Ethical Issues and Business Practices: MAS Holdings Report BBA309

This report examines the ethical issues faced by MAS Holdings, a prominent apparel company. The executive summary highlights challenges such as low wages, poor working conditions, decision-making processes, corporate financial reporting, and allegations of slave labor within the company. T...Read More

Running Head: ETHICAL ISSUES 1
Executive summary
The case study on this paperwork is the MAS Holdings apparel company, which is the world
most reputable industries on ethical issues. MAS Holdings provides employment opportunities to
several citizens. It also boosts the foreign exchange of Sri Lanka. As a result, it helps in
sustaining the Sri Lankan economy. The apparel company is the best, globally. However, it's still
challenged with ethical issues, yet it has helped in making potential initiatives like the MAS
women go beyond which empowers women. The ethical issues surrounding the clothing industry
include low wages, poor working conditions, decision-making process, corporate financial
reports, and slave labor. The paper also discusses the possible outcomes basing arguments from
the utilitarian and Kantian ideologies suggesting that human beings supersede all creature.
Therefore, they should be prioritized, and there happiness and pleasure replace other factors in
the world. The assignment is concluded with three recommendations.
Introduction
Businesses face ethical problems daily. To date, ethical management has been a vital instrument
in business administration so that the organization can be in harmony with society and
employees. Ethics are principles which determine the sustainable business conducts in a
company which is determined by interests groups, competitors, government regulators,
customer's public as well as personal morals and values. The case study company is the MAS
Holdings company. MAS is the largest apparel industry in Sri Lanka, which produces a variety
of clothes. It's one of the first foreign exchange earner and the largest single employer in the
clothing industry. MAS Holdings Company creates approximately 300,000 to 600,000

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employment opportunities annually (Athukorala & Ekanayake, 2018). Therefore its ethical
practices have been essential for its credibility and growth of the economy of Sri Lanka over
time. The current moral issues facing the MOS Holdings company include low wages, decision
making, slave labor, oppression and discrimination, poor working conditions, employee’s
privacy, and freedom of expression. Therefore the paper will discuss the ethical issues within
MAS Holdings and the possible outcomes in respect to the utilitarian and Kantian theory.
Slave labor
The U.K. fashion retailer shop and Beyoncé decided to obtain gym wears from Sri Lanka labeled
Ivy Park, they encountered the sweatshop debate, which wasn't their sensor. The Holdings
Company is the largest known company globally with a famous name of being the most ethical
manufacturing and an innovative company producing ivy park clothing's (Athukorala, &
Ekanayake, 2018). Its innovativeness has gone beyond, and they became the first company to
create an environment friendly apparel plant to Mas women go beyond, which is a women
empowerment initiative. However, according to the U.K. lucid the sun on Sunday, MAS
Holdings was accused that the employees making the ivy park clothes were laboring in the
sweatshop situations as slave labors with low pay (Fontana, 2018). Other newspapers, op-eds,
blogs stated that Beyoncé and other companies would only solve this through switching
suppliers. These allegations are new since the global anti-sweatshop movement has existed for
more than 20 years and has had different organizational and institutional forms. Therefore we
can question where the problem is? What's new in this era? What is taking place? Who are
liable? (Fontana, 2018).
Low living wages and lack of payment to workers

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The workers at Holdings are providing services with strict rules of making 200 clothes per hour,
yet their pay is below the minimum wage bill. As at 2013, the payment of a worker at clothing
companies was 10,075 rupees, and since that increment, to date, there has never been any other,
yet the inflation rate and wage bill of Sri Lanka heightens (Fontana, 2018).
The year 2008- 2011, the world apparels industries were faced with global economic recession
and the removal of the multi-fiber arrangement ratios, which had regulated the trading of
clothing since 1970(Fontana, 2018). The phase of MFA lifted limitation for high volume
producer countries like, China which had made the markets flooded and caused pressure on the
price (Fontana, 2018) hence, buyers possess more significant advantage by placing more orders
at lower prices. Such challenges never pinned down Holdings industry because of there emphasis
on the brand-conscious recess of ethical apparels. This happened due to the history of the local
norms and firm labor laws which value education and forbids child abuse. The Sri Lankan
clothing companies since 2000 they have maintained their important ethical production issues as
core business models, and they are now visionary and capable suppliers internationally and
domestically (Fontana, 2018). A responsible supplier considers customer demands like meeting
standards and quality, manages upstream supply, and provide turnaround productions. MAS
Holdings and other Sri Lankan clothing companies are known to be performers in terms of
meeting the compliance standards (Fontana, 2018). The wages concerns surrounding them
according to the current media foray states that the workers at the garments companies aren't
paid a living wage. Under the WBO body which regulates the minimum payments in the country
indicates that garment workers should be paid monthly not hourly nor depending on pieces yet
that companies are going against the laws of the state by paying according to sections.
Decision making

