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Unethical Business Practice: Nike

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The role of the government also plays a major role in these challenges that are faced by Nikkei. As we know that government laws and regulations differ from country to country and this makes manufacturing of products very difficult challenge for the international companies like Nikkei. The host governments have laws concerns against consumer protection, information and labeling, employment, wages and salaries and safety of the workers who work in those firms. The international organizations must keep these rules and regulations in their minds and should abide by them.

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The most visible hangs in the legal-political factors develop and grow out of international trade agreements and the emergence of international trade alliance between different countries for example, GAIT or EX. etc. (Stockades & Crosby, 2004) What happened is that the various roles that the host governments Of different countries like China, Vietnam or Indonesia played in this particular global business’s operations were that they turned a blind eye towards the poor working conditions of the manufacturing plants.

Another role that these governments played was that they did not do anything about the very low ages of the workers for example, in Vietnam the workers were paid 20 cents per hour or a mere $1. 60 per day but in actual the living wage in Vietnam was actually $3 per day. And neither of these governments did do anything about child labor problems or the sweatshop problems.

The ethical challenges (that is the sweatshop debate) that confront the global business of Nikkei are as follows: On 17 October 1996, CBS News ran a 48 hour program covering the inhumane treatment of workers by their supervisors, the payment of wages below the legal minimum wage, and the sexual abuse of several women rockers at Nine’s shoe manufacturing plants in Vietnam. Workers had been physically assaulted on the job. Temporary workers were paid, on an average, 20 cents per hour while team leaders were paid $42 per month; regular workers were paid even less.

By late 1 997, BLEW came out with a report that accused Nikkei of violating numerous labor laws. According to the report, Nikkei did not pay the minimum wages, did not provide proper working conditions, and did not take adequate health and safety measures. In addition, Nikkei turned blind eye to child labor and sexual harassment in its factories. The CBS sews program aired interviews with team leaders and even showed a copy of a labor contract to substantiate its claims. On March 14, 1997, Reuters reported that 56 women were forced to run around one Nikkei factory.

Twelve of them went into shock, fainted and were taken to hospital. As a result of these reports, a group of Vietnamese Americans contacted labor groups and journalists in Vietnam. A group called Vietnam Labor Watch (BLEW) was organized to study the working conditions Of workers at factories in Vietnam and monitor Nine’s labor practices on an ongoing basis. VI_W visited Nine’s stories in Vietnam and met workers, shoe manufacturing executives, labor union representatives and legal experts. By late 1 997, BLEW came out with a report that accused Nikkei of violating numerous labor laws.

According to the report, Nikkei did not pay the minimum wages, did not provide proper working conditions, and did not take adequate health and safety measures. In addition, Nikkei turned blind eye to child labor and sexual harassment in its factories. The report also observed that there was a difference between the practices in Nine’s factories in Vietnam and what Nikkei told American nonusers about its labor practices. Analysts said that in spite of its good image in the US, Nikkei was a very different company in Vietnam and other Asian countries.

The sweatshop conditions in Nine’s Asian factories were confirmed by several leading newspapers and journals including The New York Times, LISA Today, The Wall Street Journal, AP, and Reuters. However, Nikkei had repeatedly claimed that it did not tolerate worker maltreatment in its Asian factories. The company had developed and published both a “Code of Conduct” and an agreement with its Asian subcontractors, setting out the Meany’s position on wages and working conditions.

Nikkei is being hypocritical in its support of children’s programs in public schools while exploiting child labor in its shoe factories. ” – The Canadian Catholic Organization for Development and Peace. “l think that’s always been true, that basically we have not had a problem with child labor. It has been somewhat of a problem in the apparel industry, but it hasn’t been a problem at Nikkei factories. ” – Philip Knight, CEO, Nikkei. But analysts felt that in spite of some cosmetic measures, the company had not really shown any real interest in addressing the issue.

