Nike labor practices
1. The main reason behind Nike becoming a target for critics of globalization was well formulated in the words of Johan Norberg in his article ‘Why Not Globalization? For Third World workers like Tsi-Chi, a job with a multinational means prosperity, not exploitation’ published in The Spectator. According to Norberg the main ethical question against Nike is that the product of the company is sold at a staggeringly higher rate than the wage paid per unit of production. Thus, the workers are paid a minute amount of wage in comparison to the product. This appears to be a system much like the feudal wage system of the medieval era. According to Johan Norberg, this the main reason behind the products of Nike becoming a hate object for activists. For the activists and antiglobalists Nike becomes more eligible to criticism than that of the products of, say, McDonald’s hamburgers. From a utilitarian perspective, it can be mentioned that it is true for it has been found that the average pay in a similar Nike factory near Ho Chi Minh City is $72 a month. Thus, Nike is responsible for the allegation against them for running sweatshop like labor camps in other countries like Mexico, Indonesia, Vietnam and China too. (Norberg, 2005)
Moreover, with the alleged labor camps like factories in outsourced countries it becomes more important for Nike to manifest a better mode of freedom in the US. However, Nike’s presence in South East Asia is certainly beneficial for Asians and none can enumerate better than this illustration. “…eight years ago, when Nike was established in Vietnam, the workers had to walk to the factories, often for many kilometers. After three years, they could afford bicycles. Another three years later, they could afford scooters. Today, the first workers can afford to buy a car.” (Zimmerman, 2006, pg 91)
Thus, the point made clear by Nike in this context was obviously something to be convinced of. If that is not important or enough for many activists it could be mentioned that if this is an illegal move by Nike then at least the workers are not complaining at any circumstances. Moreover, this move could be regarded as the price of globalization if at all there is a price involved in it. For the South East Asians the presence of Nike is job assurance and not labor camp.
2. It should mentioned that Nike behaved quite ethically when confronted by human right activists and media by reorganizing and implementing humane approaches to its out sourced factories like creating better working conditions, restricting working age limit to a minimum of 18, allowed independent monitoring, induced research funding, providing education and implementing small business finances. However, in terms of working hours and leave schedule there were no changes and the sweatshop continued. This ignited protest all over the western world urging buyers to boycott Nike’s products thus affecting the company in a bigger way.
On the other hand, it could well be mentioned that the amount of work outsourced by Nike is huge and from a perspective of patriotic approach, this move by the company is extremely detrimental for the working population of the United States. It has been estimated that without the current mode of operations implemented by the company regarding outsourcing the working population of the US would have gained by a large proportion. With rising curve of unemployment within the US, it is true that companies as if Nike is making the scenario worse. However, seen from a utilitarian perspective, outsourcing is the most logical move of the company. It is surely less ethical to deprive the local population in terms of work opportunity but it is more relevant for the overall profit margin of the company and that is what it should always be concerned about in the long term.
The three prime stakeholders of Nike at the present day could be enumerated as China, Taiwan and Vietnam. From the perspective of Nike it is obvious that the company makes a huge profit margin by the dint of low cost per item whereas from the stakeholders’ point of view relation with Nike means constant source of work with comparatively better and secured payment mode. These low-income group countries make the most of the value rendered by US dollar and thus receive a better return of their investments. This return becomes even more vital with the low living standard of these countries thus the marginal utility of the value gets even more heightened. (Lamb, 2004) Thus, it could be seen that the relation between the stakeholders and the company is bilateral and beneficial for both the parties.
The corporate culture of Nike’s Oregon unit is extremely open and the workers’ environment can be termed as a free state. A part reason behind this could be the fact that this unit is predominantly operational in the field of designing of new products. This creativity involved in the work process leads the way for an open and free environment. However, contrary to this many depict the outsourced factory environment of Nike as labor camps.
3. Nike’s brand equity of an all aggressive all win campaigns sure have an affect over its image and this is more true in Nike’s context on its way to becoming a global corporation this because the basic attitude evoked by the company’s campaigns affect a lot of the demography all along the globe. It is for sure that not every can indulge themselves thinking as an out and out winner all the way. Nevertheless, with Nike campaigning provocatively in support of only the winners and depriving the apparent losers by portraying them in darker shades of the term hurts feeling beyond recovery. This same aggressive behavioral pattern is found with the implementation of outsourcing techniques. However, it should be mentioned that from a utilitarian perspective and under the parameters of the market induced capitalist economic infrastructure Nike is well justified with their stands about outsourcing. As a result, Nike cannot be subject to false advertising lawsuits based on statements in editorial advertising, letters written by executives, and press releases responding to issues raised by critics.
