Poor Conditions Of Working Environment Commerce Essay Example

to meet their shift's quota before being allowed to leave the factories. These incidents demonstrate Nike's significant violation of human rights.

In 1996, Thuyen Nguyen, a member of Vietnam Labour Watch, exposed an extreme case where 100 workers were punished as a result of one worker accidentally spilling fruit on the altar. This punishment involved making them kneel under the scorching sun for an hour.

According to the Vietnam Nike Fact Sheet (1996), 15 Vietnamese women workers reported to CBS News that their supervisor had physically assaulted them by hitting them on the head due to poor sewing. Two workers had to be hospitalized as a result. The CEO of Nike, Phil Knight, responded by minimizing the incidents and falsely claiming that only one worker was struck on the arm.

The fact sheet also revealed that 45 women workers were forced by Nike supervisors to kneel down with their hands up in the air for 25 minutes. Additionally, it highlighted that female workers at Nike factories have been required to work overtime in order to meet an unrealistically high daily quota. A majority of workers in Vietnam Nike factories are expected to exceed 600 hours of overtime per year.

However, Article 69 of Vietnam's Labor Law permits both employers and employees to engage in overtime work as long as it does not surpass four hours per day or 200 hours per year.

The Nike factories in Vietnam are clearly violating Article by subjecting workers to conditions resembling bondage. They work more than 16 hours a day in order to maintain their employment, which is a direct infringement on the right to life and human rights. Additionally, on International Women's Day

in 1997, there was an occurrence at the Nike factory where 56 women were penalized by being compelled to run around the building under hot weather conditions due to inadequate footwear.

As a result of the penalty, many adult females suffered from dehydration and fainted, causing them to spend the entire day in the infirmary. This incident can be classified as physical abuse towards the workers. It is disgraceful for Nike to be associated with sweatshops in Asia because these revelations put Nike's product sales at risk. Sales were declining, and the media accused Nike of exploiting and neglecting workers by withholding their wages needed for survival, all done to increase profits.

The Issue of Child Labour

Child labour is a major ethical concern linked to Nike. According to Hill (2009), Nike has faced allegations of employing children in dangerous working conditions and paying them wages below the minimum level required for basic needs. As per Hill (2009), Nike was found utilizing 11-year-old children in Indonesia for manufacturing the popular "Air Jordan" shoes, compensating them at a rate of only 14 cents per hour. Additionally, a Nike factory owned by a Korean subcontractor hired children as young as 13 years old, subjecting them to work up to 17 hours daily without freedom of speech while earning less than 10 cents per hour. The problem of child labour is widespread in Pakistan, particularly affecting Sialkot, an important hub for manufacturing export goods, especially sporting items.

Child labour is prevalent in both the export and domestic sectors of Sialkot's economic system. In Pakistan, many households are forced to make their children work due to a lack of support. In 1996, Life

Magazine published an article about child labour in Nike Pakistan, which revealed that Nike had employed children as laborers. The article included a picture of Tariq, a twelve-year-old boy who spent most of his day sewing Nike soccer balls for a wage of 60 cents. After the publication of this photograph, activists in Canada and the United States protested outside Nike stores, using Tariq's image to pressure Nike into addressing the problem.

Nike has faced ethical issues regarding its labor practices overseas, which have also had a negative impact on their public relations and reputation. According to a source (hypertext transfer protocol: //www1.american.edu/ted/nike.htm ), in a Nike factory in Pakistan, children as young as 4 or 5 were involved in the production of soccer balls. Over 200 children were working in the factory, earning only 60 cents per hour. It is noted that Nike entered the Pakistani market as part of its long-term strategic planning, fully aware of the prevalence of child labor and without taking any measures to prevent its use in the production of soccer balls.

