NIKE: THE SWEATSHOP DEBATE

| March 19, 2020

Question

Select one of the following cases:

“Nike: The Sweatshop Debate” 

“The Russian Ruble Crisis and Its Aftermath” 

“IKEA: Furniture Retailer to the World”


Write a 550-word paper in which you address the following topics:

– Describe the legal, cultural, and ethical challenges that confront the global business presented in your selected case study.

– Determine the various roles that host governments played in this particular global business operation.

– Summarize the strategic and operational challenges facing global managers illustrated in your selected case.


Format your paper consistent with APA guidelines.

Answer

NIKE: THE SWEATSHOP DEBATE

Nike is a world-leading corporation that specializes in sports equipment and athletic shoes. The company operates through a large supply chain that employs hundreds of thousands of people from different countries, mainly in Asia. During the last two decades, Nike has been targeted by critics for promoting sweatshops. Sweatshops are clothing-industry factories characterized by poor working conditions, long hours, and very low wages. These damaging claims have led the company to come up with various corrective strategies, including establishing a code of conduct for all its subsidiaries and suppliers, putting in place auditing tools, and appointing a task force to look into the matter (Cray, 2001). This paper examines the legal, cultural, and ethical challenges that confronted Nike because of the sweatshop problem. It also explores various roles that the host government played in addressing the problem. Lastly, it examines the challenges facing Nike’s managers in terms of strategy and operations.


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            The sweatshop debate has had far-reaching legal, cultural, and ethical consequences for Nike. The most serious legal challenge arises from the fact that the company has been targeted several times in lawsuits over its contribution to the sweatshop menace. For example, in September 2003, paid a lawsuit settlement of $1.5 million over claims that it made false statements regarding its dependence on sweatshops for survival (Greenberg & Knight, 2004).

            The debate also has serious cultural and ethical challenges for Nike. The association with poor working conditions of factories operated by its main suppliers made Nike look like a company that was founded on unethical principles. It is indeed unethical for factories that assemble the company’s shoes to punish workers, most of them women, for choosing not to work overtime while at the same time grossly underpaying them. To demonstrate and uphold its image as an ethical company, Nike was compelled to establish ethical conduct for all its employees and suppliers. Cultural challenges also manifested themselves in the debate on sweatshops in the sense that a sharp contrast was made between aspects of cultural submissiveness in the Asian countries where the sweatshops existed and the aggressively capitalistic American culture that placed low production costs and revenue maximization above all else.

            The United States government played a critical role in cajoling Nike into changing its way and addressing the sweatshop problem (Knight & Greenberg, 2002). For instance, it asserted that it was Nike’s responsibility to ensure that employees of overseas factories where it had subcontracted some of its production activities operated in proper working conditions. The government also challenged Nike to demonstrate its compliance with the minimum age requirement of 17 years as stipulated by the International Labor Organization. Moreover, the US government put in place various Department of Labor initiatives aimed at encouraging American multinational corporations to evolve with the changing corporate culture and banish sweatshops.

            In contrast, weak institutions and poor governance in the Asian countries affected by the sweatshop problem such as Bangladesh, Vietnam, and Indonesia were in most cases unable to reign in on the unethical labor practices promoted by Nike’s subcontractors. For example, the Indonesian government failed to take action against subcontractors who refused to comply with the minimum requirements imposed by Nike in respect of minimum wages and working conditions (Cray, 2001). The company was compelled to terminate business relations with those subcontractors.

Today, managers of global strategy at Nike face a number of challenges in their efforts to establish an ethical foundation for strategies and operations relating to subcontracted activities. For instance, they have to balance between the pursuit of low production costs aimed at maximizing revenues and the company’s social responsibilities. Because of the damaging link to sweatshops, managers at Nike are always under pressure to maintain organizational legitimacy while working under conditions of extreme complexity.

In conclusion, the sweatshop debate put Nike in an awkward situation characterized by far-reaching legal, cultural, and ethical challenges. Its response, as well as that of host governments, played a crucial role in addressing this problem. The company’s managers must put in place strategies aimed at ensuring that it does not become a victim of global labor politics, whereby actions of subcontractors, whom it has no absolute control over, are relied upon to derive judgment on the company’s labor practices.

References

Cray, C. (2001). Nike’s Sweatshirt Sweatshop. Multinational Monitor, 22(3), 4-10.

Greenberg, J. & Knight, G. (2004). Framing sweatshops: Nike, global production, and American news media. Communication and Critical/Cultural Studies, 1(2), 151-175.

Knight, G. & Greenberg, J. (2002). Promotional and Subpolitics: Nike and Its Labor Critics. Management Communication Quarterly, 15(4), 541-570.

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