University of Arkansas System
Type of paper: Thesis/Dissertation Chapter
Nike in China
According Gasmi and Grelleau (2005), Many multinational companies outsource some of their production activities in countries where ethical standards differ from those in developed countries, which often is the majority of their consumer market. This is particularly the case of multinational producing sporting goods, such as Nike, Reebok and Adidas.
Nike is the multinational leader in the world of sporting goods with 40% market sports shoes in 2000, before Adidas (15.1%) and Reebok (10.9 %). Paul Bowerman and Phil Knight founded the firm in 1964 in the USA under the name Blue Ribbon Sports (BRS). In the early 1970s, BRS began designing his own line of shoes, manufactured by Japanese subcontractors. In 1972, the company achieved a turnover of around $ 2 million and change its original name by the launch of the famous Nike brand. In 1978, due to the macro- economic environment (including the oil crisis) and economic development of Japan, Nike began to look for other countries cost of labour low to manufacture its shoes, as the Indonesia and Thailand , and then it goes to China and Vietnam.
The quote at the beginning illustrates the problems faced by multinational companies that have chosen to outsource in a country other than the ethical standards of their country of origin. Nike was not scandalized by one incident. However, it is a rather comprehensive review of the political subcontracting conducted by Nike in Asia in general and China in particular. Indeed, Nike was criticized by players defending human rights of lacking ethical practices in outsourcing in China. These actors have insisted that Nike does not meet certain international conventions, inter alia, freedom of association, working conditions, forced labour, child labour and wage issues.
Why and how multinational Nike has it become the main target, the symbol of unethical behaviour, while the practice of its main competitors (Adidas and Reebok) are often similar? To illustrate, according to an opinion poll conducted in Novethic France in March 2002, Nike was the most cited “unethical” brand (8.7 %), all socio- professional so confused that Adidas has a good picture. The leading position of Nike on the world market, the reputation of its brand and its products, its profitability, visibility allowed actors social advocacy to make a symbol of the lack of ethics and use its market power sports items as leverage their strategies of protest. Kahle, Boushet Phelps (2000) emphasize that the focus of the controversy over Nike is due, among other factors, the characteristics of stakeholders. A stakeholder is a group or individual who can affect or is affected by the achievement of the organization.
The ethical implications of outsourcing of production in developing countries, mainly Asian, are valued differently by stakeholders. It is thus possible to propose two rough categories, the first favourable outsourcing in low-cost countries and reluctant to ethical considerations and the second sensitive to ethical considerations of outsourcing. This binary categorization distinguishes key positions, knowing that many intermediate situations coexist. The following two sub- sections identify and briefly describe these two categories of stakeholders. The company is now looking for a compromise that would satisfy all stakeholders.
This first category appreciate the choice of outsourcing, relegating ethical considerations into the background in favour of the organization for private economic benefits. It brings together consumers, shareholders, employees and the countries of sub-contracting and competitors. Nike consumers have a tangible product whose quality is satisfactory at an attractive cost due to low labour costs and savings related to the volume produced. This allows the multinational to reap substantial benefits that are valued by its shareholders, anxious to get the most from their investments.
For these actors, ethical considerations are overshadowed over private profits, knowing that consideration of ethical standards – which have the properties of public goods – may be to the detriment of their private benefits. The success of Nike over its competitors is clear from the evolution of its market share and its leadership. Other actors, namely workers and governments of the countries of sub-contracting, remain back from the ethical choices of the multinational for different reasons, mainly based on considerations of lesser evil for some, attractiveness and economic development for others.
What measures have been adopted by Nike to cope with these accusations? If the three response strategies mentioned above is applied, one can examine the measures it has put in place. First of all, Nike has opted for a strategy of inactivity, keeping a low profile.
Nike receded charges recalling that its subcontractors were independent foreign companies with which it simply had a contract to produce finished products. Nike also explained that the wages of workers of subcontractors were higher than those of other firms. Finally, Nike insisted that accomplish almost an ethical work by helping with its production activities in economic development and improving the living standard of the country. Then Nike has increased responsiveness. Several NGOs began to criticize Nike using the media to denounce the working conditions at subcontractors of Nike. In addition, actions such as lobbying, public protests, encouraging consumers to boycott products and trials cascade were made. All this has affected the reputation and results of the company and thus has grown considerably, forcing multinationals to react.
In that time, Nike admitted its potential role and sought to address ethical problems from concrete and tangible elements, as is the case of the establishment in 1992 of a code of conduct ” Memorandum of Understanding ” a document that requires its subcontractors the elimination of forced labour and child labour, to apply the legal provisions in force in the country concerned, with the inclusion of one day off per week and a maximum of sixty hours of work per week. The company also undertakes to recognize the right of workers to freedom of association, and not to practice any form of discrimination. Despite the existence of this Code of Conduct, there is still a lack of control, transparency and sanctions may make it effective.
