Economics Assignment - Integrative Business

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ECONOMICS ASSIGNMENT
INTEGRATIVE BUSINESS

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Contents
Introduction................................................................................................................................3
Discussion and Summarisation..................................................................................................3
Relation of the article with system thinking..............................................................................4
Relation of the article with positioning your studies theory......................................................5
Conclusion..................................................................................................................................6
Reference....................................................................................................................................8

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Introduction
Governments around the world has different nature and characteristics, however they same in
one aspect which is the objective of having an impressive economic growth rate. Economic
growth rate is also considered as a benchmark for the performances of the world governments
as well. The government can increase the growth rate of the economy by overusing the
resources more than their capabilities. However that would ensure an impressive growth rate
for the economy at the cost of the oppression of the labours (Zhu et al. 2017). Therefore, in
order to increase the general welfare of the country as a whole the objective of a country
needs to be to maintain a balance between the economic growth and the decency of the work
where the resources are being used.
One of the major advantages of the decency of workplace and voluntary employment of the
resources is that it does not violate the human rights of the workers being used as input to the
production process. Decency in terms of payment, work ethics and work security not only
increases the social welfare but it also improves the standard of living of the workers as well.
This in turn reduces the inequality in the economy from all the aspects such as living
conditions, income and rights. Therefore peace and justice for workers in every field is an
important necessity for a balanced economic performance and social welfare. The
government’s role here is to use the institutions in a manner that connects economic
ambitions of the economy with the basic human rights of the workers helping to produce
value for the country. The objective of the paper is to discuss and draw a relation of the given
article with various theories of economics.
Discussion and Summarisation
The article discusses companies from Australia such as Cotton On and Target Australia is
stopping buying cotton from the Xinjiang province of China which has been in news for
human right violations and forced labours. Many companies of Australia that used to source
their cotton demand from this region of China have started their internal investigation and
many of them have already stopped sourcing their cotton from Xinjiang as well. International
companies like H&M was also revealed in the report to have contract with subcontractors of
that particular province related with the human right violations (Franceschini, 2016). The
H&M management also mentioned to not have found any evidence of forced labour in the
Xingjian province where a facility of subcontractors of the company exists.

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In the year 2017, reports revealed that Chinese communist party is oppressing the people
belonging to Uyghur community of the country. The government is isolating the members of
these families forcefully and pressurising them to work in Xingjian province. Apart from that
the government is also threatening these people to detain if the orders are not fulfilled (Zou,
2017). Despite the evidence of human rights violations, Xingjian is still the largest cotton
producer of the country and some companies are still sourcing their cotton from them without
admitting to do it. Experts of the forced labour in China also state that it will become
impossible in future for the business to tell whether their products are being made by
detainees or involuntary workers. The operation of the oppression and the production process
in China is getting bigger and bigger and hence there is a high risk for the foreign companies.
The expert also stated that the western companies are directly and indirectly helping the
oppression of the Chinese government (Black, 2019). There are many companies in the west
which are not reviewing their supply chain operations despite knowing the fact that their raw
materials are being produced by forced labours.
The article also states that, the government of USA is against the oppression of the Chinese
government on the Uyghur Muslims and hence as a denouncement is imposing import taxes
on the products being imported from China. However, the Chinese administration has always
denied the oppression on the labours and said that it is an internal matter of China. Therefore,
the cotton trade market in the world is an ambiguous situation where some companies are
reducing their cotton import from China and some companies are not bothered by what is
happening in the source country.
Relation of the article with system thinking
System thinking is a theory of organisation that studies the operation of the organisation from
the external perspective and also studies the system of the organisation. The theory states
that, an organisation is a huge system where different parts consist of small subsystems. The
subsystems of the organisations are interconnected to each other and cooperate to produce a
value for the organisation (Yan, 2019). In the case in hand, the Cotton On is an organisation
and hence can be considered as the huge system. Its different operations such as the raw
material procurement, production and distribution can be considered as the subsystems.
According to the theory of the system thinking, the operation of the whole system is
depended on the performance of the subsystems and hence any kind of human rights violation

