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In the case, “Facing a Fire” prepared by Ann Buchholtz, there are several
problems and issues to identify in determining if Herman Singer should
rebuild the factory due to a fire or retire on his insurance proceeds. I
believe that this case is about social reform and self-interest. I think
that Singer needs to ask himself, what is in the firm’s best economic
interests. There are several things to question within this case, what
should Herman Singer do and why, should he rebuild the factory or begin
retirement, if he rebuilds, should he relocate the firm to an area where
wages are lower and what provisions, if any, should Singer make for his
employees as well as for the community?
The first issue to look at is what should Herman Singer do and why. The
central fact or issue in this case is the fire and whether to rebuild the
factory or retire. Due to the fire, profits has decreased, unemployment
has increased, which could cause the community in a small New England
town to suffer. So, what should Herman Singer do and why? Herman Singer
has to take several issues into considerations in whether or not he
should rebuild the factory or retire on his insurance proceeds. There are
several issues that Singer needs to look at before making his decision.
The first issue is the Corporate Social Responsibility (CSR). The
Corporate Social Responsibility is where one considers the impact on the
company’s action on society. Within CSR, you have four responsibilities,
economic, legal, ethical and philanthropic. Herman Singer need to take a
look at all these to make for sure that the action that his is going to
take is an economic, legal, ethical and philanthropic approach in regards
to his corporation and society. He needs to look into all the issues that
could affect the company as well as the society when determining whether
to rebuild or retire. Singer needs to look at the bottom line, as well as
what is in the best interest of the company as well as the society and
not what is in his best interest.
The next issue to take into consideration is the stakeholders within the
company. Who are the stakeholders? The stakeholders with in the
corporation are the owners, which would be Herman Singer along with his
family since the corporation is family owned, the employees, shareholders
and consumers. Also, the employees families can be consider stakeholders
because if they are going to be unemployed then they should have a right
to say what they feel about the company. The community also plays a role
as a stakeholder. Without the corporation, this community would be
devasted due to economic factors. As with the stakeholders, one must ask
what exactly the stakes are in the corporation.
There are several stakes to take into consideration in determining if
Herman should rebuild the factory. The corporation built a business in a
small New England town that has brought light as well as employment to
this community. Without the corporation, this community would be
economically challenged. This corporation has helped the economically
depressed area by paying employees above average wages compared to other
companies with in the industry. However, if you rebuild, your continued
supporters such as consumers, customers, community, etc will continue to
help your business grow in the future. Also, this would look good in the
public image and help your reputation grow with in your company. It also
states that you and your stockholders feel that the corporation is
financially stable and strong enough to rebuild and still be a profitable
company. But on the other side, the competitors within the industry would
love to see the corporation not rebuild because it would help their
business and increase their profits. However, if Herman Singer decides
not rebuild, stocks would decrease, the company would more than likely go
under losing employees and hurt the community. So, what should Herman
Singer do? Herman Singer needs to take all these things into
consideration before determining if he should rebuild the factory. Also,
he needs to take into consideration all the stakeholders and their
thoughts on whether to rebuild the factory. He also has several
supporters that are standing by him in rebuilding the factory and have
verbal contracts that they will be committed to the corporation.
Should he relocate the firm to an area where wages are lower if he
rebuilds? If Singer rebuilds he should not relocate the firm because the
community has been a supporter of his business for over 90 years. If the
company decided to relocate the firm, the small town that once was
economically depressed might be devasted. Most of the other textile
factory moved south to lower wages. If Singer decided to relocate he
could be faced with more competion for the corporation and loss employees
due to that most have lived in the small town and would not want to
relocate. But, on the other hand he could lower wages by relocating his
firm to another area.
I think Singer needs to make several provisions for not only the
employees but for the community as well. First of all, Singer could
always cut or decrease wages but at the same time increase the benefits
or give employees stock options to help contribute to the decrease of
their wages. Also, Singer could give incentatives or bonuses to
employees. He should look at the other textile factories and compare
wages to others in the industry and try to increase his by a little bit
to keep employees. If Singer still pays his employees more than the
average factory does then most employees will continue to stay on with
the corporation and not leave. As long as Singer does not go below the
average of other companies, then his employees should be happy. Plus,
most of the employees have been there long-term or a member of their
family has and they would want to continue to support the corporation as
well as the community. As for the community, Singer needs to implement
certain donations to the community yearly so that the community does not
sole rely on the corporation. Singer needs to let the community know
about the company and what plans he intend to do because if one day he
does decide to move, that the community will not be economically
challenge.
As I have indicated, Herman Singer should rebuild his factory. However,
Herman Singer is old enough to retire and might not care about his
business and decides to retire because it is in best of his self
interest. As stated in the case, he has plenty of money to retire as well
as the money that he will get off of his insurance proceeds from the
fire. If Singer did decide to retire he would cause several problems
within the community. There would be several hundreds of employees
unemployed which could decrease the economy in such a small town that
depends on the corporation. Many businesses would love to see Singer
retire as they would benefit and take advantage of the situation because
their corporation would become more profitable. However, the small
community as well as the customers that have supported the corporation
for ninety years would be upset if this would happen. Besides rebuilding
the factory, another issue that Singer could consider is selling the
factory and let someone come in and rebuild. This would not make Singer
look like a bad guy if he decide to retire and not rebuild.
Overall, I feel that Singer should rebuild his factory. I feel that it
would be in Singer’s best interest to rebuild the factory that has been a
part of this family for ninety years. I feel that after running a
business for 90 years, I would feel that I would have to continue on with
the business not only for me but for my employees as well as my
community. I feel that it would be a social responsibility and it would
be in the firm’s best economic interest to rebuild the factory and build
back an already strong corporation. I believe if Singer would retire
right now, I think he would feel that he did not accomplish what he want
to do and he would not be leaving a successful corporation. Also, I think
if he would retire, I believe that he is doing for his self interest not
for the company. I believe that Singer should rebuild the factory and get
it back up on its feet again and then retire.

				
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posted:8/21/2011
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Description: I think that Singer needs to ask himself, what is in the firm’s best economic interests.