4. It has been reported, “In May of 2002, the California Supreme Court ruled that Nike violated sections of the Business and Professions Code, which bars false commercial speech”. (Verite, 2004) However, it should be noted that it is statutory to establish a target market segment for any product or service prior to launch the said product or service. In this scenario, it is advantageous to segment the advertisement in accordance to the selected segment of customers. This would be a fruitful advantage in the context of cost reduction and therefore the end goal would be the maximization of profit. This is because under the circumstance the producer can select the fundamental audience of the targeted advertisement making is more penetrative for the potential customer. In other words, the said advertisement would not be lost among several other product advertisements of different commodities that are otherwise not of any interest to the customer. Now, if the population wants to hear about Nike factories it is well obvious that they would provide details of factories located in US under their direct supervision. It is not expected that Nike would be provide details of their suppliers’ factories. Thus, the verdict by California Supreme Court was not correct.
5. There should not be any line between commercial and noncommercial speech. It would be relevant to state that speech can be used as a form of advertisement and this form of advertisement would not only be a fruitful measure for the producers in terms of cost benefits but from the point of view of the user too. The users would find their subjects of interests through these selected and targeted advertisements and therefore would be more likely to react positively to these advertisements. In this context, the new method of advertisement would be beneficial for both the producers and the users at the same time. Furthermore, in postmodern era, the difference between alternate and sub alternate linguistics are diminishing at a huge rate and media or advertisement should not be an exception.
6. The focal point of the case was to look into the companies, like Nike, today that are deciding to outsource previous in-house jobs to individuals overseas with equivalent skills and abilities who live where the cost of living is less and, thus, will accept much lower salaries. However, the visible aspect of the case was false commercial advertisement but the intension was quite clear. As it is, the corporations are getting the same work done, often with the same quality, for substantially less cost. These decisions touch on many ethical concerns–the obligation the corporation has to current employees, the communities it will affect, the fairness of wages, the concern for stockholders, etc. Such an organization is Nike and thus it would be logical to conduct research on its outsourcing decision. The paper would look into the moral judgment regarding whether their decision is ethical or not. To build the case moral theory like utilitarianism would be utilized.
Globalization is a big word today and one that has changed the way we look at and understand things around us. What is actually globalization? What do we understand by this word? Globalization is simply the predisposition of the economy through business, knowledge through technology and thought through philosophy to spread globally. Globalization can also mean the process by which this happens. This term is almost synonymous with intertwining of markets and economies without any consideration for physical border or legal restraints and the most influential effect of globalization is certainly the impact of outsourcing. It could be well ascertained whether global outsourcing helped Nike to achieve profits and market share or not in the initial stages. With enhanced production induced by market demands Nike decided to outsource its manufacturing units to South Asian countries like Korea and Taiwan. This is because there is practically no competitive advantage in terms of pricing with other competitors of the market. Therefore, it would have been impractical and illogical to invest capital in a new manufacturing unit. The option was to outsource the production to comparatively low salary countries. This move was one operational formulation that helped Nike to gain much more profit and market share as production was achieved under lower cost margin. (Jones, 2001)
It was alleged “Most of the workers who make Nike’s products are women under the age of 24. Since March 1993, under a memorandum of understanding with its subcontractors, Nike has assumed responsibility for its subcontractors’ compliance with applicable local laws and regulations concerning minimum wage, overtime, occupational health and safety, and environmental protection.” (Verite, 2004) However, the fact remains that these factories are run by countries outside the US and they are the order suppliers of Nike. Nike has no interference in the manner the factories are functional. Nike simply conveyed the orders and took the deliveries. Thus, from the point of view of utility Nike was clear and should be considered ethical. Thus, being on the right side Nike has no reason to settle the case with Marc Kasky.
Jones, I; 2001; Outsourcing: A Comparative Analysis of Asia and The Western World; LBT & Crooks Limited
Lamb, Davis; 2004; Cult to Culture: The Development of Civilization on the Strategic Strata; National Book Trust
Norberg; Johan; 2005; ‘Why Not Globalization? For Third World workers like Tsi-Chi, a job with a multinational means prosperity, not exploitation’; The Spectator August 15; para 3
Verite; 2004; Kasky v. Nike Case; http://www.verite.org/news/Kasky%20vs%20Nike.htm
Zimmerman, D; 2006; On the Path of Success: Facts and Fictions; IBL & Alliance Ltd