Last Updated 27 Jul 2020

Ethics implications of production facilities

Category Ethics, Privacy, Tax
Words 418 (2 pages)
Views 11

Being in a rural location, Facility A has ethics implication if it would provide tax incentives and exempted restrictions to a large and hi-tech firm (Herley Industries 2007).  The local population may demonstrate rallies and lobbying that would gradually lead to Manychip having equal-footing with similar companies.  Manychip must verify if the location provides incentives for manufacturing in equal footing rather than arbitrarily.

When the firm decided to locate in Facility B, it will expose its labor practices to international organizations due to practice of child labor.  Although cost efficient, Manychip will confront a whole new operating environment and culture that can undermine its quality and efficiency derived in developed countries.  Manychip must identify if laborers in this facility are qualified to meet their present quality criteria, potential reduction in value from the market when identified as using child labor and value-added in tariff-free distribution.

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In Facility C, Manychip can acquire its quality standards however with higher labor costs, tax and restrictions.  The company’s margin can be narrowed which can affect funding in its research and development.  On the other hand, Manychip has ample experience in operating in metropolitan environments and local regulations that it can used to minimize business risk.

There are three location analysis techniques to aid Manychip in choosing the best alternative; namely, location factor rating, center of gravity and load-distance (Bose 2002).  Load factor rating is a technique that closely resembles location evaluation above.  The difference is that it attached weights to location factor totaling to 100% (e.g. labor pool and climate, proximity to suppliers, wage rates, community environment, etc.) depending on their important to a company (i.e. wage rates = 30%).

The location that will be chose is the one that has the highest rank.  The second and third technique focus on providing the minimum transportation costs to a firm.  For example, center of gravity computes for straight-line coordinates where the company must locate its facility.  In contrast, load-distance combines the aspect of load where the location facility will be appraised based on its capacity to offer minimum load and minimum distance.  This technique will also compute specific coordinates where the firm will construct its facility.


Bose, R. (2002).A model for location analysis of industries. Esri. Retrieved August 6, 2007 from

Herley Industries (2007). Two Herley Industries, Inc. Manufacturing Facilities Suspended by the U.S. Federal Government. Yahoo! Finance. Retrieved August 6, 2007 from

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