Questions 1. What were the main benefits of SA8000 (hint: check the paragraphs in bold face)? 2.

What predictions would you make about the future of the company? 3. Can this model be profitable today? 4. How replicable is the Switcher/Prem Durai business model? 5. Which aspects are most/least replicable and why?

Answers

1. The main benefits of SA8000 or the social accountability certification are as follows

It helped Mabrouc/Switcher to follow its philosophy of sustainable development by setting

standards/guidelines to be followed as per the rules of certification. As Mabrouc/Switcher audits their suppliers hence as far as possible make them to get the SA8000 certification thereby spreading the awareness regarding social accountability in regions like India. Production has increased 1.5 fold in one year from 1999 to 2000, moving from 60 percent to 84 percent capacity utilization, with a workforce of 1,250 and an annual turnover of $10 million. Higher productivity has been 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 decrease. Major improvements can be traced to both equipment/technology upgrading and new management practices.

Due to better work environment factors, occupational health and safety measures and other facilities workers developed a sense of belongingness, contributed to decrease in absenteeism. It lead to human development by building workers self-esteem and sense of responsibility by developing awareness of each tasks importance in ensuring customer satisfaction, and setting objectives for decreasing complaint levels. Feedback from Switcher helps in measuring results. It is often provided live to Prem management and workers, with frequent trips (every 2-3 months) taking place between Switzerland and India. Due to better working conditions and thus improved productivity, proper planning, and a better work organization, overtime work has significantly decreased. Average monthly overtime in 2000 represented a 52 percent decrease was 2001. In conjunction with a more sensible management of rest periods during the day the change has contributed to reducing work stress and fatigue. Absenteeism or the percent of work days not worked dropped from 2000, all workers combined to by 11 percent in first six months of 2001; Turnover was also reduced by close to half.

Good labour relations, non-discrimination policy and avoiding child and forced labour have led to image building. Seven schools are running (12 are planned by end 2002), fully funded by the trust, free of charge, for workers children and those from poorer families of Tirupur and nearby villages. Over 1200 children are now registered.

In addition to employees children other children are selected among the poorer families of Tirupur and nearby villages. Through schooling, the company sees that children who do not work due to their age are not left on the streets. 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, including the distribution of free preservatives on the workplace and information sessions regarding their use. Family planning issues are also regularly addressed. 12,000 liters of drinking water are distributed daily to remote places which have no access to clean water. Living quarters and recreation areas are provided to workers at no cost, with safe separate quarters for single women. A daycare center was opened to help working mothers. 2. Switcher and Whale Brands established in 1981, by Swedish-born Robin Cornelius

to distribute casual clothes in Switzerland manufactured in Portugal. By 2001, clothes manufactured came from: Portugal, India and China. Since then it has come a long way. This has been possible with the continuing and hard working efforts to maintain the sustainability of the company.

The predictions that can be about the future of the company are The company wont go public in the near future. The company will set benchmark for other companies in the apparel industry. The company will only improve its image/build unique image and have more sales than before.

The Company may create a staff committee for CSR issues. A Switcher Foundation may be established. It may enter into new domains in sales areas as well as other sectors service industry (e.g., hotels).

It can like other textile and apparel players launch a 100% organic collection and engage in fair trade.

It may publish its in house journal. Revive with a reorganization of the collections in the different worlds e.g., BASIC, SPORT, OUTDOOR, FASHION and JUNIOR. The company can accelerate its international development and partners with a group of private investors. Within the framework of this opening, the share capital can increase. The founder of the firm Robin Cornelius will remain the main shareholder and will continue as president and CEO. The PGC Industries & Group (India), Switchers Industrial partner for a long time may enter the company as shareholders. This transaction will allow Switcher to gain control over the entire supply chain, from the cotton fields to the consumer.