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in the location from where the cotton is being sourced can harm the operation of the
organisation as a whole.
Volgin, Gaag and Naumov (2019) stated that the theory talks about the leverage points under
the whole system thinking and analysis. Under this the management of an organisation looks
at the organisational problem from a broader perspective that helps in finding the problematic
subsystems of the organisation. These leverage points not only solves the problems of the
organisation but also influences the other systems of the organisation positively. In the given
case, the whole system analysis helped some companies to undertake the internal assessment
that further led them to decide against the import of cotton from the Xinjiang province of
China. The four corners revealed the names of the companies that were importing cotton
from the Chinese facilities where labours are being forced to work. Bulat et al. (2018) stated
that reputation plays an important part in having a sustainable customer base and business
operation. The leverage point here allowed companies like Cotton On and Target Australia to
repair their reputation among the customers. On the other hand the companies that denied any
internal investigation in this matter may be risking their reputation.
The systems thinking theory also talks about balancing the decisions of the organisation. That
is reinforcement or change in the organisation can make changes in the subsystems that can
further influence the large systems as a whole. However, the change in one subsystem can
influence other subsystem that can further nullify the changes in the large system. For
example, in this case, the Target Australia terminated their contract with the Chinese facilities
that could increase the cost of production and hence the prices of the products could have
increased (Alsamawi et al. 2017). The customers of the market could have substituted the
products of Target Australia with other companies that were producing the product at lower
cost using the cotton imported from Xingjian province. However, there is another subsystem
that needs to be considered for the business decision making which is the organisational
reputation. In the wake of Chinese oppression on the workers an increased prices of product
corresponding to changed supply chain operation of the organisation would rather improve
the reputation of the organisation leading to a greater demand nullifying the negative effects
of the increase in cost.
Relation of the article with positioning your studies theory
Positioning is an important part of the business plan for any organisation. Hart (2019) stated
that positioning allows the management to outline its product among the chosen target

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customers of the market. For an accurate positioning of the products or the services in the
market, the management needs to understand the behaviour of the customers. The main
objective of the production process for any organisation is to meet the demand of the
customers which was not previously met by any other companies. The theory of positioning
the study states that, understanding the needs of the customers of the market often offsets the
increase in the prices of the goods and the services (Li and Jianfei, 2019). In this case, the
companies which have changed their source for cotton have also incurred an increased cost
for the production. However, an ethical production process always influences the demand of
the customers of the market. According to Tampe (2018), the increase in the prices of product
sold by Target Australia may not reduce the demand as the customers can also consider the
ethical production process of the organisation as well. Therefore the decision of the
management needs to be made depending on the positioning of the organisation in the
market. For example, if the market for the product sold by Target Australia was a perfect
competition, the rise in the price owing to the increase in the cost of the production could
have led to a reduction in the revenue.
Other than that positioning the study for the market and the customers can also provide a
competitive edge to the organisation as well. In the context of this case, the Cotton On
positions its product in the category of good quality rather than the category of low price.
Therefore, this improvement in the quality of the cotton products after switching from initial
source would actually increase its demand. This theory also explains the reason for denial of
the other companies of the market. van der Velden and Vogtländer (2017) stated that, the
organisations that mainly focus on affordability of the product refrains from increasing the
prices of their product. Therefore, changing the source of cotton due to the problem of forced
labour would actually be a problem for these companies. The theory also suggests that correct
positioning of the market study and the product can match the aim of the organisation with
the demand of the customers of the market. For example, if the market study shows that the
prices of a certain product do not matter for the customers it is rather the quality they look
for, in that case it will be easier for the organisation to practice in an ethical manner and
switch its source. This is also the reason for some of American companies to ignore the
human right violations in the source region. The customers of the company mainly responsive
to the changes in prices and hence it was impossible for the organisation to be ethical in this
case.

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Conclusion
Therefore, ethical practices of the organisation depend on the preferences of the customers of
the market. The customers of the market mostly operate in a rationale manner wherein most
of the cases the emotions and compassion does not play a significant role unless the market is
not a perfectly competitive market. Therefore in this case the institutions of the countries
need to intervene so that preferences of the customers match with the ethical operation of the
organisations. The case shows that, justice and peace is not being considered as the main
focus by many of the companies and hence they are not mentioning the source from where
the cottons are being imported. The institutions and the world government can pressurise the
Chinese government in this case to maintain oppression free production system that not only
will bring the cost effective market in the equilibrium but it will also help in implementing a
just society for the world. Given the analysis of the paper, it is recommended to the
organisations to carry out internal investigations so that it can improve the reputation of the
organisation. The paper shows that the decent work standard and the economic growth are
two important economic indicators. The theory of system thinking shows that, the subsystems
of the organisations needs to be in line with the main system of the organisation. In that case
a leverage point decision making can allow the management to undertake a correct decision
based on the situation that would ensure a just operation of the boarder economy.

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Reference
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