Case Study Essay
1
Case Study :
Hitting the Wall: Nike and
International Labor Practices
Philip Marynowicz – 24032463
Jiramate Chanaturakarnnon – 24132893
Anvesh Gopalam – 24133002
Deniz Topdemir - 24032847
L-STR1-038 Business & Society
Dipl.-Kffr. Anna Grobecker
February 3, 2015
2
Concerns of Nike’s Critics
Nike’s strategy of outsourcing its manufacturing process differentiated it from its competitors. However, this strategy of ensuring that the outsourced locations implied low labor costs brought with it a lot of criticism and unrest. Jeff Ballinger, an activist against labor practices of companies in foreign countries, believed that these companies were obligated to the well-being of even the lowest of their workers.
According to him, Nike’s policies of ensuring low labor costs and high outputs affected the working environment and subsequent ill treatment of its workers.1
Worker protection laws in Indonesia did not improve labor conditions as the laws were crippled by widespread corruption and bribery allowing companies to easily flout the laws. Furthermore, any reforms introduced were met with successful petitions from the factories claiming exemption from these rules. This led to the belief that the top management of Nike was indifferent to the crisis faced by the labor force employed by their contractors. These factors irked the activists and their movement gained momentum not only in Indonesia but also began to spread outside it.
Nike’s Response
Nikes reactions to these accusations were at first shaped by ignorance and offensiveness but towards the end Nike turned out to act as a role model for other companies. In the beginning, Nike claimed that they could not be declared guilty for business abroad “labor conditions in its contractors’ factories were not — could not
— be Nike’s concern or its responsibility“. The company’s general manager in
Jakarta further argued, “I don’t know that I need to know” and ignored any issue concerning working
Case Study :
Hitting the Wall: Nike and
International Labor Practices
Philip Marynowicz – 24032463
Jiramate Chanaturakarnnon – 24132893
Anvesh Gopalam – 24133002
Deniz Topdemir - 24032847
L-STR1-038 Business & Society
Dipl.-Kffr. Anna Grobecker
February 3, 2015
2
Concerns of Nike’s Critics
Nike’s strategy of outsourcing its manufacturing process differentiated it from its competitors. However, this strategy of ensuring that the outsourced locations implied low labor costs brought with it a lot of criticism and unrest. Jeff Ballinger, an activist against labor practices of companies in foreign countries, believed that these companies were obligated to the well-being of even the lowest of their workers.
According to him, Nike’s policies of ensuring low labor costs and high outputs affected the working environment and subsequent ill treatment of its workers.1
Worker protection laws in Indonesia did not improve labor conditions as the laws were crippled by widespread corruption and bribery allowing companies to easily flout the laws. Furthermore, any reforms introduced were met with successful petitions from the factories claiming exemption from these rules. This led to the belief that the top management of Nike was indifferent to the crisis faced by the labor force employed by their contractors. These factors irked the activists and their movement gained momentum not only in Indonesia but also began to spread outside it.
Nike’s Response
Nikes reactions to these accusations were at first shaped by ignorance and offensiveness but towards the end Nike turned out to act as a role model for other companies. In the beginning, Nike claimed that they could not be declared guilty for business abroad “labor conditions in its contractors’ factories were not — could not
— be Nike’s concern or its responsibility“. The company’s general manager in
Jakarta further argued, “I don’t know that I need to know” and ignored any issue concerning working