Knights Apparel and the Alta Gracia Factory Case

The current concept

The case explores how Joseph Bozich the founder of and the CEO of the Knights Apparel, a maker of athletic clothing in a bid to promote strong ethical values in the company. The Bozich’s operation based on the ideas of the consumers claiming that they support a business that is able to pay a minimum wage to its workers has led to the Alta Gracia factory paying three and half times what other workers around earn. Therefore, Knights apparel have been subsidizing Alta Garcia factory with funds to maintain its operation to the point of their stability. Most of the students have a strong belief that even with the higher cost basis; the issue of ethical strategy should pay off in the long run. The company’s commitment to ethics has attracted support from large universities, retailers and also the students. Therefore, knight Apparel continues to give funds on the aspect of trust that Alta Garcia would have a strong support thus having a possibility to make the profit.

However, it has become an issue for a constant support rendered to the Alta Garcia factor without any physical returns. The company has been making a number of losses each financial year due to the massive payment of the minimum wage options for the workers.  The Company’s strategy is based on lower profits margins expected in the short run with the expectation that a higher volume of profit will be achieved in the long run. The Company is making a sacrifice the long run potential for the short terms gains in order to please the stakeholders for a continued support. Therefore, the company is dealing with assumptions which can be more challenging when the market strengths have shifted.

How the Shareholders are affected

The shareholders are individuals who put an interest or concern into something especially by providing financial support to the organization. Therefore, Shareholders can be affected by organizations actions, objectives and policies that might have an overall effect on the returns. The case scenario of the Alta Garcia Company engaging more in the moral aspect compared to profit-oriented by following the decisions of the customers and the legal advisor. The Alta Garcia Factor is currently the only company that is paying its worker a minimum wage that is three and half times more compared to other Companies around. Therefore, the shareholders are not able to get their dividends since the Factory is in constant losses after every financial year. Moreover, the shareholders are expected to make contributions constantly to the Company with an expectation that it will achieve its success moment. Consequently, the shareholders’ decision does not count in the operation and directions with which Alta Garcia factory is heading. Instead, the decisions of the students, consumers and legal departments are welcomed.

Consideration of the long-term profitability

The Alta Garcia factory financial benefits are based on the future expectation through the local service to the society.  Bozich has a high anticipation based on the students and customers through their massive activity in the marketing process on behalf of the company. Therefore, though the company is receiving funds from the shareholders and Companies such as Knight Apparel, Bozich expects a major control in terms of marketing that is able to move the business forward. Therefore, the reasons for continued subsidizing of funds to the Company are because of the strong anticipation and also the ethical values attached. However, this is very challenging where huge amount funds are used.

References

Clemmitt, M. (2018). Issue: Minimum Wage Short Article: Apparel Company Cut From a Different Cloth.

Appendix

Shareholders’ effectExplanation
The absence of dividendsThis is because Alta Garcia is still in the support stage
Continuous contributions  without returnsThe shareholders are expected to support the company’s interests.
The shareholders’ decisions are constantly ignored.The Company through the manager Bozich (CEO) does acquire the ideas from students, and customers in making decision.

Leave a Reply