PRESEEN FOR TASK 1

FashionFinds (FF) is a large clothes retailer located in a large developed country in Europe. Its
business strategy is based around vigorous cost reduction and it prides itself on selling
fashionable garments for men, women and children at very low prices compared to its main
rivals. FashionFinds, is therefore always looking for a continuing supply of cheap yet
fashionable and good quality garments. For many years, it has achieved this cost leadership
through carefully sourcing its garments from developing countries where labour is cheaper
and where workplace regulation is less than in its home country.

As a company with a complex international supply chain, the board of FashionFinds regularly
reviews its risks. It has long understood that three risks are of particular concern to the
FashionFinds shareholders: 1. exchange rate risk: for the past 30 years or so, FashionFinds has
bought in a substantial proportion of its supplies from Athland, a relatively poor developing
country known for its low labour costs and weak regulatory controls. Last year, 65% of
FashionFinds’ supplies came from this one country alone. Its main clothes supplier in Athland
is Closup Company. Since most international transactions involve a currency exchange (unless
the countries are in a single currency trading block), FashionFinds needs to pay Closup in the
currency of Athland whilst selling the garments in its home currency. 2. supply risk: the risk
that FashionFinds may not be able to obtain on time the inputs/supplies it needs and 3.
international political risk where there is a potential failure on the part of the government in
countries like Athland to fulfil all or part of its functions. Each risk is carefully monitored, and
the board receives regular briefings on each, with the board believing that any of them could
be a potential source of substantial loss to the shareholders.

Athland has a reputation for corruption, including government officials, although its
workforce is known to be hard-working and reliable. Most employees in Athland’s garment
industry are employed on ‘zero hours’ contracts, meaning that they are employed by the hour
as they are needed and released with no pay when demand from customers is lower.

Half of FashionFinds’ purchases from Athland are from Closup, a longstanding supplier.
Owned by the Fusilli brothers, Closup outgrew its previous factory and wished to build a new
manufacturing facility in Athland for which permission from the local government authority
was required. In order to meet the demands of customers like FashionFinds, the Fusilli
brothers are always under great pressure to keep their prices low and so continuously seek
ways to reduce overall expenditure including capital investments.

Since the enforcement of building regulations was weak in Athland, the officials responsible
for building quality enforcement were bribed by the brothers to provide a weak level of
inspection when construction began, thereby allowing them to avoid the normal Athland
building regulations. In order to save costs, inferior building materials were used which would
result in a lower total capital outlay as well as a faster completion time. In order to maximise

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usable floor space, the brothers were also able to have the new building completed without
the necessary number of escape doors or staff facilities. In each case, bribes were paid to
officials to achieve the outcomes the Fusilli brothers wanted.

Once manufacturing began in the new building, high demand from FashionFinds meant that
Closup was able to increase employment in the facility. Although, according to Athland
building regulations, the floor area could legally accommodate a maximum of 500 employees,
over 1,500 were often working in the building in order to fulfil orders from overseas
customers including FashionFinds.

After only one year of normal operation, the new Closup building collapsed with the loss of
over 1,000 lives. Collapsing slowly at first, the number of people killed or injured was made
much worse by the shortage of escape exits and the large number of people in the building.

As news of the tragedy was broadcast around the world, commentators reported that the
collapse and loss of lives was due to the Western world’s obsession with cheap clothes.
FashionFinds was criticised as being part of the cause, with many saying that if retailers in the
developed world pushed too hard for low prices, this (the collapse of the building) was one
consequence of that. In response, FashionFinds’ public relations department responded that
it had entered into legal contracts with Closup in order to provide its customers with
exceptional value for money. FashionFinds said that it was appalled and disgusted that Closup
had acted corruptly and that the FashionFinds board was completely unaware of the
weaknesses and safety breaches in the collapsed building.

One of those able to escape the building was Jess Lui, who was also the leader of a national
pressure group ‘Protect workers’ rights’ (PWR) lobbying the Athland government for better
working conditions and health and safety practices for workers in the country. Having seen
hundreds of people killed and injured in the collapsed building, she believed that although
the government could do more, much of the blame lay with FashionFinds and the pressure it
continually placed on Closup to keep its prices low. Jess questioned whether multinational
companies such as FashionFinds should be allowed to exert so much economic pressure on
companies based in developing countries. As concern over the state of other workplaces in
the developing world became an increasing concern in the media, Miss Lui wrote a letter to
the board of FashionFinds, which she also sent to newspapers and other media. Many of the
newspapers and television channels reproduced the letter and it became a talking point in
many countries because of the issues it raised.

In the letter, she said that FashionFinds was an unethical company because it supplied a
market in its home country which was obsessed with cheap clothes. As long as its customers
bought clothes for a cheap price, she believed that no-one at FashionFinds cared about how
they were produced. She said that the constant pressure on prices had created a culture of
‘exploitative wages’, including at Closup.

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PRESEEN FOR TASK 3

The National Museum (NM) was established in 1857 to house collections of art, textiles and
metalware for the nation. It remains in its original building which is itself of architectural
importance.

Forty years ago, the government identified museums that held significant Heritage Collections
(HCs). These are collections that are deemed to be very significant to the country. Three
Heritage Collections were identified at the NM, a figure that has risen to seven in the
intervening years as the museum has acquired new items.

Funding and structure

The NM is currently 95% funded by direct grants from government. The rest of its income
comes from a nominal admission charge and from private sponsorship of exhibitions. The
direct funding from the government is based on a number of factors, but the number of
Heritage Collections held by the museum is a significant funding influence. The Board of
Trustees of the NM divide the museum’s income between departments roughly on the basis
of the previous year’s budget plus an inflation percentage. The division of money between
departments is heavily influenced by the Heritage Collections. Departments with Heritage
Collections tend to be allocated a larger budget. The budgets for 2021 and 2022 are shown in
Figure 1.

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 Collection sections Number of HCs Budget ($000s) Budget ($000s)

2021 2022

Art 2 135·00 140·00

Metalwork 1 37·50 39·00

Glass 23·00 24·00

Textiles 1 45·00 47.50

Ceramics 35·00 36·00

Furniture 30·00 31·50

Books 35·00 36·50

Photography 15·00 15·50

Fashion 10·00 10·50

Jewellery 1 50·00 52·50

Sculpture 25·00 26·00

Administration 60·50 63·00

Total 621·00 647·00

Figure 1: Section budgets; 2021 and 2022

The head of each collection section is an important position and enjoys many privileges,
including a large office, a special section heads’ dining room and a dedicated personal
assistant (PA). The heads of sections which have ‘Heritage Collections’ also hold the title of
professor from the National University.

The Director of Art and Architecture and the two professors who hold the Head of
Architecture and Head of Art posts have, in the past, successfully lobbied individual members
of the Board of Trustees with their concerns. The Director of Industrial Arts and the Director
of Media and Contemporary Art have also circumvented the former Director General and
directly contacted powerful figures in the Board of Trustees, television and the press to voice
their concerns. There have been, in the past, television programmes featuring interviews with
various heads of collections criticising changes proposed by the government.

The departmental structure of the NM (see Figure 2) is largely built around the twelve main
sections of the collection. These sections are grouped into three departments, each of which
has a Director. The Board of Directors is made up of the three directors of these departments,
together with the Director of Administration and the Director General. The museum is a

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charity run by a Board of Trustees. There are currently eight trustees, two of whom have been
recently appointed by the government. The other six trustees are people well-known and
respected in academic fields relevant to the museum’s collections.