An Exploration of Reebok Sweatshops

An Exploration of Reebok Sweatshops

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Walk through Tong Yang Indonesia (TYI) shoe factory, an 8,500-worker complex of hot, dingy buildings outside Jakarta, and company president Jung Moo Young will show you all the improvements he has made in the past two years. He did so at the behest of his biggest customer, Reebok International Ltd., to allay protests by Western activists who accuse the U.S. shoemaker of using sweatshops.

Last year, Jung bought new machinery to apply a water-based solvent to glue on shoe soles instead of toulene, which may be hazardous to workers who breathe it in all day. He installed a new ventilation system after Reebok auditors found the old one inadequate. TYI bought new chairs with backs so that its young seamstresses have some support while seated at their machines--and back braces for 500 workers who do heavy lifting. In all, TYI, which has $100 million in annual sales, spent $2 million of its own money to satisfy Reebok. But to Jung's surprise, he says. ''The workers are more productive, and the new machinery is more efficient.''

This article is real case of a particular factory in Indonesia which produces shoe, primarily for Reebok. It reveals how one of the world’s most powerful companies is influencing lives and working conditions in one of the poorest countries in the world.
The lowest paid workers earn only $1 for every shoe, which is less than the legal minimum wage, and not enough to feed one person.

In fact, more than a dozen companies have joined efforts to create an industry wide system for verifying that consumer goods sold in the U.S. are made under humane conditions. The most ambitious effort involves the Fair Labor Assn., which grew out of a Presidential task force of companies and human-rights groups. It plans to send outside monitors to factories worldwide to ensure that they meet minimum standards on everything from health and safety to workers' rights to join unions.

The problem is that such companies are the exceptions. Although many multinationals operate facilities in Asia and Latin America that are as well run as any in the West, far too many still buy from factories where practices are appalling--especially in such labor-intensive sectors as garments, shoes, and toys. And many companies that claim to adhere to labor codes are still in the window dressing stage.

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When It comes to ethical responsibility, If they want to be a leader in their market place, they have to change their mind and thought to workers. Let us think about employees. Employees are the group most responsible for a company's success, since a business is essentially nothing more than a collection of individuals gathered together for a common purpose and with a certain amount of infrastructure and capital. Without employees, a business literally could not exist. Profitable companies do not spontaneously form out of piles of equipment, software, and money.
An important caveat, however. Companies owe an ethical responsibility to employees only insofar as the employees contribute to the success of the company. It is not unethical to fire an underperforming employee. It is also important to keep in mind that changing industry or economic conditions may force a company to do things (like lay people off) which hurt employees, but are necessary to the survival of the business
The importance of ethical behavior in a business can not be over-emphasized. What a company has built in decades can simply be destroyed by a top level executive of the company in virtually no time Â- imagine someone high-up being caught publicly in a serious corruption, graft, favoritism, cheating or even telling lie on an important issue.
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(Questions and Answers)

1. What ethical responsibility do you think firms from the United States and other developed countries have in making sure their suppliers from developing countries are not badly exploiting workers?

When it comes to ethical responsibility, I think they who are U.S and other developed countries have to respect their workers. Many owners can not use to their workers by exploiting workers. Using their workers, they can get a great income more than I U.S and developed countries. And they can manage their company cheaper than here. However they can not treat their workers or employers sweat their workers. Let us put ourselves in worker’s place. They are not only working for products but also they have to show their emotion and affection to owner. If they are not going to show their excessive loyalty to owner, they might be cut in their job. Managers have to recognize that workers are not slaves and they are helpers for company.

2. How do you react to the statement at the end of the case by the Indonesian manager that “If we aren’t cheap enough, customers will go to Vietnam or else where”?

Many people think that the most important thing is price of product and they believe that will be control the market. However I disagree with that. When it comes to organization behavior, we have to manage for not product but people. If we can manage people who worker for us we can control the market more easily and If we concern with only price of product without people we can not success in the market world.

3. Besides the ethical, human rights issues, are there any implications in this case for the study and application of organizational behavior?

Ethics is involved with moral issues and choices and deals with right and wrong behavior. A number of cultural, organizational, and external forces help determine ethical behavior. These influences, acting interdependently, serve to help identify and shape ethical behavior in today’s organization. There is increasing evidence of the positive impact that ethical behavior and social programs have on “bottom-line” performance. One of the major ethical issues especially relevant to the study of organizational behavior is the right of privacy. Such ethical issues represents a challenge to today’s organizations and must be given recognition and attention and be carefully managed.
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