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Nike, a leading brand name in athletics shoes and other apparels, has been facing serious legal, cultural, and ethical challenges in its overseas establishments. Although its marketing slogan “Just Do It” has continually become recognized in popular cultures, with the company making billions of dollars, its operations have become a target for critics especially human rights organizations and anti-globalization protesters. The company has been dogged for a long time by accusations that its products are made in “sweatshops.”
An example of the criticisms against Nike is the Global Exchange Special Report titled: “Nike Just Don’t Do It” from an extract published by the Global Exchange. According to the report, “majority of its shoes are manufactured in countries, such as China, Indonesia and Vietnam, where governments outlaw independent unions and have set very little wages, posing ethical and legal challenges to the company” (as cited in Hill, 2009)
For instance, the Indonesian government has admitted that the minimum wages paid could not financially support an individual, even worse in Vietnam, the pay is much lesser. On similar counts, young women at a Vietnamese subcontractor work with toxic materials for long hours under excessive heat, noise and foul air.
For this, they are paid only 20 cents an hour while the living wage there is at least $3/day, an income that has to be achieved by working for exceptional over-time. Instead of Nike addressing the ethical, legal and cultural issues facing it, it confronted them. The company could have evaded these challenges by offering a wage rate that was sustainable. Hill, 2009 notes that, “the living wage is a cultural expectation which Nike failed to meet that led to protests.”
Hill (2009) also observes that “workers with skin or breathing problems had not been transferred to departments free of chemicals and that more than half the workers who dealt with dangerous chemicals did not wear protective masks or gloves”. Nike was portrayed as forcing “children to slavery away in hazardous conditions for below-subsistence wages” (Hill, 2009).
Thus, protesters have criticized the company for taking advantage of the child laborers in foreign countries and putting them in harsh working conditions. It’s unimaginable that at the time the company was earning billions of dollars, its laborers were living in deplorable conditions.
Even after Nike realized that it was under criticism, although it tried to create a safer working environment, it introduced undue long working hours “to fulfill quotas and had to follow strict rules during work for below minimal pay despite having 77% of the employees in Vietnam suffer from respiratory problems” (Hill, 2009).
However, the governments of these countries are to blame for not creating adequate employment opportunities in their countries. This leads to literate and intelligent, but desperate young people to settle for less, if only for their survival. The governments would also be faulted for allowing such poor working conditions to persist in these factories without much intervention from them. The governments should have instituted minimum local wage policy and ensure that child labor laws are adhered to.
The legal, political, ethical and cultural practices and structures differ in each country. Due to this, the operational and strategic structures of a company do not always work in the countries that they set up businesses. A company is usually required to adjust its policies to work well with local laws of a country.
Some challenges are however met along the way. Nike, for instance should adopt stringent monitoring systems in its facilities globally, to enable it meet the expected threshold of suitable working conditions in all countries, which sometimes prove to be hard as the subcontractors may not find it necessary to change what they are used to. This also applies to minimum wages and employ of underage children.
“Global managers are faced by a strategic challenge of engaging a company that would provide reliable accounting statements.” Furthermore, determining which countries to set up facilities is another hurdle as the compatibility of policies and laws is equally important. Managers should always review the laws and policies of a country before venturing into business and establishing overseas operations to achieve continual success and avoid lawsuits that are bound to follow if they go against any of the laws.
Reference
Hill, C. W. (2009). International Business: Competing In the Global Marketplace, Seventh Edition. New York, NY: McGraw-Hill/Irwin.
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