In an industry often viewed with disdain by workers rights groups over a stigma of outsourcing, sweatshops and an overall lack of concern for worker’s rights, one company now seemingly stands alone as a beacon of hope. In 2005, Knights Apparel CEO, Joseph Bozich, set out to do something unheard of in the global apparel industry, he committed himself and the resources of his company to prove that an apparel company could make a profit while simultaneously improving the lives of its employees. The result of his idea was Alta Gracia Apparel, a collegiate clothing manufacturing company located in the Dominican Republic. Struck by extreme economic strife, brought on by the widespread loss of the town’s only source of manufacturing jobs in 2007, the town of Villa Altagracia presented Bozich with ideal economic conditions for developing a first of its kind manufacturing facility.
Foregoing the accepted industry standards that had helped to quell widespread opposition from labor groups, he instead opted to incorporate what he saw as a more humane and ethical measure of compensation for workers along with industry leading safety standards for all employees. To do this he enlisted the help of the Worker’s Rights Consortium (WRC), which helped identify what a fair “Living Wage” for employees in the region should be. Based on several economic factors including cost of living and the cost of health and child care, they ultimately determined that wages would need to be more than three times the minimum monthly wage required of corporations operating in the Dominican Republic.
The Research paper on Unfair Labor Practice and Apparel Companies
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It is this disparity in pay that typically attracts industries, such as apparel and textiles, to chase lower production costs by starting up facilities in impoverished nations where they can ultimately capitalize on an abundance of low cost labor. In doing so, I would immediately call into question the ethical foundation of any corporation that would knowingly and willingly seek to take advantage of the fact that in these locations workers’ fates remain tied to the laws (or lack thereof) in their home countries (Cendrowski, 2013, p. 14).
In which case no one or nothing stands in the way of such travesties as excessive work hours, child labor, substandard pay and poor working conditions. The effects of which have been seen as recently as April 24, 2013 when 1,133 people were killed in a building collapse in Bangladesh.
Conversely if a company desires to open a manufacturing facility in a part of the world where labor is less expensive than they might find in more developed countries, I see no reason why they should be criticized for doing so as long as they are upholding moral and ethical standards that would be considered palatable anywhere in the world. Taking advantage of people because they have no other means in which to provide food for their families or because they have no recourse available to defend themselves from such business practices is immoral regardless of geographical location. In the case of Alta Gracia, Mr. Bozich has sought to capitalize on what are still considered to be comparatively cheap labor costs while treating his employees to an unprecedented level of dignity when compared to the normal discourse of foreign companies who chose to outsource their labor within the same region.
The Essay on Cost Labor Industry Point
Changes in cost and efficiency The situation today in the airline industry is basically a price / cost war. Companies are battling to cut and keep their operating cost low in order to remain competitive in an industry that is strongly driven by price. The principal cost factors that drive the industry are labor and fuel. In terms of labor Nee leman, Jetblue's CEO, said that "The biggest problem in ...
The value he seeks from them is not derived from a simple desire to cut cost, but a desire to still seek some advantage of low cost labor while providing people with a fare wage in exchange for their services. In this case, it should also be recognized that although the notion of paying people a “living wage” and offering them acceptable working conditions is a noble and morally correct thing to do, it is unquestionably something that could have only have accomplished by a privately owned company such as Knights Apparel. While the concept is noble, it is also extremely risky and ultimately less profitable in design when compared to the A-typical business model for an apparel company.
Because of this I find it highly unlikely that stockholders would find the idea of social experimentation a palatable venture in which to bet their stock on and would instead be content with abiding with minimally acceptable industry standards. Case in point, after three years of operation Alta Gracia had yet to break even on it’s operating costs (Northam, 2013).
While not the first person to implement the living wage concept in an attempt to improve the lives of his employees, Bozich appears to be leading the way with his ability to navigate some of the pitfalls experienced by those who have gone before him and failed. One of the first things to note would be the ability of the company to continue to turn a profit in light of the increased manufacturing costs inherent with the Alta Gracia plant.
