Introduction The majority of multinational corporations have elected to outsource their production processes to Asia in countries such as Indonesia, China, and Vietnam. The logic behind such practices is that moving production abroad is that costs are significantly lower when compared to the costs if production is based in the States. Companies such as Nike have embraced the practice of using foreign factories to manufacture its products. Labor conditions and wages are two issues that have courted concern for the company. The concern stems from questions about the level of responsibility that a company such as Nike has regarding working conditions in the foreign factories. 1. What responsibility does Nike have for conditions of work at foreign …show more content…
The problem with the code of conduct was that it was vague in terms of how it would be implemented or what consequences would face contractors who failed to adhere to the code. Nike commissioned Andrew Young in 1997 to produce a report on labor practices in its foreign factories (Locke 40). The problem with the report was that it was likely to be biased given the conditions that Young experienced. Nike officials escorted him during visits to the factories, and he was provided with a company translator. The report was ineffective as it failed to establish the true picture concerning the working conditions in the factories. The report did not appeal to the public either and faced heavy criticism given that it did not even address the issue of low wages. Nike did the right thing in 1998 when Phil Knight, the CEO acknowledged the issues surrounding the labor practices of its contractors. The company prohibited the hiring of underage workers, enforced OSHA clean air standards for all its factories and started increasing its monitoring activities in the factories to ensure compliance. In the following year, the Fair Labor Association was created with the mandate of creating a code of conduct and establishing independent monitoring. Nike was instrumental in the creation of the non-profit group, …show more content…
After the speech by its CEO in 1998, the company proceeded to implement some measures to combat issues concerning its social responsibilities (Ferrell, Fraedrich and Ferrell 412). The first step was the adaptation of United States clean air standards. This was necessary as some of the countries did not establish clear air safety standards. Records show that six hundred factory audits were conducted for a two-year period starting in 2002. The audits were focused on checking the compliance of the factories to safety, health and other standards set out in the code of conduct. Factories that had issues were the subject of multiple audits to ensure that they had complied. The approach of conducting audits instead of just monitoring saw to it that the root causes of the issues were established, and Nike had been able to strategize on addressing the
In today’s world, increasing big companies open factories in developing countries but many people said it is unethical and the factories are sweatshops. Most of the sweatshops were opened in east Asia and third-world countries and regions. The companies open the sweatshops in order to get more benefits is a kind of very irresponsible behavior. For example, Apple's factories in China are not good and unethical. Audit finds
Large corporations such as Nike, Gap, and Reebok and many others from the United States have moved their factories to undeveloped nations; barely pay their employees enough to live on. Countries such as China, Indonesia, and Haiti have readily abundant cheap labor. There should be labor laws or an obligation of respecting workers to provide decent working conditions, fair wages, and safety standards.
American companies control factories that span the globe. Shoes, textiles, automobiles and many other products are produced in countries such as Mexico, Indonesia, and Korea. In fact, the American based Nike shoe company makes no shoes in the United States (Moore, The Big One.) These factories could employ the American unemployed and homeless. 17.3 percent of the people in Flint, Michigan are unemployed (Moore, Pets or Meat.)
With the constant quest for greater profitability, American companies are reaching further and further around the globe for opportunity. Factories are being built in third world countries, and sales efforts continue to increase in the world’s fastest growing economies like China and Brazil. Consumer products corporations, especially, are seeking out the cheapest and most efficient method of production, and many are beginning to look to Indonesia for answers. According to the Indonesian Footwear Association, “sports footwear produced in Indonesia is expected to soar roughly 25 percent to $1.6 billion since 2007,” (Abelson 1). One of the American companies leading the global initiative, New Balance Athletic Shoe Inc., alone expects to increase its number of shoes manufactured in Indonesia to almost 6 million pairs over the next couple years (Abelson 1). This vast migration of manufacturing facilities is lead not only by the hunger for corporate profits, but also by the new international system of globalization. This system destroys international barriers and allows for enhanced communication, efficiency and cultural understanding. When developing production operations in Indonesia, New Balance must be aware of both the cultural and geographical differences of the country, as explained by authors Thomas Friedman and David Landes, as well as the potential benefits and costs of globalization, explained by authors Amartya Sen and Paul Collier.
Nike has been under a great deal of pressure to correct the misdoings that have been done regarding production facilities in the East. As Nike is responsible for these plants, their reputation has been tainted with increasing public debate about ethical matters. While Nike still promotes itself as one of the industry leaders in corporate social responsibility, workers in Asia are still forced to work excessively long hours in substandard environments and are not paid enough to meet the basic needs for themselves or their families. They are faced to a life of poverty and are unfortunate subjects to harassment and violent threats if they make any attempt to form unions or tell journalists about labour abuses in their factories. Phil Knight’s speech regarding Nike’s steps to improving human rights in Asian countries was a step in the right direction for Nike, but it would have been much more effective had Nike fully followed through with these initiatives.
