Nike and International Labor Practices
Synopsis of the Situation
Nike is a global brand and it is the number one sports brand in the world. Phil Knight, founder and CEO has taken the small shop from it’s humble beginnings in the early 1970’s to becoming one of the largest corporation with a 60% market share of in the footwear industry (Bizjournals.com, 2008). To cut overhead costs and free up cash Nike has no factories. This is the first corporation to accomplish this cost-saving strategy on a large scale. By subcontracting their production to factories in third world economies, they gain tremendous in the form of reduced wages, but are countered by the increased difficulty of monitoring the quality of their products and the actual working conditions in the factories (Van Dusen, 1998). Nike's strong research and development department has an evolving and innovative product range. They then manufacture wherever they can produce high quality product at the lowest possible price. If prices rise, and products can be made more cheaply in another country Nike will move the production (Kochan, T..A, & Schmalensee, R.L., 2003). Ironically, in their effort to dominate the footwear industry, the company came under attack for human rights violation among their transnational operations (Weissman, 2004).
Introduction of the problem and key issues in the case
Nike shoes are manufactured in third world countries including Vietnam, Indonesia, Mexico and China (Dobnik, 1997). The ethical and social issues in this case include the disparate treatment of foreign workers and exploitation of low wages. Nike has also been accused of exploitation of child labor in these poor countries for its own benefits where they operated through warehouse subcontractors. Many of the manufacturing processes of Nike contribute to environmental pollution.
In 1998, a Nike plant was inspected in Vietnam where subsequently, the inspection revealed cases of worker abuse (Dobnik, 1997). The...