...Nike doing business in Indonesia Firm Profile Indonesia is a difficult entrant country environment for corporations to do business in which have constraints like: child labor, low wages, mandatory overtime, and education. Low wages are beneficial for Nike; on the same token the constraints like child labor, unfair work conditions, and mandatory overtime can harm the world renowned brands repetition. The media has painted negative picture of Nike, because productivity of shoes and other athletic apparel comes with the cost of unethical work conditions and labor practices. Arguments have been made that the effort of Nike outsourcing it’s manufacturing to factories in Indonesia, is the wrong choice. Furthermore, Nike has a social responsibility to maintain a satisfactory standard in the facilities where its products are manufactured. Condoning mandatory overtime is unethical. Importance should be placed on upholding the dignity of its workers. We will determine if doing business in Indonesia is a decision that Nike should maintain, due to the negative back lash that they receive in the United States from the Media. Along with indicating what is the best strategy should be applied for doing business in Indonesia. Operation The name Nike is the Greek goddess of victory (Ballinger, 1997) .Nike Corporation was originated by Phillip Knight an athlete from Beaverton Oregon. Knight in his beginning started importing shoes from Japan in efforts to compete with athletic companies...
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...Application Report 1 “Nike Faces New Worker Abuse Claims in Indonesia” The article, “Nike Faces New Worker Abuse in Indonesia” by Stephen Wright, explores the terrible sweatshop conditions and unfair treatment of employees in Nike’s Indonesia factory. In 2003, Nike bought Converse for $309 million and Nike started to make Converse products in two-thirds of their factories. In 2007, one of the Nike factories in Indonesia started to produce Converse products. Ever since the merger, factory workers started to speak out against unfair working conditions, physical abuse, name calling, low wages and working long hours. According to the article, one employee stated that, “We're powerless…Our only choice is to stay and suffer, or speak out and be fired.” (Wright) Employees were also being punished if they did not meet their target goals for the day, one of the punishments being standing in the sun for several hours. According to the article, “an internal report Nike released to the AP (Associate Press) after it inquired about the abuse show that nearly two-thirds of 168 factories making Converse products worldwide fail to meet Nike's own standards for contract manufacturers… twelve are in the most serious category, indicating problems that could range from illegally long work hours to denying access to Nike inspectors” (Wright) The report also stated that Nike had failed to follow their Code of Ethics. (The ethical implications of outsourcing of production in developing countries...
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...TUGAS INDIVIDU MATA KULIAH ORGANISASI DAN SUMBER DAYA MANUSIA Analisis Kasus Sumber Daya Manusia Pada NIKE, Inc di Indonesia (Upah, Jam Kerja, Usia Pegawai, Uang Lembur, dan Pesangon) Oleh: Novina Eka S. P056111291.47 Dosen: Prof. Dr. Ir. Aida Vitayala S. Hubeis PROGRAM STUDI MAGISTER MANAJEMEN DAN BISNIS SEKOLAH PASCASARJANA INSTITUT PERTANIAN BOGOR 2012 OSDM – Studi Kasus NIKE - novinaekas DAFTAR ISI Halaman Daftar Isi ........................................................................................................... 2 BAB I. PENDAHULUAN ........................................................................... 3 I.1 Latar Belakang ............................................................................ 3 I.2 Tujuan Penulisan ......................................................................... 4 BAB II. LANDASAN TEORI ...................................................................... 5 II.1 Manajemen Sumber Daya Manusia ........................................... 5 II.2 Profil Perusahaan Nike, Inc ....................................................... 7 BAB III. PEMBAHASAN ............................................................................ 12 III.1 Penjabaran Kasus .................................................................... 12 III.2 Pembahasan ............................................................................. 15 III.3 Manajemen Sumber Daya...
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...A Case Analysis of Nike: The Sweatshop Debate Mindi Merritt Class Fall 2014 Instructor’s Name Introduction Nike is a hugely successful global industry that designs and markets shoes and apparel (Coakley & Kates, 2013). Most of Nike’s products are subcontracted and manufactured overseas in countries such as China, India, Vietnam, Indonesia and Korea. For decades, Nike has been embroiled in controversy where critics claim its products are manufactured in foreign factories with substandard working conditions and disregard to labor laws (Powell & Zwolinski, 2012). As a result, Nike has initiated numerous policy changes in an effort to silence these criticisms. While Nike has definitely made great strides in turning around its image, it continues to struggle with allegations from critics. Nike’s Responsibility for Working Conditions Should Nike be held responsible for working conditions in foreign factories that it does not own, but where subcontractors make products for Nike? Nike should be held responsible for the working conditions in foreign factories where subcontractors make products the company sells. Although Nike does not actually own the foreign factories, the workers are employees of Nike and Nike is the beneficiary of the products they are making. Thus, Nike is responsible (at least in part) of the working conditions endured by those that work there. Labor Standards of Foreign Factories What labor standards regarding safety, working conditions...
