BA404 – Philosophy and Business

CASE STUDIES
Modules 1 - 3

Reported by:
Kristine G. Contreras

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CASE STUDY 1 - EMPLOYMENT PRACTICES IN ZAPPA
GARMENT COMPANY
Company Profile:
• rapidly growing, privately-held apparel company
• $80 million in sales last year and are projecting $150 million for
next year
• company has succeeded by targeting a niche market that will
pay more for fashionable styles, making the speed and flexibility
of operations more important than the price.
• Poor working conditions are common at many apparel factories
in the U.S. and abroad.
• The industry is besieged by public criticism of labor practices.
Yet a fundamental tenet of your company is the belief that
apparel manufacturing should be profitable without exploiting
workers.

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Problem and Its Background:
• This summer your team found the company could not keep
pace with orders. You added a second shift and hired 1,000
new sewers to staff it, bringing the total number of sewers to
3,000. During the summer months, all employees worked
fulltime (eight-hour shifts, five per week) and often overtime
to meet sales needs and replenish dwindling inventories.
• It is now September, and it has become clear that the
company’s inventory is growing too large. Sales across the
industry are usually slow during winter months, and you know
the company must slow its production.
• Each of the 3,000 sewers assembles an average of 20 dozen
pieces per day. Based on projected orders and the maximum
inventory you can afford to carry, production cannot exceed
4,000,000 dozen pieces between October and March.

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• Therefore, you must determine how to reduce your actual
production over the next 20 weeks to only two-thirds of full
capacity.
• Wages for sewers are not based on the number of hours they
work, but on the number of pieces they sew. The efficiency of
production at your company is partly responsible for the high
wages workers earn.
• Typical industry practice in the U.S. and abroad is to lay off
excess labor for the winter season, with no severance pay or
other assistance and no promise of rehire.
• Many of your sewers have lost their jobs elsewhere during the
slow season for several years. However, if your company
made such a move it would contradict the company’s
philosophy regarding the treatment of employees as valued
partners.

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• Laying workers off seems like it would be a significant
defeat in this respect, with possible repercussions in
employee motivation and public relations.
• Also, your team has invested several thousand dollars in
training each employee, and you are concerned that new
sewers may not be skilled enough to meet the steep climb
in orders anticipated in the spring.
• If workers are laid off, there is no guarantee that you will
be able to rehire the same people in the spring.
• However, the company cannot afford to pay workers to do
nothing for 20 weeks, and many workers will likely return to
the company if they fail to match your wages or working
conditions elsewhere.
• QUESTION: How will your management team address the
company’s excess labor problem during the upcoming
period of slow sales?
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Possible Solution to the Problem:
Layoffs
Reducing a labor surplus via layoffs may seem obvious, but a
lot depends on the cause of the surplus. When excess staff
results from permanent market changes, letting employees go
may be your best response. If reasons for the surplus are
temporary, consider the costs of hiring and training compared
to the expense of retaining staff.

Outsourcing
If you regularly use employment agencies to cover your staffing
needs, discontinuing this in times of a labor surplus is obvious.
In fact, if your business is subject to fluctuating staffing needs,
using outsourced staff during labor deficits can smooth out your
need for permanent employees.

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Possible Solution to the Problem:
Pay Cuts
Though it’s all but certain to have a negative effect on morale,
across-the-board pay cuts may produce savings in wages that
permit you to weather a labor surplus without layoffs. Wage
reductions can be temporary or permanent but be sure to
consider what this action may do to your company’s
employment brand and labor relations.
Seasonal Hiring Policies
When your business experiences regular and predictable labor
surpluses, plan accordingly during hiring periods, bringing
aboard new hires only for the labor deficit period. You may be
able to build a regular seasonal staff, as well as a pool of
potential permanent workers, should the demand arise.

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CASE STUDY 2 – SETTING COMPANY STANDARDS

Company Profile:
• Special steel company limited (SSCL) is a reputed company and
specializes in alloy steel manufacturing in Nagpur.
• SSCL markets its products at competitive prices in all industrial
towns in India. The exports are handled from its head office in
Nagpur and export division in Mumbai.
• The domestic marketing is divided in 4 Zones North with its
office in Delhi, South Zonal Office in Chennai.
• The company by practice has established good ethical standards
set by the Chairman Aravind Jain.
• The company executives were known for their integrity and hard
work and thus taking the company to growth path.
• Chairman of SSCL was assisted by Board of Directors and
Company Secretary.
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Problem and Its Background:
• Last Saturday Aravind Jain was following news item on Star
News. He was shocked to see news flash that the Marketing
Director K. Ram of SSCL was alleged for molestation of a lady
employee serving in his office in Mumbai.
• The Mumbai police were looking for Ram for arresting and
further action. Ram was in Delhi on Saturday. Jain called
immediately the Zonal Manager in SSCL Mumbai and Delhi, so
that he can get first-hand information. He was angry that he
should get his company information through TV news.
• The Zonal Manager Delhi informed that he was not aware of any
Mumbai incident. The Zonal Manager Mumbai was not available
in his house in Mulund (a suburb of Mumbai). Even after 2 days
there was no news or whereabouts of the Mumbai Zonal
Manager.

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Problem and Its Background:
• TV news on 3rd Day gave that Mumbai police were searching
the absconding K. Ram, Marketing Director of SSCL. Newspapers
and weekly business magazines published and news articles on
the subject. A business weekly gave a story with photographs of
K. Ram and the lady employee giving their side of the story:
• Ram aged 54, is a marketing wiz-kid and considered good in
exports and international negotiations. Ram’s story gave that
the lady employee, a secretary in Mumbai office, did come to his
five star hotel room and went away.
• The lady employee contended that she was called by Ram along
with Zonal Manager for official work to the hotel. In the hotel
room Ram molested her telling that she will be promoted as
officer shortly. The lady ran and lodged FIR in police station.
The lady was middle aged and has a son going to high school.

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Problem and Its Background:
• The next week TV news said “Ram, Director of SSCL surrenders
to Mumbai police. Police took him to custody and produced in
Magistrate Court. The court granted bail to Ram”.

• QUESTION: Discuss the ethical issues of the company involved in

this case. What actions you suggest that Jain should take
immediately and what are policy decisions that should be
established to stop such recurrences?

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 References
• https://www.tutor2u.net/business/reference/corporate-objectives
• https://smallbusiness.chron.com/10-important-business-objectives-23686.html
• https://www.sciencedirect.com/science/article/abs/pii/S0272696301000900
• https://goats.extension.org/what-are-profit-oriented-goals/
• https://www.coursehero.com/file/74258712/Ch14pdf
• https://www.serviceautomation.org/what-is-a-service-concept/
• https://www.weanswer.co.uk/insights/5-ways-excellent-customer-service-can-help
-increase-profits
• http://www.turtlepeak.com/blog/blog/2018/01/16/make-customer-service-profit-
center-business-increase-profitability/

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Thank you again and again for listening!

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