You are the chief executive of ABC Ltd., an automotive component manufacturing company. Until recently, all of your production plants were located in City X. However, the cost of production has risen, causing profits to decline. A number of factors have led to an increase in the production costs. First, the union representing the workers in your plant waged a successful strike resulting in increased salary and benefits. A second factor has been imposition of stringent environmental regulations. Shareholders are concerned about the declining fortunes of the company. Many of the competitors have moved their operations to less-developed cities, where the operating costs are less than in City X. ABC Ltd. is a major employer in the city where it is located, and you know that a plant closure will cause economic dislocation in the city. Given the situation, answer the following questions: (a) What are the ethical issues involved in this case? (b) How can the interests of different stakeholders be reconciled in this case?

(a) Ethical issues / dilemmas involved (i) Ethics of business vs business ethics Purpose of the firm is profit which could ensure its smooth functioning. But along with that ethics of business asks for holistic take.

(ii) Institutional interest vs societal welfare The interest of the company is in relocation of the plant as it will reduce the input cost and increase profit. But as institutions of society they have certain responsibility towards the people.

(iii) Competition vs stagnancy: Most of the firms have relocated and staying in the region could increase the economies of scale.

(iv) Compliance of labour laws vs abdication As a company it is the responsibility of a firm to ensure compliance with labour laws. Labour welfare is a priority but it cant take over other priorities.

(v) Personal vs professional ethics As an individual i may have empathy with the people but professional ethics create conflicting situation.

(b) Stakeholders involved in this case (i) ABC Ltd company (ii) Chief executive of the company (iii) Workers of the company (iv) Shareholders of the company (v) Society as they get effected by environmental degradation.

Ways of reconciling interest of different stakeholders.

Continuing the industry in the region will incur losses and moving out could create economic disruption.

Company - This company should be shifted to low production cost area as it could help in increasing the profits. A subsidiary of it should remain in the city which could act as backward and forward linkage to the parent company. Along with that there is a need to adopt technologies to reduce cost. → Automation could be considered → lean machinery → Change in working culture with improved efficiency

• Labour

• The workers should continue in the subsidiary company
• CSR funds could be used for their skill upgradation so that they are an asset and not liability to the company.
• A committee need to be formed to look into their grievances, so that work loss is not there in case of strikes and other issues.
• After their skill upgradation they can be transferred to the parent company also.