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Nike faced challenges in monitoring the working conditions at their suppliers' factories because other companies also utilized the same suppliers, resulting in inadequate employee treatment and enforcement of Human Rights. The UN and NGOs condemned Nike for manufacturing products in countries with subpar labor practices. Labor activists and NGOs accused Korean suppliers, representing Nike, of violating "The Nike Code of Conduct" by mistreating workers.
The Nike Corporation encountered problems with NGOs and labor activists regarding the low wages paid to workers in Indonesia.
Korean suppliers failed to pay workers the minimum wage and attempted to deceive the Indonesian government by claiming economic difficulties, so they wouldn't have to pay the workers a mere $1.00 US equivalent wage. When questioned about these actions, a general manager believed it wasn't the company's responsibility to oversee labor violations. However, following a significant change and likely after the manager was disciplined for his statement and disregard for the company's ethics, they directed Indonesian suppliers to raise workers' salaries.
Child Labor was a major issue faced by Nike in Pakistan, as highlighted by Life Magazine in June 1996. The publication of a photo showing a 12-year-old boy stitching a soccer ball for the company in Sialkot led to accusations and backlash from NGOs, trade unions, and consumer groups.
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This ultimately resulted in sanctions being imposed on Nike for its sourcing practices. The incident served as a lesson for the company in terms of globalization, human rights, international labor laws, and corporate responsibility.
Their activities in Vietnam raised environmental, health, and safety concerns.
A Korean contractor working there faced an audit by Ernst and Young at the urging of an NGO. The audit found high levels of Toulene, a hazardous chemical that can harm the central nervous system, liver, kidneys, eyes, and skin. The release of this chemical in the plant endangered workers who lacked proper personal protective equipment (PPE). This breach not only defied OSHA regulations but also contradicted "The Nike Code of Conduct" once more.
Nike’s stakeholders were alarmed by the company's pessimistic communication regarding their suppliers, which put the organization at risk. Despite the fact that ethical issues were happening with the suppliers, it had a negative impact on Nike as a whole. Consumers focused solely on the brand, rather than the suppliers behind it. Nike was also accountable for their suppliers’ behaviors because they failed to oversee working conditions, payroll, and human rights. The extensive negative publicity, scrutiny from NGOs, and consumer backlash led to Nike losing contracts with several universities for supplying uniforms, equipment, and footwear.
When my friend asked about the validity of the claims against Nike, I initially emphasized the importance of my employer's integrity. However, speaking candidly as close friends, I would admit my true feelings in light of the public exposure of these claims and the audit by Ernst and Young.
If the claims are confirmed to be valid, I would explain my thoughts to him using only public information. I would start by asking him what he knows and then assess the situation to decide what I can ethically discuss. This is important because I am still employed by the organization and must adhere to our code of conduct.
In response to the allegations we are facing, I will address each argument specifically to the best of my knowledge, with a clear goal of maintaining my reliability to my employer. While we are being blamed for infractions by a supplier, I want to emphasize that we were unaware of the situation at hand and are investigating it because we support Human Rights, Child Labor laws, Unionization, and fair wage system. Our corporate code of conduct, known as “The Nike Code of Conduct,” reflects our company values and has been enforced during my time with the company. As we were not physically present in countries where these violations occurred, and were unaware of the situation, it is unjust to blame us. It is also important to note how the media can exaggerate information, making a small issue seem much larger than it is.
Upon discovering violations and mistreatment of workers, our organization took action to address the issue. We not only reprimanded the supplier for attempting to evade paying minimum wage in Indonesia, but also addressed the workers directly. Through collaborations with NGOs and a dedication to corporate responsibility, we have implemented various teams to monitor environmental, health, and safety standards as well as labor conditions at supplier facilities in developing countries. Should our monitoring efforts fall short, our partnerships with labor activists, NGOs, and the UN will help us rectify any mistakes made as a result of these allegations.
As an employee within this company, I must prioritize my responsibilities as a close friend in order to avoid jeopardizing my job or being labeled as a whistleblower. Nike, although indirectly involved in the violations, took responsibility for addressing the issues that the organization should have been aware of. If my friend values our friendship, they should respect my need to uphold my principles. By informing them of the allegations against the company, I aim to provide them with a clearer understanding of the situation.
It is recommended that Nike implements a triple bottom line strategy focusing on environmental sustainability, health and safety, ethics for stakeholders and shareholders, and human rights. While Nike's existing corporate code of conduct partially covers these areas, it is essential for the company to elevate their criteria in order to prevent the problems outlined in this case study.
In reference to IKEA's ethical approach, if Nike had been more observant about issues with their supplier after the initial incident, they could have likely prevented further problems. While IKEA took immediate action upon learning of working conditions, environmental issues, and human rights violations including child labor, Nike only responded after pressure from labor activists, NGOs, and trade unions. In my analysis, Nike should have been more proactive rather than reactive.
Starbucks, like IKEA, emphasized social responsibility by considering stakeholders, while Nike focused on shareholders and merchandise production. Despite becoming a multi-billion dollar company quickly, Nike faced criticism for human rights violations such as child labor and underpaid workers. Unlike Nike, Starbucks addressed these issues properly and overcame the allegations against them.
Nike must assign these problems within their organization appropriately to enforce labor laws and environmental laws to their suppliers. This case study involves a supplier located in Korea, with operations in Indonesia, Pakistan, and other developing nations. The supplier attempted to manipulate the governments of these countries by deceiving them into permitting workers to be paid below minimum wage. Additionally, workplace standards were not properly enforced. The organization must provide workers with the necessary Personal Protective Equipment (PPE), as mandated by the Occupational Health and Safety Administration (OSHA).
The company should also focus on maintaining solid relationships with various NGOs, labor commissions, trade unions, and consumer activists in the respective countries. This will assist in effectively monitoring suppliers and ensuring that any issues are addressed properly. Moreover, it can lead to cost savings by reducing the need for external monitors, such as contractors. Nike could allocate these saved funds towards a program dedicated to addressing workers' ethical concerns, as it is likely that they do not have dedicated human resources or ethics departments to handle such matters. This proactive approach could potentially enhance employee productivity.
Learning from past mistakes, the company must consider not only shareholders but also stakeholders. Both external and internal customers are crucial to a business's success or failure. Neglecting working conditions and wages could lead to the company's ultimate downfall. Nike's competitors may surpass them in the consumer market. Human rights greatly influence consumer decisions in this century, as shown by the boycott of soccer balls due to child labor.
Nike's Ethical Challenges: Labor Practices and Human Rights. (2016, May 08). Retrieved from https://studymoose.com/responding-to-the-ethical-challenges-faced-by-nike-essay
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