Obligations of Multinational Corporations When Operating in Third World Countries

Although America was able to gain much political power through its ever-growing economy there were many social costs during the process of growth and wealth creation, which are the negative and undesirable effects of large US corporations (Galambos, 933). One disadvantage of the American corporate system is the tendency towards monopolization within the market (Galambos, 933). This, in turn, will create oligopolies within industries and thus there will be little chance or incentive for competition (Galambos, 937-38). Little plurality of firms dominating the economy is problematic as economic power is so closely tied to political power (Galambos, 937-38). Now, in an international framework, as a nation, it is quite arguable why this would be

In America, Nike's owners see the abuse much differently. In front of hundreds of shareholders, after announcing record earnings and another stock split, Nike's president and CEO, Phil Knight minimized the problems in Asia as simply an incident in which a single worker was hit over the head by a supervisor. Nike spokesperson Jim Small, while knowing that the conditions in the sixteen Indonesian plants are not ideal, said, "The bottom line is: Do we abuse our workers? Absolutely not." (Levy, "Working conditions protested at the opening of a new store). Roberta Baskin of CBS News commented that, "It turns out Nike has a great deal to learn about what goes on inside these factories."

Typically, a multinational corporation develops new products in its native country and manufactures them abroad, often in Third World nations, thus gaining trade advantages and economies of labor and materials. Almost all the largest multinational firms are American, Japanese, or West European. Such corporations have had worldwide influence—over other business entities and even over governments, many of which have imposed controls on them. During the last

But, omnisciently speaking, both entities faced severe scrutiny and criticism from United States and international citizens for their capitalistic business practices. Furthermore, a vast number of American citizens, mainly teenagers, had been killed over Nike Air Jordan sneakers because of their high price tag, while the cost to produce the shoes were rapidly declining due to Nike’s unprecedented offshore production. Bill Bigelow’s, The Human Lives behind the Labels: The Global Sweatshop, Nike, and the Race to the Bottom accurately portrays this capitalistic mentality when mentioning, “children as young as 6 are ‘sold and resold like furniture, branded, beaten, blinded as punishment for wanting to go home...’ For pennies an hour, these children work in dank sheds, stitching soccer balls with the familiar Nike swoosh and logos of other transnational athletic equipment companies” (Bigelow, 113). What is most disturbing to fans of Nike and Jordan were their comments and proposed remedies on the matter. Essentially, Jordan did nothing to curtail the number of kids being killed for his shoes and, as far as his affiliation with capitalistic Nike, Jordan did not want to cause any kind of rift between himself and the corporation that made him millions

Nike owns factories in Indonesia where they pay their workers forty cents an hour. Johnson Controls moved from Milwaukee to Mexico, because a half million-dollar profit in three years was not enough for them, they wanted to increase their profit further. (Moore)

Legally the company has done no wrong doing, and the types of environments that these sweatshops are located in are normal within the countries cultures. The main issue in this case is the ethical responsibility of Nike to ensure that the workers work in humane work environments, and are paid wages that they are able to survive on (Vann, n.d.).

The company Nike operates in over 50 different companies. This makes them a very large global company. Nike makes all kinds of products including gym shoes, clothing and apparel, equipment and accessories. “In 2004, Nike products were manufactured by more than 800 suppliers, employing over 600,000 workers in 51 countries” (Locke, Kochan, Romis & Qin, 2007, p. 6). Nike came under fire because of their workers that work outside the United States. In other countries, labor laws are unlike those within the United States. Large corporations often exploit the fact that they can pay laborers significantly less outside of the United States. Companies may also provide less than favorable working conditions to its labor force outside of the United States.

