Essay on Alta Gracia: Factory Subsidized to Improve Labor Standards in Dominican Republic

Introduction

The Dominican Republic in 2014 had something quite uncommon happening, subsidize of the Alta Garcia factory. The reason for subsidizing in Alta Gracia Factory is to improve its supply chain with labor standards. A living wage is paid by the factory to the employees whereby, this accounted for a high percentage of the country minimum wage of about 350 percent (Brest & Schifrin, 2014). The old factory owners were the knights and allowed unionization of workers and additional health care benefits. Payment of minimum wage was a routine by most of the factories and for workers this was not enough to pay the needs of their families and their basic needs. From both personal and business motivation, Joe Bozich, the CEO of Knights Apparel, came up with the decision to subsidize (Brest & Schifrin, 2014). Student's number from colleges is growing, and many are not pleased with working conditions, Bozich saw this opportunity and branded the schools' apparel. The Alta Gracia Factory subsidize wanted to create a pathway for hope for generations to come to be out of poverty. The subsidize results in good wages but lack profits because it takes small returns to ensure a close point in selling their garments with the competitors' price and offer a standard margin to their retailers. Additionally, with good wages, there is the creation of few opportunities for employment because workers will tend to stay long for the factory benefits.

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Save 25%

Ethical considerations

Alta Gracia is an ethically responsible brand with a pathway for out of poverty by providing living wages for people making clothes. As an independent business model, Alta Gracia is a good example showing that doing well in business can go in hand with doing good (Brest & Schifrin, 2014). With the continuation of subsidizing, the factory needs to have account on ethical considerations. Giving the workers a living wage is good because previously they were not earning this type of pay. Fringe and benefit payments from the factory will help and bear a sense of belonging in covering severance accrual, vacations and holidays for their workers. The ethical framework portion has common good, but additionally, some cons need to be in consideration. They can destabilize the economy with the common good of workers being a disadvantage in the community and the location of the factory. Those not working in the factory could have problems that are more significant because it can root an increase in the cost of living, and these people would no longer be able to afford to live in the region. Individuals can be stuck in a cycle of poverty, especially for those functioning in sweatshop conditions manufacturing apparel. The race to bottom by the apparel industry is causing manufacturing of garments to be at the lowest probable costs. The bottom race undermines labor rights compliance and causes the existence of sweatshops, whereby it results in individuals to receive poverty wages in manufacturing.

Stakeholders

Stakeholders are people or groups in an organization with rights, interest and ownership of the business with its actions. The Alta Gracia factory subsidizing affects stakeholders. The change in this case benefits the customers who are student activist, Joe Bozich the primary stakeholder and employees (Brest & Schifrin, 2014). The Alta factory subsidize helps the stakeholders by drawing devotion to their cause with necessary human rights awareness to overseas clothing factories that employees need. The student activist ideals that they need are set adhered by the factory and are included within the Alta Gracia values. Drawbacks by the factory can also have negative consequences for these stakeholders. Failure in Alta factory would cause other companies that are overseas to offer no or minimal living wages to their employees because the factory failed as an example for all.

Considerations for long-term profitability

With the continuing subsidizing, the Knights Apparel needs to consider how to succeed in long-term profitability for the Alta factory. They are marketing their products the same way that they started in stores. They can use celebrity endorsers such as images and stories from their workers. It is a great way to sell their products by giving consumers the right to know where the products are manufactured. The company can open many doors for sale because consumers care more about where the product they buy come from and the work environment involved. The marketing strategy is of advantage but additionally, they need to consider the image of other companies in the same industry in one host country whereby they do not make them look bad. Making a host country in the sector to look bad can create barriers for the factory to move and loss of jobs to the employees. Employee's image can influence consumer choice in purchase of their product when they show ethical responsibility and prove that they are doing well with the living wage.

References

Brest, paul, & Schifrin, D. (2014). Knights Apparel and the Alta Gracia Factory: Paying a Living Wage. Retrieved April 5, 2020, from https://www.gsb.stanford.edu/faculty-research/case-studies/knights-apparel-alta-gracia-factory-paying-living-wage

Sweatfree Purchasing Consortium. (2010). Alta Gracia, A New Living Wage Factory.