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...Will Nike “Just Do It”? Name: Huzefa Poonawala Class: GM 675MC Instructor: Eric Baker Date: December 12, 2012 As one of the leading brands in athletic wear, it would seem that Nike would be in the frontlines promoting human rights in the factories where their products are made. There have been many reports of workers in Nike factories facing poverty, harassment, dismissal and violent intimidation (Wazir, 2001). The motto of “Just Do It” does not seem applicable to the company itself. Despite numerous reports and audits, Nike has yet to take action against human rights violations by their suppliers. In 1998, the CEO of Nike, Phil Knight promised six main improvements in conditions at Nike factories around the world. These were: all Nike factories would meet US air quality standards, the minimum age would be raised to 18 for workers in Nike shoe factories and 16 for those in clothing factories, Nike would include non-governmental organizations in factory monitoring, and the company would make inspection results public, Nike would expand its worker education program, with free secondary-school equivalent courses, a loan program would be expanded to benefit 4,000 families in Vietnam, Indonesia, Pakistan and Thailand and research on responsible business practices would be funded at four universities (Wazir, 2001). Despite such high aims by the company, there are still reports of human rights violations in factories manufacturing Nike products. In 2005, the company sent auditors...
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...examples of traditional outsourcing (Robbins,34). 2. Greenfield outsourcing is all about is the corporate change without hiring any external employees or service providers. In other words, the company like Nike in our case may hire independent contractors or startup companies to provide some services that the company did not do inhouse (Caroselli, 113). The following essay will speak about the NIKE company and its outsourcing business practices that although proved to be very profitable for Nike at some point of time would attract international attention with respect to the ethics involved in the corporate management, working conditions and compensation. According to corporate website (www.nike.com) Nike, Inc. is principally engaged in the personal design, development and worldwide marketing of stylish fashionable footwear, apparel, equipment and accessory products. The Company is a seller of athletic footwear and athletic apparel worldwide. Nike sells its products to approximately 18,000 retail accounts in the United States alone and through a mix of numerous independent distributors, licensees and subsidiaries in approximately 140 countries worldwide. Virtually all of its products are manufactured by independent contractors located in the third world countries like Indonesia, China and Thailand, and virtually all footwear products are produced outside the United States, while apparel products are produced both in the United States and abroad. The Company’s athletic footwear...
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...Analysis (Hitting the Wall: Nike and International Labor Practices ) Business Ethics (MBA-513) Section: 02 Case Summary Nike is global footwear for athletes and non-athletes. It is still a highly successful athletic shoemaker today. Based in Beaverton, Oregon, Nike had been a corporate success story for more than three decades. It was a sneaker company, but one armed with an inimitable attitude, phenomenal growth, and the apparent ability to dictate fashion trends to some of the world’s most influential consumers. Selling a combination of basic footwear and street-smart athleticism, Nike pushed its revenues from a 1972 level of $62,000 to a startling $49 million in just ten years. Many researchers believe that Nike went in decline due to two reasons: Michael Jordan’s final retirement and the slowing economy. Another aspect of Nike that has brought a negative image upon them is the negative accusations of exploiting foreign child labor with lower wage. Poor labor conditions and low wages have been an issue for many years, and are still present in 2011.In the 1980s and 1990s, Nike had been plagued by a series of labor incidents and public relations nightmares: underage workers in Indonesian plants, allegations of coerced overtime in China, dangerous working conditions in Vietnam. For a while, the stories had been largely confined to labor circles and activist publications, until a young female worker had died in a Nike contracting factory in 1997...
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...Hitting the Wall: Nike and International Labor Practices Synopsis of The Situation Based in Beaverton, Oregon, Nike had been a corporate success story for more than three decades. It was a sneaker company, but one armed with an inimitable attitude, phenomenal growth, and the apparent ability to dictate fashion trends to some of the world’s most influential consumer. Selling a combination of basic footwear and street-smart athleticism, Nike pushed its revenues from a 1972 level of $62,000 to a starting $49 million in just 10 years. In the 1980s and 1990s, Nike had been plagued by a series of labor incidents and public relations nightmares; underage workers in Indonesian plants, allegations of coerced overtime in China, dangerous working conditions in Vietnam. For a while, the stories had been largely confined to labor circles and activist publications, until a young female worker had died in a Nike contracting factory in 1997, the labor conditions at Nike had hit the mainstream. While the marketing of Nike’s products was based on selling a high profile fashion item to affluent Americans, the manufacture of these sneakers was based as an arms-length and often-uneasy relationship with low paid, non-American workers. Key Issues Nike's strategy of shaving costs caused ethical dilemmas that ultimately damaged its reputation. Nike outsources all of its manufacturing. This approach has provided Nike with huge profits, from a 1972 level of $60,000 to a startling $49 million in...
