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    Nike Inc.’s Outsourcing and International Labor Case Study

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    The multinational corporations such as Nike needs to developed code of conduct for their suppliers to make its unidirectional and correctly. The meaning of a code of conduct is the code that provides a guideline of ethical behaviors and values which company uses to follow when faced the problem in a day-to-day work.

    He also states that the code of conduct of Nike requires subcontractors to consider some basic labor, safety standards, and environmental and health.

    According to Kochan (2007), the codes of conduct do not protect the labor rights or improve working conditions but can limit legal liability and prevent the company reputation only. According to the case, Nike faced the problem of the low labor standards in foreign factories that are the subcontractors.

    Nike had become a sweatshop — symbol of the evils of globalization. The definition of sweatshops is unsafe and unhealthy working conditions including low wages, long hours or work with no overtime pay, health or safety, and child labor.

    The sweatshops will occur in the factories that have the problems of poor labor standards. For example, the company that pays the salaries less than minimum wages and forces employees to work overtime. The sweatshops and low labor standards are the important factors that can impact the economic development.

    According to Greene (2007), the salaries are set based on the productivity level. No company can pay a labor wage beyond the productivity level. The reason of poor labor standards in terms of minimum wages and hiring child labor caused NikeA¿A½s subcontractors to become a sweatshop.

    The setting of minimum wages should be cancel to deny the problems of the poor labor standards. The statistical analysis found that the anti-sweatshops campaign can increase the unskilled labor wages around twenty percent in the footwear factories.

    Regarding to safety, working conditions, overtime, Nike should hold the conditions with foreign factories which are Indonesia, Vietnam, and China. If Nike persists on prevailing conditions in the United States, there is unessential for Nike to look for outside countries manufacturers.

    According to Park-Poaps (2009), the research found that the foreign outsourcing firms have impact on the stakeholders and governance structure in terms of the public pressure. Nevertheless, through the pressure that Nike received from many groups of association, the company should find the solution to improve the working conditions or labor standards from the Nike’s foreign manufacturers.

    If Nike can enhance its labor standards, Nike will receive benefits from the public relations rather than putting more effort. In addition, Nike can reduce the cost of developing public relation strategies.

    According to Park-Poaps (2009) in the recent time, the American companies place importance on corporate public relation in order to answer and perform the public response. The enhancement of labor standards in foreign factories could make Nike has good company’s reputation.

    To avoid the problems of the sweatshops, the improvement of education and a living wage should be done by the government in each country . Moreover, the viable systems of labor conditions should be control and restrict by non-governmental association such as non-governmental organizations (NGOs).

    Nike has got a high public pressure from the problem of sweatshop in the foreign subcontractor companies. Therefore, Nike should response to the public by creating the ethical labor management strategies which respect to human rights and also public relation management strategies based on the moral practice.

    Nike can also establish the codes of ethics in the corporate culture. According to Kantor (2002), the codes of ethic can produce a good effect on corporate social responsibility (CSR). The company that does the corporate social responsibility can create the company reputation in the positive way.

    Nike should put more effort in decision making when doing business internationally by having the ethical standards in human resource management in supplying company. According to Park-Poaps (2009) the ethical standards of the company can refer to the role of top management that can impact on the company reputations.

    The managers should present their higher standards as role models to employee in the way they should behave (Kantor, 2002). If Nike practices the better ethical labor standards, the company will receive good corporate image.

    Moreover, Nike should hold the foreign subcontractors to those prevailing in the United States by having the possible standards in term of working conditions and overtime that protect the basic rights of employees.

    In the production period, the productivity limitation within a day should not exceed employee strength and also should not hurt the worker’s health. Regarding to the Nike case, the company could not meet the satisfaction of stakeholder which is the employees.

    The problem of employees seems to be the influential concern rather than other stakeholders.

    The needed of the huge labor markets in the real world can create the obstacle in the working conditions such as a low wages paid, no overtime pay, long-time working, and child labor. On the other hand, the education and a living wage are also important factors that need to concern in order to solve the problem of unskilled workers in developing countries.

    Moreover, Nike should hold the foreign factories to those prevailing in subcontractor countries as Vietnam, Indonesia, and China. To improve the labor standards regarding safety, working conditions, overtime, Nike should practice the ethical standards by concern on the human right and basic needs of employees.

    The managers should act as the role model on the ethical behavior to make the employees to follow the codes of ethic. In addition, the codes of conduct are important for the Nike foreign manufacturers to follow and practice in the correctly way.

    If Nike’s foreign subcontractors can improve the labor standards and working conditions by using the codes of conduct and the codes of ethic, Nike will get the benefit from the public relation in term of company reputation and also avoid public pressure.


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