Unit III -Nike Ethical Delimma-Case Study-MBA 6301-15K-7-C. Austiin
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Running head: NIKE’S ETHICAL DILEMMA 1
Nike’s Ethical Dilemma Caroline A. Austin
Columbia Southern University
NIKE’S ETHICAL DELIMMA 2
Nike’s Ethical Dilemma
Phil Knight, the CEO of Nike had addressed the issues that plagued Nike. He explained that Nike is a marketing company and the product is the most important marketing tool (Willigan, G. E., 1992). If this is true then why did Nike outsourced their product overseas and treated the third world country employees as slaves in a mafia style ownership. This behavior was so bad that it tarnished their reputation which changes the view point of their customers that it then affected their product. He ensured that Nike would make improvements in their overall operations and address any
issues that would cause controversy. “Really” you might not be saying this if you had not gotten
caught abusing employees in third world countries. Being under a micro scope is hard to get away from when you are facing wage controversies in subcontracted Asian factories (Landrum, N. E., 2008). Nike, in its quest to make their product should have kept their ethics in check so that any wrong doing would not have been publicized, which changed the focus and view point of everyone around the world. A video of Nike’s sweatshops was published for the world to see by Jim Keady in 2011, showed the deplorable conditions that the Nike employees lived. Jim Keady felt that Nike had to be exposed for their cruelty and ethical violations. After the story came out of Nike’s unethical behavior towards the poor workers just the thought of buying a Nike product puts a sour taste in anyone’s mouth. The controversies rallied a cry for justice from all over to put a stop in this inhumane treatment of poor workers in overseas third world countries. In anyone’s view point, Nike should have never behaved this way in the first place not of these violation of human rights would not have been reported. Nike would have gone on to produce their product without any scrutiny.
NIKE’S ETHICAL DELIMMA 3
Many years ago, Nike began its outsourcing for its marketing campaign and opened up factories in several countries, such as Korea and Taiwan. It also started expanding in China, Vietnam and Indonesia. Because Nike had been so successful it became an early target for its labor practice that tarnishes its reputation. Nike had set up factories in these countries so that they can cut cost and it was an easy way to avoid federal regulations. Despite these reasons, Nike was reported as having sweat shops that was in violation of human rights. The reports were
being published about Nike paying employees as low as $1.25 to $2.40 a day (Radin, T. J. & Calkins, M., 2006). The workers were earning slightly more than it cost to buy three meals a day
and were under strict rules about their bathroom and water breaks (Radin, T. J. & Calkins, M., 2006). The treatment in which these employees suffered was intolerable and broke every ethical rule in the world. The study in 1997 was released by Nike to resolve wage controversies in subcontracted Asian factories (Landrum, N. E., 2008). Nike’s CEO Phil Knight had to face ethical questions and decisions that may or may not be beneficial for the company. Some decisions can be very difficult in order to illuminate problem or solve problems. Nike had been so successful that it neglected its ethical code of conduct, its standards and that it abused its employees in an intolerable way, which the conditions were harmful and unhealthy towards the employees. Many would pass out or fall from exhaustion and were so depressed they felt they had nothing else important in their lives that they felt trapped with nowhere to go because of their dependency of earning a paycheck. Nike’s decision to choose their product and profits over their
ethical beliefs was a stupid move on their part.
When it was noted or reported that Nike was paying low wages and had poor working conditions, the response from Nike was to implement a code of conduct. The news media
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NIKE’S ETHICAL DELIMMA 4
investigated the protest that was being conducted by the workers for change in the working environment. The protest gained national attention that Nike had to establish a department to work with the workers to improve the lives of the employees. Public outcry continued while the abuse continued to emerge and Nike tried to expand its product by endorsing Michael Jordan to sell their shoes and also trying to address issues in reports that only seem to cover up the issues. Activist organizations were questioning why despotic sweat shop, child labor, and physical abuse
practices of the 19
th
century were being tolerated at the end of the 20
st
century, especially by a US corporation such as Nike (Landrum, N. E., 2008).