Alternatively, Nike has profited from their contractor in Pakistan who has utilized child labor in the production process. According to a report by Foulball campaign, Nike has twice declined to conduct an inspection at their Saga-managed facility in Pakistan, whereas their competitor Reebok readily allowed access to its Moltex-managed facility in Pakistan ( hypertext transfer protocol: //www1.american.edu/ted/nike.htm ) . Various rumors have arisen regarding this matter, leaving the government with no choice but to pressure Nike into investigating and resolving this issue. As per Ted's case studies (1999), a 12-year-old girl in Indonesia was working 70 hours per

week in a hazardous factory environment, producing shoes for Nike. Nike is benefiting from the low cost of labor by utilizing children in the production of their products. In favor of cost cutting and lowering health standards, Nike disregarded laws that protect workers.

According to Cesar Rodriguez, in 2005, political leaders were bribed by mill supervisors to limit government intervention. The leaders relayed the message to military and police units to ignore the conditions in mills, allowing the illegal environment to continue operating. Leaders were also instructed to be vigilant for signs of labor activists near the mills, in order to prevent workers from aligning with them for better conditions.

Discrimination Issue

There was a discrimination case against Nike in Chicago in 2003. According to journalist Barbara Rose of the Chicago Tribune, Nike Chicago clearly violated their respect policy outlined in the Nike code of ethics.

Nike has implemented a complaint procedure to prevent favoritism and harassment. However, a recent court case revealed that not all Nike stores are adhering to their Code of Ethics. African-American employees at Chicago's Nike store alleged unfair treatment and segregation, claiming discriminatory practices such as being assigned lower paying positions like stock room or cashier roles.

In addition, African-Americans face limited career advancement opportunities because they fail to submit job applications. Nike primarily hires Caucasian employees for sales positions and provides them with full-time roles that include benefits like health insurance and paid vacation. On the other hand, African-American employees are only offered part-time positions without these advantages. Furthermore, solely African-American employees undergo searches when exiting the store, while this requirement does not apply to their Caucasian colleagues.

According to the lawsuit, inconsistencies in

work regulations and attendance, sick leave, and employee discounts have created a hostile work environment. The supervisor at Nike Chicago violated the Nike code of ethics, specifically regarding respect, which resulted in racial discrimination. Consequently, employees have initiated legal proceedings against Nike to safeguard their rights. Government authorities are urging Nike to expeditiously resolve this sensitive court case.

Nike's Response to Ethical Challenges

The ethical dilemma has adversely impacted Nike's reputation and image.

When Nike's reputation is damaged, it leads to a decline in sales and goodwill as customers lose trust in their products. This has financial consequences for the company. To address and resolve the ethical dilemma faced by Nike, they have implemented measures to tackle the issue.

Approaches for Dealing with Sweatshops

Nike chose to outsource their production to foreign companies that were not directly supervised by them, based on the analysis conducted in section 2.1. However, when reports of harsh working conditions emerged, actions were taken against Nike. According to Global Exchange (2001), Phil Knight, President of Nike, made six promises and mandated all Nike factories worldwide to comply with these guidelines.

Nike has taken action to address concerns surrounding the use of methylbenzene, a harmful chemical adhesive, in their manufacturing process. The company discovered that this chemical was causing harm to workers who did not have proper protective gear such as masks and gloves. In response, Nike developed a water-based adhesive for their athletic shoes, which does not have these detrimental effects. This innovative solution serves as a positive example for other companies to emulate in terms of controlling air quality. CEO Phil Knight has also committed to continuing research and ensuring that all Nike factories meet

the air quality standards set by the United States Occupational Safety and Health Administration (OSHA). To accomplish this objective, Nike requires indoor air testing at all footwear factories with subsequent tests conducted as necessary.

An independent non-government organization (NGO) has stated that these trials were an essential part of a conclusive study. After the study, Nike was given a three-month period to improve air quality levels. To address concerns about child labor, Nike implemented another initiative where they increased the minimum age requirement to 18 years for footwear factories and 16 years for clothing and equipment factories. Phil Knight, the founder of Nike, affirmed that child labor has never been a problem for their company and is not an issue in the shoe industry as a whole (source: http://www.stanford.edu).

