Individual_Case_Study_Nike__the_Sweatshop_Debate

Running head: INDIVIDUAL CASE STUDY Individual Case Study Nike: “The Sweatshop Debate” University of Phoenix Global Business Strategies MGT/448 June 06, 2011 Individual Case Study-Nike “The Sweatshop Debate” When the marketing phrase “Just Do It” is uttered, one is fully aware of the corporation that is responsible for the saying. “Nike states that their greatest responsibility as a global company is to play a role in bringing about positive systemic change for workers within their own supply chain, and in the industry, by looking at their overall footprint in the world and realizing the needs of nearly 800,000 workers in their contract supply chain overshadow any other group.” (Nikebiz, 2011, ¶ 1) This responsibility they have adopted after serious allegations of their products being made in sweatshops by women and children working in hazardous conditions for less than minimum wage in overseas factories scattered across the globe. This paper is based upon the case study entitled, “Nike: The Sweatshop Debate”, and will describe the legal, cultural, and ethical challenges that confront Nike’s global business. This paper will also determine the various roles that host governments have played, and summarize the strategic and operational challenges that face global management for the Nike Corporation. Blue Ribbon Sports was founded in January of 1964 on a handshake, $500, and mutual trust between Bill Bowerman and Phil Knight. Blue Ribbon Sports soon became Nike in 1971 with the help of their first employee Jeff Johnson who is responsible for creating the first marketing materials for the company including brochures, print ads, and company catalogues. The first athlete to endorse for the company, Steve Prefontaine is remembered as the “soul of Nike”, and many famous athletes including Michael Jordan and Bo Jackson have literally followed in his footsteps. When Michael Jordan joined Nike as a rookie in 1985 by wearing and fully endorsing his signature shoe, Nike began to regain their spotlight as the industry leader. In the following years with their popular marketing campaigns featuring Bo Jackson, Nike was once again the leader in the industry and continues to remain so. According to the case study, the profits and success that the Nike Corporation has gained has not come without a price, but instead has affected hundreds of thousands of workers in other countries that have worked in harsh conditions for very little pay. The case study points out that “Nike is now one of the leading marketers of athletic shoes and apparel on the planet, but Nike does not do any manufacturing, rather it designs and markets its products, while contracting for their manufacture from a global network of 600 factories scattered around the globe that employ some 650,000 people.” (Hill, 2009) Nike has subcontracted its manufacturing to countries such as China, Indonesia and Vietnam in particular. When any company subcontracts work to other companies abroad, they are always putting themselves at risk because they aren’t able to fully manage the workplace by evaluating and monitoring labor practices. These companies do however save money in regards to wages, which is one of the main reasons they go abroad. Nike faces many challenges to legal, ethical and cultural points of view in regards to this case study. Nike upholds a responsibility to act in an ethical way, and even though they subcontract their manufacturing to other countries, they still need to uphold their responsibility regarding ethical practices in their factories abroad. It is unfortunate that the company refused to see what was happening behind the closed doors of far away countries that made Nike who they are today. The women and children working in harsh conditions, extremely long hours, with little wage is unacceptable to most people in the United States, which is why the action was taken against Nike. Once the press started to run with stories regarding Nike’s sweatshops overseas, Nike needed to rethink their global position, and take a look at it from a different light. Nike stood to lose a lot of money if some effort wasn’t put forth, and they had an ethical obligation to make sure that the accusations of running sweatshops were put to a rest. In an effort to put a more positive light on Nike in regards to their ethics, the company joined a presidential task force that would work towards banishing sweat shops. Nike also hired an independent contractor to audit their factories abroad, and in an effort to show everyone that they were making serious effort, closed down four Indonesian factories that weren’t willing to abide by the wage levels and working conditions set forth. As with any company operating on a global level, the laws must be followed in both countries. Nike must abide by the laws and be in compliance, but the countries in which they subcontract out to (host countries) must do the same. Labor laws need to be followed and enforced by host countries, and the employees need to be protected. In the case study, the auditors found small violations of labor laws and codes of conduct, but missed out on the actual problems. The hazardous working conditions and violations of overtime and wage laws are something that Nike will have to continue to work on in order to gain the trust that was lost during this ordeal. Not only will it be important for Nike to uphold the laws set forth, but the host countries also need to follow these laws order to maintain their status as a global business operation. It will be of great importance for Nike to continue to remain in good corporate social responsibility (CSR). By maintaining CSR, Nike will be able to manage the strategic and operational challenges that the global managers are faced with. Within any company operating on a global level, communication is of great importance. Nike will need to remain in constant communication with their management abroad and up to date with education and auditing practices. Auditing practices are a must and need to be treated with great importance to achieve Understanding the cultures of the countries in which Nike is dealing with is also of equal importance because it is necessary to understand their needs versus the needs in other countries. The debate against Nike and their sweatshops across the globe remains to be an issue, but if the company continues to be involved on a global level, they must obey the laws in the countries in which they do business. Another approach that the company can do to maintain good standing in corporate social responsibility is to create a code of ethics policy that can be used in every workplace of Nike. If Nike continues to show that they are doing their best to eliminate all sweatshops and abide by the rules of foreign governments, they stand to reap many more benefits in the future. References Hill, C. W. (2009). Ethics in International Business. In J. Weimeister & M. Richter (Eds.), International Business: Competing in a Global Marketplace (pp. 154-157). New York, NY: McGraw-Hill/Irwin. Nikebiz (2011). Workers & FactoriesImproving conditions in our contract factories.. Retrieved June 5, 2011, from http://www.nikebiz.com/responsibility/workers_and_factories.html