Business Ethics and Law
Over the last several years, the issue of ethics and legal challenges has been increasingly brought to the forefront. This is because globalization has created a change in the way firms are interacting with employees. Over the course of time, this has resulted in firms outsourcing jobs to key locations (which have lower labor costs). This has given executives greater amounts of flexibility in determining: what is asked of employees, the kind of benefits that are received and the impact on labor relations. (Franklin, 2001, pp. 7 -- 16)
In the case of Caterpillar, they have been using this kind of strategy to reduce their costs and to begin selling their products in developing markets. This has resulted in the company realizing increasing profit margins and it has helped the firm to aggressively market to consumers in these areas. However, a problem has emerged inside many of the established plants at locations throughout North America. In these kinds of situations, executives are asking employees for greater reductions and changes to their union contracts. This has resulted in a series of strikes and labor disputes. After a period of time, is when the union will renegotiate a contract that is in line with the management's objectives. This is problematic, as these practices are circumventing different legal and ethical guidelines. To fully understand what is happening requires focusing on: the issue in relation to the firm, understanding current ethical challenges and providing suggestions for addressing these kinds of impasses in the future. Once this takes place, is the point that existing and future challenges can be effectively dealt with inside the workplace. (Franklin, 2001, pp. 7 -- 16)
The issue / situation in relationship to business, government and society
One of the major challenges, facing Caterpillar has been the contentious relationship the firm has with its employees. This is because the company is a traditional manufacturer of heavy equipment that is used in the construction and excavation industries. However, as time went by the firm was adjusting to changes that were occurring from globalization. At first, this was a very gradual shift with the company building plants in states where unions were not as strong. (Franklin, 2001, pp. 7 -- 16)
Then, in 1990s, is when the firm began to rapidly expand its operations to locations overseas (i.e. Japan, Europe, China, South Korea, Mexico, Brazil and India). Their focus was on establishing a foothold in key markets that were quickly growing. Moreover, the emphasis on free trade and the elimination of critical barriers; meant that Caterpillar could open a number of manufacturing facilities in these regions. (Franklin, 2001, pp. 7 -- 16)
When this happened, the firm was able to reduce their costs and increase profit margins. For many established facilities in the U.S., this resulted in Caterpillar closing some plants and shifting the work to other locations. In 1991, when the company's union contract was up for renewal, management wanted to change the terms. As there was a focus on several areas that were supposed to help streamline the way they are dealing with these issues to include:
Demanding a reduction in salary and benefits: In this situation, the management wanted the average hourly rate reduced from: $35.00 to $17.00. At the same time, executives wanted to pass on more of the health care and retirement costs to the employee.
Requiring employees to have less protection against possible disciplinary procedures: This is when the firm wanted to enforce workplace rules without having to go through the traditional grievance procedures. Over the course of time, this allowed executives to increase the quality of work from their employees by imposing harsher standards on them.
The ability to fire and lay off staff members: During times when the economy was facing severe challenges, the firm needed to have greater amounts of flexibility. This meant that they wanted to make adjustments to the workforce (to reflect these shifts). At the same time, the company needed to have an effective strategy for getting rid of bad employees (who are creating a toxic work environment). (Franklin, 2001, pp. 7 -- 16)
The combination of these factors set the stage for a series of strikes throughout the 1990s. The difference this time, were that the company had over 50% of their plants in locations outside of the U.S. This meant that they could shift their workload to these locations. When this happened, the firm was able to continue to meet the demands of customers and circumvent union plants (where...
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