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Nike Case Study

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A Case Analysis of
Nike: The Sweatshop Debate

Mindi Merritt
Class
Fall 2014
Instructor’s Name

Introduction Nike is a hugely successful global industry that designs and markets shoes and apparel (Coakley & Kates, 2013). Most of Nike’s products are subcontracted and manufactured overseas in countries such as China, India, Vietnam, Indonesia and Korea. For decades, Nike has been embroiled in controversy where critics claim its products are manufactured in foreign factories with substandard working conditions and disregard to labor laws (Powell & Zwolinski, 2012). As a result, Nike has initiated numerous policy changes in an effort to silence these criticisms. While Nike has definitely made great strides in turning around its image, it continues to struggle with allegations from critics.
Nike’s Responsibility for Working Conditions
Should Nike be held responsible for working conditions in foreign factories that it does not own, but where subcontractors make products for Nike? Nike should be held responsible for the working conditions in foreign factories where subcontractors make products the company sells. Although Nike does not actually own the foreign factories, the workers are employees of Nike and Nike is the beneficiary of the products they are making. Thus, Nike is responsible (at least in part) of the working conditions endured by those that work there.
Labor Standards of Foreign Factories
What labor standards regarding safety, working conditions, overtime, and the like should Nike hold foreign factories to; those prevailing in that country, or those prevailing in the United States?
I do not think it is feasible to ask foreign factories to adhere to the same standards regarding safety, working conditions, overtime, and the like as those of the United States. Many countries, especially third-world countries, would not be able to support the labor standards of the Western world and if forced to do so many foreign factories would be forced to shut down – leaving workers without a job at all (Ballinger, 2011).
Pay Rates in Indonesia
An income of $2.28 a day, the base pay of Nike factory workers in Indonesia, is double the daily income of about half the working population. Half of all adults in Indonesia are farmers, who receive less than $1 a day. Given this, is it correct to criticize Nike for the low pay rates of its workers in Indonesia?
I do not think it is correct to criticize Nike for the low wages it pays its workers in Indonesia. Considering the fact that these factory workers make more than double what the majority of adults in Indonesia earn in a day, Nike is providing the people of Indonesia an alternative (and higher paying) job opportunity (Ballinger, 2011).
Negative Publicity Over Sweatshops
Could Nike have handled the negative publicity over sweatshops better? What might it have done differently, not just from a public relations perspective, but also from a policy perspective? Overall, I feel that Nike handled the negative publicity over sweatshops rather well. When the allegations against Nike initially emerged, the company moved quickly to publicly address them, and implemented various policy changes and monitoring programs (Coakley & Kates, 2013). These efforts, while a step in the right direction, have also been criticized. I do feel, however, that Nike should have been more aggressive in finding out what the conditions were like in its subcontractors’ facilities.

Nike’s Labor Policy
Do you think Nike needs to make any changes to its current policy? If so, what? Should Nike make changes even if they hinder the ability of the company to compete in the marketplace?
While profits are sure to decrease as a result, Nike really has no choice but to continue to respond to criticisms and allegations of substandard conditions in its foreign factories. Nike must mandate that the subcontractors adhere to safe working conditions and pay workers a decent wage (Doorey, 2011).
Workers Rights Consortium (WRC) and Fair Labor Association (FLA)
Is the WRC right to argue that the FLA is a tool of the industry? The FLA is a collaborative effort of universities, civil society organizations and socially responsible companies dedicated to protecting workers’ rights around the world. The WRC is an independent labor rights monitoring organization, conducting investigations of working conditions in factories around the globe. There is no basis for the WRC claim that the FLA is a tool of the industry. FLA has joined with many responsible organizations and enhanced the working conditions and labor rights of employees throughout the world.
Global Solution to Sweatshops
If sweatshops are a global problem, what might be a global solution to this problem? Nike, perhaps because of its size and popularity, has been a popular target of protestors against poor working conditions. However, there are many other companies that are not under scrutiny that are also paying low wages and providing poor working conditions (Locke, 2013). I realize that it would be impossible to inspect the working conditions of every factory across the globe, but there are possible solutions. Stiffer fines and penalties for companies that do not comply with an internationally recognized set of standards may be one way to combat sweatshops.

References
Ballinger, J. (2011). How civil society can help. Harvard International Review, 33(2), 54-59.
Coakley, M. & Kates, M. (2013). The ethical and economic case for sweatshop regulation. Journal of Business Ethics, 117(3), 553-558.
Doorey, D. (2011). The transparent supply chain: From resistance to implementation at Nike and Levi-Strauss. Journal of Business Ethics, 103(4), 587-603.
Locke, R. M. (2013). Can global brands create just supply chains? Boston Review, 38(3), 12-29.
Powell, B., & Zwolinski, M. (2012). The ethical and economic case against sweatshop labor: A critical assessment. Journal of Business Ethics, 107(4), 449-472.

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