Martin’s Textile Case essay

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The Assumptions and the Priorities of the Case

As far as the present case is concerned, it is evident that there is a conflict of the corporate interests and the social responsibility policy towards the employees of the firm. In other words, the company either survives or relocates to Mexico, or the firm continues to operate in the United States of America and very soon it will collapse under the pressure of the competitors, whose industrial cycle is not so expensive and under the unwillingness of the existing customers to purchase the commodities because of their cost prices. In order to give effective counseling, a number of the peremptory assumptions must be outlined:

1)      John Martin reasonably cannot abrogate the bylaw which proclaims the creation of the union. He is neither a congressman, nor the member of the administration. Besides, it is not specified in the statement of the facts whether he is able to unite the local producers or not. Therefore, this option will not be regarded in the paper.

2)      The global economic situation will remain the same in the reviewed period.  In other words neither economic distress, nor other vacillations of the international labor force market and the demand for textile remain the same and the vacillations will insignificant to affect the proposed solutions.

3)     The personal traits and individual characteristics of the business owner John Martin precisely indicate the existence of business which belonged to his family for many years is the task of paramount importance for him. However, although it is clear that while the existence is necessary and undisputed, the amount of the profits accrued by the firm is of no importance and his personal enrichment is not an objective.  He is more preoccupied with the well-being and with the subsequent monetary maintenance of the people who have been long employed by his firm.

4)      The industrial performance of the workers in Mexico is worse than the ones in the United States. They are neither loyal to the firm, nor their performance is effective and productive.

The Best International Practice and the Proposed Solution

The first task to accomplish is to guarantee that the existence of the company is not endangered. First and foremost, Mr. Martin indeed has to relocate all his facilities to Mexico, where the labor force is considerably cheaper than in the United States of America.  However, to ensure that the hired low-skilled Mexican workers perform their duties effectively, the employee loyalty of them must be achieved. The shortest way to achieve and to retain their loyalty, resulting in the high productivity rates is to set higher wages. In the United States the average wage for this kind of industrial activity is between $ 8 and $ 12, 50, whereas in Mexico the average market wage of the similar activity is less than $ 2. It will economically justify paying the Mexican workers $ 3-5 per hour. This mechanism will help to achieve several goals:

a)      The workers will be interested in retaining their job positions, due to the fact that will be impossible for them to find better employment opportunities on the Mexican labor market. This way the negative aspects of the Mexican workers – high turnover rate and absenteeism. The workers will be interested in working to the very utmost to persuade the managers not to replace them.  Besides, this way within several decades the same corporate values will be established as in New York.

There is a popular opinion among the business analysts that when the average hourly rate in a specifically reviewed geographical region is lower than the one which is established at the enterprise, the workers of this enterprise will tend to work less hours for the same monetary remuneration. To avoid the prospective negative repercussion of this business phenomenon, the owner of the textile manufacture shall combine two integral conditions, which will be obligatory for all candidates claiming to occupy the position with the firm. First and foremost, the labor contracts must incorporate a provision in where the number of hours which must be worked will be defined, providing that all legal requirements of Mexico are observed. The second sine qua non of the competitive and effective business environment is the selective employment process. The HR team shall focus all their attention and they shall attract only those, whose psychological traits indicate that they will be loyal and a longstanding, mutually beneficial cooperation will be formed.  Considering the seductive character of the employment opportunities, the majority of the future workers will enter the contract and considering its obligatory nature they will have to stay with the company and to work the required hours. It can be predicted that within decades the lazy Mexican working mentality will be substituted by the American labor traditions, and the Mexican labor saboteurs will comprehend that the  more they work, the better their living standards become. When the mentality will be changed by the change of the life standards, the turnover problem will be eternally vanquished. The same strategy was followed by the law firms at the dawn of the legal business. For instance in the early 1970th the attorney worked 40 hours weekly, while in 2000 90 weekly voluntarily job is not an exception in the legal field.  The money is the best motivator for the change of working mentality.

The same approaches have been taken by “AutoVaz” (Russian automotive giant) when it hired thousands of workers in Turkmenistan (2000) and by the Aquastar Crewing Company, which hired a number of sailor from Philippines unwilling to work in accordance with the sea standards(2009).

To substantiate this opinion, it is desirable to recur to the international experience.

b)      In order to tackle the pangs of conscience of Mr. Martin, specific program shall be followed. Namely, it can be offered to all of them to relocate to Mexico to instruct local workers. Naturally, the majority of them will repel this proposition, because they are deeply rooted to their families.   Moreover, it is stipulated in the Statement of the facts that several divisions of the firm remain in America. Those, who are eligible, are advised to be re-assigned to those departments, for instance the mentioned 54 years old Mary Morgan can effectively exercise the functions of the salesperson in the sales department of the firm.  For those, who are reasonably not eligible for the re-assignment or who refused to relocate to Mexico with the main facilities, huge post-employment benefits can be guaranteed. Considering the fact that the company keeps on operating and the revenues will be increased, because the operational costs will be diminished (due to the lowered wages paid to the Mexican workers) these benefits will not be a problem for the firm.

Besides, the fact that the majority of the workers have a long history of cooperation with the firm, they are all gradually advancing the retirement age.  Therefore, considering their retirement payments and extra-payments from the firm, their financial well-being will be secured and they will not be forced to seek another employment to earn for their living.  This strategy has already been undertaken by the French automotive giant Renault and by the several UAE oil companies. Overall, the strategy of relocation and the development of the extensive set of post-employment payments may help to ensure the existence of the company and the decent living standards of the loyal employees.

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