Nike Sweatshops Business Ethics - Case Study Example

Business Ethics case-Nike Sweatshops What Happened? Nike, Inc. is said to be accused of utilizing sweatshops in the production of apparel and footwear. The company is considered to deny such claims numerous times by saying that it has got no control over sub-contracted factories. The company was accused of such charges since the year 1970 when it was considered to manufacture goods in Taiwan and South Korea. As the economy of such countries developed, workers were considered to become more productive and as a consequence wages rose to a significant extent. As a result, workers were considered to move to higher paying jobs. The labor unions of such countries were also said to gain significant influence. Countries such as Vietnam, China, and Indonesia were considered to offer cheaper labor to the company Nike, Inc. and also prohibited labor unions. But when the workers of these countries demanded additional benefits and rights, the company closed all its factories in such countries and moved to other countries to continue its operations at a lower cost. The company Nike, Inc. was highly criticized throughout the 1990s for selling such goods which were considered to be manufactured in sweatshops. In the year 1991, an activist named Jeff Ballinger published a report which highlighted the poor working conditions and low wages in the country of Indonesia (Esbenshade, 2004). He published an article which stated that an Indonesian worker was considered to work for the company’s subcontractor for only 14 cents an hour which was considered to be less than the minimum wages that was prescribed in Indonesia. Numerous disturbing stories were said to come from the factories of the company Nike, Inc. throughout the world. The major issues were considered to be forced overtime, child labor, and wages which were considered to be well below the poverty line. There were also other issues such as poor air quality, exposure to chemicals considered as dangerous and physical abuse from the overseers of factory. It was considered that groups such as Global Exchange, Education for Justice, and students who were considered to be against sweatshop labor were mainly considered to lead the efforts against the company Nike, Inc. in this regard. Team Sweat was established with the main objective of tracking the protests that were considered to be made against the organization. It is considered as an international coalition of workers, investors, and consumers to put an end to the injustices that were considered to be in the sweatshops of the organization Nike, Inc. around the world. Jim Keady is said to have founded the Team Sweat in the year 2000 (Esbenshade, 2004). Who Got Hurt? It was considered that the working conditions were sub-par in various critical areas of overseas Nike factories and there must be a minimal standard that should be reached for all employees of the organization. It was also considered that the organization had exploited workers from Asia for its financial gain. It can be said in this regard that the company experienced huge growth after it shifted its primary manufacturing branches overseas. The employees of the organization were mostly the poor inhabitants surrounding the factory area who were looking for any sort of income. Nike contractors were considered to be the head of such factories who mostly live in Europe and America and were considered not to have any relations with their employees. The task of supervision was mainly allotted to an upper level factory worker. The main objective of supervision was to maintain optimal standards and also to ensure that workers follow the rules and regulations of the factory. It could also be said in this regard that supervisor went beyond their duties numerous times (Featherstone, 2002). The laws with regard to protection of workers were considered to be ignored in an attempt to lower health standards and cut costs. Government intervention in this regard was considered to be quite low as factory supervisors were considered to pay huge amounts to political leaders in this regard. Women constituted a major portion of factory employees. They were considered to approximately form 80% of total factory workers. A major proportion of these women workers were considered to be in their teens or early twenties. Jobs were considered to be very scarce and work in factories was considered as the only way to earn their living for these young women. The work in factories required these young women to put in long hours ranging from 10 to 13 hours per day on a consistent basis for 6 days a week. They were also considered to be forced to work overtime which limited the amount of time they could actually take off. The hourly wage was considered to be ranging between 13 to 20 cents per hour which could be considered as an outflow of 20 dollars per day for the organization. The hourly wage rate was considered to be very low as compared to the minimum value of physical needs. It could be considered as the lowest possible wage rate that a person could actually earn and be able to maintain his/her basic needs (Featherstone, 2002). Who Benefited from the Event? It was said that the organization had exploited workers from Asia for its financial gain. It can be said in this regard that the company experienced huge growth after it shifted its primary manufacturing branches overseas. Countries such as Vietnam, China, and Indonesia were considered to have on their books laws relating to minimum wage rates but Nike, Inc. was considered to appeal successfully to governments of such countries regarding the applicability of such wage rates which allowed it to pay wages well below the minimum prescribed rate. It can be said that more than 10000 workers of the Indonesian factory of Nike went on strike in an attempt to protest against unpaid and low wages in the year 1997. There were also 1300 workers from Vietnam who went on strike in an attempt to get a raise of 1 cent per hour. The company was said to pay low wages to workers which were considered much below the prescribed rate under the guise of providing training to its employees. The factory jobs at Nike were not considered to qualify as technical vocations and the Nike factories were not considered as vocational schools (Hapke, 2004). The company used such an approach only to underpay its workers which were considered as unethical