Professional Documents
Culture Documents
RESPONSIBILITY
ASSIGNMENT - 3
SUBMITTED BY
DFT-VII
CASE STUDY 1: SWITCHER AND WHALE BRANDS–COMPANY
HISTORY AND DISTRIBUTION
CASE NOTES
• By 2001, clothes manufactured for Mabrouc were coming from three countries:
Portugal, India and China.
• Switcher has become the better-known brand and now represents a full line of
basic clothes: T-shirts, sweat-shirts, tracksuits, shirts, polos, pants, jackets and
accessories for adults and children.
• The Switcher brand is a concept in itself: simple and fun, bright colours,
everyday casual wear for the whole family, staple clothes that everyone should
have in his/her wardrobe, with a clear medium range positioning.
• Switcher has a image generally being that of a friendly brand with a good
price/quality rapport.
• Switcher / Whale clothes are distributed through three channels:
Company Philosophy
• Owner Robin Cornelius strongly believes that economic issue should not
prevent a company from being an active contributor to social development and
environmental protection.
• The “citizen brand” image is well developed, but still essentially limited to
Switzerland, due to Switcher’s geographical market concentration.
International Standards
• Switcher and Whale products are Oeko-Tex 100 certified (absence of harmful
chemicals in production process).
• Switcher requires from all its business partners that they engage in the same
process.
• In 2000, along with two other Swiss companies (Migros and Charles Veillon),
Switcher agreed to be part of a pilot project for the independent monitoring of
its own code of conduct.
• The audit takes place through observation, checking company records and
legal documents, talking to labor union representatives, individual workers and
their families.
• They signed an exclusivity contract by which Prem Group’s full production was
destined to Switcher, Prem Group being in return Switcher’s unique supplier in
India.
• In the process, the company realized that the standards required for
certification could only be met through greater control of upstream activities, which
led to vertical integration.
• Production was first intended solely for export to the Swiss and German
markets.
• Since 1999, Prem Group also supplies Switcher with products for the Indian
market which is growing steadily.
• Production had increased 1.5 fold in one year, in 2000, capacity utilization
moving from 60 percent to 84 percent, with a workforce of 1,250 and an annual
turnover of $10 million.
• Higher productivity matched with a significant improvement in quality, with an
average rework level decreasing from 20.4 percent in 1998-99 to 8.3 percent in
2000-01 and average rejection level decreasing from 10.6 percent to 4.8 percent.
Social Management
• In complying with SA8000 standards, Prem Group has put into place, early
2001, a complete set of social accountability procedures.
• The company’s Social Accountability Systems Policy is well known and widely
spread: the policy statement is distributed to workers in their native language
(Tamil), to active NGOs and to local and regional political authorities.
• Several recent press articles have contributed to its diffusion to the public.
Social management factors are reviewed below, with some of the operational
specifications thought to have a direct impact on the company’s competitive
standing.
Work Environment
• Workplaces are well spaced, light is abundant, high ceilings control for heat
from neon lighting.
• Air quality is optimized by blocking out fibers (churning and spinning) and
odors (dyeing) by isolating the related activities or by installing exhaust fans to suck
micro dust.
• On the positive side, in addition to ensuring that each worker gets sufficient
nutrition for the day, the canteen is a socializing space that may contribute to
workers’ sense of belongingness.
• Ongoing training takes place at all levels to help workers develop multiple
skills and competences and thus provide career progression opportunities.
• Workers are trained for more downstream operations and for machine
monitoring and quality and task checking.
• Working hours are clearly defined and communicated on a notice board in the
canteen. Regular working hours do not exceed 48 hours for a six-day week,
including rest periods.
• Managers and supervisors are trained to deal with workers, who are entitled
to an inquiry.
• All workers also have the benefit of health and retirement plans, which
remains an exception in the Indian textile industry.
