Nike’s cultural issues

Erica Cuington

ETH/316

May 1, 2013
Robert Woener

Poor work conditions and exploitation of children in the labor force are some of the common problems that are faced by organizations at the local and international. Despite the problems, nothing or very little has been done to prevent the labor related problem until it’s too late. Like in the event of a tragedy, it is then when the public takes and interest and protest against child labor. These are the same conditions that the United States faced during the Industrial Revolution. Such work conditions have currently been effectively dealt with in the United States apart from some small areas in the agricultural sector. However, in the third world countries the problem of poor work conditions and the use of children as part of the work force is still a problem.

Corporations in the United States have moved their factories abroad as a way of saving money while receiving cheap labor. In third world countries such as South Korea, China, Vietnam, Taiwan, and China among others provide cheap labor. US based companies view availability of cheap labor to be a great benefit. They are able fulfil consumers needs while maintaining low costs of production in offshore production. The malpractices of these corporations have been highlighted by the media and one of them is Nike Corporation which has been highly criticized based on its organizational culture.

Nike’s cultural issue

Nike Corporation is a company known all round the world. Since the beginning, Nike has ventured into other countries outside the United States. The company’s head quarters are in Beaverton, Oregon. The aim of the Nike Corporation is to reach the untapped markets around the world in order to increase its profits. The venture to other countries is also a means of achieving cheep labor. The Nike Corporation was founded by Bill Bowerman and Philip Knight. The founders of this organization opted to venture into other countries like Japan as a way of saving money for production and labor cost. It emerged as a Blue Ribbon Sports organization operating in the United States but later went global in its efforts to expand the company’s products line.

The company has also managed to expand its outsourcing to different countries including Pakistan. In Pakistan, Nike Company faced serious cultural issues including the use of children for Labour and poor work conditions. The allegations ranged from situations where children’s job was to stitch soccer balls to stitching of and sports garments. Boje & Khan (2009) indicate that Sialkot, Pakistan has been the place where soccer balls of Nike Company have been produced for several years and it is estimated that thousands of children have been used as workers in the production process of the company’s goods. Various world cultures do have different views concerning the responsibility that children should be given. This is a different case with the United States where child law laws have been passed to protect the American children from being used as labourers at a young age.

The main cultural issue that affects Nike Corporation is child labor and this is a problem that has affected this company’s interaction with other countries outside United States. The discovery of the company’s malpractices led to countless attacks on the Nike brand and strict recommendations had to be set to improve working conditions.

Ethical and social responsibility analysis

For the corporation to remain competitive in terms of price without the need to reduce its workforce, the company decided to outsource its manufacturing factories overseas just like many other companies have done. This gives the company a cost advantage over its competitors and enables the corporation to go further and venture into new emerging global markets. Though this might be seen as an unethical practice by others, because the company was shifting its jobs from the US, some may say that Nike’s decision was in the best interest of the company. when a company is unable to maintain an competitive edge within their current markets, it will experience stagnated growth which will result in many employees losing their jobs.

The customers are another consideration. This is within the ethical responsibility field which has for a long time been overlooked. For the case of Nike Corporation, it is clear that it underestimated the consequences of failing to follow the required base market regulations. Creating jobs or moving jobs out of the US can be difficult to justify but when it comes to a point where children are the ones being given the job, then this turns into a problem. Nike was accused of lowering the human standards rights only to maximize profits. Further Nike products have synonymously been linked to forced overtime, slave wages, and habitual abuse.

Conclusion

The main difficulties in diversifying an organization is based on the principle of cultural adoptability while ensuring that ethical and social standards are maintained. This paper has shown that ground work of an organization can well be described when there is a clear analysis of what practically takes place in an organization. It is clear that the decision of the company to take its business abroad was with a good motive of cutting down cost, increasing the competitiveness of the company and increasing its profits, but this had not to be done at the expense of the minors and other workers.

The Nike Corporation ethical downfall is mainly based on the poor working condition, the use of minor as labourers and the exploitative wage scale that the employees abroad face. Nike was not only criticized for its poor treatment of workers in Asia, but further attacked for taking away jobs from Americans. Thorough the corporate social responsibility laws, the corporation was forced to adhere to the recommendation in order to improve the poor working condition in its overseas factories

References

Boje, D, & Khan, F (2009) Story-Branding by Empire Entrepreneurs, Journal of Small Business and Entrepreneurship, p 9-24.

DeTienne, K & Lewis, L (2005) the Pragmatic and Ethical Barriers to Corporate Social Responsibility Disclosure, Journal of Business Ethics, p 359-376.

Khan, a (2010) Discourses on Childhood, History & Anthropology, p 101-119.