To offset its increased labor and operating costs, the company had to both accept a decrease in profit margin and accept the fact that it would be forced to compete at a price point alongside such well-known manufacturers as Nike and Reebok. While these companies depend heavily on brand recognition, Alta Gracia has had to find imaginative ways in which to identify their products with consumers and, in essence, educate them on the story behind the brand. By staking its initial claim within the collegiate apparel market it is likely that Bozich was hoping to target a small market demographic that he felt would be more receptive to the philanthropic ideals that his new company is hoping to purport, and that they would be more willing, or at least more likely, to utilize their purchasing power as a show of support.
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Downsizing, �a systematic reduction of a workforce by an employer� (pages.infinit.net/Rodrigo/downsizing.html), is a popular practice in large firms these days, and for good reason. Downsizing can reduce the company�s expenses, increase productivity, free up workers for other industries, speed up the corporate decision making process, raise stock prices, and lower unemployment percentages. ...
By building his consumer base in colleges he has the opportunity to both test the waters of viability for such a business model and build a consumer base that allows him access to die hard college sports fans who will continually seek out his product while introducing the company to swaths of new customers with the start of every new school year. Of course, this is not to say that such a venture couldn’t have overarching support in a wider and more commercialized market, but it certainly helps that these products are being introduced on college campuses where the consumers are being introduced to the brand’s goal of fair labor within the industry and then taking that knowledge and brand recognition with them as they head out beyond the walls of their academic institutions.
Whether or not this was an intended approach, it is likely that once the American public becomes aware of Alta Gracia’s business model, they too will choose to endorse such a company through consumerism as well. In the end, the story behind this company is likely to resonate with American consumers who are continually recognized as the largest supporters of charitable organizations in the world. While the feel good aspect of the Joe Bozich’s business model should continue to be emphasized, the company must also recognize that it cannot simply hope that its unique story will be the only factor that attracts consumers. They must hope that their commitment to the well being of employees is reciprocated with employee loyalty and the desire of those at the company to ensure their product maintains quality standards that exceed those of it’s rivals.
One would think that this would not be an issue as conditions at the plant and wages offered to employees far exceed any kind of median income for the region and should therefore incentivize extremely high levels of quality assurance for its brand. As product demand increases it will also be important for the company to realize other effects of it model that should help to defer its higher operating costs. Other factors such as an anticipated low employee turnover rate and low rework rate associated with employee pride and continuity of employment may help to make up this delta. In all, the value derived through the anticipated loyalty of its employees to building a brand that is synonymous with quality manufacturing will help firmly establish them at the top of the market and help to drive other ancillary business costs down in order to offset the accepted higher than normal labor rate.
The Business plan on Intro To Business Businesses Product Consumers
... concentrating on the business itself rather then the product so that consumers trust it and feel safe by using the companies products. Setting the right ... more willing to adjust to their employees needs and responsibilities.The services industry is dominated by small businesses which require limited capital in order ...
Regardless of the outcome of the Alta Gracia plant, Joe Bozch and Knights Apparel have set themselves apart from others in their industry. They have created “buzz” surrounding their product and made their name synonymous with ethical behavior in an industry that has continued to be labeled as just the opposite. Their ethical approach to business and commitment to their employees will undoubtedly create more business as consumers and industry alike seek them out as a company dedicated to doing the right thing, regardless of the cost.
References
Cendrowski, S. (2013).
CAN OUTSOURCING BE IMPROVED? Fortune, 167(8), 14. Northam, J. (2013).
CAN THIS DOMINICAN FACTORY PAY GOOD WAGES AND MAKE A PROFIT? Retrieved from http://www.npr.org/blogs/parallels/2013/06/20/193491766/can-this-dominican-factory-pay-good-wages-and-make-a-profit