At present, we can say that ethical and environmental issues are considered priorities in the overall management of the company. Recognizing the benefit of proactive actions, Nike has recently launched in North America ” Reuse- A-Shoe “, a voluntary program to collect and recycle used sneakers for the manufacture of flooring for different types of sports fields . This initiative and others allow Nike to acquire an image of confidence, both technical and moral, in the context of environmental protection and regulations.
To conclude, we can say that the existence of a power to international market such as Nike comes more of a notion of social and moral responsibility of the business, especially critical in activities based on reputation of the company. It is absolutely necessary for the company to find a balance between ethical and economic objectives, it means for the company to make substantial profits on financial matters without affecting the expectations and interests of the various stakeholders.
The integration of the ethical dimension is generally perceived as a company generating costs. However, beyond this approach in terms of cost alone, it is possible to consider integration as a strategic option that can generate a competitive advantage. Indeed, the establishment of a pre-activated or proactive strategy may, under certain conditions, allow companies to integrate ethical issues and generate “winwinwin” situations (win for the company, consumers and activists), by inserting these efforts in a strategy of differentiating its products over those of competitors. These strategies raise many research questions, because of their characteristics.
This type of differentiation, such as lack of child labour does not bring tangible changes to the product. This differentiation involves not visible and unverifiable characteristics of the final product by the consumer (” credence goods “). To make perceptible to the consumer, taking into account informational dimensions (information asymmetry) and cognitive (informational overload) are crucial. In addition, ethical profits generated by these strategies generally have a favourable opportunistic behaviour collective dimension, as the risk of free riding. In addition to the costs associated with the implementation of ethical characteristics, previous problems generate transaction costs can be high, especially to ensure the credibility of ethical differentiation.
_PART B: PORTFOLIO OF EVIDENCE_
_Appendix A: Ethical debate_
We can say that Mike Gustavsson is indeed utilitarian for him happiness is the supreme good of life. So happiness must prevail on wealth, freedom, and equality. Indeed, Mike thinks that corporate behaviour is determined by the behaviour at the top of the organization, if you have good people at the helm of the company, make good decisions, and using the right rules, then the society itself is ethical.
Mike was initially very happy that her daughter had a good job with good pay, but now he is worried business type of environment that is generated in the business that takes graduates of business schools fees and idealistic transforms them into frames bonus to research.
We can say that Jan Edwards is utilitarian, in fact, it is to maximize the overall well-being of all sentient beings. Jan is involved in a program to provide education in Guatemala. January launched a program to encourage employees of his company to give their time to help the most disadvantaged people themselves. But Jan has become increasingly concerned in recent years the nature of graduates it employs trade schools on its internal development program graduate. Many graduates seem extremely focused on profitability and work their way up the corporate ladder rather than on good people management skills, being well-rounded citizens and good, genuine people.
Arguably Mei- Hua is non- consequentialist right and justice, in fact according to John Rawls (1971) , justice is served when the burden and benefits of a corporation are distributed in accordance with the principles that free and rational persons would agree as conforming to their own interests without knowing in advance what are the advantages and disadvantages they would actually receive in the distribution process. The key to ethics is fairness. She believes that professionals have had in recent years a very bad image and negative press about their ethical behaviour.
Accounting as a profession has strict codes of conduct and strict rules, and Mei- Hua has consistently adhered to these rules, and she also believes that she and her colleagues are very professional ethical and moral people who are treated unfairly . In his company, for example, they have a strict code of business conduct, especially on financial matters such as fraud, and she was always impressed by the way the code of conduct is reinforced in the induction of company and the company documentation. Mei- Hua believes that strong ethical codes of conduct and codes of conduct strong professional to lead a moral and ethical company, and the generation of profits and wealth, as well as ethical, can work alongside each other.
Finally, we can say that Deshi Chen is individualistic, in fact, according to Emile Durkheim Individualism is a political, social and moral conception which tends to favour the rights, interests and values of the individual versus the group and the community. Its principle is that the individual is the only entity that can measure the moral worth of an action. And rejects the substitution of the individual by the group process often used to unfairly promote individual sacrifices for the benefit of others.
The dream of him one day work for a large international companies but is concerned that without a good office job, he will never be able to provide a stable environment to raise a family, and it will not be attractive to potential brides. Deshi parents are the first in their family to have reached a comfortable lifestyle of the middle class. Deshi worked hard all his life in his education, and tried to build a good business experience to do office work. But he also knows that Western societies are hypocrites who say one thing and mean another when they operate in China. But even if Deshi is unhappy with the teaching of ethics and ethical leadership, if it fails this course, he knows he will be in danger and his diploma, which means not only the end of the dream work, but also the dream of being attractive for a bride. Deshi is not clear why these dreams have to suffer because of this useless ethics course, and would like to see removed from the curriculum.