Jim Cox, executive president of the New York based CGI group,5 said, “Nikkei has adopted a defensive attitude throughout. Recently, Nikkei seems to be grudgingly coming around to admitting something may be wrong but they missed an opportunity at the outset when they effectively said ‘we’re Nikkei and we’re not doing anything wrong. We don’t own these plants so they aren’t our problem”. In 1958, Phil Knight, a keen athlete and an undergraduate at the University of Oregon, and his track coach Bill Borrower realized the need for a good American running shoe.

The track shoes produced by Aids and Puma were made of leather, had little cushioning, and used steel spikes for traction. Knight felt there was scope for improvement in these shoes. After graduating, Knight enrolled in the School of Business at Stanford University. At Stanford, Knight analyzed the shoe manufacturing industry and arrived at the conclusion that with cheap Japanese labor, an American manufacturer could sell track shoes that rivaled Aids in quality, at significantly lower prices.

In 1 964, Knight and Borrower decided to form their own athletic shoe company and called it the Blue Ribbon Sports (BARS) Company. Borrower’s job was to test the shoes, offer design ideas, and persuade coaches he knew to endorse the shoes. The company decided to specialize in designing and selling high-performance shoes made in Japan. In 1971 , the duo developed a distinctive trademark and a new brand name. They named the brand Nikkei, after the Greek winged Goddess of Victory.

A local Portland student, Carolyn Davidson, who was paid $35 for the design, created Nine’s “Swoosh” symbol. The new Nikkei shoes were launched at the 1972 Olympic trials held in Eugene, Oregon. Knight and Borrower quickly cashed in on the publicity by advertising that Nines were worn by “four of the top seven finishers. ” During the first half of the sass, Nine’s sales grew from $10 million to $270 million. The growth was facilitated by the creation of the waffle sole and the cushioning system (patented by Nikkei), known as Nikkei Air.

Though Nikkei claimed that it was trying to monitor and enforce its Code, it did not have an effective system in place for monitoring and enforcement. There were not enough Nikkei supervisors in all of Nine’s factories in Vietnam to ensure that its contractors were complying with the Code of Conduct on a day-to-day, shift- o-shift basis. Nikkei constantly denied that it used unfair labor practices. The company sent representatives to college campuses in the US in an attempt to convince students that Nine’s treatment of foreign labor was fair.

In addition, Nikkei targeted journalists in countries In which they had factories to report their side of the story. Veda Manager, Nine’s senior spokesperson, explained the rationale for this move, “Unlike us-based reporters, who are writing about factories they have never visited, journalists working in those countries understand the local conditions. Nikkei offered a 12-minute online video tour of its contracted shoe facilities in Vietnam. In May 2001, a report prepared by a labor rights group claimed that even after three years, Nikkei had not delivered on its promises.

The report said that Nikkei used to warn its factory managers about inspections by its own inspectors in advance, allowing them to minimize toxic fumes by the time they arrived. Personal Opinion. Nikkei’ s management should analyze the employment practices; they should make sure that the company is following the policies on recruitment, training, lath, safety and welfare, and also oversee the environmental practices to make sure that the company follows procedures that are responsible in terms of waste disposal and avoidance and energy inputs etc.

Set targets and identify performance measure standards. With the help of performance management, Nikkei will be able to develop skills of people to achieve their capability to satisfy their ambitiousness and also increase profit of a firm Nikkei has decided to use a PR campaign so that it is able to repair its social image due to the sweatshop debate.

It will be good for Nikkei to understand why ethical responsibility is needed within the company because it’s the obligation Of organization’s management to make decisions and take actions that will grow the welfare and interest of the society and as well the organization. It would include activities and commitments that are related to human rights, governance and teeth CICS, development, working conditions of the employees, community involvement, customer satisfaction, relations with the company’s suppliers and customers and lastly respect for diverse cultures and different people etc.

Cite this Unethical Business Practice: Nike

Unethical Business Practice: Nike. (2018, Feb 01). Retrieved from https://graduateway.com/unethical-business-practice-nike/

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