Business ethics

Brief Overview

Ethics is an important aspect in organization. Companies with higher ethical standards enjoy higher profitability and long-term returns. On the other hand, organizations which fail to comply with ethical standards face many challenges like employee turnover, lack of productivity, poor performance, lack of cooperation, and lack of company credibility and more (Hartman, DesJardins & MacDonald 2014).  One of Apple’s factories known as Foxconn is involved in unethical issues, following those workers in this factory work in poor working conditions and with little payment. Despite the fact that they are paid less, they are forced to work overtime and this unethical behavior brings negative consequences where a large number commits suicide (Hartman, DesJardins & MacDonald 2014).

Strategic Issues

The strategic issue which Foxconn organization is facing is poor management.  As a result of poor management, there is no strategic planning of ethical principles. Managers do not comply with their overall responsibilities and as a result, they are unable to plan, organize, control, motivate and lead (Hartman, DesJardins & MacDonald 2014). Lack of strategic management and planning has contributed to adverse effect on the organization team since the life of workers is uncertain and out of control. Due to lack of management, the organization is unable to set goals, vision and mission and thus there is no strategic performance. Due to lack strategic management, the organization is lacking an effective communication, leadership and motivation (Hartman, DesJardins & MacDonald 2014).

Key problems

The key problem which the organization is facing is suicide. Employees are unable to bear with the harsh condition in the place of work.  According to the research, employees have to comply with the policy of ‘silence mode’ which means that they should keep silence and persevere with the harsh condition or else they will be terminated.  In all organizations, employees expect a positive condition which helps them to meet their goals and sustain their lives. For example, they need flexibility, autonomy and transparency (Hartman, DesJardins & MacDonald 2014).  However, employees in Foxconn organization experience a great difference between what they expect and what they come across. They are unable to cope with the situation and this causes them to lack future goal. Other important point is that employees need compensation and this is another key problem which is causing suicide. It is a fact that the company has employed 1.3 million workers and these employers asserts that their value the jobs.  However, they commit suicide due to lack of good payment and benefits which will sustain their lives (Hartman, DesJardins & MacDonald 2014).

Key issues

The key issue which is contributing to all the negative consequences in Foxconn Company is poor working condition.  Employees are forced to work overtime, the dormitories are crowded, they are imposed heavy fines and they have to comply with strict enforcement. It hurts when an employee works for more that 8hours while standing and the appalling thing is that he or she will get poor payment no matter the struggle (SACOM, 2011).  There is lack of relationship between employees and security personnel. They are treated unfairly and monitored to an extent that their freedom is limited. For example in year 2010, a phone prototype was missing and an employee was asked about it by security personnel. Shortly after, the man jumped from apartment building and when a research was made, the man had said that he was physically punished and humiliated. The bad thing with the organization is that it does not create a permanent residence to the workers. The latter lives with ‘unfinished proletarianization’ or in other words they do not belong to the organization or to the city (SACOM, 2011).  This makes them to feel angry and frustrated and at last they opt to commit suicide.

 The organization strategic issues and problems have clearly shown that there is   a need for ethical business strategy. The ethical strategy helps in creating business ethics and the latter is created through identifying the ethical goals. Ethical goals which create ethical business are achieved through setting ethical standards, ethics committee, and ethical awareness, ethical monitoring, implementing actions and creating a sustainable ethical culture (Hartman, DesJardins & MacDonald 2014). In Foxconn organization, there are strategy implementation issues which are hindering successful operations. First, the company fails to value the employees’ rights and the moral implication of rights violation. Other point is that it cannot implement ethical strategy if it does not   first solve the cost-management issues. Thus, the company has the moral obligation in order to implement ethical strategies (Hartman, DesJardins & MacDonald 2014). Other factors which are hindering ethical incorporation is that  the leadership and management do not understand the environment, they have partial commitment,  they are unwilling to bring change , they have unrealistic goals and they are  do not have the accountability.

 

Analysis and Evaluation

Foxconn, being the Apple’s largest manufacture of electronics, have a great role in serving the global customers.  Even though the working condition is poor, Foxconn is planning to reform the manufacturing industry and create safe and conducive environment where workers can feel comfortable and improve their performance. In addition, the company said that it wants to provide compensation and benefits, food allowances, housing and other employee compulsory needs (Quarterman & Strategoz, Inc. 2012).  Foxconn business model which is known as eCMMS has played an important role in helping the organization maintain its competitive edge in the market.  In production, it focuses on producing high quality, flexible, innovative, fast and cost saving products.  This acts as the marketing strategy which is incorporated in the manufacturing system.  In addition, the company has main manufacturing strategies which help it to meet the goal of marketing. For example, it uses assembly lines, unskilled labor SMT automation, supervision and support (Quarterman & Strategoz, Inc. 2012).

 

 

 

 

 

 

 

 

 

The information below demonstrates the valuation, profitability, efficacy, capital structure and Liquidity.

Foxconn Technology Co. Ltd.