_Appendix B: Ethical Dilemma Case_
In this part, we are going to Identify and analyse all the ethical dilemmas for each characters. Using several concepts: such as the utilitarianism, egoism, and virtue ethics concepts. So first, we are going to explain All Those concepts according to Bentham and John Stuart Mill (1987), Utilitarianism is a system of morals and ethics, unable to objectively define what is good and evil, is proposes to ignore establishing useful as the first principle of action. He considers that what is useful is good and that the utility can be determined rationally. Utilitarianism is based on the sole criterion of optimization of the greatest happiness for the greatest number of people, assuming that the well- being of all is well for all men.
He rejects the notion duty as first and measure the morality of an action with consequences we can expect quality. Österberg explains that egoism states that the human being should always act in order to satisfy his personal interests in the long term it would be better for everyone and not only but for all. Finally, according Metayer (2008) the virtue ethics focuses on character traits as evidenced by the actions: to determine the morality of an action, we must look the character trait that is usually associated with such an act. Is it a virtue or a vice? An act is morally good because it is what would someone virtuous.
Now that we have explained these concepts, we will apply them to the different characters. Firstly the characters are faced with a dilemma are: Borries, Borries ‘s manager and Marcus.
Borries was due to go on holiday with his girlfriend Swee Lan but his manager told him to not to go to holiday because of work. Borries ‘s dilemma is to choose to go to meet his girl friend and her parents’, but Borries would face sanctions for his manager. Or to stay at work that would generate further contracts for the company but Swee Lan and her parents’ Would Be very upset not to meet him. Borries decided to cancel his holiday! According Bertham and Mill (1987), Borries is utilitarian because he wants the happiness of the greatest number of people and in this case these are the shareholders, managers and co-workers. The solution would be that shifts the date of his vacation he finishes his work and he leaves after.
The manager ‘s dilemma is to let Borries to go to holiday and loose further contracts or to force Borries to stay by threatening to sanction that would generate lots of contracts. For Österberg (1988) the manager is only egoist because he sees its own interests and the company interests because more contracts said more profits, and shareholders will best see him. The solution would be to leave Borries go on vacation because it give huge for the company and replace it with another person.
Finally, Borries’s friend Marcus reacts after the decision of Borries to not go to holiday and he told him that he was a coward, he was to weak to say no and had jeopardised his relationship with Swee Lan. Marcus dilemma is to tell him his opinions on him decision to stay and to convince that he made the wrong decision (that what true friend do or to do not tell him and to be a bad friend. For Metayer (2008), Marcus is a holding of virtue ethics because the fact to help that person would be charitable or benevolent. Indeed, in this case Marcus just wants to do its best to him. He took the better solution that is to say to tell him its opinions.
_Appendix C: Interpersonal and Team-working skills_
First, we were a group of 5 students, from different countries. In the group, there was no leader or no secretary. It was a group of communication. Indeed, the people participating in the group share the same “status” within the group. The social order is indeed based more on compliance but on consensus, compromise emerges an institutionalized dialogue in which everyone can participate either by a mutual adjustment. For each seminar, we had case studies to analyse.
Firstly, we were doing our work in our side and one week before the seminar, we met all together to exchange our views and our differences. The interpersonal communication in our group was very strong between members of the group and the transverse flow and informal communication. After exchanging and gave its opinion, we put our thoughts together and divided the parts we would propose to the oral. At the end of the meeting, we asked questions to each other to see if we mastered well about us.
Personally, these group projects taught me a lot, in fact, to discuss, say, and especially to defend my opinions, listen to those of others, to find a consensus. This allowed me to provide personal enrichment discuss with people with different cultures. And the fact that there was a good atmosphere and good communication within the group pushed ourselves to more investment in this module and I’m convince that we were more interested!
BENTHAM JEREMY AND STUART MILL JOHN (1987) UTILITARIANISM AND OTHER ESSAYS
DURKHEIM ÉMILE (1898) L’INDIVIDUALISME ET LES INTELLECTUELS
– Gasmi N. et Grolleau G., (2005) Nike face à la controverse éthique relative à ses sous-traitants
– Kahle L. R., Boush D. M., Phelps M., (2000) “Good morning, Vietnam: an Ethical analysis of Nike activities in Southeast Asia
– Métayer Michel (2008) La philosophie éthique : enjeux et débats actuels
– Österberg Jan (1988) Self and Others: A Study of Ethical Egoism
– Rawls John (1971) A Theory of Justice