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Most garment companies uphold the dictatorial system of government, where workers views are
not considered the employer's decision is always paramount; therefore, workers fell they lack the
right of expression. Studies show that several workers have complained that not even once has
their view been considered, but everything is done in favor of the management. They are afraid
of expressing themselves since they are threatened with expulsions if they complain or make any
simple mistakes. According to Kantian theory, human beings are universal over other things
(Scholten, 2016), while utilitarian believes human beings pleasures and happiness is paramount
(Butler, 2018). Therefore if workers are engaged in the decision-making process, there will be
universality, by making every person equal in the company. As a result, there will increase
production because the value of humanity would be realized.
There are reported ethical violations in various workplaces like verbal abuse, physical abuse
which is either forced overtime, denied maternity leave payment, sexual nature and failure to pay
bonuses and salaries in time and full work pressure and neither using dirty toilet water issued for
drinking and unfavorable working conditions. These issues are intense because the workers at
clothing companies are oppressed because of limited facts on human rights.
Poor working conditions
The falling prices of clothes have made production to be cheap in demand all along the supply
chain. Therefore the pressure is always on workers to work round the clock to make more
clothes. Factories in developing countries possess fewer rules and restrictions than those in Sri
Lanka where working conditions are poor, and workers suffer health wise there are toilet breaks
limitations leaving workers suffering from kidney failures, eye strain, backaches, burns and
injuries (Fontana, 2018). When people work for up to 16 hours, fatigue could occur and cause

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accidents. Therefore dignified working environs should be created in Sri Lanka just as the
rational theory posits that human beings happiness and pleasures should be
paramount .consequently, the employers should consider improving working conditions to
reduce accidents and care for the health of a worker. When the employers reconsider the working
conditions, they will conform to the theory of Kantian who believes human being supersedes all
other creatures in the world; so they should be considered first. When workers work under
conducive environments, they will feel safe and happy as result productivity won't be an issue
since human beings are valued just as Kant posits. On the other hand, poor working conditions
are supported by utilitarian's who provides loopholes for employers to use workers to sacrifice
for their happiness and help them achieve good results in the end.
Oppression and discrimination
The MAS Holding company is faced with the ethical issue of oppression and discrimination. The
Holdings company could be accused of discrimination because it is a gender-biased company
which upholds women over men they provide employment to women and they have established
initiatives like the MAS women go beyond which is a women empowerment initiative, and also
it educates the workers but they are majorly women this is gender parity and can be
discrimination. Likewise, there are cases of workers exploitation and oppression where workers
do not have the freedom of speech or expression and also the right of making conscious
decisions. For instance, the Holdings Company ensures workers sign a written document that
they must never join unions, and if they take part, they will lose their jobs (Fontana, 2018).
Additionally, workers are oppressed since they worked for six days a week with only Sunday as
a holiday, but whenever there is urgency, they get to work, and at times their due isn't paid. If

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they inquire, they are physically abused or verbally abused, and workers could be issued fewer
orders by the management as a punishment for reacting towards matters which they shouldn't
engage on. The Sri Lankan government and the union officials are liable for the oppression and
discrimination of workers because they should be protecting workers against such humiliations,
but they aren't taking up their responsibility giving room for companies to exploit the workers.
For example, the Sri Lankan wages board ordinance and the employee’s office act of 1954 help
in fixing wages. However, some companies go against these rules because of business demands
on extra produce, so the engagement of workers for longer hours is payable, but some garment
companies assume such factors to exploit workers.
Corporate Financial reporting issue
The holdings company is not left behind on financial concerns. The financial reports are still
deceitful, because, for the last 20 years, fraudulent financial activities are still rampant. Several
managers deliberately misapply funds to deceive investors and provide fake company shares.
When false revenue is provided, misstatement entries. There is a misappropriation of assets at
employee levels a major ethical issue. Assets are used for other personal interests other than
companies interests, funds are embezzled, and wrong documents and invoices are prepared
instead. This will affect the morale of workers and the company's reputation. Then full disclosure
is also another issues in textile industries since they are opting to find investors they will always
make errors which are caused by negligence. Consequently, the financial reporting system will
be labeled as a fraudulent system full of unauthenticated financial reports.

