Case study

Case Study: Can Knights Apparel satisfy all stakeholders?

When there are two separate stakeholders in the picture, it’s hard to satisfy them both. In this case, Knight Apparel is possessed by its original stakeholders and here we define the term “stakeholder” as one party with an interest in the corporation. Thus the primary stakeholders of Knight Apparel are its investors, employees, customers, suppliers and community. More importantly, Knight Apparel focus more on reopening Alta Gracia which makes local government, community and its trade associates its additional primary stakeholders as well.
The major problem with various parties of stakeholders arises that their self-interest may be not aligned well. Since Alta Gracia has a complex issue of human resource, such as labor rights, workplace condition and minimum wage, the job of HR in the corporation has to be separated. One part of HR needs a more traditional role, which makes its job to deal with labor relation, unionization and living wage setting. The other part of HR here is set to be more community-supportive and will be responsible for adjusting the prior part of job to feedback community.
Usually, when management of Knight Apparel comes to the decision to lean more on supporting the community than making benefits, it’s hard to tell whether the corporation will make a financial outcome in the long term. From my perspective, I don’t see the success in the traditional way. Because of two reasons, Knight Apparel may face difficulty. One reason is it only managed to reopen one local factory and with an above-average wage rate, it may suffer from huge loss in the long run. Also, only support from their distributors’ promotion and public reputation is far away from making ends meet. The other reason lies in the fact that other competitors are not taking the same move which directly suggests that Knight Apparel is not making the most competitive model economically. With the difficulty in calculating a living wage in the sweatshop factories, the wage it set may fail. In the term of Game Theory, it will be faced with price collusion in the future.
Also, we shall see the positive side of the story, in the process of deconstruction of sweatshop factories, improving labor relation and feeding back the community, Knight Apparel has been very successful.