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...Outsourcing : Outsourcing is the process of contracting with another company or person to do a particular service/job. Compared to 1998, in 2005 manufacturing employment was 19 percent lower in The United States, even though manufacturing output was 10 percent higher . The drop in manufacturing employment coincided with an increase in outsourcing to domestic contractors, including staffing services and an increase in outsourcing of materials and services inputs to foreign companies or affiliates which is also known as offshoring. A number of companies had recently signed or were expected to sign billion-dollar outsourcing deals. Topping the list were Xerox Corp. with a $4 billion plus outsourcing deal, and McDonnell Douglas and General Dynamics,with $3 billion deals. Advantage of Outsourcing to Other Countries : China Over the years China has become the choice of destination for manufacturing and supply chain outsourcing and material supply for many organization in America, Europe and Asia. Companies continue to receive several key benefits when outsourcing current business processes to China, such as: Gowth in Economy - China is the fastest-growing major economy in the world, and has had the fastest growing major economy for the past 30 years with an average annual GDP growth rate over 10%. Cost: The main reason U.S. businesses give for outsourcing is to remain competitive by cutting costs, especially wages. With China’s population well over one billion, the...
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...Nike is no stranger to ethical issues, which are situations, problems or opportunities when one must choose among several actions that may be evaluated as morally right or wrong (BATEMAN, 2012). A moral philosophy is deemed by society in deciding what principles, rules, and values are considered right or wrong (BATEMAN, 2012). For this event Nike was given the opportunity to increase their minimum wage to that of the Indonesian standard, and they chose to not do so. Instead, Nike put effort into manipulating its employees into thinking the documents they were signing were intended to represent something other than what the document read. The goal of employees in Indonesia is to receive a utilitarianism decision, stating that the greatest good for the greatest number of people should be the overriding concern (BATEMAN, 2012). By Indonesian law, a company can actually apply to be excused from a minimum wage increase if they can support the decision with facts that it will hurt the company as a whole, and that the employees are behind their position (MARKS, 2013). Nike had summoned military personnel to interrogate its employees. Mainly females were pressured into signing a document stating their willingness to decline a pay raise. This type of behavior leads to a poor ethical climate for the employees working in the facilities. Another example of manipulation performed by Nike is that factory managers tricked trade union officials into signing a document that they thought...
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...Most people are familiar with the Nike logo. Most people also know that Nike is a multi-million dollar company that sells name brand shoes worldwide. Millions of pairs of Nike shoes are sold daily, but what people don’t know about Nike shoes is how and where they are made, who makes them, and how Nike spends its money in this process. According to the “Sweatshop Fact Sheet,” Tiger Woods is paid over fifty five thousand dollars a day to be their spokesman. Another famous person that is a spokesman for Nike is Michael Jordan. According to the article “Running Away With the Profits,” (Environmental Action, Academic Search Elite), Michael Jordan is paid twenty million dollars in endorsement fees. Big name sport teams advertise Nike to appeal to the common person. Indonesia is one of many countries around the world that is home to numerous Nike factories. Indonesia is a third world country of 214 million people. The main part of the economy is farmers, with half of these being the labor force. This happens to be an ideal country of choice for Nike to set up their factories for manufacturing their shoes. It allows Nike to take advantage of the local people. These people need to work in these factories to make a living, and they are stuck with the poor working conditions that Nike has provided. One way in which Nike is taking advantage of their workers is through long and hard work hours. According to the article: “We are not machines,” the Nike’s code of conduct states that...
