Nike and Human Rights Essay

1. What ethical issues faced by MNCs in their treatment of foreign workers could bring allegations of misconduct in their operations?

•Ethical issues may include the violation of fundamental human rights of ‘sweatshop’ workers such as freedom, speech and discrimination. The treatment of their workers could be deemed ‘unethical’ by media who construe this view to consumers. Such allegations can and will have damaging effects with Nike having been taken to court already in the past.

2. Would the use of third-party independent contractors insulate MNCs from being attacked? Would that practice offer MNCs a good defensive shield against charges of abuse of “their employees”?

•Not necessarily, as Nike will be using labour which is just managed by another party.

They would just be shifting the blame of abusing “their employees” to hiring someone else’s. The connection of the brand to any unethical labour will still be damaging regardless of whether they are directly related or not.

3. Do you think that statements by companies that describe good social and moral conduct in the treatment of their workers are part of the image those companies create and therefore are part of their advertising message? Do consumers judge companies and base their buying decision on their perceptions of corporate behaviour and values? Is the historic “made in” question (e.

g., “Made in the USA”) now being replaced by a “made by” inquiry (e.g., “Made by Company X” or “Made for Company X by Company Y”)?

•I think that good social and moral conduct is an inaugural part of the advertising and marketing message of any brand. In these times more consumers are moving to seek ethically sourced products (such as fair trade coffee), this includes worker conditions and perceptions the consumer may have of the company’s corporate activities. The ‘made in’ question is not necessarily being replaced by ‘made by’ it is more likely that both questions are beginning to be asked in conjunction with one another.

4. Given the principles noted in the case, how can companies comment on their positive actions to promote human rights so that consumers will think well of them? Would you propose that a company (a) do nothing, (b) construct a corporate code of ethics, (c) align itself with some of the universal covenants or compacts prepared by international agencies?

•It would be wise for Nike to develop a corporate code of ethics to help foster what is seen as acceptable standards within the company and its operations. It would also be beneficial to comply with international practice standards.

5. What does Nike’s continued financial success, in spite of the lawsuit, suggest about consumers’ reactions to negative publicity? Have American media and NGOs exaggerated the impact of a firm’s labour practices and corporate social responsibility on its sales? How should managers of an MNC respond to such negative publicity?

•Nike’s continued success suggests that consumers may not be as deterred by negative publicity as it has been suggested. Nike still remains one of the biggest global brands today and perhaps the value of the label is stronger than damaging publicity. American media and NGOs may have sensationalised the impact of CSR on sales to some extent, although it is deemed important by some consumers, it seems that demand for Nike good remains strong regardless as many are more swayed by celebrity endorsements than working conditions. Managers of MNCs should respond to unfavourable publicity fixing the exposed issue, undertaking community outreach programs, and implementing pre-emptive measures to ensure that bad publicity will not be an issue in the future.