Corporate greed and global competition to produce goods at the lowest possible price are the main reasons for the existence of sweatshops. It’s much more cost-effective for corporations to subcontract their manufacturing to suppliers who produce goods cheaply by minimizing worker salaries and benefits, skimping on factory and dormitory upkeep and standards, and demanding high levels of productivity (long hours and big quotas) from their workers.
Nike manufacturer’s shoes in different countries on subcontractor basis, Although Nike do not own any manufacturing facilities in those countries it is accused of producing its goods where the workers are exploited.
Problems
a sweatshop can be described as a workplace where workers are subject to extreme exploitation, including the absence of a living wage or benefits, poor working conditions, and arbitrary discipline, such as verbal and physical abuse. Since sweatshop workers are paid less than their daily expenses, they are never able to save any money to improve their lives. They are trapped in an awful cycle of exploitation.. Nike was faced with anti globalization protesters for the following problems
Child labor.
As the report published by Global exchange in September, 1997
Workers as young as 13 earned as little as 10 cent an hour and worked unto 17 hours daily in enforced silence. Talking during work was not allowed with a violators fined $1.20 to $3.60.
Hazardous working conditions
If workers got sick or had something’s to take care of it is impossible to get a sick leave until the workers have made the required quota of the day before they can leave work.
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 glove. This led to workers to be exposed to carcinogens that exceeded local legal standards by 177 times in parts of the plant and that 77 percent of employee suffered from respiratory problems.
Nike says that it requires all subcontractors to obey local laws; but Lap has already put in much more overtime than the annual legal limit: 200 hours.
Below subsistence wages
The workers here don't share in Nike's huge profits. They work six days a week for only $40 a month, just 20 cents an hour.
The Indonesian government admits that the minimum wage there does not provide enough to supply the basic needs of one person, let alone a family. In early 1997 the entry-level wage was a miserable $2.4 6 a day. Labor groups estimate that a livable wage in Indonesia is about $4.0 0 a day. In Vietnam the pay is even less-2 0 cents an hour, or a mere $1.60 a day. But in urban Vietnam, three simple meals cost about $2.1 0 a day, and then of course there is rent, transportation, clothing, health care, and much more. According to Thuyen Nguyen of Vietnam Labor Watch, a living wage in Vietnam is at least $3 a day

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.
Alternatives
1. Put a standard or bench marks how the subcontractor must follow and set a code of conduct for subcontractors to follow and appoint independent organization to monitor on those subcontracted companies.
• Nike should increase its monitoring over its suppliers and make a strict company policy for inspection which should meet the company’s standardized rules for labor and health. One strategy would be to involve international agencies to assist with policy adjustments that will help to correct the problem.
• Nike must enforce codes of conduct and use their power to ensure that their workers receive basic human and labor rights. Nike should be held responsible and also accounts for the working conditions that prevail in the factories that it sub-contracts. Nike should not only take the positive aspects of cheap labor in the foreign countries but also take responsibility of the employees working in those countries. Should take control and take actions on those sub-contractors who exploit the workers in the foreign countries. * Set targets and identify performance measure standards. If performance is to be rated accurately, the performance of the company would require the management to asses each and every relevant performance dimension. A multidimensional form increases the usefulness of the performance appraisal for giving rewards and the facilitate the employees of the company to grow and develop and this in return will help the company to become more professional and it will also help in to grow and develop * Companies must disclose the treatment and pay of workers and how and where products were made. This disclosure needs to be backed with independent monitoring of working conditions and pay. Violations that are discovered must be corrected in a way that protects workers and their jobs. This includes paying for education for child workers found in factories and paying parents a living wage

2. Stop subcontracting to those country’s with sweatshops
A "sweatshop" is defined by the US Department of Labor as a factory that violates 2 or more labor laws. Sweatshops often have poor working conditions, unfair wages, unreasonable hours, child labor, and a lack of benefits for workers

• Advantage
Nike has the responsibility to hold subcontractors to those conditions that exist only in the subcontracted countries. Nike has to follow the rules and conditions of the host country and see to that they do not violate or break any rules in that 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 3. Create new policy Nike needs to make changes in its policy, if only because it’s current policy has served it so poorly. The management of Nike should look at the employment practices; they should make sure that the company is following the policies on recruitment, training, health, safety and welfare.

The management of the company should also oversee that the environmental practices. To make sure that the company follows procedures that are responsible in terms of waste disposal and avoidance and energy inputs etc
In response to the growing criticisms, Nike should create several new departments for Eg-(Labor Practice department, environmental issues department). Nike should appoint people dedicated to labor and environmental compliance,

4. Develop Management Training and New Structure
Conduct and design a training program for the Management. Training and development efforts enable the employees to assume expanded duties and greater responsibilities. The management must also remember that training and development programs are not universal solutions to every need of the company.

Effective job designs, selection, placement and other activities of the HR department are also very important. Create such a program that would help the management in dealing with problematic behaviors of the employees. The company used cross functional teams to develop products and services and solve the issues that arise.

Advantage and disadvantage of alternatives
Alternative 1
Put a standard or bench marks how the subcontractor must follow and set a code of conduct for subcontractors to follow and appoint independent organization to monitor on those subcontracted company’s.
Advantage