Case Study: The Nike Sweatshop Debate
The Nikkei Sweatshop Debate Established in 1972 by former university of Oregon track star Phil Knight, Nikkei is one of the leading global designers and marketers of athletic shoes and apparel. The organizations “swoosh” logo and “Just Do It! ” marketing phrase are among the most recognizable logos in history. Nikkei has annual revenues of $15 billion and sells Its products In over 140 countries. The corporation does not manufacture products but rather contracts manufacturing, “..
. Room a global network of 600 factories scattered round the globeћ. ” (Hill, 2009, p. 154). For many Nikkei had become a symbol of the evils of globalization as the company became a target for accusations that products were manufactured in “sweatshops” using child labor, working excessive hours under hazardous conditions while being paid sub-standard wages. This paper.
Based on the case study Nikkei: The Sweatshop Debate authored by Charles W. L. Hill in his book _ International Business.
Competing in the Global Marketplace _ (2009) will analyze the legal, cultural and ethical challenges confronted by global business: examine the roles that host governments have played and summarize the strategic and operational challenges facing global managers at Nikkei. _Legal, Cultural and Ethical Challenges_ Legal, cultural and ethical challenges play a large part in this case. Nikkei, one of the first truly global companies, contracts with foreign manufacturers thereby taking advantage of low-cost labor in countries such as South Korea, Taiwan, Indonesia, China and Vietnam.
Many legal challenges must be considered many of which include legal, cultural and ethical differences, trade regulations, employment law, and public policy. Ethics presents a challenge for Nikkei as these countries have a deferent perspective on what is ethical and acceptable when It comes to working conditions, wages and labor practices. For example, according to Hill (2009) “The majority of Nikkei shoes are made In Indonesia and China, countries with governments that prohibit Independent unions and set the minimum wage at rock bottom” (p. 55). Ethically speaking the base pay of a Nikkei factory worker Is $2. 28 per day, double the Income of over half of Mullen wage that does not provide for the basic needs of an Individual In an attempt to survive.
Nikkei must question the legal, cultural and ethical Implications of its global workforce policies. Working within the local customs and labor standards is not enough if Nikkei is genuinely concerned with the rights of the workers ability to earn a decent wage rather than just a public relations inconvenience.
Roles AT rent Governmental actions in foreign countries have a significant impact on Nine’s global operations. During the sass Nikkei contracted with South Korea and Taiwan to produce shoes and apparel. As a result of newly gained freedom to organize wages began to rise. Nikkei looked toward Indonesia and China where the government prohibits unions and controls the minimum wage (p.
155). As recently as 2008 Nikkei found themselves embroiled in another foreign government debacle; this time the organization touted the issue themselves.
Due to a shortage of labor in Malaysia, workers from Bangladesh and other areas have come to Malaysia to work. The new workers, after paying a fee in their home country to obtain work have had their passports and wages withheld until they have paid the Malaysian government a $375 US foreign worker fee. _Strategic and Operational Challenges Over the past decade it seems that Nikkei has learned an important lesson relevant to keeping an eye on their contract workers.
Bad public relations notwithstanding, Nikkei must continue to monitor the companies, governments, and workers with whom they do business.
Strategic challenges include identifying global opportunities to conduct business while adhering to ethical regulations governing working conditions and wages; continue to streamline distribution channels to ensure product quality across the globe and monitor and overseas contract manufacturing to ensure Nikkei policy compliance. Some operational challenges include global training and development programs; overseeing working conditions and implementing policies to improve workers rights.