Hello, dear friend, you can consult us at any time if you have any questions, add WeChat: THEend8_
MGMT2001
Case Study Case/Background Dyson (dyson.co.uk), a company that designs and manufactures household appliances, is currently being sued by workers employed by a third party in a Malaysian factory where Dyson products were being manufactured. The claim alleges that workers were subject to unlawful and exploitative working conditions and that Dyson is liable because it knew, or ought to have known, of the alleged illegal practices. They point to Dyson’s previous public statements about their procedures for detecting and preventing forced labour in their supply chains. Driven by environmental, social, and governance (ESG) principles, governments and regulators are increasingly obliging businesses to identify and address human rights and environmental risks along their supply chains. A transition from previous ‘soft law’ standards to “hard law” obligations has the potential to impact businesses outside the territories in which regulations are imposed, including businesses based in the UK. Businesses will need to monitor new legislation as well as their own supply chains in preparation for greater scrutiny by regulators and by contracting parties who are directly bound by the new rules. The EU is bringing forward a series of mandatory supply chain due diligence proposals over the next two years under its “Green Deal”, a programme of policy initiatives with the overarching aim of making the EU climate neutral by 2050. The EU's measures are designed to have extra- territorial reach with the aim that commodities traded through the EU and products placed on the EU market are sourced / manufactured responsibly. UK companies with an EU presence will be directly affected but any UK companies supplying in-scope EU companies will be indirectly affected. The regulatory scrutiny is wide-ranging. For example, the Deforestation Regulation will require companies trading commodities with the EU (including cattle, cocoa and wood, as well as products made from those commodities such as leather, chocolate and books) to ensure their supply chains are not linked to illegal deforestation. According to the Food & Drink Federation, EU trade made up 69 per cent of the UK’s total food and drink imports and 55 per cent of exports in 2022. All of this trade will be covered by these regulations. Those companies found to be non-compliant can have products confiscated, be denied access to the EU market or, in the worst cases, potentially be fined up to 4 per cent of their annual turnover in the EU. Germany has already implemented its own Corporate Due Diligence Obligations in Supply Chains Act (Lieferkettensorgfaltspflichtengesetz - LkSG) (the German Act) in January 2023. As with a similar EU directive, it requires companies to have a compliance management system to assess and report on the risk of ESG abuses within their own companies, with direct suppliers and, where they are deemed to have “substantial knowledge”, indirect suppliers. Any UK businesses which trade directly or indirectly with German companies will therefore be subject to scrutiny via their German counterparts and will need to be able to account for their own onward supply chain, or risk losing business. Furthermore, UK companies with branches in Germany employing more than 3,000 employees are already bound. This threshold will fall to 1,000 employees from next year. Regulations relating to supply chain due diligence have also been introduced outside the EU in recent years, including the Business Supply Chain Transparency on Trafficking and Slavery Act in the US (2020), the Transparency Act in Norway (2022) and the Corporate Responsibility on Human Rights (C-262) statute in Canada (2022). This is a developing area, but the direction of travel globally is clear. Risk There is an obvious risk to any UK businesses which are directly bound by local laws in other jurisdictions, including supply chain due diligence regulations, of being subject to legal claims or regulatory action in those jurisdictions. There is also a risk of disputes between contracting parties where one has allegedly failed to comply with its ESG-related obligations. For example, a German company seeking to ensure its own compliance with the German Act may request a contractual warranty from a supplier that it has complied with the relevant statutory codes of conduct. Claims could arise where any such warranty is allegedly breached. Question Dyson has been growing through its innovation based on R&D investments, which require continued investment. However, as a global manufacturing company, managers must navigate the complexities of managing the supply chain across countries, which now poses greater supply chain-related risks. [Body] Against this backdrop, write a report (case study) on Dyson, focusing on organizational change. Should Dyson change its manufacturing strategy in terms of off- shore manufacturing? [Recommendations & Conclusion] What strategy would you recommend to Dyson to deal with the current problem. Detail your approach to resolve the issue in 1-3 years (short- term) and 5-10 years (long-term).