International Marketing: Evaluating GAP's Actions in Bangladesh

This case study examines the ethical and business challenges faced by the GAP clothing company concerning its supply chain operations in Bangladesh's garment industry. The study begins by highlighting the Rana Plaza factory collapse and its impact on worker safety, low wages, and poor working conditions. The assignment explores the outsourcing practices of multinational corporations, like GAP, and their responsibilities toward their offshore supply chains. It delves into the complexities of corporate social responsibility, the impact of corruption, and the benefits and drawbacks of outsourcing. The study analyzes the importance of ethical sourcing, the potential for legally binding accords, and the need for companies to maintain a strong brand image by considering the welfare of stakeholders. The case study references several academic papers and reports to support the analysis, providing insights into the economic, social, and ethical dimensions of international business, particularly within the context of Bangladesh's garment industry.

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1. Various Multinational firms tend to outsource their supplies and productions offshore in order
to minimise the cost of labour as well as production. Multinational companies like Nike or Gap
generally outsource their supply chains and productions to the third world countries where there
is great availability of more labours at a low rates. In the light of the given case study, the
question thus arose is the extent of responsibility of such MNC in the working condition of their
supply chains offshore. Issues like the poor conditions of the workers, their working in harsh
conditions and receiving not even the minimum wages have been in news for long. Voices have
raised for the companies who are having supply chains in these areas to take the responsibilities
of the working conditions in this place (Kapstein 2015). It is however difficult for any company
to look after the internal issues and the internal environment of every supply chains. The GAP
Company only works with eighty factories in Bangladesh. The statistics for other countries may
be quite similar. Still, the companies must understand that the sustenance of the supply chains
are part of their corporate responsibilities. The supply chains are their stakeholders and any
malicious deed will affect the brand reputation of the company. For example, Coca Cola
Company became the news of media and incurred mal reputation to a large extent because of the
poor working conditions of their workers in the third world countries. The nature of corporate
social responsibility is an evolving one and is at present not restricted to the domain of the
company where they are operating but also held responsible in the environmental as well as
labour practices of their global trading structure (Habib and Zurawicki 2011). Controlling the
production and the working environment without exercising ownership will ultimately help the
companies in strengthening their brand image.
2. Considering the poor working conditions and the level of corruptions, there has been debates
whether it is ethical or beneficial for the multinational firms to carry out the outsourcing

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offshore. The major reason for going against this was the corruptions prevailing there. The
dealers and the factory owners are often found to be the most beneficial by having supply orders
where as on the other hand the workers who come from the lower sections and are poor are being
exploited to a large extent (Hensler and Blasi 2013). Reportedly, they are forced to work under
harsh conditions, often for ling hours and are denied of their minimal pay. News of such issues
can hamper the reputation of brand. However, to some companies, it is still beneficial to work in
these areas. The first area of convenience is the huge cheap labour market. If a company is able
to have a strict sustainable plans and laws and regulations, the corruptions can be checked largely
if not totally. The cost that will be required for this will be complemented by the lower cost of
labours and thus profit margins will remain high. The second benefit that the organisations get by
the outsourcing is their own minimisation of cost in production. The third world countries appear
to be a great opportunity in this respect since these areas are particularly in need of employment.
The third point of benefit, particularly in respect of garment factory is that it is generally held
that the handcrafts of the people from eastern sides, particularly Bangladesh are of superior
quality. The textile industry of Bangladesh is thus a reputed one (Ahmed 2014).
3. it will be judicious for GAP to be signing the legally binding accord. The company has been
already criticised by the national as well as the international governments and the unions and
thus at present in a high risk of facing accusations of neglecting their social corporate
responsibilities. Moreover, if there is an assurance that the responsibilities will be taken up by
the parent firms, tendencies of joining of workers in respected supply chain countries will be
more. Due to the ill reputations of the corruptions and the working conditions of the workers in
such factories, workers often chose other occupations (Wu 2016). Thus, signing the bond will be
beneficial for GAP in maintaining their own sustainability. Moreover, this will also create a

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healthy relationship with their stakeholders not only in economic terms but also in ethical terms
as well.

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Reference List:
Ahmed, F.E., 2014. The rise of the Bangladesh garment industry: Globalization, women
workers, and voice. NWSA journal, pp.34-45.
Habib, M. and Zurawicki, L., 2011. Country-level investments and the effect of corruption—
some empirical evidence. International Business Review, 10(6), pp.687-700.
Hensler, B. and Blasi, J., 2013. Making Global Corporations’ Labor Rights Commitments
Legally Enforceable: The Bangladesh Breakthrough. Workers Right Consortuim
Kapstein, E.B., 2015. The corporate ethics crusade. Foreign affairs, pp.105-119.
Wu, S.Y., 2016. Corruption and cross-border investment by multinational firms. Journal of
Comparative Economics, 34(4), pp.839-856.