Nike Case Study Transnational management PDF

Preview

Summary

Case Study...

Description

Nike Case Study What ethical issues faced by MNC’s in their treatment of foreign workers could bring allegations of misconduct in their operation? The ethical issues faced by MNCs in their treatment of foreign workers that could bring allegations of misconduct in their operations are wage rates and benefits, taking advantage of the relaxed environmental and workplace standards contribute to social and economic problems, human rights violations such as child labor, women rights and gener equality, working conditions, expected consecutive work hours, workplace safety and the temperature / ventilation of the working environment. Some issues: 1. Employing child labor 2. Using workers overtime 3. Paying unfair salaries 4. Treating inhumanly with workers 5. Providing poor working conditions for the employees 6. Discrimination and prejudice towards race, sex, gender and age 7. Unlawful business practices 8. Unfair business with minorities such as older workers and or religious minorities Would the use of the third party independent contractors insulate MNC’s from being attacked? Would that practice offer MNC’s a good defensive shield against charges of abuse of “their employees”? Human rights issues are a major concern globally. Due to the cultural difference, many countries do not have in place a “right or wrong” job description. An example of the cultural difference is concerned with child labor; some countries do not allow it and some countries do. Sometimes MNCs use third-party independent contractors, offshore or outsourcing. In order for MNCs to be insulated, they should consider the ethical issues when contracting. Hiring third-party independent contractors allows the company to operate independently and helps the MNC avoid criticism and attack from the public. This also allows a good defense shield against charges of abuse of “their employees” because the employees are working for the contractor, which is responsible for the working conditions

Do you think the 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 behavior and values? Is the historic “made in” question now being replaced by a “made by” inquiry?

The statements that some MNC provide to the public eye about their good social and moral conduct in the treatment of their workers are part of their advertising message. Some MNCs don’t want to grab public attention about this issue as to why they give false statements. E.g. after the Nike Child Labor incident, Nike spends billions of dollars to reinvest and regain their reputation. They implemented CSR strategies to aim to rid of the negative impact the scandal had on the organization. The question can be seen as a yes and no, it’s just dependent on the specific consumers. But in retrospect, how the results unfolded even though there was a large backlash from the community over child labor, it did not affect consumer buying behavior based on the corporate values and behavior. As seen when Nike did not have large financial losses. Yes the historic “made in” question is now being replaced by the “made by”. This is the globalization era. Large companies produce their products through third party to minimize cost and maximize their growth and profit advantage. Wal-Mart Clothing might be produced in Bangladesh. Companies go to multiple countries to produce goods due to cheaper overall costs.

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? Organisations are part of the social construct of society; they are part of the local community. MNCs should aim to play their part in society and take responsibility for the actions and consequences of how they behave. To achieve this they should have CSR policies and ethical business practices, whilst enforcing it upon employees. MNCs can take it upon themselves to help human rights through various activities such as fundraisers or sponsorships to boost their brand reputation and brand image amongst consumers. A corporate code of ethics will help MNCs maintain a positive impact among consumers and it should be able to instill how employees to behave.

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

Consumers are aware of CSR; Nike’s continues financial success is the result of the company accepting responsibility to society. Nike is one of the most popular brands around the world, they have spent billions in the promotions of their products annually, but the thing is that those negative issues that arise by some people can’t create problems for Nike, it was a large issue but it was handled successfully with proper care by Nike. According to their International CSR profile, they donated 1 million to a Tsunami relief which helps with consumer trust, charitable donations help with brand image. The negative issues of Nike don’t create a problem on their sales. American media and NGOs were so conscious about the labor issues of Nike. But the general consumer doesn’t care, they only care about the product, negative publicity doesn’t create any backlash on Nike’s sales. A manager of an MNC could do certain procedures to aim to reduce negative publicity. They are:    

The manager should focus on the positive aspect of the company. E.g. Promote Nike CSR activities Maintain a corporate code of ethics so that every one of the companies are treated fairly. Promote positive attributes of the company such as the products, services, CSR and the good deeds such as charitable donations to help human rights. Do more charity work to regain the trust of the consumer, media and NGOs...