Essay about Global Financing and Exchange Rate Mechanisms

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Case Study

October 1, 2013

Case Study
The Nike brand has been in business since 1972 and has become synonymous with sports. Nike has attracted Michael Jordan and other athletes to promote its brand. Nike contracts work out to different shoe manufactures from around the world. Nike contracts work out in order to keep costs down and to allow more time to focus on developing the Nike brand. Nike has been criticized for allowing its sub contractors workers to work in unsafe work environments. This paper will discuss the ethical, cultural, and legal challenges that faced Nike when dealing with criticism.
Legal, Cultural, and Ethical According to Hill (2009) Nike contracted different manufacturers from around the world to manufacture their products. Activists accused Nike of allowing its products to be made in “sweatshops.” Nike has its products manufactured by different manufacturing companies located around the world. Nike places an order with the companies and the manufacturing companies design the products to Nike’s specifications. Nike has limited control over the conditions within the companies that they place orders with. Nike complies with local laws within the regions that they conduct business.
From a logical standpoint Nike conducted its self professionally and didn’t break any local laws within the countries that manufacture their products. Nike used subcontractors to control the manufacturing of Nike products. A subcontractor is used to mitigate risk and reduce cost of a project. An average person may call up a company to place an order for greeting cards. The individual doesn’t know the working condition of the company or where their greeting cards will be manufactured. The individual simply places the order and the order is completed according to the individual’s specifications. The individual isn’t responsible for his greeting cards being made in unsafe working conditions. In the same instance Nike contracted 600 manufacturing companies from around the world to manufacture their products. The working conditions within those 600 companies may vary and because Nike doesn’t own those companies it shouldn’t be responsible for working conditions within those companies.
Many people have different views about culture when it comes to conducting business. There are many different cultures in the world and many individuals within those cultures are hard working people that want to provide for their family. Nike is a company that wants to make a profit and stay competitive in the industry. Low labor cost is the reason Nike contracts out work in developing nations. The activists accused Nike of having workers work for below minimum wage. The activists are comparing western standards with developing countries. The main reason Nike is doing business with other countries is because they can save money on labor costs. Pressure from the activists and ant globalization supporters has forced Nike to make changes to their business model. Nike is now working to improve the working conditions in developing nations. Moffitt, M. (2007) Nike has gone to court on several accessions accused of misrepresenting the working conditions in developing nations. Many individuals and organizations have different views about ethics and morality. Normally organization tends to take the moral high ground when it comes to conducting business. The main goal of any organization is to make a profit. Nikes goals are to make a profit and maintain a positive brand image. Nike has set standards for working conditions within its contractors manufacturing plants. The activists want Nike to apply United States standards on manufacturing plants in a foreign country which may not be attainable. Nike makes sure that the manufacturing plants are abiding according to the standards and business practices within the foreign country. Nike should not be held liable for working
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