Here\'s some background info. A company\'s duty to operate honorably, provide go

Question

Here's some background info. A company's duty to operate honorably, provide good working conditions for employees, be a good steward of the environment, and actively work to better the quality of life in the local communities where it operates and in society at large". However, despite the benefits that operating socially provides, there are also several inherent conflicts with corporate strategies: •Investment in CSR initiatives take resources that may compete with resources to improve profits and expand operations, or can significantly increase costs and require higher product prices that consumers may not always support. •Different countries in which firms operate may allow things such as child labor, low pay levels, and lax safety and environmental regulations. In fact, these maybe not only legal, but also socially acceptable. For example, in some countries, families rely on children to work and earn wages to help support the family.

Here's the question... How do you answer criticism that by building plants in countries with much lower labor and manufacturing costs, it is often at the expense of jobs, revenue, and expertise in your home country?

Explanation / Answer

Companies benefit by building plants in countries with much lower labor and manufacturing costs because the revenue earned in these countries is far greater than the revenue earned in the home country . The excess revenue earned by the firms can then be used for new product development , increasing the advertising expenditure or to create new jobs in the home country . Even though low skill jobs will be lost , the firm benefits from increased revenue by building plants in countries that have low labor and manufacturing costs .

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