Question

The Chairman of Fine Textiles Corporation faces a serious dilemma. His employees are demanding an average wage increase of 10% over present wages. Since profits are expected to be very small even at present cost levels, the management would not accept another increase in costs unless prices are raised. Consumer groups, however, are pressing the firms to keep their prices at current levels. The Chairman wonders what to do in such circumstances. Advise him. What do you think should be the most socially responsible decision in this situation?

Answer 1

The Chairman should adopt a balanced and socially responsible approach instead of immediately accepting or rejecting the employee’s demand.

1. He should discuss the matter with the employees and explain the company’s current financial position.
2. If possible, he may grant the wage increase in phases or offer performance-based incentives instead of an immediate 10% increase.
3. The company should try to reduce unnecessary costs and improve efficiency rather than increasing product prices.
4. The prices of goods should be kept stable as far as possible to protect consumers from additional financial burden.
5. The management should maintain transparency with all stakeholders and work towards increasing productivity and profits in the long run.
6. If profits improve in the future, the company can consider a higher wage increase for employees.

The most socially responsible decision is to maintain product prices while providing employees with a reasonable wage increase through phased implementation or incentives. This protects the interests of employees, consumers, management, and shareholders and ensures the long-term sustainability of the business.