Corporations in the United States have proved time and time again that they are all about profit and not about what is good for America. One example of this is the fact that many corporations have factories in other countries, or buy from other corporations that do. Nike (an athletic shoe and clothing company) produces most of their shoes and apparel in factories in other countries, including Japan, South Korea, Indonesia, China, Vietnam and Malaysia. According to Nike’s factory disclosure list released May 2011, only 49 of it’s over 700 factories are located in the U.S. (Nike, Inc.) This means that thousands of jobs that could be filled by needy Americans are instead being filled by workers in other countries. This reason that Nike and other corporations outsource is very simple, it is very cheap to do so. In an excerpt from Jeffrey St. Clair's book “Born Under a Bad Sky” the author describes the vast differences between Nike’s production costs and retail prices. “In Vietnam, it costs Nike only $1.50 to manufactu...
Nike’s sweatshop manufacturing practices which can be seen through media have shown people that this company goes under the good guys images, these images which are displayed in their commercials show people that their employees are treated well and their happy in their working environment.
Nike has always been a company that's been questioned ethically. People have heard about the stories of the sweatshops in Southeast Asia exploiting adolescent employees for unreasonably small amounts of money. This had blemished Nike’s reputation several years ago, but since then, it has strived to become a truly respectable company. Located on Nike's website you can find Phil Knight's credo about ethics. It is as follows:
Since the pressure of the NGOs on the company has been growing, Nike developed a concept that promises to improve the monitoring of social and environmental standards for their contractors. According to Nike’s principle “Nike was founded on a handshake” , the company wants to work together and bind their business partners on the Responsibility Concept. Nike presents a symbiotic relationship of all parties based on their stated values of “trust, teamwork, honesty and mutual respect.” SHAPE stands for Safety, Health, Attitude, People and Environment and is combined with the Code of Conduct. The Responsibility Concept has been distributed to the manufactures since 1992. Nike introduced a new version of the Code of Conduct in 1997 which is oriented on the basis of human rights. According to article 23, a person has a right to work, which will remunerate him/her to such a degree that he/she will be able to live humanely.
Phil Knight started his shoe company by selling shoes from the back of his car. As he became more successful in 1972 he branded the name Nike. In the 1980’s Nike Corporation quickly grew and established itself as a world leader in manufacturing and distributing athletic footwear and sports' attire. The Nike manufacturing model has followed is to outsource its manufacturing to developing nations in the Asia Pacific, Africa, South and Latin Americas; where labor is inexpensive. It quickly became known for its iconic “swoosh” and “Just do it” advertisements and products. Its highly successful advertising campaigns and brand developed its strong market share and consumer base. But, the road has not always been easy for Nike; in the late 1990’s they went through some challenging times when their brand become synonymous with slave wages and child labor abuses. During this period, Nike learned that it paramount that the company understands its stakeholders’ opinions and ensures their values are congruent with their stakeholders. Nike learned that their stakeholders were concerned with more than buying low cost products; their customers were also concerned with ethical and fair treatment of their workers. Because Nike was unwilling to face the ethical treatment of its employees, the company lost its loyal customers and damaged its reputation. Nike has bounced back since the late 1990’s and revived its reputation by focusing on its internal shortfalls and attacking its issues head on. Nike nearly collapsed from its missteps in the late 1990’s. They have learned from their mistakes and taken steps to quickly identify ethical issues before they become a crisis through ethics audits. This paper is based on the case study of Nike: From Sweatsh...
Many people in our society today are constantly asking, "Why do sweatshops exist?" The answer to this question is that companies like Nike and Wal-Mart use sweatshops to produce their goods for a much cheaper rate, to reduce the cost of their products. The problem with sweatshops is that the workers are subject to hard work in often times poor conditions for minimal pay. But although many people may condemn sweatshops, there are some advantages that many people overlook when arguing against sweatshops and their practices.
With the increasing awareness and publicity of poor working conditions in subcontracted factories in East Asia, Nike has stimulated an uprising of activist and watchdog groups working toward seeing these conditions changed. With Nike in the negative spotlight, various organizations have revolved around generating a negative outlook on Nike’s practices of social irresponsibility. Certain campaigns such as the “National Days of Consciousness” and “International Day of Protest” were organized to educate people on the deplorable working conditions in Nike’s Asian manufacturing plants, and were designed to get more people involved in global employment issues.
In 1999 Nike began the Fair Labor Association, which is a non-profit group “that combines
In June of 1996, Life magazine published a article about Nike’s child labor that was occurring in Pakistan. The article showed a little boy who was surrounded by pieces of Nike sports gear. The articles were shoes and soccer balls. Nike then knew then that they had to make some major changes in the way they were producing their items.
There has been increased the outcry by international labor organizations accusing multinational companies of foul play when dealing with their workers. Many multinational companies, in a bid, to reduce operation costs and costs of production, end up suppressing their clueless workers. Some multinational companies have gone to the extent on having their central productions being done in low-income earning companies where they would not have many responsibilities to bear for the workers. Coca-Cola, however, has received widespread criticism for its mistreatment of workers and the way it has...