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Hitting the Wall: Nike and International Labor Practices

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To Whom it May Concern,

I want to begin by congratulating you on your success with the Nike Company. I believe that Nike will continue to grow and be successful in the future. However, with the recent concern of foreign labor abuse growing, I accept your request and would be happy to share with you my opinion on what Nike should do next. I will start by elaborating on the general, specific, and changing environments Nike is facing right now and will continue to face in the future. I will then share my recommendations in how to keep Nike afloat and out of the negative public eye. First and foremost, the general environment for many large corporations in the United States have moved portions of their factories overseas to avoid the working regulations in the United States. In the past, Nike has outsourced to several low-income countries such as South Korea, Taiwan, and currently has manufactures in China and Indonesia. As we both know, the purpose in doing so is to receive readily available, cheap labor. Revenues have reached over $9 billion and until recently, Phil Knight’s (Nike CEO) plan to outsource to the poorest countries has worked. However, it has recently become common knowledge to the public that the working conditions in these foreign factories are below the ethical standards. More specifically, the press is beginning to criticize Nike’s offshore exercises and advocacy groups are beginning to emerge. Jeff Ballinger, a labor activist and Nike’s original critic, compared a pay-stub from Indonesian factory to a Nike endorsement contract. The numbers sparked even more controversy. Other public figures such as Kathie Lee Gifford have been caught in worker exportation scandals and have rallied together to make companies and citizens more aware of this issue. This attention forced Nike to respond to the allegations but their response was not proof enough to move from the spotlight. One of Nike’s largest competitors, Reebok went out of their way to prove their innocence by giving a tour of their Indonesian factories while Nike refused to do so. In recent months, the labor issue has grown so out of control that President Clinton has set acceptable labor standards in foreign countries and is known as the AIP, or apparel industry partnership. Nike, along with religious groups, labors activists and other companies have joined President Clinton in this coalition. Knight also announced Nike’s membership in the organization, Business for Social Responsibility. However, your uncertainty leads me to believe that Nike wants to know if joining the group will end the negative publicity or if there is more that needs to be done.
While Nike is taking steps in the right direction I personally believe that there are several things Nike needs to do to in order to get back in the United States good graces. Through out the entire scandal Nike, has been very clear that what happens in their contractor’s factories is not in their control. Nike needs to take responsibility and take charge of their third party manufactures. By taking responsibility Nike should be ensuring that factories are paying the legal minimum wage. This may involve investigating what the legal wage is in each country. Media outlets have also brought up the idea of “training wages”. These are wages that are even lower then the legal amount. The legal minimum wage in Vietnam is already extremely low and it is completely unethical to pay anyone below that. This idea needs to be completely abandoned. I strongly believe that Nike needs to take corporate social responsibility by placing their Code of Conduct above everything else for the time being. By this I mean all workers should be going out of their way to put lower employees ahead of themselves, sales, and quality of the goods being produced. This is a short term, financial cost that will be beneficial to social and environmental change.
These basic ideas, including the implementation of Nike’s Code of Conduct as a top priority, will take time and require patience. However I believe that if Phil Knight has the power to build an empire like Nike, he will be able to adjust that empire until it is politically and ethically correct. By being completely honest with citizens, providing appropriate paying jobs, and scanning the environment for threats and opportunities, I trust that you will be back at the top in no time. I hope that you will take these ideas into consideration and I wish Nike the best of luck in the future.

Sincerely,
Emily Bitzer
Management Consultant

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