Nike's third initiative focuses on recognizing the importance of independent monitoring in its manufacturing facilities. This monitoring system is crucial for establishing public accountability and ensuring acceptable working conditions. By proposing the immediate implementation of a structured monitoring system, Nike aims to improve conditions and prevent sweatshop-like situations in their factories. The adoption of this system enables prompt identification of any inadequate working conditions, reducing the time needed to address and resolve such issues. In 2003, a Nike factory in Vietnam successfully resolved a sweatshop problem by implementing this initiative following a 2.1 incident. The workers at that factory received an average salary of $54 per month, which was three times higher than the minimum wage for state-owned enterprises.

Nike provides a range of advantages to its staff, such as consistent remuneration, complimentary or reduced-cost meals, free healthcare services, instruction, and education. These improved working environments and increased

salaries have led to enhanced economic efficiency. As stated in the Jakarta Post (2011), Nike also offers development initiatives for factory managers to enhance their cultural awareness and leadership skills. In order to avoid any potential mistreatment occurrences, Nike's Beaverton headquarters in Oregon has made substantial investments in training managers and closely overseeing their conduct at the company's factories (Wright.S, 2011).

The 4th and 5th enterprises aim to improve working conditions and provide benefits to employees. They focus on addressing issues of poor working conditions and child labor in Nike's operations. Nike has introduced an educational program in its mills, which includes the availability of elementary and high school equivalency classes and free classes outside of working hours for all workers in Nike footwear mills. These enterprises also encourage Nike's mills to increase the wages of employees who successfully complete the program.

Aside from that, Nike's 5th initiative offers a small business loan program in Indonesia, Pakistan, Vietnam, and Thailand. This program supports thousands of families by providing loans to women who want to start small businesses and also assists unemployed women in establishing their own businesses, which improves their family's economic well-being and contributes to overall societal development. By increasing household incomes, children are not forced to work and can receive a better education. Additionally, Nike's 6th initiative supports independent research by sponsoring university research and open forums that investigate issues related to global manufacturing and ethical business practices (Tim.c, 2001). Nike's sponsorship efforts enhance their reputation and create a positive image, generating favorable press coverage that pleases the public and stakeholders and helps to overshadow negative issues. Through the implementation of these six initiatives, Nike

demonstrates their commitment to practicing descriptive stakeholder theory.

The concept of descriptive stakeholder theory, as defined by Crane and Matten (2007), involves a company determining whether and how it takes into account stakeholder involvement. Nike has utilized six initiatives to please its stakeholders and guide its management decisions. These initiatives have successfully addressed criticisms from the public. Nike closely monitors working conditions, raises low wages, and resolves the issue of child labor by providing employee benefits. By increasing household incomes, children are no longer required to work for a living wage. Nike is aware of the ethical dilemma it has faced and has developed safeguards to prevent future occurrence of such criticisms.

Compensation

One of the actions taken by Nike to improve its reputation is to provide compensation to its workers, aiming to resolve the negative image created among the public.

Nike has refuted allegations of favoritism in court, but they resolved the case by paying $7.6 million in compensation. Additionally, as part of the settlement, Nike Chicago agreed to appoint a diversity advisor to ensure compliance with the consent decree (David.S, 2007). Nike also committed to enhancing workforce diversity and fostering a more inclusive environment.

To illustrate: Nike's shop in Chicago would need to have a diversity advisor and all their supervisors and directors are required to receive diversity training (Sachdev.A, 2007). As part of the settlement agreement, Nike has closely monitored discrimination issues and their business ethics. As a result, Nike can practice business ethically and regain the trust of the public in their products.

Nike's Best Practices and Values

Despite facing ethical challenges, Nike has consistently implemented their best practices and values to ensure that their corporate operations are

conducted in good faith and to make positive contributions to stakeholders and society. It is the responsibility of a corporation to contribute to society and best practices can take the form of charitable initiatives, donations, sponsorships, and more. By adhering to best practices, values can be integrated into the company's reputation and image, increasing stakeholders' confidence and loyalty.

