Facts About Nike Sweatshops Business Essay

Nike is one of the largest athletic shoe brands in the world. While the company sells millions of shoes and pieces of clothing each year, Nike does not produce any of these products. Instead, the company contracts with manufacturing facilities located throughout the world. Nearly 800,000 people work in these factories, located primarily in Asia. Since the 1990s, the company has been criticized for the working conditions and low wages at these factories, with many critics accusing the company of profiting from sweatshop labor. While Nike has made efforts to improve conditions, many rights groups still push for higher wages and greater change.

History

When Nike was founded in 1972, the company contracted with factories in Taiwan and South Korea to manufacture shoes and related goods. Over the next two decades, workers in these countries successfully lobbied their governments to win improved wages and the right to form labor unions. Faced with these new challenges, Nike moved much of their production to countries like China, Indonesia, and Vietnam, where it is illegal for workers to organize, and where wage rates are some of the lowest in the world.

The Nike Campaign

By the 1990s, disturbing stories were coming from many of the Nike factories throughout the world. Some described child labor, wages well below the poverty level and forced overtime. Others told of physical abuse from factory overseers, exposure to dangerous chemicals and poor air quality. These stories drew the attention of human rights groups, which began to bring media attention to these stories, hoping that pressure from the public could bring about change. Groups such as Education for Justice, Global Exchange and Students Against Sweatshop Labor led the effort against Nike. It is important to understand that the use of sweatshops was not then, and is still not, something that only Nike engages in. While many shoe and apparel manufacturer’s are accused of using sweatshops, human rights groups have focused their efforts on Nike, because of Nike’s role as the sales leader in the industry. Groups like Global Exchange hope that by pressuring Nike to change, other companies will be motivated to change their own practices.

Worker Protests

Along with the campaigns of human right’s groups, Nike began to see protests from the factory workers themselves. While Indonesia, China, and Vietnam all have minimum wage laws, Nike had successfully appealed these wages with the governments of these countries year after year, allowing them to pay wages well below the minimum rate. Nike further got around the wage laws by paying new employees an apprentice or trainee rate for several months to new employees. In April 1997, more than 10,000 workers from Nike’s Indonesian factories went on strike to protest low and unpaid wages, while 1,300 workers in Vietnam went on strike hoping for a raise of one cent per hour. The next year, 3,000 Nike workers in China protested dangerous working conditions and low wages. All of these protests took place in spite of the fact that these sorts of worker strikes are illegal in these countries.

Nike Makes Improvements

As pressure from the public and human rights groups began to mount, Nike made efforts to improve working conditions for its contracted workers. In 1998, dangerous petroleum-based chemicals used in most factories were replaced by less harmful alternatives. In 1999, wages in the Indonesian factories were increased to rates higher than minimum wage. The company also agreed to allow random factory inspections from the Fair Labor Association, and to set up independent monitoring with both US and international organizations. Finally, Nike added its own on-staff team of nearly one hundred workers who are responsible for performing inspections of the company’s partner factories. Inspectors must score the factory on factors ranging from employee safety to humane working conditions. They then meet with factory managers to address problems that were found.

New Standards

In 2002, Nike issued a company Code of Conduct to all its factories, regulating the conditions and safety requirements that work should be conducted by. The company’s 2004 Responsibility Report established further health and labor standards, and described increased monitoring plans. This 2004 report was considered a major victory for workers and many human right’s groups, because Nike included a full list of its factories and their addresses throughout the world. This has allowed for independent monitoring and investigations. While these were perceived as positive efforts on Nike’s part, the human rights campaign against the company have not ended. According to the Educating for Justice group, between 50 and 100 percent of Nike factories require more working hours than those permitted by the Code of Conduct. In 25 to 50 percent of factories, workers are required to work 7 days a week, and in the same percentage of factories, workers are still paid less than the local minimum wage.

