Business & Society -Subject

Case Study 3

Collapse at Rana Plaza The deadly collapse of a garment factory building in Bangladesh stirs debate over worker safety in the effort to drive down prices for international manufacturers and consumers In 2013, a garment factory in Dhaka, Bangladesh collapsed, killing more than 1,100 workers and injuring many more. This was the deadliest disaster in the history of the clothing manufacturing industry. The Rana Plaza building was known to have been built with substandard materials under faulty conditions, yet the factory remained very active up until the deadly collapse. An investigation into the building after the collapse found that the mayor of the city wrongly granted approval for construction and allowed the owner to disregard construction codes. The building’s owner, Sohel Rana, illegally constructed the upper floors of the building to house factories with several thousand workers and large power generators that shook the building whenever switched on. The day before the collapse, large cracks appeared in the building and an engineer who was called to inspect the building determined it was unsafe. Rana and the factory owners, however, ordered workers to return the next morning. When the generators were switched on that day, the building collapsed. Murder charges were brought against Rana and 37 others held responsible for the disaster. Three other people were charged with helping Rana flee after the collapse. This was not the first deadly disaster in a garment factory in Bangladesh—the factory Tazreen Fashions collapsed only five months earlier, killing over 110 people. But the scale of the Rana Plaza collapse brought greater global attention to the unsafe working conditions of many workers in the garment industry. The collapse also raised concerns over the responsibility of American and European companies and governments who employ labor in Bangladesh and other low-wage markets around the world. In efforts to drive down prices for consumers, companies often drive down manufacturing costs. Bangladesh is home to more than 5,000 garment factories, manufacturing clothing for most of the top brands around the world. Garment workers in Bangladesh are among the lowest paid in the world. Companies that manufactured goods at Rana Plaza included Walmart, the Gap, Adidas, and dozens more. These companies faced growing pressure to take action in the wake of the collapse. Some companies donated money to relief efforts, but many activist groups saw these measures as inadequate. Liana Foxvog, of the International Labor Rights Forum, stated, “What’s important is that the victims receive the full amount that they are owed.” Kurt Cavano, vice chairman of supply-chain logistics company GTNexus, said, “From what I’ve seen, Tazreen and Rana were wake-up calls… Chasing that last nickel of cost has to be done in a way that doesn’t put your business at risk.” Yet many in the Bangladesh garment industry feared that holding international companies and governments accountable could put them at further financial risk should the companies choose to pull their businesses out of the country. Aleya Akter, union leader and secretary general of the Bangladesh Garment and Industrial Workers Federation, noted, “There are about 4 million garment workers. It’s impossible for them to get work anywhere else, because this is what they’re skilled to do… Not only are we asking for compensation for the brands, we are also asking them: Do not walk away from us. Do not walk away from Bangladesh.” There is often a conflict between profit goals and the goal of worker safety. Virtually every company focuses on making money, but they also have an ethical obligation to provide reasonable safety to workers. When company officials focus upon only profits and ignore worker safety, this unfortunate framing of their decision can lead to unethical and tragic decisions. This was the case of the Rana Plaza collapse in Bangladesh that killed more than 1,100 people in 2013. The garment factory building was built with substandard materials. An engineer inspected the building the day before it collapsed and warned the owners that it was unsafe. But the owners ordered workers to return the next day, which tragically resulted in the loss of many lives. Business decisions such as this almost always affect others and therefore have an ethical dimension that cannot be omitted from the decision maker’s frame of reference.

1 Identification of the main issues/ problems in the case study.
3 – 5 issues and/or problems

2 Analysis of Issues
All issues must be analysed.

3 Comments of effective solutions/ strategies
The solution maybe already provided in the case or proposed by you.

4 Link to the course reading material
Include short term or long term recommendations; roles and responsibilities of all stakeholders.

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