CIMA SCS Nov 2017 Steelcast - Ethical Isssue
The management of Steelcast is of the view that they should create a limited edition watch for the premium segment. The watches can be procured for a low price material from a vendor from another country who will polish the skin of the watches to ensure that the shine remains for a considerable time period. The biggest advantage of the deal is that the limited edition watches will be sold at a considerable premium, and the procurement cost would be negligible. This is certain to create a huge positive financial benefit to the company.
However, the company would like to have the words "Made in Highland" to ensure the credibility of the watches.
- Discuss the implications of the above decision from the financial view point. You need to consider both short term and long term financial implications to Steelcast's business.
- Do you think that the above decision has any ethical implications to have the words - "Made in Hiland" which is not true?
The failure of the new design of the watch has resulted into a loss of significant investment without any positive returns. Steelcast's management understands that the shut down of the new unit is unavoidable now. The rumors of the shut down are already widespread and the labour at the site is having unrest about the uncertainty of their careers and job prospects. The labour laws are weak in the nation, and there is no legal implication of shutting down the unit.
How should the news of a possible shut down be communicated with the labour? What possible options are available to Steelcast's management to support the labour which is made redundant?