• First aid, health and hygiene training are conducted by visiting doctors. All
employees are trained both in safety and fire fighting and in first aid, health and
hygiene.
• Specific safety precautions for daily work include, for example, requiring the
use of masks and finger guards for some of the tasks that remain dangerous.
Labor Relations
• The company has two trade unions, the Central Indian Trade Union (CITU)
and the Marumalarchi Labor Federation (MLF).
Non-Discrimination
Child Labor
• ILO standards specify children under 15 should not be hired for work.
• Prem Group has set the minimum age for recruitment at 18, for all tasks.
• In case a young worker was found to be working in the factory, despite the
checks mentioned above: it would be reported immediately to the Personnel
Manager.
• For young workers over 15 years old, the company may try to maintain a light
work load for a few hours a day (no overtime), combined with school enrolment.
• For a child under 15, the company will provide free schooling and may pay a
stipend to the child to replace lost income to the family.
Forced Labor
• In compliance with the Indian Bonded Labor System Act of 1976, Prem
Group does not engage in practices which lead to forced labor.
• Supplier conformance;
Internal Audit
Supplier Audit
• Visits to suppliers’ premises allow for checking the authenticity of the data
provided in the questionnaire.
• This practice is well in line with Switcher’s own auditing procedure resulting in
a 4-level grading scheme of its business partners.
Image Building
• A charitable trust was initiated by Switcher and Prem Group to provide free
health, safety and education services to the workers, their families and to the
public in general.
• The “social contribution” philosophy spreads out to a number of activities.
• Seven schools are running, fully funded by the trust, free of charge, for
workers’ children and those from poorer families of Tirupur and nearby
villages.
• Employees’ children, are automatically accepted, other children are selected
among the poorer families of Tirupur and nearby villages.
• A criterion of selection is the family’s motivation to see their children through
school.
• Four dispensaries were opened in the factories and schools for free medical
service and hygiene advice.
• Safety awareness and first-aid training is provided on a regular basis in the
factory.
• An AIDS awareness and prevention campaign was launched in 2001,
• Some observers have compared such initiatives with 19th-century European
paternalism.
• Criticisms are few, however, and do not seem to emanate from Indian sources.
• The possibility for Switcher to go public in the near future is an ongoing
question and great concern.
• Switcher managers are looking at different ways in which shares could be
made available to “socially committed” stakeholders, in order to avoid
jeopardizing the company’s current line of action and its strong partnership
with Prem Group.
Questions
Q2. What predictions would you make about the future of the
company?
Answer:
• The business model of the organisation is laid down on the principles of mutual
exclusive benefits.
• While the complete production of Prem group was completely dedicated
towards Switcher. In turn the former has been made the unique supplier of
Switcher in the country.
• The underlying rationale behind the success of the partnership is the
commitment and belief in values and benefits of a long-term relationship.
• These enduring commitment lead to the accomplishment of objectives rarely
achievable in a condensed time frame.
• This type of model can be successful as well as non-successful depending
upon various factors like market conditions, vendor speculations, competition,
mutual understanding and cooperation.
• The model of this type guarantees good amount of long term benefits on one
time investments requiring implementation of various systems.
• Since this model also seeks parity in contribution along with the contractual
bindings, it might be difficult for covertly ambitious partners to survive in such a
model.
• In cases where partners agree on a common platform to surpass their
convention bound relation and strive to achieve for mutual sustenance and
benefits then in those cases success is possible for such kind of mutually
coexistence business model .
Q4. How replicable is the Switcher/Prem Durai business model?
Answer:
• The Switcher/Prem business model is a very unique and exclusive in nature.
• The model works on an easy principle of one organisation dedicating/providing
services on a whole to the partnering organisation and in turn gets an equally
viable opportunity to make profitable business.
• This model however replicable isn’t easy to do so without the required amount
of commitment, patience, mutual trust, understanding and acceptance.
• Replicating this model can be expensive, tedious and time consuming before
expected results are realized.
