Nike Case Study - Research Paper Example

Ballinger was passionate that a company should have a responsibility for its workers even if they are the lowest paid workforce of the company (Spar, 2002). Ballinger was assigned to monitor labor conditions in an Indonesian plant by overseas American companies because he considered that the reason for international companies to prepare a setup in poor countries is to exploit the low-wage labors. This has been true over years that big multinational companies have been shifting their operations to lower wage countries in order to reduce their production cost and collect more profits.

The cost of production in America is double the cost of a product which is being manufactured in other countries (Locke, 2002). He claims that Nike has a policy that in order to produce cost effective products, they mistreat their workers and make them work longer hours than required. He believed that even though there were laws for protecting the labor rights, Nike continuously fed the Indonesian government with bribe to overlook their part of misdeed. Ballinger accused Nike that they knew people were dependent on the company and would rarely leave the company, so they mistreated them to get more production with fewer necessities and food provided to the people.

Ballinger had strength in his arguments because workers were in a bad situation and when they were interviewed by Ballinger, they agreed with the same (Connor, 2001). Nike’s Response to Ballinger’s Allegations The first response from Nike was clear that their manager said Nike’s not responsible for the actions of their independent contractors. Nike considered that they are not involved in any kind of activity in Indonesia and most likely they would not be responsible for their act. However, Nike asked its public relation officer to draft a code of conduct for its independent contractors (Stoner, 2006).

This code of conduct would then be sent to their new contractors in which all aspects of working conditions of labors, environment regulation and insurance of their workers were addressed. Nike wanted all of their suppliers and independent contractors to agree with all terms that were specified before making any further deal. It was made mandatory that these suppliers would have to give their written consent of their honesty and non-discrimination (Spar, 2002). Nike hired an accounting firm Ernst & Young to conduct an audit of its overseas factories.

Auditing would inform Nike with activities of their overseas factories and would identify their problems. But the problem started to mount and criticism had started to rise again with a greater force. Nike denied any act of direct involvement in child labor activity and of worker exploitation. In Washington, Nike was the first company to join Apparel Industry Partnership (AIP) which was aimed to develop reformed labor standards in foreign factories. Nike also included a new department in its company which was known as Labor Practices Department which role was to monitor labor practices in premises of the factory (Spar, 2002).

Recommendations Firstly, Nike should focus on improving its processes in their overseas factories by making strict guidelines and norms for their factories to follow. The company shall motivate their independent