Case Study - Nike Sweatshops Inc.

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Corporate Sustainability Management|
Case Study Analysis: Nike, Inc. and Sweatshops|
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Ethics refer to what is defined as right or wrong in the morality of human beings and social issues are matters which could directly or indirectly affect a person or many members of a society. In this case study, Nike has been accused of subjecting employees in their subcontracted factories overseas to work in inhumane conditions for low wages. The CEO and cofounder of Nike lamented that “The Nike product has become synonymous with slave wages, forced-overtime and arbitrary abuse.” Initially, the firm purchased two shoe-manufacturing facilities in the United States but eventually had to shut them down due to tremendous loss in profits. Today, practically all of Nike’s factories are subcontracted and located in countries such as Indonesia, Vietnam, China and Thailand, where the labour costs are significantly lesser than those in the United States. The founder of Vietnam Labour Watch, Thomas Nguyen, inspected several of Nike’s plants in Vietnam in 1998 and reported cases of worker abuse. At one of these factories which he inspected, a supervisor punished 56 women for wearing inappropriate work shoes by forcing them to run around the factory in the how sun. Twelve workers fainted and had to be taken to the hospital. He also reported that workers were allowed only one bathroom break and two drinks of water during each eight-hour shift. The ethical and social issues in this case are that Nike unethically takes advantage of these labour markets because it provides them with a higher profit.

Nike should also be held responsible for what happens in factories they do not own to a certain degree because low-cost manufacturing has always been their strategy in the market. Although they do not directly own these factories, they should take the initiative to be socially responsible and monitor the minimum working conditions as it would reflect on the company’s image. A living wage is defined by the wage which allows the earner to afford basic needs such as food, shelter and other necessities of life. The labour cost of manufacturing a shoe is $2.43 while the consumer pays $65 for it. Nike could still afford to pay its workers a living wage without raising its prices to the consumers. Realistically, the wage guideline of the FLA seems more feasible as it is based on a fixed statistic of minimum wage as required by law or the average industry wage, whichever is higher. That being said, the minimum wages of some developing countries are too low and would not provide the benefits of a normal living for the employees. Therefore, the guidelines of the WRC seem more appropriate to me and it would be considerable to take into account the wages of a normal-income employee and follow that guideline. It is unethical for Nike to pay endorses millions of dollars while its factory employees receive a few dollars a day. Sure, it is important for them to market their products and using celebrities and spokespeople would cost tons of money but there are many other ways for them to market their products without the need to exploit the conditions of employees in third world countries. All other major athletic shoe manufacturer also contract with overseas manufacturers albeit to various degrees. Athletic shoe firm New Balance Inc. is somewhat of an anomaly as it continues to operate five factories in the United States. However, New Balance has developed a different marketing strategy in comparison to Nike. They do not use professional athletes to market their products. Instead, they choose to invest in product research and development. New Balance also makes most of their shoes in the United States, paying workers over 30 times what Nike workers get in Vietnam, yet they still make a profit.

To achieve corporate social responsibility, Nike should seriously consider the impact of their company’s actions on society. It is an...
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