in bad publicity. In another public perception consideration, Berthiaume (2006) suggests, "establishing safe, healthy workplace conditions and treating workers fairly can have a beneficial impact on turnover, accident and absentee rates," also leading to a positive public perception (33A). It is clear that closing domestic facilities and moving operations to an offshore location where conditions are not as fair and safe as in the United States would lead to a poor public perception of Electrocorp as a company.

The Question of Company Profits

Company profits are an enormous consideration when making any decision as substantial as the relocation of operations internationally. Liability is always


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