Company Description 2016

Retrieved from: http://www.marketwatch.com/investing/stock/2354/profile?countrycode=tw

 

Variation		profitability		efficiency		Capital structure		liquidity
P/E Current	10.69	Gross Margin	16.41	Revenue/Employee	512,503,160.00	Total Debt to Total Equity	0.23	CurrenRatio	3.23
P/E Ratio (with extraordinary items)	11.48	Operating Margin	12.23	Income Per Employee	62,877,546.00	Total Debt to Total Capital	0.23	Quick Ratio	3.10
P/E Ratio (without extraordinary items)	7.95	Pretax Margin	14.34	Receivables Turnover	3.06	Total Debt to Total Assets	0.17	Cash Ratio	2.25
Price to Sales Ratio	0.98	Net Margin	12.27	Total Asset Turnover	0.78
Price to Book Ratio	1.07	Return on Assets	9.59
Price to Cash Flow Ratio	4.54	Return on Equity	14.11
Enterprise Value to EBITDA	3.62	Return on Total Capital	13.16
Enterprise Value to Sales	0.64	Return on Invested Capital	14.11
Total Debt to Enterprise Value	0.01

 

 

Though the key issue facing the organization is poor working condition, it has developed a hardwork culture.  The model   which is called “e-nabled Components, Modules, Moves and Services” acts as a strategic success as it helps the business to combine all capabilities related with optical, mechanical and electrical solutions (Quarterman & Strategoz, Inc. 2012).  In manufacturing the products, the organization is guided by manufacturing strategy. Starting from 2003, the company’s annual growth rate was 50% and gross income was $10 billion. The company competes with global markets given that it entered in American market and established a branch in California. Its unique products such as Camera Canon, Motorola and Nokia cell phones, iPhones, iPads, Xiaomi and other many products helps the company to gain it position in the global market (Quarterman & Strategoz, Inc. 2012).  The competitive position of the company is influenced by two completive forces namely rival sellers and new entrants.  Foxconn is ranked as the largest manufacture and employers. It has more that 10,000 million employers worldwide who manufactures many different products in order to meet the demand of different customers.  On the other hand, the new entrants weaken the company’s competitive position. This is because it has a poor working condition which affects the production and employees performance.  The condition affects time management and production process which them weaken the competition position in the global market (Quarterman & Strategoz, Inc. 2012).  

 

Recommendations and course of action

Foxconn should introduce a business proposal which will provide guidance for eliminating business issue. In the proposal, there should be upper management information related with employee and employers relationship.  In addition, the proposal should have training programs. This will help managers in understanding the employment law, communication and leadership (Cliff Lin, 2013).  Given that there is ineffectiveness in resources allocation, the proposal should include proficient resources allocation and should be set for the purpose of reinforcing employee welfare.  Last, the proposal should include employee satisfaction which will be achieved through teamwork, effective communication, limitation in monitoring and employee breaks (Cliff Lin, 2013).  Other point in recommendation is that efficiency should be maximized. Since ineffective compensation is contributing to suicides, efficiency should be increased through limiting the working hours for all employees.  This will eliminate the exhaustion, reinforce work-life balance, and improve performance as well as the productivity.  On the same note, the company should also introduce the piece rate system. This is a method of payment where an employee is paid with respect to the job done (Cliff Lin, 2013). This payment is fixed and it will help the workers who work overtime to be motivated to work efficiently without complain.  This will also benefit the organization as a result of higher job performance.  Last, the organization should create a positive culture where all employers and employees follow ethical standards. This will be created through transparency, empowerment and effective communication.

Conclusion

Foxconn Company also called Hon Hao Co., Ltd. is a multinational company in Taiwan.  It is ranked as the largest manufacture of electronics and   also as the third-largest company with higher revenue.   For many years, the company’s reputation has not been good due its unethical behaviors.   Poor working condition has affected the lives of workers to an extent that they decide to commit suicide than to bear the unbearable.  The working condition is related with long working hours, maltreatment,   low payment, lack of relationship and ineffective communication.  However, the company has opportunity to develop in the global economy and maintain its competitive edge in the market if it improves its working condition. Being the largest company, it has employed more than 10,000 workers who manufacture different products to meet the customer needs in the worldwide.

 

 

Reference

Hartman P. Laura, DesJardins Joseph & MacDonald Chris (2014). Business Ethics.  Decision making for

Personal  Integrity and Social Responsibility. Third Edition. Published by McGrwa-Hill

 Students & Scholars Against Corporate Misbehvaior (SACOM) 2011. Slave Behind the iPhone Foxconn

Workers in Central China

Retrieved from: http://sacom.hk/wp-content/uploads/2011/09/20110924-islave-behind-the-iphone.pdf

 Cliff Lin (2013). Apple Inc & Foxconn Technology Group. Retrived from: http://www.cliffordlin.com/apple-and-foxconn

 Quarterman Lee & Strategoz, Inc. P.E. (2012).    Apple, Foxconn & Manufacturing Strategy

Retreived from:  http://www.strategosinc.com/downloads/Apple-Foxconn-dl1.pdf