1.Gingham Best, Inc. is a US company with clothing production facilities around the world. Gingham is concerned about conditions in the factories with which it has production contracts. What advice can you offer Gingham for preventing a public relations crisis or a boycott over factory conditions?
2.You have just been put in charge of supervising all of your company's offices around the world. What will you do to be certain that there are no FCPA violations?
3.You have been given the task of analyzing whether your company should expand its operations into a particular country. There are concerns about risk in that country. Based on the cases that you have studied, what would you examine in that country to provide input on risk?
Full Answer Section
- Empowering Workers: Establish grievance mechanisms for workers to report violations without fear of retaliation. This fosters trust and allows for early identification of issues.
- Supplier Partnerships: Build strong relationships with suppliers who share Gingham's values. Collaborate on improving working conditions and invest in training programs for factory workers.
- Stakeholder Engagement: Engage with NGOs, labor unions, and other stakeholders to gather feedback and address concerns proactively.
- Preventing FCPA Violations: A Global Supervisor's Responsibility
Combating the Foreign Corrupt Practices Act (FCPA) violations requires a multi-pronged approach:
- Anti-Corruption Policy: Implement a robust anti-corruption policy that clearly defines prohibited activities like bribery and facilitation payments. Train all employees worldwide on the policy and FCPA regulations.
- Due Diligence: Conduct thorough due diligence on potential business partners and third parties to assess their anti-corruption practices.
- Internal Controls: Establish strong internal controls, including financial reporting systems and whistleblower hotlines, to detect and prevent FCPA violations.
- Monitoring: Regularly monitor employee behavior, transactions, and third-party interactions to identify potential red flags.
- Culture of Compliance: Foster a culture of compliance within the company. Employees should feel empowered to report suspected violations without fear of retribution.
- Country Risk Analysis for Expansion:
Before expanding into a new country, Gingham Best should conduct a comprehensive risk analysis:
- Political Risk: Assess the country's political stability, corruption levels, and potential for regime change. Unstable governments may impact business operations and investments.
- Economic Risk: Evaluate the country's economic climate, currency stability, and infrastructure development. Economic instability can pose challenges for businesses.
- Legal Risk: Analyze the country's legal system, property rights enforcement, and regulatory environment. Uncertainties in the legal system can create challenges.
- Social Risk: Consider the country's social unrest, labor laws, and cultural factors. Social unrest can disrupt business operations.
- Currency Risk: Evaluate the stability of the country's currency and potential for fluctuations. Currency fluctuations can impact profitability.
By carefully assessing these risk factors, Gingham Best can make an informed decision about whether expanding into a particular country is a sound business strategy.
Sample Answer
1. Preventing a PR Crisis from Factory Conditions:
Gingham Best can take proactive steps to avoid a public relations disaster or boycott:
- Transparency and Accountability: Publish a code of conduct outlining their commitment to ethical sourcing and fair labor practices. Conduct regular audits of factories to ensure compliance with labor laws and ethical standards.
- Third-Party Verification: Partner with independent organizations to verify working conditions in factories. Publish the results of these audits to demonstrate transparency.