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...organizations, especially the World Trade Organization. Nike, Inc. is a company that has come to symbolize both the benefits and the risks inherent in globalization regarding the various difficulties and complexities companies face as they seek to balance both company performance and good corporate citizenship in today’s global world. Ethical Issues Resulting From Globalization The athletic footwear industry experienced an explosive growth in the last two decades with Nike, Inc. (1972) as one of the largest company dominating the market. The company, once called “Blue Ribbon Sports, has evolved from being an importer and distributor of Japanese specialty running shoes to becoming the world leader in the design, distribution and marketing of athletic footware.” (Info.Nike) Knight, one of the original founders of Nike, Inc. realized that while lower-cost, high-quality Japanese producers were beginning to take over in the United States, most leading footwear companies were still manufacturing their own shoes in higher-cost countries like the United States and Germany. “By outsourcing shoe production to lower-cost Japanese producers, Knight believed that Blue Ribbon Sports could undersell its competitors and break into this market. Blue Ribbon Sports began to import high-tech sports shoes from Onitsuka Tiger of Japan” (Info.Nike) and over time, moved to Korea and Taiwan. As a result of increased production costs, Nike began to urge its suppliers to...
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...revenue. It sells in 140 countries. It only Sub Contracts. Employs 550,000 all around. Mission Statement “ Just Do It “ Accusations !! Products are made in Sweatshops. Many are Child Worker. Work in hazardous condition. Less than Subsistence Wages. Nike have become symbol of Evils of Globalization. Global Exchange – A Human Right Organization targeted Nike for repeated critisicm. Accusations !! The condition at foreign factories was at stake. Subcontractors were not matching minimum local labor laws. Long working hours. Working environment very poor. Minimum Wage rate very low. Safety & Security compliances not followed. Case Against Nike In search of cheap labor Nike looks factories as such in target countries where minimum wage level is not set. Targeting literate , disciplined and desperate job seekers. Mostly young women are hired. Labors don’t share Nike’s huge profit. They work 6 days a week for only $40 a month - just 20 cents an hour. Attack on Nike’s Sub Contracting Some factories were employing 11 years old labors in Indonesia for their sneakers. Wage as low as 14 cent per hour. In Indonesia , China and Vietnam where Nike has their subcontracts are those countries where government prohibits independent unions, and set the minimum wage level rock bottom. Attack Continues Indonesian government admits that the minimum wage do not ensure enough to supply the basic need of one person...
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...SEPTEMBER 6, 2002 DEBORA L. SPAR Hitting the Wall: Nike and International Labor Practices Moore: Twelve year olds working in [Indonesian] factories? That’s O.K. with you? Knight: They’re not 12-year-olds working in factories... the minimum age is 14. Moore: How about 14 then? Does that bother you? Knight: No. — Phil Knight, Nike CEO, talking to Director Michael Moore in a scene from documentary film The Big One, 1997. Nike is raising the minimum age of footwear factory workers to 18… Nike has zero tolerance for underage workers. 1 — Phil Knight, 1998 In 1997, Nguyen Thi Thu Phuong died while making sneakers. As she was trimming synthetic soles in a Nike contracting factory, a co-worker’s machine broke, spraying metal parts across the factory floor and into Phuong’s heart. The 23 year-old Vietnamese woman died instantly.2 Although it may have been the most dramatic, Phuong’s death was hardly the first misfortune to hit Nike’s far-flung manufacturing empire. Indeed, in the 1980s and 1990s, the corporation had been plagued by a series of labor incidents and public relations nightmares: underage workers in Indonesian plants, allegations of coerced overtime in China, dangerous working conditions in Vietnam. For a while, the stories had been largely confined to labor circles and activist publications. By the time of Phuong’s death, however, labor conditions at Nike had hit the mainstream. Stories of reported abuse at Nike plants had been carried in publications such as Time...
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...Introduction The Nike Corporation is rightfully considered one of the most successful international corporations. Despite its status of the leading athletic shoe and apparel producer, the company’s image has been marred with frequent accusations of exploiting underpaid employees in places like China, Indonesia, Thailand and Vietnam (Fung, O’Rourke, Sabel, & Cohen, 2001). Although a great deal of responsibility does fall on the company’s management, it is also the governments of host countries who should be blamed for allowing sweatshops operation in their states. Nike has a subcontract with the host countries and the stated reports of Nike weren’t Nike’s doing. Media has been spinning for a while reports about Nike taking advantage of children, who, admittedly, have been working overtime and under hazardous conditions while receiving less than minimal wages. La Botz (2001), for example, reports that Nike was committing acts in some Asian host countries that would not be legally allowed in the United States. It was found that Nike was committing acts in the countries where its subcontracting manufacturers were housed that would be considered illegal in the United States (La Botz, 2001). Those illegal acts included child labor, labor laws, and physical working conditions. This example proves that while expanding globally, any responsible corporation needs to carefully calculate what legal, ethical, social, and environmental impact it might have in a host country. Nike protected them...
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