Reference no: EM132808962

1. What ethical framework is useful in looking at this situation? (Utilitarian; Justice, etc.)

2. What would you recommend to Disney Management? Explain your reasoning?

3. What is Disney's ethical responsibility to its stockholders, customers, and its workers who make their products?

Sweatshops and Corporate Social Responsibility

One of the most persistent and challenging corporate responsibility issues for many global brands is how to manufacture products in contract factories in less developed countries while paying fair wages and maintaining acceptable and safe working conditions for workers.

Background

On April 24, 2013, at Rana Plaza on the outskirts of Dhaka, Bangladesh, a building containing apparel factories collapsed, trapping and killing over 1,100 employees. It was not only the worst industrial disaster in the history of the garment industry, it was also the world's most fatal industrial building collapse. News reports soon emerged that the factory owners had ignored ominous warning signs, such as visible cracks in the wall, and had illegally added several stories to the top of the building, creating a weight the building could not bear. Many of the factories operating in the building were producing apparel for well-known Western brands, such as Walmart. While this was the worst fire there was another fire in 2011 at the Tazreen Fashions factory in Bangladesh that made products for Disney. This fire killed 112 workers.

What followed was an outcry to increase safety and accountability in these kinds of factories. The tragedy also raised questions about the social responsibility of companies who made millions on their products while turning a blind eye to the low wages, child labor, and unsafe conditions of the workers.

What is a Sweatshop?

The term sweatshop refers to a factory that is guilty of some sort of labor abuse or violation, such as unsafe working conditions, employment of children, mandatory overtime, payment of less than the minimum wage, unsafe working conditions, abusive discipline, sexual harassment, or violation of labor laws and regulations.

Over the years many famous brands have been involved in sweatshop scandals such as: Nike; Apple; Walmart; The Gap; Disney; and many others. And reports of sweatshop abuses are still common in many developing countries.

Case Study: Disney in Bangladesh

The Walt Disney Corporation is one of the world's largest entertainment conglomerates, known for its theme parks, such as Disneyland and Disneyworld; its long history of producing blockbuster animated movies from Fantasia and Snow White to The Lion King and Tangled; and its sale of licensed apparel and toys featuring famous characters from the Disney movies. Given that an important segment of Disney's target market is children, the company is especially exposed to negative publicity related to certain sweatshop abuses, in particular, the use of child labor.

After the 2011 Tazreen Fashions factory fire in Bangladesh, Disney management became concerned about the company's public relations exposure due to its sourcing operations in Bangladesh. One commonality to the Disney-branded products was that they all relied on Disney's image as a wholesome provider of family fare. If Disney were to become tagged with accusations that it was the beneficiary of child labor in sweatshop conditions-the consequences could be quite devastating for Disney's public image. What would Disney do if high-school students started nagging their parents to abandon Disney vacations or to stop renting Disney movies?

Therefore, in early 2013, Disney decided to pull its manufacturing operations out of Bangladesh. Anti-sweatshop and workers' rights groups condemned Disney's decision as an abdication of social responsibility. In the view of such critics, Disney should have stayed behind to help remedy the problem.