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Actions that Nike Could Take to Improve Labour Conditions of Its Workers in Developing Countries

Free Management EssaysThere are limitations to ability of any organization regardless of its size. These are based on the factors bigger than the organization itself. However, as long as a company exists, it might be able to influence decisions on the ongoing events which relate to it. At a certain period, Nike company was accused of having sweatshop conditions in some of its supplier factories in developing countries. With its power and influence, Nike attracted many other comments from the world community. Therefore, this was followed by numerous accusations on the company which involved their disregard for corporate social responsibility. At first, Nike had taken a defensive position. However, they, later, noticed that they had to answer to the question of these poor working conditions.

Unfavorable labor conditions that were surrounding Nike included violation of human rights, discrimination, unfair treatment, child labor, low wages, physical and mental abuse, compulsory overtime, low wage, no time off and other allegations. Due to its size Nike has many ways in which it can improve these labor conditions in developing countries. The first way in which Nike can be helpful is acting as an example; that is by being open in its activities and ensuring that they are in line with corporate ethics in all aspects. Some time ago, Nike had mentioned that it couldn’t disclose its suppliers. The company claimed that this would encourage the competitors to seize an opportunity. However, this was an excuse that any other company would have afforded to give. Therefore, this was not an ideal example for other companies to lead. In another instance, Nike was alleged to have sweatshop conditions in factories of some of their suppliers in other countries. According to Wicks et al., newspapers received pictures of underage workers working in conditions that were deplorable. This led to boycotts and demonstrations. With such reputation, this company cannot be in a position to influence the respect for corporate ethics in other countries. Therefore, the company should ensure that any organizations associated to it are socially audited by trusted bodies. The results of the audits should be compared to social ethical international standards. After this, they should be made public for everyone to see. This would help in building trust in the society. This way, the company would be in an influential position to introduce changes and decisions (Zimmerli & Holzinger 2007).

The first way in which the goal can be achieved is through association with organizations that could be having the same motive. These could be companies that may have also witnessed the disadvantages that come with the ignorance of corporate social responsibility. It could also be organizations that are meant for the sole purpose of protecting labourers in developing countries. In 2000, Nike CEO Phil Knight was the only CEO from an American company to attend the launch of the global compact organized by the UN. These were among the first activities that Nike carried out, away from the demonstration of profit-making motives. During the meeting, the CEO mentioned that he fully supported global standards for social auditing of companies. He mentioned that all companies should evaluate themselves regularly with regards to these standards. Such activities can be most influential to developing countries. Being a successful company Nike would have influenced most companies to uphold respect for the rights of workers. (Carbasho & Westport 2010). However, a single company cannot be in a position to initiate all the change needed in the market. Instead, it would include companies that are specialized in the endeavour, and with the power required to cause considerable influence (Bhattacharya & Korschun 2011).

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An organization like Fairtrade can be most useful, working with companies like Nike to ensure that labourers in developing countries receive the justice that they deserve. Fairtrade ensures that developing countries acquire better trading conditions when exporting. They receive compensation during exports to ensure sensible profit margins and sustainability. When companies in the developing countries acquire such trading conditions, they are able to provide their employees with the required working conditions. This way, it becomes possible to ensure optimum working conditions for the employees (Schwartz 2011). Therefore, companies should play complementary roles with such organizations to ensure success in improving labor conditions in these nations. UNICEF (United Nations Children Emergency Fund) is another company whose contribution is greatly felt. Its role is helping poor children and mothers in developing nations means that they are in a position to elevate the standards of living of these poor mothers and children. Also, the move would reduce the number of people who are desperate for a job through finding local companies which can offer employment (Vogel 2005).

When new technologies arise, Nike should strive to ensure that the workers are able to acquire the same. This is in a bid to ensure that the workforce is in line with the new technologies. By doing this, the short-term effect would be increased labor cost. However, the long-run would prove it to be a worthy course because the company would have skilful employees.. Also, the company should use technology to come up with new ways of monitoring employee conditions in most of their suppliers’ factories. Without much strain, they should be in a position to know how all the state of affairs of the employees in those organizations. This should also be acquired by other companies, through their influence. Therefore, Nike should ensure that the findings of the conditions they show are publicized. This way, people in other organizations can have an idea of what Nike is getting engaged in (Bloomfield 2001).

