Although there have been reports of unfair labor practices conducted by their contractors, Nike didn’t admit these malpractices neither they enforced their contractors to improve the working conditions of their workers. Nike managers argued that the Indonesian factories were owned and operated by independent contractors, not by Nike and further claimed that Nike is just marketers and designers.
- Nike has not done an especially good job of scrutinizing the subcontractors with which it’s working.
Nike’s subcontractors are found to have been violating basic labor practices. If Nike cannot control its subcontracted plants, it means they have not implemented their rules and regulations effectively. Furthermore, it shows that it is not abiding by the international standards which they have set for themselves.
Opportunities
- May attract more workers and help employ people from less developed countries.
Nike has never made shoes in the United States. Its first factories were in Japan, when the country was still a part of the Third World. And since then, Nike have been migrating from nation to nation, arriving as countries install the necessary mechanisms for orderly business operations. With such mechanism, Nike helped in increasing the employment rate of a developing nation.
Threats
- Various groups are protesting and banning the use of all Nike products.
The anti-Nike headlines had flooded campuses, where group of activist movements consider Nike as a symbol of corporate greed and exploitation. This is now making a big threat to the image that Nike is projecting.
- Reebok, a chief competitor of Nike, had moved aggressively into the human rights arena.
When activist accused the company of violating workers’ rights in Indonesia, Reebok responded with a far-reaching set of guidelines, one that spoke the explicit language of human rights; set forth specific standards for the company’s contractors and promised to audit these contractors to ensure their compliance. By doing so, Reebok was able to convince the public that they are sincere in promoting a better standard of living for their workers and in promulgating human rights.
OPTIONS
Option A: Maintain the status quo
Option B: Strictly enforce the Nike Code of Conduct, not only to the whole organization more so to its business partners (contractors)
Option C: Propose and implement a sustainable increase in the wages of the workers employed by their business partners (contractors)
RECOMMENDATIONS
Nike has had to face real questions about its labor practices abroad, the first time that it has felt a public-relations impact. At this point, that impact does not seem at all devastating. While in the short run Americans are generally horrified by the is due of child labor and has expressed concern over the working conditions in foreign factories, Nike should take immediate actions in order to provide remedy to all the activism it faces, otherwise it can prove devastating for the company’s image in the long run.
Now the burden is on the company both to do a better job of implementing company-wide global standards of conduct and also to improve its openness to the media. The more you hide, after all, the more people think you have something to hide.
Wages are very important to the workers within the Asian countries. Nike needs to pay a livable wage to cover the basic necessities for their Asian employees. There is definitely something wrong when American pay US$100.00 for a pair of shoes and the workers only receive about US$3.00 to make them.
Nike has a code of conduct that it holds all of its sub-contractors to. This code outlines the expectations that Nike feels all sub-contractors need to follow in order to do business with Nike. Nike must cancel contracts of its sub-contractors who have failed to comply with the code of conduct. In addition, Nike must levy fines against several sub-contractors who have committed abuses or violations of the code.
Nike could take more responsibility for the working conditions in its sub-contractor factories. Nike could also use its leverage more effectively to influence the sub-contractors. Nike could also examine the communication between the managers and workers at their factories and work to improve it. This problem and others could be alleviated if Nike located more of its own employees in the region.
The workers also need a more secure and efficient way of voicing their complaints in the factory, without the fear of retribution. Independent monitors could be considered to help the workers and to more effectively analyze the problems in these factories. These independent monitors may be necessary because of the questioned validity of the audits already conducted of the Nike sub-contractor factories.
