Fundamentals of Management 10th Edition by Stephen Robbins,Mary Coulter ,David De Cenzo

Exercise 13

The deadliest disaster in the history of the clothing industry
Although one fortunate and lucky young woman was pulled alive after 17 days buried in the rubble, over 1,100 workers perished in a deadly factory building collapse in Dhaka, Bangladesh, in April 2013. 60 The Rana Plaza building collapse is now considered the deadliest disaster in the history of the clothing industry. As stated in the chapter, the dynamic competitive environment facing contemporary global organizations demands new solutions but as this story illustrates, sometimes those solutions have consequences-tragic consequences. As global apparel retailers reassess their operations management strategies, changes are likely to be forthcoming.
Rock-bottom labor costs enticed global clothing giants to Bangladesh during the mid-2000s. Many of the retailers that have relied on these factories are known for cheap, ?fast? apparel: HH MM, Zara, Lee, Wrangler, J.C. Penney, and Walmart. And when you?re selling many articles of clothing for $20 and under, it means your costs (especially when being shipped from another location halfway around the world) need to be tightly controlled. Also, the concept of fashion trends has changed over the last two decades. Where fashion used to be ?good? for an entire season, now fashion styles, colors, shapes, and so forth, change, seemingly overnight.
Retailers like Zara and H M have hooked customers on fast fashion?that is, clothes that go from concept and design to being in your local mall stores in a matter of weeks?and clothing has become a sort of ?single-serving disposable item.? Now consumers are wanting new and different items almost continuously. There?s a ?constant, ceaseless rotation through looks and styles.? Providing that has placed a significant strain on the operations system behind this fast, cheap fashion. Hasty expansion of factory capacity, lax governmental enforcement of permits and approvals, and a focus on keeping costs as low as possible in whatever ways needed have become the focus of factory work culture in this developing country. Because garment factories in Bangladesh don?t have a lot of the more sophisticated machinery like China, their edge in the fashion industry had always been basic, simply-constructed clothing. And as the fashion industry?s fashion emphasis changed, Bangladesh?s importance to the global clothing trade rose. In fact, in six years, it rose from the 8th top clothing exporter to the 3rd (after China and Italy). Both Bangladeshi factory owners and the government were fully aware of the importance of this industry to the country.
Working conditions for factory employees in developing countries have long been less than desirable. Explosions and fires have been a continual problem, as have other unsafe work conditions. (Unfortunately, this isn?t just a problem of the retail fashion industry.) Workplace protections are expensive, which doesn?t work with consumers hooked on fashionable ?cheap? clothing. However, with this latest tragic loss of life at this specific garment factory, the fashion industry?s decisions-good and bad-are now on the world stage for everyone to see and criticize. Says one outspoken critic, ?What happened in Bangladesh is a game-changer because of the gravity of the situation and tremendous loss of life.? Now public policy and governmental groups around the world are turning up the heat on Bangladesh to reform its labor standards and are pressuring global retailers to more carefully monitor their sourcing standards. Recently, several of the world?s largest apparel companies agreed to a significant plan to help fund fire safety and building improvements. Part of this five-year agreement is to not hire/use manufacturers whose clothing factories fail to meet safety standards. Well-known European retailers who have signed on include Hennes Mauritz AB (H M), Inditex (the Spanish parent company of Zara), Tesco PLC, and others. So far, major U.S. retailers including Wal-Mart Stores, Sears Holdings Corporation, Gap, and J.C. Penney haven?t signed the agreement. The Bangladeshi government also has pledged to raise wages for garment workers and to fix labor laws making it easier for workers to form labor unions.
What can managers learn about managing operations from this situation?