Was Nike at Fault for Unethical Labor Practices - Case Study Example

Institution Program Course code: Assessment Number: Student Name: Student ID: Section: Submitted to: Introduction There are so many shoe manufacturing companies in the world which have been involved in the process of manufacturing on their own. Most of these companies are based in Asia where they receive cheap and easily available labour. Some of the shoe companies that have been identified to be taking part in offering low wages include Reebok, Adidas, Nike, Puma and Hi-Tec. These companies are involved in personal production and most mostly their production is involved in contraction of the third world companies (Almaney, 2000). 1. Was Nike at fault for unethical labor practices? Give two reasons for your answer and explain in detail, applying theory and references where possible. 30 marks The contractors of Nike Company were at fault for unethical practice due to the following reasons: The first reason is: The sweatshop conditions in all of the Asian Nike’s factories which in reality no human being should live in as well as the mistreatment of the employees. It was evident that the company had broken a number of labour local laws in most of the Asian countries it was operation in like Thailand, Pakistan, Vietnam, China and Indonesia. It had also signed a very long contract with a contractor who was meant to make the shoes. It was also the contractor’s fault about that issue. The only thing the company does is to give the designs to the contactors and then pay for their services. Then the contractors mistreat the employees as well as provide them with the unsuitable conditions. This is stated by the case study that “Nike now has a work force of only 8,000 employees. The 350,000 people who make their shoes in Asia are employed by the subcontractors, not Nike.” This directly means that is not Nike’s fault it’s the subcontractors. It should be noted that Nike did not provide the working conditions which are favorable, did not pay them the minimum wages and also did not take the sufficient safety and health measures. In addition, the contactors turn a blind eye to child labor and sexual harassment in its factories (locking employees in cages hit over head, tapping mouth...sexual harassment from supervisors). This unethical behavior and the subcontractors didn’t take social responsibility of the workers. This is stated in the case study which shows that they don’t take social responsibility or awareness toward society. They pressure and force the workers to work 500+ hours per year which is a lot! In addition, if the workers refused to work these long and hard hours, they are punished and receive a warning. Three warnings and they are fired. They know that these employees need the money even if Nike pays them low wages. But, that will leads to unmotivated workers and bad health. The company has taken some measures to improve the situation but it has also failed to improve the working conditions especially to put an end to the ill treatment of its employees. According to the case study that was done, it is written that “Nike’s primary defense to changes of abuse of workers is that they do not own the Asian factories. The company is therefore, run by the subcontractors meaning they do not have any control over them, even though Nike has control over each and every stitch that goes on in each product line.” That statement automatically makes both companies responsible of the conditions that are happening to Nike. The second reason is: Nike has breached the code of it conduct and had a conflict between social obligations and economic performance. There are differences between the practices in Nike’s factories abroad (Vietnam, Indonesia …etc) and what Nike told American consumers about its labor practice (CEO and Nike president minimized that problem). The theory that I think appropriate for the Nike’s situations is “utilitarianism” because the aim of this theory is the greatest happiness of the greatest number of people. Here they mean the customers and the sport consumers that are using Nike’s product all the time. But, on the other hand these workers are not treated well and they live in such a small room all of them, they live in hunger and suffer from the bad treatment of the managers. They are forced as I said before to work long hours that’s unfair for all of the human beings. We as a students and also teachers, managers, employees here we get really tired from the work and sitting, moving all day how these poor workers are punished and beaten to work. I think that Nike’s and their contractors should use the “due care theory and employees rights” because if they used it they will be socially responsible where all the workers, customers, managers and all the citizens and society. The company has good image in the US, but was a very different company in other Asian countries and Vietnam. The conditions in sweatshop of Nike Asian factories were confirmed by several leading news papers and journals, as well for its mistreatment in these factories because of the conditions in Asian subcontractors. Nike failed to produce and deliver according to “due care” theory in the production line. (On-the-job-injuries, women lost her fingers which had been crushed in machine at a Nike factory). Some of the employee’s rights and due care theory includes: Just cause Due progress Right of privacy Right to refuse and know about hazardous work Equal opportunity Freedom & Respect Occupational health and safety Rights regarding plant closing and downsizing Safety from the harassment especially sexual as well as the respect in the working places If Nike Company applies the rules named above then no one will have a problem with the company due to dissatisfaction with the work as well as their products. 