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Nike Case Study

1287 words - 6 pages

MGT/448 Global Business Strategies
March 17, 2011

STRATEGIC ISSUES AND DISCUSSION QUESTIONS
Nike is a worldwide global corporation that has its shoes manufactured on a contract basis in places like Asia, China, and Vietnam. Although it does not actually own any of the manufacturing locations, it has long been accused of having its products manufactured in facilities that exploit workers. Although Nike admits some wrongdoing in the manufacturing facilities of its contractors, it claims to have started a commitment to improve working conditions in those facilities.

Nike has suffered attacks from a number of agencies and organizations throughout the world that claim that the workers who ...view middle of the document...

Still, Nike is a publicly owned firm whose goal is to improve the wealth of its shareholders. The workers in these Asian countries were happy, even eager, to accept the conditions that were provided as a manufacturer of Nike. The reason is that those wages were probably equal or superior to wages available from other sources. If Nike were to leave the country because of the pressures placed upon it, the workers would undoubtedly suffer greatly.

2. What labor standards regarding safety, working conditions, overtime, and the like, should Nike hold foreign factories to: those prevailing in that country, or those prevailing in the United States.

Clearly, Nike has the responsibility to hold suppliers to those conditions that prevail only in the supplying country. If it insisted on prevailing conditions in the United States, there would be little reason for Nike to seek contractors from outside countries. However, through pressure or contractual concessions, it is possible for Nike to seek ways to improve the conditions of workers in supplying countries. In doing so, Nike may find that it receives some public relations benefit rather than undergoing the effort and the cost of developing defensive PR strategies.

3. An income of $2.28 a day, the base pay of Nike factory workers in Indonesia, is double the daily income of about half the working population. Half of all adults in Indonesia are farmers, who receive less than $1 a day. Given this, is it correct to criticize Nike for low pay rates for its subcontractors in Indonesia?

Although student answers will vary according to their sensitivity on this issue, Nike probably should not be held responsible for the pay rates of its Indonesian subcontractors. The worker pay, and resulting low cost of goods, is a major reason why Nike has contracted with these subcontractors. The result has been to given jobs to Indonesians who might not otherwise have them. It is also not clear to what degree Nike can influence the pay that subcontractors pay to workers. Therefore, it is not fair to be continually critical of Nike in that regard.

4. Could Nike have handled the negative publicity over sweatshops better? What might have been done differently, not just from the public relations perspective, but also from a policy perspective?

There is certainly major room for Nike to improve on its handling of the negative publicity. A defensive policy of denial is always more poorly received than an open admission of fault with constructive strategies for improvement. Part of Nike’s problem was that it didn’t address the total criticisms, and chose to answer the age issue rather than the issue of total inferior working conditions. Its strategy to announce policy change at large public relations functions appeared insensitive, rather than addressing criticism directly, on the spot, and with corrective action strategy in hand. From a policy perspective, it would be better to suggest...

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