Business Ethics of Nike Inc.

Topics: Ethics, Business ethics, Sweatshop Pages: 19 (5528 words) Published: December 11, 2012
1.0 Introduction

Ethics, also known as moral philosophy that can be defined in basic term as what is right or wrong in humans’ morality. The definition of business ethics on the other hand, can be defined according by Wikipedia (2011), ‘a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and entire organizations.’ It is important to implement an ethical approach in a business company, as it has various responsibilities to look upon to, such as to shareholders, employees and the community. Therefore, by embracing this positive concept of ethics as part of the business operation, it will ensure the business is in conducive to success, develop and profitability for the long term wise.

In this report, based on the requirement given, I have chosen Nike Inc. as the topic of the discussion. Nike Inc. is the world leading company merchant of athletic shoes, sportswear and sports gear based on United States. Bill Bowerman and Phil Knight established the company in the 1964 and during that time Nike Inc. was known as Blue Ribbon Sports. Furthermore, the organization has been experiencing phenomenal growth and rapidly expanding since then. Krentzman (n.d.) claimed ‘Nike sold $3.2 million worth of shoes in 1972, and its profits double-up each of the subsequently 10 years’.

Regardless of the remarkable success that the company has made, it’s image and reputation somehow has been tarnish several times, mainly because the unethical business practices that have been done. Therefore, it shows that in terms of corporate responsibility, the company did not tag along with its own principal and advice ‘Just do it’.

2.0 Labor Rights

Nike is one of the companies that are commonly known in ‘outsourcing’ practices, according to McDaniel (2010). Outsourcing is a practice of contracting certain business task or operation to another companies instead of handling the task in its homegrown as to restrain manufacturing, production and overhead costs. Therefore, the company bonds with other factories that sited all over the world, which majorly located in Asian countries due to the low labor cost. Powell and Skarbek (2004) claimed that Nike has ‘took part in such event by out-sourcing it products production to countries such as Indonesia, Cambodia, China, Vietnam, Pakistan, Thailand and Malaysia’.

The company has been said that it has provided many job opportunities, incomes, and also skills to be shared with others. However, the company did not act in accordance with several labor rights obligations in the Third World involved in the production of the company such as Cambodia, Vietnam and Pakistan. As stated by McDaniel (2010), ‘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.’ This shows that the company has unethically abused or misused the business advantages in the Asian countries. Hence, the main issue to be discussed here is regarding the labor right abuse.

According to Carroll and Buchholtz (2011, pp.314), stated that ‘Sweatshop is a manufacturing facility characterized by poor working conditions, violations of labor law, long hours, and low wages.’ The company has been receiving many criticisms regarding to this issue. In the terms of low wages, according to Sbrilli (2010), ‘in Vietnam, China and Indonesia, the company only pays the worker $1.60, $1.75 and $2.46 a day.’ Besides, the workforces also have to work for long hours with that amount of salary. As for the work period is a set eleven up to twelve hours and seven days per week, not including the hours of working overtime. As according to Vietnam Labor Watch (1997), ‘factories contracted by Nike have violated minimum wage...
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