Nike can use empowerment of employees as a tool to ensure that they achieve more success than they would have imagined. This way, they can be in a position to complain, whenever their rights are violated. When it comes to child labor, this is an issue that companies should ensure is out of discussion because it is completely against social and ethical expectations of any community. Children should be given a chance to study and better their lives. Therefore, multinational companies should unite to eliminate the issue of child labor in developing countries (Iyer 1999). A company like Nike can be the center of mobilizing other companies to form such union. The work of this organization would be activities such as paying school fees for children in the most dramatic conditions. This endeavour may be costly for the companies in the short run. However, the long run results would be that everybody wants to be associated with this brand. Therefore, sales of their products would massively increase with time. They would also receive any support that they would require from international organizations (French 1995).

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From the explanations above, it can be said that upholding social ethics has more advantages for a company than the disadvantages because it entails measures undertaken for the long-run being of a company. Therefore, managers should be objective enough to notice that corporate social responsibility does more good than harm for any company. In the above explained conditions, the real moral issues lie in the omission mistake of companies. It is because big companies have influence to cause changes in the industries they operate in. Therefore, they should not be silent on the ongoing issues. A company does not have to commit mistakes to be considered guilty. On neglecting this duty, the stakeholders involved include shareholders of the company, who stand to lose in case of loss of publicity, poor employees in developing countries, social organizations, the company itself and the governments of the countries in which the companies are located. Therefore, any company is responsible for affecting many parties involved. Therefore, they should ensure that they always make right decisions (Tuan 2012).

Moral Theories

For CEO of a multinational company, decision making is one of the most difficult tasks because the size of decisions and their consequences are always in line with the size of an organization. In 2006, Nike used to buy footballs from a company in Pakistan. After sometime, there were claims that the company in Pakistan did not respect the rights of workers. The reaction taken by Nike was that they shifted their activities to China and Thailand. According to research by Griseri, 20,000 poor families depended on the company, Saga sports, for their living. This meant that about 70% of the poor families in that area were rendered unemployed. This also caused a lot of criticism around Nike. Though, it was not the only case reported. Pictures showing the detrimental conditions that the factories of the suppliers of Nike had subjected the workers to caused protests around the US. As the CEO, it would be a difficult task to decide on whether to take responsibility of the misdeeds. Therefore, the decision had to be a slow one. (Thomas 1997).

Accepting this responsibility would mean that the company would confirm that they had knowledge of the activities that were going on in the suppliers’ factories. This would have had an immediate effect on the sales of the product, leading to the downfall of the company. On the other hand, denial of responsibility would show that the company did not have any respect and regard to upholding and promoting ethics in the corporate world. Hence, it would be sound to ensure that the company message was as ambiguous as possible. This would give room for proper explanations, as well as allow time for execution of the required rectifications (May & Roper 2007). As the CEO of the company, there is always a moral obligation that has to be fulfilled. However, it is important to note that survival of the company is the priority because a company cannot uphold any ethics in its own absence. However, there had to be a statement made to the public. This is where the use of moral theories would come into the question (Harris 1986).

Nike is a successful company. As a result of this success, the company has many stakeholders. These are people who would be affected by any right or wrong decisions that would be made in the company. For this reason, the management of the company is another key player in this regard. A need to supply the demanding market and maximize the sales as well as to maximize the profits could only be satisfied by reducing costs. Therefore, Nike contacted the suppliers who had a product that they needed. The management had already released and determined a budget that mainly aimed at profit making. The industry was extremely competitive, hence, the company was always to create strategies that could help in improving productivity. As much as the long-term effect of activities is considered, the short term is equally vital (Fernando 2009). It is because in the short term, a company is able to generate income that can be used to run the daily activities in the company. Additionally, there were no allegations that had been placed on Nike, with regards to their main factories. For this reason, it is clear that the company was only acting on its line of duty. Apart from the consequences of the ignorance that Nike showed to the activities carried out by suppliers in different countries, it was only doing what is required of it. Deontological theory shows that this company had acted ethically right (Cavalieri 2007).

However, it would be necessary to state that the company accepts that more could have been done. It is to counter possible arguments that may come to state that the company had no provisions for upholding corporate social ethics. As the CEO, it would be vital to state that the company would incorporate the upholding of social ethics in its strategies. It is also important that the public receives such information regarding the company. This also ensures that the previous image of the company is restored. Therefore, the CEO should have denied responsibility for these actions, which would be in line with the truth. After this, it was vital for the company to ensure that the second step of ethical growth immediately follows the denial. Some companies perform based on such denial for as long as it takes to lose their hard earner customers’ loyalty. Therefore, the company should have stated that it would be responsible for correction of these mistakes with immediate effect. In the real sense, this should have followed immediately, in a bid to repair the torn name (Rich & DeVitis 1985).

