Solemate Draft 2 Scenario for Final Exam Tri 3 2020
Solemate is one of Australia's biggest shoe retailers with an average annual turnover of AUD 6 Billion. It has its own
retail outlets and a strong online presence. The company also exports to Europe, Asia and Americas. The company is
famous for its trendy shoe designs and has a strong hold on the market for its sports and casual wear shoes. The
company annual report for 2019/2020 states that the company has financially performed well. Solemate’s shoes are
generally considered to be highly valued with quality and price to match. Solemate’s slogan is 'fashion with integrity'.
It attempts to 'manage all aspects of their business transparently'. The company has an impressive track record of
providing best quality products.
Solemate, does all its shoe designs at its head office in Melbourne, Australia. The company
has many overseas production sites and mainly outsources their production. Solemate has
found a new external manufacturing supplier to assemble/ manufacture a new range of
shoes according to the design they provide under strict guidelines.
Production of the Easy Bounce shoe range has been outsourced to Istanbul Industries, a
Turkish shoe manufacturer who have their own online shoe retailing unit. Their website
sells over 250 brands of shoes and ships to more than 154 countries.
Istanbul Industries were chosen by Solemate because of they were the best fit for the Solemate’s company regulations
and quality standards. Product safety is one of the top priorities of Solemate, who promise to deliver products that
are safe for consumption, and under no circumstances make compromises on the safety of a product.
Solemate have a strong sense of corporate responsibility, beyond compliance to proactively
seeking to improve relationships with all stakeholders. Compliance refers to Solemate and
their suppliers adherence to laws and willingness to observe social/ community values.
Proactiveness means Solemate is taking the initiative to protect our natural environment,
such as reducing greenhouse gas emissions and planting trees to offset carbon emissions.
Solemate and their suppliers promise that all the workers will be provided with ‘fair wages’
that are determined on the basis of what a labourer has to spend in order to enjoy a decent
standard of living. Solemate and their suppliers should also value workforce diversity and managing for inclusion
because equality is a core value at Solemate. Solemate promise their workers that they will empower them to connect,
belong, and grow through their employment.
It was found that the Istanbul Industries had sub-contracted some of its production of Solemate shoes to a small
workshop in Istanbul, Turkey’s industrial hub. This subcontractor was found to be underpaying workers and some
evidence was found that refugees were forced into working there in exchange for food and shelter. In response to the
allegations the company stated that ‘the facilities’ in which Solemate’s shoes were found was a 'sub-contractor' and
operated 'without the company’s knowledge'.
The use of sub-contractors, where Istanbul Industries pay smaller Turkish businesses to work on different parts of
Solemate’s shoe production has been a way that Istanbul Industries have been able to produce the shoes on time
and at the promised cost, while making a significant profit. While their workers are looked after, workers in the sub-
contractors factories are not provided with the safety, fair wages or work conditions that the larger company
Solemate is not pleased with the conduct of their partner, who promised to use the best workers, who would receive
the best training and would work in an inclusive workplace, where staff can be their authentic selves at work. Amnesty
International have conducted an embarrassing investigation into Istanbul Industries local manufacturing partners and
found evidence of religious, gender and sexual orientation discrimination against workers. It was identified that the
sub-contracted partners have been employing mainly male workers who were considered more acceptable to work in
Turkey and they had employed mostly young males in the hope of getting the work done faster.
These sub-contracted suppliers were also not meeting the contractual obligations to use an environmental friendly
process of production. Instead of using ethically sourced leather and chemicals that minimised the harm to the
environment it has been revealed that fake documents were used to trick Solemate and Istanbul Industries are
claiming they are victims of this fraud too. These factors have been caught on by many leading pressure groups that
advocates for children’s/human rights and ethical behaviour. These advocacy groups have come forward to lobby
against Istanbul industries and Solemate as they have realised the contractual obligations between both companies
have not been met. A known pressure group in Turkey for animal rights has also hit back on the use of unethically
sourced leather that has been used for their production.
Istanbul Industries have counter claimed that they are being exploited by the Australian company when they have
looked at Solemate’s operations and made comparisons between Turkish and Australian workers/pay and conditions.
The generous treatment of Solemate staff is in stark contrast to the margins offered to their supplier in Turkey, who
cannot afford to reward their staff so handsomely when they are only being paid the minimum amount to produce
their shoes. These claims by Istanbul industries were used an attempt to justify why the wages that were offered to
their staff was low. There have been instances where Istanbul Industry mangers having only considered any pay
increments based on how well the staff has been known to the management and depending on the personal
relationships the staff has maintained with the managers. Overtime work was mainly offered to the male employees
thinking females were not culturally allowed to work as much in Turkey and overtime work payments given to female
staff had a significantly low rate when compared to the male employees. The economic conditions are significantly
different between the two countries with GDP per capita USD 9225 in Turkey and USD54200 in Australia. The
unemployment rate in Turkey is much higher too, Australia’s is 5.3% compared to 13.5% which accounts for some of
the wage differences.
The Australian and Turkish governments have become involved in this highly publicised and reputation damaging
dispute. Where there used to be a friendly relationship, that stemmed from recognition of the brave fight of Turkish
and Australian soldiers at Gallipoli relationships between the two countries are in conflict over several trade and
political issues, including the treatment of Kurds and refugees in the south of Turkey. One source of conflict has been
the treatment of women and different sexual orientations, with a huge cultural divide between the two countries on
these issues. The Turkish government have hit back, pointing out the largely white male Australian government and
ministers, which is a similar demographic make up to Solemate’s senior management team.
Solemate’s competitors have taken advantage of this negative publicity and have been widely advertising about how
thoroughly they check the manufacturing of their shoes and their suppliers. Some customers have been posting
memes and critical comments to Solemate’s social media using the #notTurkishdelighted hashtag. One key competitor
for Solemate based in Sydney “Double Step” has questioned Solemates inclusion policy and claimed that Solemate
does not practice good inclusive practices. Double Step has elaborated how they follow similar business operations as
Solemate but their management team is comprised of a better distribution of male and female staff compared to the
mainly male dominated management staff for Solemate. Double Step have further explained how their team is
comprised of people from different backgrounds such as gay, lesbian and trans employees, who are working on ground
breaking designs in their head office in Sydney and which will intensify the competition in the year to come.
Another supplier who had initially bid for Solemates supplier contract but was not rewarded the contract has written
an official letter to Solemates executives in Melbourne, Vietnam Co Ltd. This official letter highlights how they share
the philosophies of Solemate. It points out how they have a fair recruitment plan and invites anyone to apply for
positions in the company and the equal pay schemes used for all genders based on merit. Vietnam Co Ltd has made
allegations into Istanbul Industries and stated how that company does not practice a fair recruitment policy but hire
through personal connections and depending on such connections these staff are paid different amounts of money as
wages. There are no true initiatives set in place to develop any workers in practice even though it was on paper. If
there were any selection programs as such, it was favoured for workers who had built close connections with the
management. In the letter Vietnam Co Ltd has claimed how facilities have been put in place respecting and valuing
people from all religions. Istanbul Industries being in a Muslim country such as Turkey only allows the male employees
one hour of free time during Friday afternoons to go out and pray. The same is not considered for their female
employees nor there are any special religious areas set up in the production factory for people to pray. Anyone wishing
to pray needs to find a vacant area and this is mostly common rooms used for breaks.