Introduction

The declaration by Philip H Knight that he would discontinue financial aid to the University of Oregon was a major issue that attracted the attention of the world media. That Mr. Knight had chosen to cut links with his alma mater was an issue that was greatly analyzed not just because of the business compulsions that hid behind the decision, but because the issue was important to understand the attitude of multinational companies towards business ethics.

Analysis

Nike was under international pressure from various communities and non-governmental organizations on the issue of practicing unethical business tactics to enhance profits. For example Nike, which outsources most of its manufacturing tasks to other companies, had to face stiff public censure for possibly encouraging labor practices that provided very little compensation to the workers. Most of Nike’s shoe and apparel manufacturing units are situated in the Asian region where the labor costs are far less when compared to rates in the US. Additionally, the workers in the Asian region are less organized, are constrained to work at lower wages in order to overcome poverty and familial pressures, and so were easily available even if the conditions in the factories were pathetic according to US labor standards. The main issue that often came in for public criticism was that Nike used the services of ladies who could be paid much less in the Asian job markets. Similarly, the peculiar societal culture in the Asian region ensured that large numbers of ladies were available to take up the jobs offered by Nike's business associates in these countries. Another serious allegation which rocked the business prospects of the company was that Nike's business counterparts in Pakistan used child laborers to make footballs. The fact that child labor is banned and considered unethical in the developed nations was a major factor that turned public opinion against the company.

The factories that partnered with Nike also paid much less attention to safety standards of its workers. While their American counterparts attended to research and development activities in the relative safety of their offices in the US, the contract workers were exposed to chemicals and strong scents in very hot and humid conditions. The chemicals with which they dealt were quite harmful to the body and could pose serious diseases that affected the skin, lungs and even the reproductive organs. That the workers paid scant respect to the insufficient safety procedures in the factories pointed to the fact that they were either not informed of the harmful effects of the chemicals, or they were much less concerned for safety when faced with the question of their livelihood. Either way it was plain exploitation of cheap labor and abundant manpower.

The ill treatment of workers who often had to work under great mental pressure in the factories was also a great concern that attracted media attention. Workers, especially women, were often rebuked and even assaulted by their supervisors and they had to work for long hours in order to keep their jobs. Often women had to commit to extra hours of unpaid duty in order to confirm to the strict productivity requirements within the company. The pay parity in the companies was also a very big issue when compared with the American standards. The stakeholders of the company and the general public of the United States were particularly peeved at the fact that women had to put in long hours of work in exchange for a pittance for their efforts. In short, Nike’s manufacturing units witnessed human exploitation and economic opportunism that provided rich dividends to the company.

The company on the contrary maintained that it was only outsourcing its manufacturing operations to the Asian firms and that the situation in these companies was not under its direct control. However, the public debate and alienation directed against the company was mounting slowly and soon the company managers felt the need to revamp the image of the company in order to arrest the sliding morale of the company's executives. This was particularly necessary because prominent media houses started specifically attacking Nike's policy to not to interfere in the affairs of its franchisees. Nike, which had a good reputation among youngsters, also started gaining reputation as a badly managed company that exploited the economic weaknesses of the South Asian regions. No explanations of the company that it could not interfere with the local operations could convince the US public which believed that the company could enforce ethical work culture if it so desired. Even the high profile advertisements that the company used to its advantage started to get negative appeal in the US markets and that is when the company decided that it had to do something about the deteriorating work conditions in its co-concerns.

Nike was initiated into action to promote good work culture when a furore was created on the issue of child labor in Pakistan. Nike immediately compelled its associates to prevent child labor in its factories. This was an important step that let the company management know that administrative pressures on the local firms were necessary to ensure the support and brand image that the company enjoyed worldwide. Of course, all the partnering companies of Nike agreed to the proposals made by the company with a view to prevent unethical work practices in their premises. Many activities that could be considered as unethical business practices such as child labor, exposure to harmful chemicals and fumes, supervisory pressures and assault were effectively checked by Nike even though many people believe that there are enough loopholes for the local firms to exploit.

However, Nike went ahead and gave in to many demands that could effectively wear away its new reputation as an unethical business concern. For example, the company hired well known independent auditors to look into the practices of the violation of labor rights in its associate companies. This ensured that the Nike could assess the company even if the company secretly violated labor rules to maximize profits. A bare minimum wage plan was agreed upon in various companies so that the workers could be assured of at least a decent minimum pay. Workers were offered a better safety package so that they could be kept away from harmful chemicals and reagents. A medical plan was constituted to look into medical problems and the internal quality of the factories was made to suit internationally accepted health standards. This meant that the on-site hazards to the workers could be reduced to a great extent. Forced labor was abolished and a maximum limit on working hours was introduced. Similarly, the company discouraged engaging the services of children below a specific age for work in the factories. Labor issues like discrimination on the basis of religion, sex, and age were to be done away with and employees had to be given a right to organize themselves to press for their rights.

Even though Nike made tall claims regarding its new labor-oriented practices in its companies, it may be said that all the recommendations were not fully met because there are many loopholes that can be used to work around the stipulations. In addition, the reluctance of the company to accept the demands of the Workers Rights Consortium on the basis of flimsy reasons proves that the management has serious reservations in implementing labor oriented practices because such practices can cut into the profits of the company. In this regard, it must be said that the company wants to make a facade of its labor oriented-activities while it wants to press forward with its practices that exploits the poor and the not-so-privileged.