The other theory that could be used to explain the fact that the company could not take personal responsibility for the misdeeds is the virtue ethics theory. Nike is a company whose success had been stipulated by strong determination it had shown towards success. The virtues that were in every member of the production process were directed towards pure capitalism. There are bodies meant for ethical issues alone. These have to identify issues in the area at any given time. However, the virtues that Nike has did not allow room for noticing some issues since the company paid much of its attention and efforts deriving profit (Gomez 2007). Therefore, the activities that the company was involved in were in line with its beliefs and virtues. From this perspective, the issues that arose in other companies in Nike supply chain could not be regarded as its responsibility. Despite failing to take personal responsibility for the actions that conspired in these suppliers’ factories, Nike had to ensure that it took the initiative to remedy the situation. This would counter the fact that critics would arise to claim that the management of the company has disregard for corporate ethics (Sims 2003).

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Is it reasonable to expect a large company in one part of the world to be responsible for the activities of a supplier based in another part of the world?

Owing to its relevance with the question, the scenario between Nike and its Pakistan supplier has been partly used in this analysis so as to prevent arguments that may be too general to be related to the real current state of affairs. The question of whether one nation should be expected to be responsible for another one in another country can have varied answers. In other words, there can be no definite answer to this question. However, explanations can be offered on the suitable course of action by any company. First, it is important to note that the main aim of any organization is making profit. This means that most of the activities that they carry out are aimed at reducing costs and maximizing the output. For example, Nike had capitalized on forming and maintaining a unique brand. Then, the company ensured that its products were valued and recognized. However, involvement of suppliers from other country presupposed the increase of cost of production due to human factor. In this view, it can be concluded that it is not right to expect a company to control the activities of its suppliers in another nation. After all, the requirements that could be in another nation, regarding various issues may be different from those of the country in which the organization in question is based. Therefore, it may be extremely hard to control these activities (Henderson 1935).

The above explanation does not mean that companies can receive the mandate to ignore misconduct of members in their supply chain, just because they are beyond their reach. When a company expands, it starts being conscious of the ethical image it portrays to the public, especially, within the country in which it is based. According to deontology theory, such company can be regarded to have chosen the right approach, since it just does what it has to do in order to receive profit. In this regard, Nike withdrawing its association with the Pakistan Saga Company seems the only right course of action undertaken by the company since it has done what it needed to do to redeem its good image to the world. After all, the company has done all the activities that it had placed on its budget. Therefore, it would just be operating in its line of duty. (Griseri & Seppala 2010).

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The case study of Nike and its Pakistan supplier is a good example for better understanding of the issue in question. People tend to understand factors and notions better when they are relevant to them. As pointed out above, the consequence of shifting of the interest of Nike from Pakistan led to that almost 20,000 jobs were lost in the area; leaving the unemployed little chances to get a job with another big company, due to the negative image of their previous employer. According to this, Nike had not acted ethically because the result of their withdrawal caused loss of jobs Hence, it was an unsuccessful decision of Nike to work with a company that did not respect the rights of its workers. This led to Nike losing its popularity. Now, the company had withdrawn its association with the Pakistan supplier which amounted to violation of corporate ethics. This means that there was only one solution for Nike, as a company. It had to make an effort of controlling the activities of its suppliers. (Crowther & Bacchus 2004).

Big company with a number of suppliers in different countries must be a huge influence on most of other smaller companies in the industry. However, the suppliers may be too small to cause any influence. This means that the only party left to correct the wrongs is the company in question because huge companies have the capacity to issue public views and attract attention of the society. A company expected to control activities of its suppliers is under extra pressure. This pressure causes the company to work towards improvement of the conditions that have been mentioned. Otherwise, the company would not invest in such endeavour, especially if it did not translate directly to the end profits (Levad 2012). As seen in the case with Nike, this method proves to be successful only for huge companies. Also, the fact that Nike was expected to take this responsibility caused it to go through the necessary stages that an organization undergoes in ethical development. This way, it has even been involved in plans to advocate for upholding of social corporate ethics by other organizations. However, it is clear that there will be numerous changes, with regards to corporate social responsibility. First, the standards in different work aspects will be changed This will mean that every company that does not perform up to the same shall be answerable to the international community. This way, companies will not be expected to account for activities carried out by other organizations, just because they are in the same supply chain (Rendtorff 2009). The other trend that shall be observed is that workers will learn more about their rights. Therefore, it will be difficult for any company to abuse workers without getting public attention. (Epstein 1987).

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