This section on the political environment will identify the legal issues, intellectual property rights issues and trade barriers which may impact that firm’s operations or product.? It will also identify the cultural and ethical issues which may impact the firm’s strategy. In identifying the political environment of the company, it is helpful to remember that the company is operating daily in the international arena. It has plants in China and the United States. It sells its products principally in Asia, Europe, North America and South America.
Finally, it employs thousands of employees around these areas. The writer would first discuss the legal, ethical and cultural issues. In its pursuit to expand and establish a global presence, the company has recognized that different legal and cultural environments exist within the places it operates. Because of the companies expansion operations made to create and establish factories in China and other Asian Nations, key legal, cultural and ethical issues have surrounded these expansions.
The following are the key issues on the expansion efforts of the company: 1) Legal and Ethical Business Practices, 2) Child Labor, 3) Forced Labor, 4) Wages and Benefits, 5) Hours of Work, 6) Freedom of Association and Collective Bargaining, 7) Health and Safety, 8) Non-discrimination 9) Harassment, 10) Women’s Rights, 11) Subcontracting, 12) Monitoring and Compliance, 13) Informed Workplace, 14) Worker’s Residence, 15) Facility Security. Vanity Fair has specifically focused on these issues in making its Global Compliance Policy.
To address these issues generally, the company first made a commitment to comply with the specific laws in place in the separate areas where their factories and stores are located. To put responsibility, the company has entailed the compliance expenses to be at the cost of the facilities. Violations will also result to the termination of the working relationship by the company with these facilities. Among the key issues, the following issues have been very controversial in the United States: Child Labor, Forced Labor, Hours of Work and Wages and Benefits.
Recent news on Child Labor Use by Multinational Companies have had a negative effect and backlash on the sales of these companies. For Child Labor, the company makes it a policy not to employ any child younger than 15. It also refuses to employ those younger than 14 where the policy is consistent with International Labor Organization guidelines. At some countries it makes the education the benchmark for child employment. The company would not hire children younger than the age for completing compulsory education in the manufacturing country when such age is higher than 15.
It also stresses the strict compliance with legal guidelines for all workers under the Age of 18 particularly those pertaining to work hours and working conditions. For Forced Labor, the company explicitly makes it a policy not to engage in involuntary or forced labor. It is not qualified even if the labor is indentured, bonded or otherwise. For Hours of Work, the company ensure that the employees’ hours worked shall not, on a regularly scheduled basis, exceed the legal limitations on regular and overtime hours.
It also puts a maximum cap of 60 hours per week including overtime with the exception of extraordinary business circumstances. The company ensures at least one day off in every seven day period. It also mandates that employees must be informed if mandatory overtime is a condition for employment. Last, for Wages and Benefits, the company first recognizes that these benefits would vary country per country. The company then mandates that compliance with the legally mandated minimum standards must be made the minimum standard.
If the prevailing industry wage is higher, the company mandates such a higher fee. These are the current key issues on ethics, culture and law that are important to the company because of their efforts to expand internationally. For Intellectual Property Rights Issues and Trade barriers, we need to remember that the company operates more than 30 brands spanning Jeanswear, Imagewear, Outdoor, Sports and Contempary Brand Apparel. The international operations of this company makes intellectual property rights issues a key issue in the company’s operations.
Patents of these brands have to be properly secured within each jurisdiction where the company operates in. There is also a proliferation of “pirated” versions of several of the company’s brands. Although not comparable in quality, the intellectual property rights issues abound. The companies that product that produce these illegal versions of the product are using the name and goodwill that the product has attained throughout the years. Trade barriers are less of a problem in today’s international business setup.
Free trade agreements between countries have facilitated this solution. These trade agreements include the North American Free Trade Agreement (NAFTA), the South Asia Free Trade Agreement (SAFTA), European Free Trade Association, European Union (EU) and the Union of South American Nations. Trade barriers between countries have also lessened because of the advent of cheaper travel and internet. Products are freely carried across borders and can be ordered online with minimum cost of correspondence.