The attention to the ethical issues and abuse by Nike caught the attention of college students and civil right activist. Protest after protest began to wear down Nike. Workers were laid off due to low product demand since the market soured over Nike’s products. Nike faced many ethical issues that were affecting the company. Nike’s products were affected with unrelenting criticism; the CEO “Phil Knight” believed that it was time for change by saying in a speech that Nike product became synonymous with the sweat shops, slave wages, forced overtime, and arbitrary abuse that he believed American consumers does not buy products made under such abusive conditions.
The CEO Mr. Knight decided to fix the situation raised minimum wages for workers, monitoring their environment and adapted the U.S. OSHA clean air standards in all of their factories. Nike also created the fair labor association which consists of non-profit groups and human rights organization as well as a labor representative for monitoring the code of conduct for employees and a 60 hour work week. Nike is no longer on the defensive; but rather it has emerged victorious and is successfully using labor issues and the media to its advantage (Landrum, N. E., 2008).
NIKE’S ETHICAL DELIMMA 5
Conclusion
Leaders have a difficult choice on how to handle ethical issues with employees but at the same time must be able to motive employees to give 100% to the company. Many issues arise from day to day and leadership strive to improve those that must be addressed. Leaders and employees face many challenges and legal issues when dealing with any ethics problems but it comes together in the end when good leaders and employees work together. In the current culture and demographic world everyone lives in, it is a shame that there are still countries that are poor. Countries that are poor and have not economics associated with their population to feed and employ its people, Corporation such as Nike can take advantage of the situation and reap the benefits of slave labor or sweatshops. If Nike’s CEO was smart, he should have started from start to finish a environment with ethical standards from which the employees learn and benefited from their experience. Being employed in a poor country has its disadvantage where the government never took care of its people from such abuse. Desperate people will do anything in order to have the needs to survive despicable conditions within their culture.
NIKE’S ETHICAL DELIMMA 6
References
Arnold, D. G. & Hartman, L. P. (2003), Moral imagination and the future of sweatshops, Business & Society Review
, 108(4), 425-461, Retrieved from AB/Inform Collection database
Ballinger, J. (2008), No sweat? Corporate social responsibility and the dilemma of anti-
sweatshop activism, New Labor Forum (Routledge),
17(2), 91-98, Retrieved from AB/Inform Collection database
Brown, G. (2006), Why sweatshops won’t go away, Industrial Safety & Hygiene News
, 40(6), 70-71, Retrieved from AB/Inform Collection database
Keady, J. (2011, July 28) Nike sweatshops: behind the swoosh
, [Video file], Retrieved from https://www.youtube.com/watch?v=M5uYCWVfuPQ
Landrum, N. E. (2008), Using an ethnostatistical analysis to interpret data: the Nike case, Organization Management Journal (Palgrave Macmillan Ltd.)
, 5(3), 119-131, Retrieved from AB/Inform Collection database
MGM Resort International (2015), MGM resort named one of America’s most reputable companies for corporate social responsibility, Reputation Institute, Entertainment & Travel
, 59. Retrieved from AB/Inform Collection database
Radin, T. J. & Calkins, M. (2006), The struggle against sweatshops: Moving toward responsibility, Journal of Business Ethics
, 66(2/3), 261-272, Retrieved from AB/Inform Collection database
Torres, C., & Garcia-French, M., & Hordijk, R., & Lana Olup, K. (2012), Four case studies on corporate social responsibility: Do conflicts affect a company’s corporate social responsibility policy? Retrieved from http://ssbea.mercer.edu/blanket/four%20Case%20Studies%20on%CSR.pdf
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NIKE’S ETHICAL DELIMMA 7
Van Buren, H. J., III, & Greenwood, M. (2013), The genesis of employment ethics, Journal of Business of Ethics
, 117(40), 707-719, Retrieved from AB/Inform Collection database
Willigan, G. E. (July/August 1992), High-performance marketing: An interview with Nike’s Phil
Knight, Harvard Business Review
, 70(4), 90-101, Retrieved from AB/Inform Collection database