Nike and International Labor Practice Essay

Problem IdentificationEstablished in the early 70s Nike, Inc., based in Beaverton, Oregon, USA face a severe stream of criticism and experienced growing problems concerning their plants and employee treatment, principally in Indonesia and Vietnam in 1988. Rising demand for Nike products, which almost doubled inside a short period of time, led the comp whatever and its 350+ subcontractors to raise the intersection level. Series of tire out problems and abuse such as cheap drudge profitss, poor functional conditions, health and unhazardousty issues and underage doers exploitation, were the main issues Nike had to hand out with. Further more, Nike, Inc. had to deal with managing the diversity of cultures and language barriers had to be overcome, while notwithstanding be able to produce the high-quality product Nike is famous for. Throughout the 1990s Phil Knight, chief operating officer of Nike, Inc. and the telephoner itself lost their superb corporate image in the fondnes s of the world and it became an international incident.Causes of ProblemAfter establishing a call forth in the world, Phil Knight, decided to manufacture Nikes app atomic number 18l in South Korea and Taiwan, and by 1982 already 86% of Nikes sneakers came from these two countries. Realizing that Asian countries like Indonesia, Vietnam and chinaware provide cheaper labor cost, better politics support and higher profit, Nike travel their production lines there, with Indonesia becoming an important location. In 1991, the daily minimum remuneration was barely $1 in Indonesia, compared to a typical daily wage of $24.40 in South Korea and a US hourly wage of approximately $8 in athletic shoe manufacturing. Even that the Indonesian government raised the minimum wage from 2,100 Rupiah ($1.00/day) to 2,500 Rupiah ($1.25/day), the new wage was still underneath the workers living expenses. In 1992, these issues went outside of Indonesia and even hit Washington D.C., when electric chair C linton introduced the task force Apparel Industry Partnership (AIP) to develop and rig labor standards for international factories.Although Nike was the first one to join, they had trouble convincing throng that everything went right in their plants in Asia. Ernst & Young was being hired to aver and audit the factories, except soon voices became loud, that there was not a unfeignedlyobjective post at the problems, since Nike was paying them. It hit the peak in 1997/ 1998, when TV shows, newspapers and even a movie (The Big One) were talking most the bad conditions inside Nikes factories in Asia and publicly challenged Phil Knight to modification the way workers were treated, compensated and how underage workers were employed. Adidas, Reebok and New Balance took advantage of Nikes down slope and gained in competitive advantage. This led to diminishing sales number, earnings fell 69%, and for the first time in 13 years Nike, Inc. had a loss at the end of the year 1998. subst itutes1.Government regularisation of NikeAdvantagesa)Local Government would have a closer look onto what is happening in its own sphere and with their peopleb)US Government could also have a closer look onto what Nike is doing abroad and would be able to intervene any illegal activity from the motherlandc)Both governments would work closer together and it would escaped doors for other US companies to set in the foreign countryDisadvantagesa)As indicated in the case, some governments just see the money that is brought into the country, regardless what is happening within the company, or better said to its people.b)Ties between the US government and the foreign country readiness not be the best, due to political tensions, and makes it and then tougher to work together.2.Improve employees working and living standardsAdvantagesa)A happy employee is a better worker improve the employees living standard by genteelness his wage, giving him more benefits (health insurance, vacation time), lessen his working hours, etc.b)Equal prospect give chances to workers to move up the company ladder, and not hardly shoot down outside people in. Furthermore, adjust workers compensation, working hours and labor conditions to human standards.c)Extensive training and development for managers All managers should learn foreign countrys language, living habits and adapt to culture. Training the workers on the job ordain also help to overcome workforce diversity and make the body of work a better place to be.Disadvantagesa)The changes leave behind land time and leave alone be cost effective.b)Adapt to western working habits, might be a huge change for Asian workforce and might not be adapted well3.Documentation and InspectionAdvantagesa)Factories will be supervised, by each the local government or organizationsb)Inspections will lead to better working conditionsc)Workers will have someone to talk to and will not be left soloDisadvantagesa)Again, organizations might be paid by Nike and not report the whole truthb)Reports from workers might be left alone and not brought up to people in chargeBest AlternativeThe best alternative for Nike, Inc. is to undertake all three alternatives simultaneously. In narrate to gain back the market share and competitive advantage, their global view has to strengthen. They started off very well by implementing some of the above-mentioned ideas. These alternatives will just help them to become a stronger player in this fasting growing and very competitive business world.Implementation StepsThe actions, that Nike, Inc. should take are as followed First they should work on getting their name back into the right spotlight, by implementing the alternatives. The governments will be more than instinctive to help them and since Nike is recognized all over the world, even the local governments/ countries are keen on keeping them in their country and employ their citizens. This might even bring countries like the USA and In donesia closer together and more companies from the US will be ready to go to Indonesia and produce there. Secondly, the workers benefits, brio standard and work habits are the most important of all of the alternatives.Nike, Inc. should invest most of their research and development in this field, since the stipend are still not as they should be. An idea would be to start raising the wages to at least the countrys standard, so that people green goddess live off their earnings a normal life. Nike started successfully the murder of programs that involved increasing the workers living standard in the developing world, but still the compensation of the worker is the main problem that fates to be taken on right away. Secure working places, no lay-offs and safe working environments should be steps that must be taken immediately, only then we can see the difference and make a worker a happyand productive employee.Last but not least, Nike should be watched, inspected and documented upo n. It will not only help the factories in Vietnam or Indonesia, but also the company itself. Once outside organizations tell Nike where they need to improve on and do it after being told, then the company will also get into the positive spotlight, which will resume in higher sales and more profit. Nike will then be over again the strongest contender in supporting and sponsoring universities, pro athletes and teams and most important a company that everybody wants to work for, regardless where.