2. Should Nike’s contractors (as one of Nike’s main stakeholders) take actions to improve the way they are treating their employees? Please explain what actions should they take to change their ways and how could these actions benefit Nike in the long run (in the end)? You should discuss at least 2 actions or more. 20 marks Yes, it is important for the Nike contractors to take actions towards improving the manner in which he employees are treated. The following are the actions needed to be taken: 1. Reformation of the working age, hours, wages, hours and also improvement of the working conditions and environment. 2. Promote the utilization of the exiting processes within the factory to ensure problems are resolved as soon as possible. 3. Adoption of the necessary code of conduct for the factory which must comply with the minimal standards of labour. 4. Provide safe and secure work environment for the human. 5. Restitution of the workers who may have lost their jobs because of leading protests against low-breaking contractors. 6. Report all violation to the local law. 7. Stop all abuses against any workers. 8. Educate managers and workers about their rights and responsibilities. The above actions can be implemented through meetings with the employees, the management as well as making a site visit to the place. Also frequent interviews with the employees must be done as well as provision of a safe and confidential way of the employees to report any form of violation must be provided for the employees so that incase of any upcoming culture of inhuman practices, it can be dealt with before things gets worse. How these action could benefit. Nike in the long run: With the growing movements and rising levels of awareness among stakeholders, corporations are realizing non compliance with environmental issues and hazardous working conditions are no longer indifference to unethical practices. It means that, successfully Adoption and implementing of the code of ethics will at the end of the day translate into very great economic gains. This is because most of the investors are not only looking for a company that is well managed and governed to invest in but also for a company that has a good reputation. The improvement of the working conditions for the employees as well as the issue of increasing their wages will lead to the improvement and increment of the product quantity and quality production as well as efficiency of the employees. As a result this will add value to the organization since the employers and the employees will be aware of their responsibilities and their rights hence will improve the effectively of the workers. They will be happier so that will leads to a good motivated workforce that will make the workers love the work and not forced anymore. The following are some of the focus that will benefit the Nike Company: 1. Living standards: Living standards improvement for the company as well as the workers will also improve. This will be reflected by the fact that when the above situations are made right, then the sales of the comp[any will improve in the sense that so many people will have confident with the company and will opt to buy from them meaning the company’s sales will increase as well as the profit. This will also increase the wages of the employs and they will afford better and larger rooms to live in hence a better living and working conditions, safer and healthier conditions and entirely their living standards will be improved. 2. Reputation: The success of the company is associated with its good reputation. One the company has a good reputation then it will easily reach its objectives as well as the goals. Everyone at any age can wear Nike’s shoes, sport wear, towels, balls, socks and trousers. Even high class people wear Nike’s products. On the other hand, Nike has affected by the subcontractors reputation. They didn’t treat their workers in a good ethical way. Many people knew about what is happening through the media. Some of the schools stopped dealing with Nike’s products because of the working conditions in the factories. Despite all what is happening Nike has its good reputation till now. 3. Being social responsible: Any company wants to maximize the positive impact on stakeholders & minimize its negative impact. At the same time they will take care of the workers and never mistreat them because they are also humans. 3- What role do the media play in cases such as this? Investigate two different roles and explain in detail. 20 marks Answer of Q3 The role of media plays in such cases: The media has a social corporate responsibility towards all the consumers as well as the public which is the responsibility to pas information. It is its duty to ensure that there is no misrepresentation or withholding of the information, also the duty not to take undue advantage or force as well as the duty to take “due care” to avoid any injuries that are foreseen . The key element of the media is to ensure it duties are performed through proper analysis as well as critical thinking by applying and evaluating any information before it makes a conclusion. This was clear in the media gathering the information and investigating Nike violation and keeping the heat on Nike and its contractors practice and revealed the employment of Nike to subcontractors to violate economic and social rights. Without the media “the duty to inform” these violation and unethical breaches to the code of conduct and labor law practice would not be known to the public. The media want to create awareness to people and society about what is doing in Nike’s contractors so that people know that Nike can do something about this problem. The media played an important role here they announced the information about the working environment and how the workers are living in the factories. They announced in the news reports in the TV, newspapers and many other videos that are related, all that to be aware of what is