Nike in China

Topics: Ethics, Business ethics, Morality Pages: 9 (2967 words) Published: November 10, 2014

Case study



According Gasmi and Grelleau (2005), Many multinational companies outsource some of their production activities in countries where ethical standards differ from those in developed countries, which often is the majority of their consumer market. This is particularly the case of multinational producing sporting goods, such as Nike, Reebok and Adidas.

Nike is the multinational leader in the world of sporting goods with 40% market sports shoes in 2000, before Adidas (15.1%) and Reebok (10.9 %). Paul Bowerman and Phil Knight founded the firm in 1964 in the USA under the name Blue Ribbon Sports (BRS). In the early 1970s, BRS began designing his own line of shoes, manufactured by Japanese subcontractors. In 1972, the company achieved a turnover of around $ 2 million and change its original name by the launch of the famous Nike brand. In 1978, due to the macro- economic environment (including the oil crisis) and economic development of Japan, Nike began to look for other countries cost of labour low to manufacture its shoes, as the Indonesia and Thailand , and then it goes to China and Vietnam.

The quote at the beginning illustrates the problems faced by multinational companies that have chosen to outsource in a country other than the ethical standards of their country of origin. Nike was not scandalized by one incident. However, it is a rather comprehensive review of the political subcontracting conducted by Nike in Asia in general and China in particular. Indeed, Nike was criticized by players defending human rights of lacking ethical practices in outsourcing in China. These actors have insisted that Nike does not meet certain international conventions, inter alia, freedom of association, working conditions, forced labour, child labour and wage issues. Why and how multinational Nike has it become the main target, the symbol of unethical behaviour, while the practice of its main competitors (Adidas and Reebok) are often similar? To illustrate, according to an opinion poll conducted in Novethic France in March 2002, Nike was the most cited "unethical" brand (8.7 %), all socio- professional so confused that Adidas has a good picture. The leading position of Nike on the world market, the reputation of its brand and its products, its profitability, visibility allowed actors social advocacy to make a symbol of the lack of ethics and use its market power sports items as leverage their strategies of protest. Kahle, Boushet Phelps (2000) emphasize that the focus of the controversy over Nike is due, among other factors, the characteristics of stakeholders. A stakeholder is a group or individual who can affect or is affected by the achievement of the organization.

The ethical implications of outsourcing of production in developing countries, mainly Asian, are valued differently by stakeholders. It is thus possible to propose two rough categories, the first favourable outsourcing in low-cost countries and reluctant to ethical considerations and the second sensitive to ethical considerations of outsourcing. This binary categorization distinguishes key positions, knowing that many intermediate situations coexist. The following two sub- sections identify and briefly describe these two categories of stakeholders. The company is now looking for a compromise that would satisfy all stakeholders.

This first category appreciate the choice of outsourcing, relegating ethical considerations into the background in favour of the organization for private economic benefits. It brings together consumers, shareholders, employees and the countries of sub-contracting and competitors. Nike consumers have a tangible product whose quality is satisfactory at an attractive cost due to low labour costs and savings related to the volume produced. This allows the multinational to reap substantial benefits that are valued by its shareholders, anxious to get the most...

References: :
- Gasmi N. et Grolleau G., (2005) Nike face à la controverse éthique relative à ses sous-traitants
- Kahle L. R., Boush D. M., Phelps M., (2000) "Good morning, Vietnam: an Ethical analysis of Nike activities in Southeast Asia
- Métayer Michel (2008) La philosophie éthique : enjeux et débats actuels
- Österberg Jan (1988) Self and Others: A Study of Ethical Egoism
- Rawls John (1971) A Theory of Justice
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