Corporate social responsibilities (CSR) refer to a company's policy of engaging in various societal activities, such as contribution, charity, sponsorship, community engagement, and environmental protection, in order to benefit their stakeholders (Crane and Matten, 2007). This is a process where a company actively contributes to and impacts society, with the goal of creating a safer, better educated, and more equitable community. By doing so, the company can generate positive and stable outcomes for their business (Crane and Matten, 2007).

Nike exemplifies a commitment to CSR. They strive to go above and beyond legal requirements and fulfill what is expected of a leader in this realm. One way they show compassion towards society is through donations. On May 17, 2004, Nike donated USD $1 million to the Lance Armstrong Foundation (LAF), as stated in their 2009 annual report.

LAF and Nike jointly launched the "Wear Yellow Live Strong" run to raise funds for LAF's support, instruction, public wellness, and research programs. Nike's contributions have significantly increased LAF's funds through the sale of yellow wristbands. As of October 28, 2004, over 20 million wristbands have been sold, benefiting individuals with cancer. Nike continues to support this cause by selling LIVESTRONG wristbands in their stores. According to Crane and Matten (2007), corporate social responsibility encompasses economic, legal, ethical, and philanthropic responsibilities.

Nike is committed

to improving education programs for low-income households in the community. In April 2004, Nike pledged its support to Head Start, a National School Readiness Program that offers comprehensive education, health, nutrition, and parent engagement services to low-income children and families. Through a donation of $5.2 million, Nike has aided Head Start Programs in providing 2,102 computers to benefit thousands of children and their families. Additionally, on December 14, 2004, Nike introduced the NikeGO Afterschool program in partnership with SPARK (Sports, Play and Active Recreation for Kids), offering physical activity programs with training and education components. Nike also contributed equipment kits and other facilities to children aged five to 14 participating in the program. The program was implemented at 42 sites across the United States (source: http://www.knowmore.org).

According to Nike's Sustainability study, the company aims to set an example in how to ethically and fairly produce their products. In times of natural disasters, Nike has shown their understanding by helping affected communities through both support and contributions of merchandise, in order to quickly replace what was lost. However, Nike has realized that their contributions did not always meet the needs of those affected in a timely or appropriate manner. To address this, Nike has adjusted their approach and discovered that by supporting NGO partners such as Mercy Corps and CARE, both through contributions and through the assistance of Nike employees wanting to help the victims of the disaster, they can have a greater impact during the immediate aftermath of a catastrophe.

Nike also focuses on utilizing the power of sports to assist young people affected by natural disasters in overcoming the trauma of losing loved ones, homes,

belongings, and sometimes even communities. The Traveling Forward Program, created by Nike and NGO partners, helps communities rebuild after a natural disaster. This program equips teachers, coaches, and parents with tools to support youth in the aftermath of a disaster through well-designed sports activities and counseling courses. The program has been successfully implemented in various communities worldwide, including Japan, China, Peru, and Haiti.

Nike is deeply committed to the impact and adaptability of their plan, which is why they have made it available online for any community or organization to follow. Additionally, Nike's employees willingly volunteer to help rebuild schools and community centers. For example, after the earthquake in Haiti in January 2010, over 1600 Nike employees personally contributed more than USD $170,000. When combined with Nike's contribution, the total amount for Haiti disaster relief was USD $450,000. In another instance, following the Japan Tsunami in 2011, Nike donated USD $1 million in cash and USD $250,000 worth of merchandise towards relief and reconstruction efforts for the victims of the catastrophe. By practicing these acts of corporate social responsibility, Nike is demonstrating its commitment to ethical duties.

The concept of Ethical Motives of Duties is the belief in justice and morality regardless of who is involved or the profits and losses. According to Crane and Matten (2007), these motives are not based on the outcomes of one's actions. Nike practices Corporate Social Responsibility (CSR) in its business operations because it believes in doing what is right. Additionally, Nike justifies CSR by demonstrating the positive impacts it has.