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Outcomes in respect to Kant and utilitarian theories
Kantianism and utilitarianism devour different means of determining if an action being
performed is right or wrong. Kant posits that employers should look at the maxims or intents of a
specific action. The Kantians considers "human life as valuable since they are the bearers of
rational life" (Butler, 2018). To mean human beings are free-rationales skilled with rational
characters and shouldn't be used only for the happiness and enjoyment of an employer or another
person but for their pleasure and satisfaction. On the contrary, utilitarian's posits that acts
towards beings should produce a maximum amount of happiness, however utilitarian is criticized
because it allows an employer to use an employee as a mere means leading to sacrifice of lives
for grander good. Therefore utilitarianism justifies punishment of innocent people "if it is crucial
in realizing adequately good results (Butler, 2018)." As a result, typically binding promises
between an employee and an employer can be broken to produce grander good, which is
applicable in any obligation even between partners. Hence utilitarianism at times, involves the
sacrifice of a person's happiness or life for the sake of promoting grander happiness and
minimizing miseries.
Workers morale is shuttered
When financial reporting issues are fraudulent, the employees suffer, and the company's
reputation would be tarnished. But, if the financial process is designed with honesty by providing
approach based evidence, With supporting documents adequately arranged the company will be
conforming to the Kantian theory which believes that human beings should be prioritized and be
made happy for activities to have positive outcomes or results. According to the two approaches
whenever unethical issues are occurring in an organization, there are higher chances that human

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beings are not prioritized and made happy because of the unethical conducts within a company if
the financial reports are ineffective employees morale will be destroyed and performance output
will decrease. The fraudulent activities taking place in business management are justified
through functional theory, which believes human beings happiness can be sacrificed to reduce
one's misery and make the employer happy. As a result, providing an incorrect financial
calculation for the sake of obtaining investors is very right and ethical, according to utilitarians.
However, for Kant, it's utterly unethical since the workers' morale is disturbed because they are
not valuable, and their happiness is not considered.
Low wages cause poverty
The low minimum wage was introduced by the government so that the employees are protected
because of the rising costs of living. According to the Sri Lankan declaration act, every person
who works has the right favorable and pay, which can sustain the family and dignifies
humankind or socially protects humanity (Athukorala, & Ekanayake, 2018). Hence an employer
should be ethical to provide the employees with reasonable wages. Since low payment causes
poverty and may make some employees to engage in prostitution which makes them vulnerable
to diseases, which may affect their health, therefore the production rate will be reduced since a
majority of workers will have poor health. Just as Kant posits, it's essential for employees to
value humanity and refrain from practicing utilitarianism, which allows employers to treat
workers as mere means by using them for their happiness.
The working hours should also conform to the Sri Lankan laws which govern working hours
which shouldn't exceed 48 hours and a maximum of 12 hour overtime weekly is allowed
(Athukorala, & Ekanayake, 2018). For instance, the company can adapt to changes in scheduling

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practices and job designs which are accommodative to human needs through adopting social
friendly deals which upholds the theories of Kantian, which supports all aspects of humanity. By
stating the human beings supersedes all creatures globally; therefore, they should be given
priority by considering their well-being regardless of the situations.
Insecurity
Infringement of workers' rights can be solved through the use of unions since most of the
employees at the clothing industries are lows killed or unskilled therefore it's through
allowing them to join trade unions where union leaders will speak on their behalf.
(Athukorala & Ekanayake, 2018). Therefore workers will feel secure. Also, the employer
should ensure the rights of the employees are upheld, and they shouldn't be denied the
chance of joining trade unions or labor union because it's their right.
CONCLUSION
The recommendations on the discussed ethical issues are based on the employer's moral
behavior. Likewise, the government can create awareness programs and orient employers on the
rights of employees. Lastly, employers should be knowledgeable about legal responsibilities and
proper service practices. I wish to advise employers to conform to the Kantian theory and ignore
the pragmatic approach which beliefs in dehumanizing beings for the sake of good results and
employer's happiness

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References
Fontana, E., (2018). The case of MAS Holdings in Sri Lanka. Eco-Friendly and Fair: Fast
Fashion and Consumer Behaviour.
Athukorala, P. C., & Ekanayake, R., (2018). Repositioning in the global apparel value chain in
the post‐MFA era: Strategic issues and evidence from Sri Lanka. Development Policy Review,
36, O247-O269.
Butler, C., (2018, May). Human Rights Ethics: A Contemporary Normative Ethical Theory. In
Proceedings of the XXIII World Congress of Philosophy (Vol. 12, pp. 41-49).
Scholten, M., (2016). Reminders of duty: A Kantian theory of blame.