3. The model can be profitable today as well as in the near future. It complies with international environmental and social standards and labour and humanitarian laws hence work legally, efficiently and morally. It also systematically performs audits, hence has clear view about their status and what needs to be done. These give all the more credibility and thus better sales. This long term commitment may lead to successful completion of goals in a small period of time. The model guarantees long term benefits on one time investments which require implementation of various systems. It has good working environment and facilities for workers, hence minimize absenteeism and employee turnover. It provides training at all levels to help workers develop multiple skills and competences and thus provide career progression opportunities. Work organization and general conditions of work lead to improved productivity, proper planning, and a better work organization, overtime work has significantly decreased. Occupational health and safety is taken care of minimizing accidents. Labor relations are healthy management review meetings and audits take place regularly. This has led to improved productivity, proper planning, and a better work organization, overtime work has significantly decreased, thus more profit. Policies such as non-discrimination, abstinence from child labor and forced Labor not only improve image but help the company keep away from economical and legal problems and the society from becoming backward.

The scale and nature of the benefits of the above model are difficult to quantify. Corporate social responsibility or social accountability is becoming an essential and inseparable part of the business strategy if not short term then long term. Some of the potential benefits of its CSR are as follows Human resources Risk management Brand differentiation License to operate

4. The Switcher/Prem Durai model is quite replicable. What is needed from both sides is belief in a long-term partnership and personal commitment along with acceptance and understanding. Though there are few criticisms of the model comparing such initiatives with 19th-century European paternalism, the idea itself is unique and profitable. In-depth analysis of the organizations market image, capabilities, finances, compliances and various other business dynamics should strictly be done before entering into such partnership.

Following are some of the benefits observed from the case study The idea of exclusivity contract is a good one since both the companies can work together in well defined direction and goals. They share the same values and can finance projects together. There is more security and better management in terms of orders and production for both companies as here Switcher has a strong exclusive manufacturing base in India and Prem Group is its unique supplier in India. Companies like Prem Group can gain success and move to the next level. Not only did Switcher benefit from the model but due to its requirements Prem Group also began to follow international standards and laws. It expanded as it began production intended solely for export to the Swiss and German markets but entered the India market as well in 1999. There was vertical integration and the Prem Group of companies was set up and it became fully integrated at the production level, with the exception of raw material. The production levels, capacity utilization and turnover rise with time. As here production has increased from 0.5 million units in 1984 to 5.1 million units in 2000, with increase in percent capacity utilization, with a workforce of 1,250 and an annual turnover of $10 million. Higher productivity has been matched with a significant improvement in quality, with decrease in average rework level and average rejection level.

5. The aspects of the Switcher/Prem Durai model that are most replicable are

Follow international standards and laws. It not only legalizes business but also helps in trade and image building. Having a Social Accountability Representative and Social Accountability Systems Policy and holding management review meetings. This will ensure that the company remains serious about its CSR issues and management. A good work environment and facilities given to workers. This to workers sense of

belongingness and decreasing absenteeism and employee turnover.

Training programs for workers. This helps employee empowerment and general

performance improvement.
Proper work organization and general conditions of work. This leads to better

worker performance and have had a direct impact on absenteeism and workforce turnover rate and thus improves productivity, proper planning, and a better work organization, overtime work significantly decreases.

A series of occupational health and safety measures. This leads to fewer accidents.
Follow a non-discrimination policy. This is legal and helps in maintaining a good working atmosphere. Avoid child and forced labour. This is also legal and helps avoid economic, financial and social loss. It discourages education hindering human resource

development and, it prevents the development of the company due to a lack of mature and educated workers.
Internal and supplier audits can be done. This will help keep an eye on the total scenario of the company.

The aspects of the Switcher/Prem Durai model that are least replicable are Timely equipment/technology upgrading and introduction of new management practices. This is a quite time consuming and costly process. Initiatives to establish work contracts for all employees, a guarantee of year-long employment. All workers to have the benefit of health and retirement plans. Workers

still have a one-day-at-a-time mindset and find it hard to understand the advantages of putting money aside for the future.
Providing a sense of security may backfire at the organizations objective of providing security cover to its employees in the sense that they may become rest assured of their job and have less productivity.

The company has to avoid two trade unions. Unionized workers are sometimes problems for the company itself.