Corporate Governance

Nike is committed to improving business ethics by following a Code of Ethics. This code includes guidelines regarding employee health

and safety, environmental responsibility, fair employment practices, and non-discrimination. Nike's code of ethics for employees is called Inside the Lines, which outlines the expected standards of behavior for all Nike employees.

Nike enforces that its employees confirm their reading and comprehension of Inside the Lines on an annual basis (www.nikeresponsibility.com, 2011). Additionally, Nike has established a global toll-free Alert Line where employees can report any suspected violations of the law or their code of ethics. All employee information remains confidential, as this is also known as the Whistle Blowing Act. Reports involving concerns related to accounting, auditing, or internal control are conveyed to the Board's audit committee, which determines the appropriate course of action. This act encourages employees to be accountable and vigilant in understanding the company's operations, allowing them to raise concerns and help improve the company's ethical practices.

Nike expects all employees to demonstrate honesty, truthfulness, trustworthiness, fairness, and concern for others in their work-related activities. They are also expected to exercise wise judgment and uphold principles in their business conduct, taking into consideration any potential negative impact on Nike's reputation. This Code of Ethics applies to Nike and its subsidiaries worldwide. In their Code of Ethics, Nike is committed to socially responsible practices and strives to go beyond legal requirements, behaving as a leader should. They hold the same expectations for all their business partners, including contractors manufacturing Nike products.

The Nike spouses should abide by the codification of conduct which includes respecting the rights of employees, protecting the environment, ensuring a safe and healthy workplace, and promoting the well-being of all employees. It is the responsibility of Nike team members to comply with the

Nike Code of Ethics (Nike Code of Ethics, 2011).
According to the export and import laws, Nike's policy is to comply with the United States Anti-boycott laws. This law aims to prevent Nike from engaging in any activities that support a boycott imposed by one country on a country friendly to the U.S.

This text states that Nike strictly prohibits any form of graft and corruption, as outlined in their Code of Ethics (2011). It explicitly mentions that a conflict of interest arises when Nike employees utilize the company's reputation or name to personally benefit from or engage in business with other companies. This behavior can lead to bribery or corruption. In addition, employees are discouraged from taking opportunities to benefit themselves or others, and they should not engage in competition with Nike.

The mentioned codification serves to protect Nike from involvement in cases of bribery and corruption, which could have negative consequences for the company's reputation and image. This code also demonstrates Nike's commitment to making business decisions with honesty and integrity, and they are aligning their corporate goals with ethical practices by doing the right things. Nike's business operations are conducted in accordance with principles of fairness and justice, as stated in their Code of Ethics (Nike Code of Ethics, 2011). To ensure fair competition, Nike has implemented policies that require compliance with antitrust and competition laws. Furthermore, all product development must adhere to ethical standards in business (Nike Code of Ethics, 2011). Employees who fail to comply with the Nike code of ethics will not face retaliation from the company.

Nike will conduct an investigation if any employees are reported for suspected misdemeanors of jurisprudence or

policy. After the investigation, appropriate action will be taken to prevent future misdemeanors. Additionally, if local laws or ethical codes are violated, employment termination may occur. The Board of Directors is the only authority capable of waiving provisions in the Nike Code of Ethics. Any waivers will be promptly disclosed to shareholders when necessary (Nike Code of Ethics, 2011). Nike's implementation of this code demonstrates their commitment to ethics, fairness, and justice.

Ethical principles of rights and justice encompass the inherent rights, including those of humanity, companies, and properties, which should be upheld and safeguarded in every individual's actions (Crane & A; Matten, 2007). By following an ethical code, Nike is upholding rights and justice for both its employees and the company itself. Through the implementation of this code, Nike not only protects its corporate rights but also respects the human rights of its employees. Nike treats all employees and contractors as equals, ensuring that no one receives additional benefits or authority. In cases of misconduct, Nike takes action against those responsible.