Nike: Sweatshop Debate
June 29, 2011
University of Phoenix
This paper will describe the challenges in the legal, cultural, and ethical challenges that Nike faced while conducting global business within the foreign governments. This paper will also analyze the strategic and operational challenges facing global managers. The various roles these foreign governments played in the case will also be examined.
Nike is a global corporation that was “established in 1972 by former University of Oregon track star Phil Knight”, (Hill, 2009). Nike is the leading shoe company in the world. Nike does not ...view middle of the document...
He recognized that the company was becoming associated with slave wages and abuse. Nike had to reimburse the workers and made sure they were in acceptable living conditions. The company admitted that its practices were wrong and they must enforce labor standards.
In 2006, Nike sold 280 million shoes. Nike has manufacturing plants in Indonesia, China, and Vietnam. In this case the Vietnamese government didn’t play a major role. The shops in Vietnam were mostly Korean owned. The roles that Chinese and Indonesian governments played were that both governments prohibited independent unions. Both governments set minimum wage very low. Before Nike started shops in these places, Nike shoes were produced in Korea and Taiwan. Eventually, Korea and Taiwan gained there freedom to organize and demand better wages. This was a challenge for Nike.
Faced with this operational challenge, Nike started sweatshops in places like China, Vietnam, and Indonesia. These places used cheap labor and provided low wages. Another role that the Chinese government played was one that involved the working conditions of a Nike location in South China. This involved 13 year old children who were paid 10 cents an hour and worked up to 17 hours a day. The workers were fined anywhere from $1.20 to $3.60 for violating the no talking rule. The Chinese government stepped in and stated that it is a violation of the Chinese labor law for any child under 16 to work in a factory. The Chinese government also stated that the minimum wage for China was $1.90 for an eight hour day of work.
According to Greenberg and Knight (2004), the success of Nike has not been based on building the brand image with stars such as Michael Jordan and Tiger Woods. The...