Nike Debate Essays

Nike Debate Essays Nike Debate Essay Nike Debate Essay Case:Â   Nike:Â   The Sweatshop Debate 1. Should Nike be held responsible for working conditions in foreign factories that it does not own, but where subcontractors make products for Nike? Yes, Nike is not only responsible but also accountable for the working conditions of foreign countries that it does not own. Nike should realize that it is a Global Organization and working globally does not only mean that taking advantage of low cost destination but also taking responsibility of the contractors/employees working in other countries. For example: Pepsi was recently in the news for allegations of having pesticides in the cold drink in India. Pepsi ensured that it has same standard of water purification across the world and not just meeting standards in the Indian Market. Similarly, Pepsi should realize that while they are getting cheap labor in low-cost destinations but at the same time they need to be socially responsible to ensure that the workers get minimum wages and work in conditions that are acceptable in respective countries. 2. 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? There need to be combination of standards for Nike. If Nike follows only the standards (wage rates) prevailing in Unites States, it might not be able to enjoy the cost advantages that they are realizing by off shoring manufacturing of shoes. However, if Nike adopts the standards prevailing in the country of manufacturing then it is not able to comply with some of the Human Rights related issues that global organizations should comply with. Hence, it is very important that Nike designs a combination of standards that ensures that workers get at least the minimum wages in the respective country but the working conditions should be acceptable enough for workers to work and the minimum age limit of workers should also be enforced strictly. 3. 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 subcontractors in Indonesia? The daily wage rate in different countries is fixed by the labor laws in that country. The daily wage rate also differs by the skill of workers, type of city the worker lives/works in and the prices of essential commodities in the city/state. Hence, the daily wage of workers in factories manufacturing Nike shoes may be higher than farmers in the same city/state. If Nike’s contractors are not abiding the minimum wages for the type of skill and working conditions in which these workers work in, then Nike need to be criticized. If Nike’s contractors abide by the minimum wages set by a class of workers depending upon their skill and working conditions, then Nike cannot be criticized and comparing wages of one set of workers with another set of workers like farmers may not be correct. 4. 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? Nike could have handled the negative publicity over sweatshops better from a policy perspective. Nike could have enforced norms for all the contractors, who are manufacturing either shoes or apparels for Nike across countries, to abide by the local rules and also created some new norms that would apply to all the factories that manufacture Nike’s products. Nike should have published the names of all the contractors across countries abiding by the local working conditions and wages. They should have also requested the local labor inspectors in different countries to do an audit of their factories on a regular basis to ensure that contractors comply with the local laws in their respective countries. 5. 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? Nike needs to ensure that all the contractors comply with the wages and local working conditions in respective countries. Nike can do this either by appointing a labor inspector in each of the factories for all the contractors and asking them to report the details of all the workers working in their respective factories and this report need to be reviewed by legal experts at the country level and worldwide level to ensure that all the laws are in compliance by contractors of Nike. Any non-compliance should be considered seriously and serious actions should be taken against all such contractors, which might result in termination of contracts with such factories. In fact, Nike should go ahead and open schools for children of workers working in their factories across different countries to take care of the developments of its workers across the globe. Nike should make such changes even if this means termination of contracts with non-compliance factories or more expenses for development of workers in factories. This is because all organizations in today’s world affect the society and hence they need to be sensitive towards the conditions of the employees and the society. Thus, Nike should engage in Cause Related Marketing (CRM) by ensuring that working conditions are made better in all the factories and also ensuring that developments of workers happen so that they are not devoid of good working conditions, food and respectable wages. 6. Is the WRC right to argue that the FLA is a tool of industry? WRC has claimed that FLA is tool of the industry as they found certain evidence, which were not being followed in Nike’s factories. It may be possible but WRC should provide some time to FLA to ensure that all the factories of Nike are compliant with the local labor laws in respective countries. WRC should audit some of the factories which FLA has declared as compliant with local labor laws to ensure that it is not a tool of the industry. The change management across all the factories of Nike for ensuring compliance will take some time and hence WRC need to ensure that FLA does its job of creating compliance in a foolproof manner. 7. If sweatshops are a global problem, what might be a global solution to this problem? Sweatshops are a global problem as organizations have started working in a global environment. The Organizations need to be sensitive to the laws of different countries and also accountable toward the workers / employees / contractors of low cost destinations to ensure that they work in better working conditions and abide by the rules and regulations of countries in which they operate in. b. Next summarize the strategic and operational challenges facing global managers illustrated in your selected case. Also comment on recent global developments affecting the company in this case. Strategic Challenges Identifying low cost destinations for ensuring cost efficiencies Ensuring synergy of product specifications across different manufacturing locations Ensuring consistent quality across manufacturing locations Operational Challenges Ensuring consistent wages across different manufacturing locations across countries Ensuring similar working conditions across different manufacturing locations across countries Ensuring development of employees across regions