Hitting the Wall: Nike and International Labor Practices

1368 Words Apr 15th, 2006 6 Pages
1) Which criticisms leveled against Nike do you consider to be "fair"? Explain.
Nike's corporate practices are good indicators that the company is only interested in exploiting low wages in third world countries. This is indicated by investing in these countries through worker training or human resource investment but has continually shifted its operation to the country with a lower wage.
Nike is in control of its subcontractors – They dictate the price of a shoe and the cost of operation to its subcontractors forcing them to set high quotas for their workers and to pay low wages.
Based on the Ernst & Young report to do an "independent" inspection of Nike's factories, Observers found the following:
• 77% of the employees suffered from
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Because this activity would likely also increase their relative labor costs, these nations may also believe their competitive advantage in the global economy would be reduced or eliminated, especially because they normally suffer from other comparative disadvantages. For companies this approach would create significant risks of their becoming less competitive on costs unless all competitors acted together or there were substantial first-mover advantages.
Localized firms usually do not face such criticisms, since their competition is local and the supply and demand market catered to by these companies is the same. Government intervention is usually not likely unless there is blatant disregard of the working atmosphere or incompetence in production operations.
4) Evaluate Phil Knight's response to Nike's criticism. What would you have done differently to diffuse this criticism early on or to eliminate it completely?
Nike has attempted to respond to criticism by arguing that if alleged abuses actually did occur in their factories, they were not a consequence of company policies which do not condone unfair, illegal, or immoral behavior on the part of factory managers.
Nike's response to the criticisms came in four stages;
• The first stage up to the early 1990s was one of avoidance. Nike disclaimed responsibility by displacing blame onto its