INTERNATIONAL CARPET WHOLESALERS

Overview

February 1994

International Carpet Wholesalers : rug importer and distributor company, NY, USA

James McHenry: Buyer for “International Carpet Wholesalers”

Mr. Abdelhadi Hachad: Managing Director of “Somarta”, Morocco, North-Africa

Ms. Paula Feldman: President of “International Carpet Wholesalers”

Overview

Mr. McHenry managed to come to a provisional agreement to purchase handmade carpets from Mr. Hachad

Mr. Hachad had to purchase raw wool from McHenry’s firm.

= mutual benefit from the agreement

BUT:

Mr. McHenry shocked by 12-14 years old girls working at four or five at one single loom, 48 hours a week for 50 cents a day.

Overview

Complete dilemma:

Take the best deal he can by purchasing carpets knowing its employees working conditions

Or call it off

Organization Chart

Deal ?

Presentation of the different exhibits

1. A dialogue between Mr. McHenry and Mr. Hachad of their meeting in Marrocco to finalize the agreement

2. A fax from Mr. McHenry to Ms. Paula Feldman explaining her the details of the deal.

3. A fax from Ms. Paula Feldman to Mr. McHenry telling him her answer

4. A portion of a letter sent by McHenry to his wife

5. A note from McHenry telling Mr. Hachad Ms. Paula Feldman’s response

Strengths and weaknesses of the situation

Child labor employment

Strengths low-cost for both

industries

working in factories is a better solution for children than working in sex trades

rug’s quality is better when it is done by children

Weaknesses Problem of ethics, moral

and conscience

What about their education ?

Cultural Differences

Strengths Child labor is a tradition

and is cultural

Young girls give the money to their family so they can survive

Weaknesses What about our business

culture ? Where do we stop ?

A cultural custom doesn’t mean it is not a bad one

Moroccan Carpet Business

Strengths Moroccan carpets are

good quality

Export and import duty and taxes are free

Doing business with Morocco is easier in terms of logistics

Weaknesses But there are other

countries that have a good carpet reputation

Statement of Problems

Do foreign activities perceived as immoral must be taken into account in international business even if those are defined as legal?

The Different Options

Option 1: Status Quo

Advantages Mr. McHenry can wait for

his wife’s answer

Mr. Hachad can propose him a better offer

Disadvantages It won’t change the girls

labor problem

Option 2: Inform Ms. Feldman about the employees conditions of work

Advantages Clear conscience for Mr.

McHenry

Mr. McHenry’s boss might be the most situated person

Disadvantages Possible conflict of ethics

between the two of them

Mr. McHenry originally had the possibility to call off the deal

Mr. McHenry perceived as inefficient and not responsible enough

Option 3: Mr McHenry decides to call off the agreement

Advantages No more ethical problem

Mr. Hachad can think about the risks for his business of employing young girls

Good image of the company

Disadvantages Will have to find another

deal, in another country = may be hard

Price can be higher

Quality can be affected

Option 4: Mr McHenry accepts the commercial exchange with Mr.

Hachad

Advantages Low-cost prices

Taxes and duties free

Children labour in Morocco is legal

Disadvantages Ethics and morals concerns

will remain for Mr. McHenry

Emphasize the credibility given to those conditions = bad reputation for the company

Option 5: Mr McHenry reports the problem to the local authorities

Advantages McHenry sure about the

laws, he’s faultless

No more ethical problems

Good way for checking the real age of the girls and their work conditions

Disadvantages It prevents the young girls

from earning money for their family

No more deal with Mr. Hachad and Morocco

It can put off other partners

THANK YOU FOR YOUR ATTENTION