In this video I learned incredible amounts of information about the Nike brand and how they run their factories. The video itself contained information about how two people, Jim Keady and Leslie Kretzu, flew to Indonesia to live off a factory worker’s wages in an attempt to inform people how inhumane the workers are forced to live. They experienced the physical as well as the mental issues involved with living on a worker’s wages. After paying for fee such as housing, water, and basic human amenities they were left with barely enough food for two meals and a drink. If they wanted or needed anything aside from the two meals and a drink then they would have to sacrifice one or more of their meals in order to attain such objects. The two people themselves had experienced such an issue when Leslie Kretzu became ill and in need of medicine as well as when Jim Keady decided to buy a small amount of shaving cream and one razor. Leslie Kretzu would have had to starve for the rest of the day if she was to buy an aspirin and a small juice in order to gain some nutrients. Jim Keady had to sacrifice three meals throughout his week due to the fact that he decided to buy the shaving cream and the individual razor. Throughout the experience, the two individuals lost a tremendous amount of weight as well as been depleted of energy and motivation. Eventually they tried to enter into a Nike factory and they were denied

Another attack on Nikes practices came from the Global Exchange in 1997 when they published a report on the working conditions from 4 factories in Southern China. According to their reports in one of the factories, owned by a Korean subcontractor, workers as young as thirteen were working for a mere ten cents an hour for up to seventeen hour days in complete silence. Talking while working was prohibited and violators were fined anywhere from $1.20 to $3.60. Global exchange stated that these practices were in violation of Chinese labor law, which states that no child under 16 may work in a factory. Also that the minimum wage requirement was $1.90 for an 8 hour day. Though once again Nike defended themselves and assured that the monitoring systems they had in place was in fact working and that most, if not all, of the issues were addressed. Global exchange though obtained a confidential report of an audit stating that thousands of young women were working more than 10.5 hour days, six days a week, in excessive heat, noise and foul air. Also many workers suffered from skin or breathing problems and many were not

Time and time again, there are stories of dishonest companies who take advantage of the fact that they have money, try to create more wealth and subsequently forget their workers well being. Although they have more then enough money, greed takes over and good morals are overlooked. Nike, a popular sports brand, makes billions of dollars a year selling various products. To manufacture them, Nike has created many sweatshops throughout the world. Although they can definitely afford to pay their workers fairly, it has been found that these workers,

After several years of record breaking performance Nike's global labor practices were brought to the attention of the public as early as the 1990s. Which included publishings in Harper's magazine that a   Nike subcontractor paid woirker's just under 14 cents an hour. Other reports include

During the late 80s and early 90s Nike was faced with a series of labor strike back at home due to unethical labor practices by its independent countries in third world countries. It is well known for Nike to outsource almost all its production from third world countries at cheap prices and sell them in U.S. market at an abnormal profit. The company began outsourcing its products from Japan where labor was competent and wages were very low. The living standards were raised which prompted Nike to outsource its products from Thailand, Pakistan and Indonesia since wages in these countries were extremely low and labor for these products were competent due to rapid development of the Japanese economy. The outsourcing of footwear products from Asian countries enables Nike to earn high profits and enjoy a competitive advantage over its rivals in the footwear industry. The company invests the high profits realized in marketing its products through celebrities. For instance, Michael Jordan was used to advertise the positive image of Nike Company (Lipschutz and James, pp. 87-96).

The Pou Chen factory is located in a place where the minimum wage is far below the national average. It has 10,000 workers who make Converse sneakers. Most of the workers are women, and they earn only 50 cents an hour. The amount that they earn is not even enough to cover their food and very poor housing. In this factory, the women are both physically and verbally abused. Nike’s own investigations have proved these complaints to be true. The company made a statement saying that immediate actions would be taken to deal with the situation. It is interesting to note that, “an internal Nike report, released to the Associated Press after it inquired about the abuse, showed that nearly two-thirds of 168 factories making Converse products worldwide failed to meet Nike’s own standards for contract manufacturers. Twelve are in the most serious category, ranging from illegally long work hours to

Nike took advantage of that and disregarded that the people making their products at an extremely low price were actually humans. It was ethically wrong for Nike to not see those employees as actual people but saw them as a machine that produced products. They did not care to see how being underpaid affected a person’s family. They also did not see that children were working to support families and continued to work in terrible health conditions because they needed the money no matter the environment. The biggest issue was that the company had a total disregard for human life.

A multinational corporation (MNC) is a corporation that operating in two or more countries, known as host countries but managed from one country, known as home country. Multinational Corporation is also known as international corporation (Wikipedia, 2011). Besides that, MNC can be defined as a corporation that derives revenues from operations in countries other than home country (BusinessDictionary, 2011).