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Ethics and Governance in Business (Gpo 101)

Business Ethics Case Analysis

Maribel Cristina Ordóñez Urgilés

A01531677

June 19, 2024

 Ethical Analysis of the Rana Plaza Disaster

Introduction

The Rana Plaza disaster on April 24, 2013 in Savar, Bangladesh, marked a
tragedy in the global garment industry. More than 1,100 workers were killed and more
than 2,500 injured when the factory building collapsed. This disaster highlighted critical
ethical dilemmas, including unsafe working conditions, lack of corporate social
responsibility, and inadequate regulatory oversight. The central ethical question revolves
around the responsibilities of multinational corporations (MNCs) that source their
products from low-cost factories in developing countries, often at the expense of the
safety and well-being of workers. (Quelch and Rodriguez, 2015)

Background (150-200 words)

The Rana Plaza building housed five clothing factories and was a key supplier
for several Western fashion brands. Built with low-quality materials and without
properly adhering to building codes, the factory's collapse was inevitable. Factory
owners and building authorities ignoring safety warnings and forcing workers to return
to work under the threat of losing their jobs (Quelch and Rodriguez, 2015).

This event brought to light the dangerous conditions faced by workers in

Bangladesh's garment industry, which is the second largest in the world. The aftermath
saw a global outcry and calls for better labor practices and stricter safety regulations.
Stakeholders involved included factory workers, their families, factory owners,
multinational brands, local government officials, and international labor rights
organizations.

Ethical Analysis (250-300 words)

Applying utilitarian ethics to the Rana Plaza disaster, we focus on maximizing

overall happiness and minimizing suffering. The actions of factory owners and
multinational brands did not pass this ethical test (Singer, 2023). Factory owners
prioritized profits over worker safety, ignoring clear warnings about the building's
structural integrity; building that was built with permits obtained corruptly. Similarly,
MNCs sourcing products from Rana Plaza focused primarily on cost reduction and price
competitiveness, often turning a blind eye to the conditions under which their products
were manufactured.

Deontological ethics, which emphasizes duties and norms, also condemns the
actions taken (Velasquez, 2011). Factory owners had a duty to ensure a safe working
environment, while MNCs had an ethical obligation to respect human rights in their
supply chains. By neglecting these duties, both sides contributed to the catastrophe.

Virtue ethics, which focuses on moral character, further highlights shortcomings

(Woodruff, 2023). The lack of integrity and responsibility of factory owners and MNCs
led to decisions that endangered the lives of workers. MNCs, in particular, had the
resources and influence to impose best practices, but chose profits over ethical
considerations.

The decision-making process did not adequately consider the well-being of all
stakeholders. Factory owners ignored engineers' warnings and coerced workers to
return, prioritizing deadlines over human lives. MNCs, despite having codes of conduct,
often did not enforce them rigorously, allowing unsafe practices to continue.

Impact on Stakeholders (100-150 words)

The primary affected stakeholders included factory workers and their families,
who faced immediate loss of life, injury, and financial hardship. Secondary stakeholders
included multinational brands, which suffered reputational damage, and local
government, which faced criticism for regulatory failures. In the short term, workers
and their families experienced immense suffering, while MNCs faced negative
consumer reactions. Long-term impacts included ongoing health issues for survivors,
loss of income, and a push for better regulatory frameworks and corporate practices.

Recommendations (100-200 words)

To address these ethical issues, MNCs must enforce strict compliance with
security standards in their supply chains. This involves regular, independent audits and
transparency in information on working conditions (Nelson, 2022). Companies must
collaborate with local governments and NGOs to improve factory conditions, ensuring
investments in infrastructure and worker safety. Establishing a fund for victims and their
families can provide immediate relief and demonstrate corporate responsibility. In the
long term, MNCs should advocate for and support regulatory reforms in the countries
where they operate, promoting labor rights and safe working conditions.

These recommendations can improve corporate governance by incorporating

ethical practices into business operations, ensuring worker safety, and fostering a
sustainable supply chain (Rodin and Dempsey, 2023). By aligning corporate practices
with ethical standards, companies can prevent future tragedies and build a reputation for
social responsibility.

Conclusion (50-100 words)

The Rana Plaza disaster underscores the urgent need to integrate ethical
considerations into global business operations. Ensuring the safety and well-being of
workers in supply chains is both a legal and moral obligation. Multinationals must
implement and enforce strict safety standards, support regulatory reforms and prioritize
human rights to prevent similar tragedies in the future. Additionally, consumers have the
responsibility to demand ethical and sustainable practices, choosing products from
companies that respect the labor rights and safety of their workers.

Throughout this analysis, key concepts such as utilitarian ethics, deontological

ethics, and virtue ethics have been integrated to evaluate the ethical dimensions of the
Rana Plaza disaster. Recommendations are based on theories of corporate social
responsibility and sustainable supply chain management, connecting classroom
knowledge with real-world ethical challenges.

References:

Nelson, J. S. (2022). Business Ethics: What Everyone Needs to Know. Oxford

University Press.

Quelch, JA, & Rodriguez, ML (2015). Rana Plaza: Workplace Safety in Bangladesh
(A). Harvard Business School Case 514-034.
Rodin, D., & Dempsey, J. (2023). The Ethics Study 2023: Business Leaders on the
Ethics Gap and How to Close It. Principia Advisory.

Singer, P. (2023). Ethics in the Real World: 90 Essays on Things That Matter. Princeton
University Press.

Velasquez, MG (2011). Business Ethics: Concepts and Cases (7th ed.). Pearson.

Woodruff, P. (2023). Living Toward Virtue: Practical Ethics in the Spirit of Socrates.
Oxford University Press.