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Nike- Ethical Issues

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Ethical Case Analysis:

Nike

Introduction

Nike was established in 1972 by Bill Bowerman and Phil Knight. These two men were visionaries. The goal for Nike was to carry on Bowerman’s legacy of innovative thinking by helping every athlete reach their goal or by creating lucrative business opportunities that would set the company apart from any competition. This included providing quality work environments for all who were employed by Nike. However, Nike has long been eluding allegations of employing people in the developing and under-developed economies, at low wages and poor working conditions for a long time. Nike tried many different measures of correcting its image as well many public relations measures to help salvage the image the public had of them after images of Nike employees working in sweatshops were released. In this essay, we will look at Nike’s international business operations and analyze the ethical issues and dilemmas they are faced with as a result of manufacturing their goods on foreign soil.
Areas of Concern Some areas of concern for Nike include poor working conditions, low wages, child labor, as well as health concerns in the factories. These are all areas of concern where ethics is involved. Ethics is the generic term for the science of our morals. The executives at Nike have been accused of many ethical dilemmas. For example, poor working conditions in factories that produce Nike products has been one big issue plaguing the company for years. Nike outsources their labor to countries that are in need of economic growth. They are able to obtain the labor at a cheap, and some may say, unfair rate. This causes workers to be exposed to working conditions that would be far below what we would accept here in the US or any developed country in the world. These workers are faced with long grueling hours, some as long as sixty five hours per week, this according to the NY Times. Employees at this particular factory were located in Vietnam. (Greenhouse, NY Times) Working all those hours and only bringing home $10 USD a week. The employees endure this type of treatment because they are desperate for the little money they earn. This brings me into my next point of concern, low wages. Nike contracts all their manufacturing to developing or third world countries. Even though the countries wages are lower than our own here in the US, Nike fails to provide wages to workers at a rate in which they can sustain themselves and their families. Because of this, cheap labor is exploited and many workers are treated poorly. Some workers earning these low wages were children as young as early and preteens. Deplorable working conditions have lasting effects on employees. Many employees experienced skin and breathing problems in those factories. Just because you are operating in a country that is not up to the standards of the United States, does not make it ethically okay to subject your employees to conditions that are unacceptable.
Current Analysis One can speculate as to why Nike would be involved in such a Hodge podge of ethical dilemmas. Could it be because they are not operating in the US and feel as though they should not abide by the ethical standards and OSHA requirements set forth in our country? Is it that the upper management has something to gain personally from outsourcing its labor to under developed countries? Should our government step in and be able to regulate how the factories and workers are treated on foreign soil? I do believe Nike was socially responsible for its actions. When the allegations came to light in the public eye, there was a lot of backlash regarding them. Nike joined a task force called fair job labor association to review the allegations made against them. This was to help ensure that Nike was abiding by the ethics code in the shoe and clothing industry. Since the allegations came out in 2008, Nike has helped improve the conditions in its manufacturing plants by improving the ventilation systems, reducing the use of many toxic chemicals, as well as improving safety features for those who work in the plants. By joining a task force that helps promote fair labor practices, Nike is taking responsibility for its actions and showing the global market that is does take an interest in those working in the factory. This helps to alleviate any hesitation consumers may have with purchasing products made by Nike. The Sarbanes-Oxley Act of 2002 can help Nike monitor the compliance of the factories in foreign companies because it can help Nike monitor the wages paid to its employees more closely to ensure they are being paid fairly. As well it can help the company identify any significant changes in internal controls and related factors.
Government Regulations The International Labor Organization (ILO) sets the standards for working conditions around the globe. ILO’s main target is governments however; many of the standards recognized today affect the behavior of corporations. The UN Global Compact sought to create a partnership between the UN and many transnational companies to promote ten essential principles in the areas of human rights, labor, the environment, and anti-corruption. (Anderson, International Regulation of Transnational Corporations, p.5) These principles include the right to equal opportunity, right to security, right to workers, as well as the respect for independence and human rights. For Nike, I think these organizations helped shape the path in which the company will continue to strive to follow. Since the allegations of ethical issues arose with Nike, they have gone through great lengths to make sure that the company has more transparency to its stakeholders, the government as well as the general public. This allows Nike to clearly define their policies as well as be able to hold employees responsible should any ethical issues arise with the principles established for Nike. The UN Global Compact has helped Nike be able to implement acceptable standards in their factories. This helps decrease the child labor that is used in these countries as well as improve the standards of the manufacturing plants. It helps Nike be able to analyze the amount of accidents within a certain time frame and adjust schedules and shifts to make sure that the accident numbers are at the bare minimum.

Conclusion Nike has faced much criticism over its decisions regarding the manufacturing plants in developing countries. Experts will continue to question how Nike runs its manufacturing plants even though when we do look at Nike today, they are operating at standards that are acceptable. The Nike brand is known worldwide in practically every country in the world. It is a brand that has sustained its success. There will always be questions regarding the practices Nike is involved in. However, once you begin to analyze the company, you see the Nike is determined to continue to be successful. It has implemented its own independent audits of the foreign manufacturing plants as well as engages in events that support human rights. It will be a tough fight for Nike as it will constantly be faced with ethical dilemmas because of the way the world economy is today. Nike continues to receive harsh criticism for producing its product overseas and not on US soil, much to the dismay of critics who are hardcore supporters of products made in the US. Nike has collaborated with their suppliers, their employees, other buyers and non-governmental agencies to help design policies that are effective for each of the different cultural norms they encounter. This has helped Nike determine what good working conditions are as well as develop an effective product flow. Nike will continue to be one of the best known brands in the world. Their shoes will continue to sell for good money while being produced on foreign soil.

References

Greenhouse, S. (1997). Nike shoe plant in Vietnam is called unsafe for workers. Retrieved on September 6, 2012 from http://www.nytimes.com/1997/11/08/business/nike-shoe-plant-in-vietnam-is-called-unsafe-for-workers.html?pagewanted=all&src=pm

Wilsey, M. (2000). The Nike controversy. Retrieved on September 7, 2012 from http://www.stanford.edu/class/e297c/trade_environment/wheeling/hnike.html

AICPA (2006). The Sabanes-Oakley Act. Retrieved on September 6, 2012, from http://www.soxlaw.com/

Anderson, S. (2006). International regulation on transnational corporations. Retrieved on September 8, 2012 from http://www.policyinnovations.org/ideas/policy_library/data/01311/_res/id=sa_File1/

Flering, P. (2005). Nike press release. Retrieved on September 6 2012 from http://www.ceres.org/press/press-releases/nike-inc.-issues-2004-corporate-responsibility-report-highlighting-stakeholder-engagement-and-new-levels-of-transparency-and-disclosure

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