In a capitalist society. it is by and large accepted that direction has a fiducial duty to foster the involvements of shareholders ; interpreted as a demand to maximise corporate net income. In the words of Milton Freidman. “The societal duty of a concern is to increase its profits” . The past few decennaries have given rise to the globalisation of the dress industry. With this globalisation the competition has intensified. asking the taking dress houses to develop extended planetary sourcing capablenesss. In order to follow with their fiducial duty. current directors at these companies are faced with the challenge of developing and pull offing a planetary supply concatenation. with providers. operations and markets in several diverse states. To win productively at this undertaking. requires the effectual and efficient allotment of resources on a planetary footing. The rough worlds of planetary competition dictate that direction maximizes effective usage of these resources by seeking the lowest cost options available.
In an industry such as dress. where labour cost is a high per centum of the cost of goods sold. directors are compelled to seek states where labour costs are lower in an attempt to keep profitableness and fight. The same forces driving planetary fight that made Mexico an attractive labour market to the dress industry ab initio can in turn influence direction to subsequently seek a new locale when the handiness of yet cheaper labour creates a more desirable operations environment. In making so. direction is merely following with their due diligence. Equally long as the local labour Torahs are complied with. directors are free to reapportion their resources in a mode that will heighten their cost construction ensuing in a positive consequence on both costs and profitableness.