September 20, 2012
Case Study Nike is a corporation that is recognized all over the world. The company was started in 1972 by Phil Knight. In the athletic shoes and clothing, Nike is the brand that leads the world. The main difference with this company is that they do not manufacture its products, instead the company designs and markets the products. After establishing a great success, Nike began being falsely accused of using “sweatshops” to produce products (Hill, 2009). With such accusations, people began to question whether there was any truth behind it. After the founder spoke in May of 1998, many protest began to attempt to keep people from supporting the company. After all the back and forth, in 2000 the accusations were still there and the Global Exchange insisted that the company was letting Phil Knight down (Hill, 2009). This paper will discuss some of the legal, cultural, and ethical challenges, decide roles that host played in the global business operation, and summarize the strategic and operational challenges global managers may encounter.
Legal, Cultural, & Ethical Challenges People would have never imagined that this fifteen billion company would face legal issues. Nike faced several legal challenges with these damaging accusations. One of the legal challenges include labor laws and unfit working conditions. Nike subcontracted its industrialized plants to several countries striving to reduce expenses and become more proficient in output. Nike was not prepared for the unexpected; the company became a center of protest. The company was tagged as making “children to slave away in hazardous conditions for below-subsistence wages” (Hill, 2009). Things began to take a turn for the worse quickly, the protestors started making allegations toward Nike for using the workers and subjecting them to harsh conditions. The corporation began increasing the money, but neglected to make the working conditions suitable. Once Nike discovered all of the chaos the work habits revealed, the company realized the need for better work environments for the overseas factories. The workers pulled long hours to accomplish quotas and were governed by harsh rules while working for low pay regardless of the “77 percent of the employees in Vietnam suffer from respiratory problems” (Hill, 2009). Nike faced many challenges, but ethical issues and debates seem to become common. Nike provided jobs to those in need of work, it only paid “a mere $1.60 a day to Vietnam factory workers when the living wage is at least $3 a day” (Hill, 2009). All of the controversy could have been avoided by paying workers the living wage of the country. The issue rose when Nike neglected to meet the living wages that is a cultural requirement. An additional issue challenge evolved “a report that found 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” (Hill, 2009). One topic of the debate surrounded dangerous conditions Nike was allowing their workers to subject themselves to while company experienced an increase in income. Nike failed to adhere to child labor laws by employing children that were underage and forced them to work overtime with very little pay. “According to Global Exchange, in one factory, owned by a Korean subcontractor for Nike, workers as young as 13 earning as little at 10 cents an hour toiled up to 17 hours daily in enforced silence” (Hill, 2009). Endangering workers with severe toxins were areas that could possibly put the corporation at a lost against the activists. Nike strived to change the perspective by saying “it had formulated an action plan to deal with the problems cited in the report, and had slashed overtime, improved safety and ventilation, and reduced the use of toxic chemicals” (Hill, 2009). The…