• It requires a high level of thought process to assess the contractual binding
required in the process of becoming an exclusive supplier or manufacturer.
• In-depth analysis of the organisations market image, capabilities, finances,
compliances and various other business dynamics should strictly be done.
• The model also has some portions out of the contractual bonds where in
Switcher stimulates Prem group to go for various certifications such that their
products produced at Prem group factories comply to the same certification
norms to which originally Switcher products comply to.
• The certification portion may be a hitch in replicating the model as the
organisation doing so will be assuring its quality, responsibilities and receive
competitive edge but in the process of doing the same it may cost the
organisation a hefty amount in all.
Q5. Which aspects are most/least replicable and why?
Answer:
The following are the least replicable aspects of the business model followed by
Switcher and Prem Group:
• Vertically integrating activities by backwards integration may not always be
easily done as it would require a staged and planned development with huge
capital requirement.
• Providing amenities such as a free canteen is a very difficult and a bold move
as cost is a prime concern in garment industry, the food being completely
sponsored by the company adds to the overhead costs which may feel
burdensome with large number of employees.
• Establishing work contracts for all employees along with a guarantee of year-
long employment.
• All workers also have the benefit of health and retirement plans, which
remains an exception in the Indian textile industry.
• Providing a sense of security may backfire at the organisations objective of
providing security cover to its employees in the sense that they may become
rest assured of their job and have less productivity.
• Providing retirement and health benefits to an extent is fine unless the costs
remain in tolerance
• Suppliers are required to comply by the SA8000 standards of which the
organisation does a yearly audit to authenticate their commitment towards the
certification in order to retain the suppliers.
• The suppliers may act apprehensively to the act of vertically integrating their
activities and obtain certifications same as that desired by the buyer which may
be quiet difficult in cases where adamant suppliers only supply small
components ,quantities or the suppliers for the particular component are very
few.
The following are the most replicable aspects of the business model followed by
Switcher and Prem Group:
• The partnership model followed is perfect to serve the purpose of entering a
new market wherein partnering with a local firm knowing local conditions for
marketing your product.
• Outsourcing to places where costs incurred are less is also a suitable
alternative to cost reductions
• Occupational health and safety, measures to ensure all employees are trained
both in safety and fire fighting and in first aid, health and hygiene.
• The Non-discrimination policy adopted is also an easy way to keep a balance
in the work force and avoid dis-contentment of gender biasing.
• The child labour and the forced labour policies are also one which can be
readily replicated to avoid any type of violation or discrepancies in the work
force.
• Conducting comprehensive internal audits and ongoing monitoring allows for
management to check out possible fluctuations in performance.
• The “social contribution” philosophy that focuses on funding several social
activities spreading out to a number of activities.
CASE STUDY 2: BENEFITS FROM WORKPLACE CERTIFICATION: YESIM
TEKSTIL (TURKEY)
Case Notes
Strengths
Outcomes
Measurable Achievement:
• Overtime Limit : In 2006, just four out of 2500 employees exceeded yearly
limit of 270 hours, by 2007 (end of September): Only one employee exceeded
yearly limit.
Measurable Achievement:
• Lost days fell from 652 days to 414 days (238 days gained).
Questions:
Q1. With cost considerations so important in the global apparel market, will
CSR issues adequately raise demand to offset cost issues?
Answer:-
• Cost has always been an integral part of the apparel business since time
immemorial.
• Cutting cost may not every time serve the purpose for realizing better profits.
• CSR activities aim at serving the purpose of paying back the society to offset
for the resources utilized from it along with providing the company with benefits
of its activities.
• CSR activities if directed in the right direction can bear long-term benefits
(tangible and intangible) for the organisation.
• These benefits are realized in form of image building, confidence and appeal
among consumers.
• CSR activities help portraying a company’s responsible image such that the
consumers feel a sense of pride in having been connected to the company and
its products.
Answer:-