and illegal. The wage rate in the country Vietnam was said to be already very low and as such there was no need for the company to pay anything lower than the wage rate of $ 45 a month. The organization was considered to take advantage of poverty in such countries. The sweatshops of Nike were considered to use child labor in a significant manner. Children of only 8 years old were forced to work for 9 hours a day. The organization was considered to have sweatshops in such countries where the child labor laws were considered to be very lenient. In countries such as Vietnam and China, employees were prohibited to form any independent trade unions which were considered as a big plus for the organization Nike, Inc. In such countries, there was no existence of organized groups such as to fight or strike for more rights in the place of work. Countries such as Vietnam, China, and Indonesia were considered to offer cheaper labor to the company Nike, Inc. and also prohibited labor unions. But when the workers of these countries demanded additional benefits and rights, the company closed all its factories in such countries and moved to other countries to continue its operations at a lower cost (Hapke, 2004). How it Got Resolved? The human rights groups and the general public began to mount an increasing pressure on the company to improve its working conditions. As a consequence, the company started to make efforts to improve the working conditions for its contracted laborers. Dangerous petroleum based chemicals were considered to be used in most of the Nike factories. The company replaced those with less harmful alternatives in the year 1998. The company also increased the wage rate for the Indonesian workers higher than the minimum wage rate prescribed in the year of 1999. The company agreed in this regard to allow random factory visits by the Fair Labor Association in an attempt to raise the standards of working conditions. It also set up an independent monitoring initiative with both international organizations and the US (Buchholtz and Carroll, 2014). Nike, Inc. was also considered to issue a company Code of Conduct for all its factories which was mainly concerned with regulation of working conditions and safety requirements. The Responsibility Report that was considered to be issued by the organization in the year of 2004 established its efforts to improve labor and health standards and also described increased monitoring plans of the organization. This report was considered to be a major victory for human rights group and workers of the organization. Nike in this regard issued a full list of all its factories and also their addresses throughout the world. This was considered to facilitate independent investigations and monitoring. The company also stopped its use of a toxic adhesive called toluene which was found to have harmful impacts on workers. Nike replaced it with a water based adhesive which was considered not to have any side effects. Nike, Inc. also adopted a zero tolerance policy for underage labor. The company announced an expansion of educational initiatives in the factories of Nike such that workers could attend free classes during their non working hours. The company also made announcements to increase its support for the program of Micro Enterprise Loan which is considered to provide loans to such women who have a desire to develop small businesses. The main purpose of such a program is to provide assistance to unemployed women to run small businesses that have the potential to contribute to their families well being as well as to the development of the community as a whole (Jones and Hill, 2012). Standard Ethical Frameworks to Resolve Such Controversy Deontology or deontological ethics is concerned with the normative ethical position that seeks to judge the morality of any action based on the adherence to rules of that action. Deontological ethics is considered not to apply in the Nike sweatshop case because the company is not considered to do the right things. The major issues were considered to be forced overtime, child labor, and low wages which were considered to be well below the poverty line. There were also other issues such as poor air quality, exposure to chemicals considered as dangerous and physical abuse of employees from the overseers of factory. Deontological ethics is concerned about doing the right things and avoid any act of wrong doing (Rachels, 2003). It was considered that the working conditions were sub-par in various critical areas of overseas Nike factories and there must be a minimal standard that should be reached for all employees of the organization. It was also considered that the organization had exploited workers from Asia for its financial gain. It can be said in this regard that the organization has not done the right things in an attempt to generate more revenue for the organization. The hourly wage was considered to be ranging between 13 to 20 cents per hour which could be considered as an outflow of 20 dollars per day for the organization. It could be considered as the lowest possible wage rate that a person could actually earn and be able to maintain his/her basic needs. The company was also considered to employ child labor and made children work for 9 hours a day. Such acts by the company were considered as unethical and could be termed as wrong doing by the organization Nike, Inc. The organization should not in any way employ child labor as a means to cut costs and increase its revenues. It had paid wages to its workers at a rate which is very low as compared to the minimum base wage rate. Such acts by the company are not said to follow deontological ethics which is solely concerned with doing the right things in a proper manner (Rachels, 2003). References Buchholtz, A. and Carroll, A. (2014). Business and Society: Ethics, Sustainability, and Stakeholder Management. Stamford: Cengage Learning. Esbenshade, J. (2004). Monitoring Sweatshops: Workers, Consumers, and the Global Apparel Industry. Philadelphia: Temple University Press. Featherstone, L. (2002). Students Against Sweatshops. New York: Verso. Hapke, L. (2004). Sweatshop: The History of an American Idea. New York: Rutgers University Press. Jones, G. and Hill, C. (2012). Strategic Management: An Integrated Approach. Stamford: Cengage Learning. Rachels, J. (2003). The Elements of Moral Philosophy, 4th Edition. London: McGraw Hill. Read More