Nike Case Study

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Instructor: Peter Bannon Nike, Inc., and Sweatshops – A Case Study Ethics & Stakeholder Management-MGMT 703-102 Submitted By, Arulraj Rajaram-300729443 Strategic Management Date: 09th July, 2013 1) What are the ethical and social issues in this case? A) Poor & Harsh Public Relations: It is evident from the case that, Nike didn’t have a proper public relation system. They were harsh with the media in response to the complaint made by Jonah Peretti about Nike refusing to take his order. Nike didn’t give clear clarifications to Jonah as well as to the public. They refused to take any responsibility and instead tried to prove that there isn’t any mistake from the company’s side. B) Contract Labor in 3rd World Countries: Nike outsourced its shoe manufacturing to facilities in the third world countries such as Indonesia, Vietnam, china, and Thailand due to the low labor costs. The social and ethical issue here is that the laborers were paid as low as $2.43 per shoe which is as low as 4% of the selling price of the product which means Nike is exploiting the opportunity of cheap labor in these countries and reduce the cost of manufacturing. C) CEO’s harsh comments: When Michael Moore, interviewed Knight about the child labor working in Nike’s factory, Knight replied that it doesn’t bother him. This is completely a social issue. A CEO should never give such comments when the entire world is fighting to eliminate child labor. This case shows that Nike is interested only in making money and not concerned about the welfare of the labors and the society. D) Worker’s Conditions: The conditions of labors working in Nike’s factories in Vietnam were prone to abuse. In one of the factories, a supervisor made 56 women to run around the factory in the hot sun for not wearing appropriate work shoes. There were also cases that the workers were
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