ETHICAL THEORIES

UTILITARIANISM

Define the expression Utilitarianism using your own words and provide an example to show your understanding of the expression (5 marks)

Utilitarianism can be defined as understanding of taking care of the assets, maximizing the number of happiness and reducing the suffering of the assets which one has. It has great importance in measuring the rightness and wrongness of actions. Example Nike’s Code of conduct in 2002, history of Nike’s operations is changed after maintaining of labour rules.

Applying utilitarian theory, discuss the trade-offs from Nike using factories owned by other people in Asia and employing workers directly in their own factories in the US (5 marks)

Nike after hiring its own inspection team in US practiced trade-offs between the factories in Asia and US employees, the working standards, employees

health and environment improved. Necessary steps against child labour were taken. Wages level in most of the factories were improved, which off course results in the more productive and growth of companies working together.

Applying utilitarian theory, provide some suggestions for overcoming the problems that Nike face described in the case study (5 marks)

Human resource when happy and contented working for a goal, nothing can stop achieving the KPI’s of quality and quantity of work. Implementation of labour rules. Utilizing and maintaining the resources whether humans, machines or environment to the more productive level reduces the chances of employees and operational issues like strikes and other negativities.

There will be effects if higher wages are paid to the workers in the factories producing Nike products. Using examples discuss one benefit and one problem that might occur.

Discuss in some depth a benefit from paying higher wages (5 marks)

Employees when satisfied with wages will focus more on their work resulting smoothness in work operations and more quality and quantity productions for the company. Living standards of the employees improves and they strive to work more hard to achieve the goal and job assigned to them. No employees thinks for the strikes or making Unions in the factories when everyone working happily.

Discuss in some depth a problem from paying higher wages (5 marks)

Company may suffer a lesser ratio of profits by paying higher wages, if with the limited amount of stock investments it might result in the need of more investments might be banking loans or selling public shares. Wages more than market determined wages may result in market failure of the other products. Paying higher wages may result in unemployment when company in crisis.

DEONTOLOGY

Define deontology in your own words and give an example from the case study to demonstrate that you clearly understand the expression (5 marks)

Deontology is defined as to understand the duties and implementing them morally whether required, permitted or forbidden. The duty of the Brand Management should be taking quality assessments of every department the brand has. If Nike would have implemented the duties of maintain standards from the start they would not have faced the employees strike and Fair Labour association.

Describe how employing workers in Asian factories creates duties for the factory owners and also for Nike (5 marks)

Asian factories when organised and maintained it did create the need of maintaining standards for labour and so creating responsibility on the factory owners. They perform the duty of taking proper measures for health and safety of the employees. Nike after maintaining labour rules and work standards with the partner companies in Asia did create a responsibility on factory owners.

VIRTUE-BASED ETHICS

Discuss in some depth the argument a shoe/clothing company might make to explain their choice to use foreign labor. Make your justification for the decision based upon virtue-based ethics (5 marks)

Companies using foreign labour while making choice to outsource business should make quality rules and laws with factory owners. Hiring the right people on board taking care of the labour rules and environment that their employees are working are key factors which can cause the smoothness in outsourcing business to remote countries.

SWEATSHOPS

In your own words, write a summary of the main ethical arguments against multinational companies using sweatshops (100 – 150 words) (10 marks)

Many multinational companies these days even are trying to get their work done from remote countries where labour is cheap and new brands of shoes and clothing’s mostly make more profits. There is not any harm in getting the work done from the remote locations but when proper measures are not taken by the brand management, for employees and staff working for them, the environment where the work is being done for the company it creates a blurry picture of the future of employees. Proper labour rules should be emphasized. Sweatshops workers find long hours to work in hazardous environment, most of them in these days as well using child labour. Brands like Levis, D & G, Calvin Klein and the list goes on, and most of them are getting the work done from China using the same old sweatshops.

MARKING CRITERIA

Evidence Required

Marks available

Attained

0%

Not addressed or not submitted

40%

Almost no coverage of the answer

60%

Some weak coverage of the answer and missing significant information

80%

Not completely correct answer, and missing some important information or not original

4

5

QUESTION 4

10

ASSESSOR: TOTAL MARKS: /50

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