happening. Media has a very great role as far as passing of information is concerned. Te media has the freedom of expression in that it has the freedom of covering any kind of information as far as it is the right content. The internet though several documents in terms of articles can be in the frontline to posting what is happening in the company. Through the articles that are posted in the interne t, the relevant authorities will have a glimpse of what is happening in the Nike Company and the issues which are not done the right way. Issue like the poor wages can be dealt with also the fact that the company is utilizing the labour of the children can be dealt with by the relevant bodies that are concerned with the child labour. Also the issue of sexual harassment can be brought out in the light as well as the workers poor living conditions which are not good for their health. It is also the role of media to enlighten the employees who are working in the Nike Company on their rights and freedoms like the right to works in a good condition as well as to have employees associations to help them fight for their rights. They employees also need their freedom of expression and through the media they can achieve that. This is through the media having interviews with them to be able to express their problems to the world for help. Who knows, they may even get a better company willing to employ them and at better conditions. 4. In your opinion in what ways could the situation faced by the Asian laborers damage Nike as a brand? Please analyze one consequence in detail. 10 marks Answer of Q4 Ways the situation faced by Asian laborers could damage Nike as a brand: The problems in the Asian Labourers that will arise as a result of the implementation of the requirement are many and will affect the morale of the employees or the employees both the managing and the subordinate staff. This is because of the fact that there will be a reduction in the number of the casual employees. These casual employees were definitely playing a very great role in the Asian Labourers and the permanent employees were able to work effectively and efficiently because of the fact that they were helping. Their reduction in numbers due to employee turnover means that there will be a more work load for the permanent employees and the remaining assistants. The problem will be that they will be working even harder and the pay is not even increased. As a result, then the quality of their work will be reduced tremendously due to their reduced working morale. Also they will be required to attend to a greater number of responsibilities making their work load even greater. This will bring the problem of the employees not being very efficient and effective since they may be forced not to give more attention to the shaping of the products. The main effect on the company will be the production of very low quality shoes which will mean that the Nike’s brand will be greatly compromised in terms of the quality. Rise of very negative publicity: In my opinion, the situation that faced by Asian laborers could damage Nike’s as a brand is the environment and the pressure that is caused by the subcontractors. “According to the Vietnam labor watch, Nike did not pay the minimum wages, did not provide proper working conditions, and did not take adequate health and safety measures. In addition, Nike turned a blind eye to the child labor and sexual harassment in its factories. Though the company has taken some measures to improve the situation, it has failed to improve the working conditions and put an end to the ill treatment of its employees.” In this way, Nike has affected on the production of the goods and the services. Although Nike workers are working long hours the quality of the product, they are producing is high because they are threatened by the subcontractors this cycle and problems will reduce the customers of Nike’s brand because of its reputation. 5. The public has been made aware of the exploited laborers in Asia by a variety of magazines, newspapers, TV and radio channels. Assume you are the President of Nike and want to change the organization’s damaged image. What actions would you take to regain your stakeholder’s trust and improve your image? List 2 actions and explain in detail. 20 marks Answer Q5 Action I would take to regain stakeholders trust and improve image. Focus on “best practices” by 1. Protection of the company’s image through a good code of conduct practice. 2. Coordinating developing strong linkage with the factory and country managers. 3. Taking a proactive approach towards becoming socially responsible. 4. Understanding why the children are working providing the opportunities for advancement and growth. 5. Ensuring accountability and transparency. 6. Improving the public relations. 7. Addressing all the issue concerning the wages. Implementation Stakeholder’s management: 1. Identify all the key stakeholders. 2. Working very closely to come up with some of the common solution. 3. Understand the stakeholders varied needs. 4. Support them at all levels 5. Recognizing the manual interests which will lead to the development of corporate as well as social policies. 6. .Extensive communication which will ensure all is well versed. Bibliography 1. A.J. Almaney, P. (2000, March 14). Strategic Analysis of Nike, Inc. Retrieved March 14, 2000, from condor.depau: http://condor.depaul.edu/aalmaney/StrategicAnalysisofNike.htm 2. Essay topics, essay writing: Nike Case Study. (2004-2011 ). Retrieved 2004-2011 , from essaypride: http://www.essaypride.com/essays.php?free_essay=486252&title=Nike-Case-Study 3. Ethics Issue Where Involved Nike. (n.d.). Retrieved from oppapers: http://www.oppapers.com/essays/Ethics-Issue-Involved-Nike/158813 4. Eyre, K. (n.d.). MNC or TNC:Transnational Corporations and the global economy. 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