Nike's Current Csr Issue

Introduction

Nike Inc., the world leader in the athletic apparel, footwear, accessories and equipment for sports and accessories for sports and fitness enthusiasts faces today the challenge of finding appropriate solutions to the sweatshop conditions for the labors in their factories in Southeast Asia especially Vietnam and Indonesia (InWriteWork.com, 2010).

This paper consists of four main heading. The first part of this paper you will find the brief introduction of Nike Company. The second part will provide the fact of Nike's current CSR issue that happened in Indonesia and Mexico. The third part will be my analysis on how and why this issue happened to Nike and the last part of the paper contains my recommendation to what Nike should do in order to solve the CSR issues they faces at the present.

Nike the company

NIKE, Inc. (Nike), based in Beaverton, Oregon, USA, is a major sportswear manufacturer and the largest shoemaker in the world, selling in over 160 countries. Brands include NIKE, Cole Haan shoes, Nike Bauer Hockey (ice skates, apparel, and equipment), Hurley International (sports apparel for surfing), and Converse (shoes, apparel) (Sourcewatch, 2010).

Most of the Nike's products are made by independent contractors with footwear products in particular being produced in developing countries. Nike has many factories all over the world including: Mexico, Korea, Taiwan, China, Italy and in the US.

What are the issues?

Most of the Nike's corporate social responsibility issues are involved with the working conditions of workers in developing countries as well as the human rights. There was a news came out in January 2012 in regards to the conditions for the workers in Indonesia. This issue has been a source of heated debate, with allegations made by campaigns of poor conditions, with commonplace harassment and abuse. In Indonesia, the following was reported: 30.2% of the workers had personally experienced, and 56.8% had observed, verbal abuse. An average of 7.8% of workers reported receiving unwelcome sexual comments, and 3.3% reported being physically abused. In addition, sexual trade practices in recruitment and promotion were reported by at least two workers in each of two different factories, although a subsequent investigation was unable to confirm this. 73.4% of workers are satisfied with their relationship with direct line supervisors, 67.8% are satisfied with management. Moreover, the main concerns expressed by workers relate to their physical working environment. In addition, a further report has been produced relating to a site in Mexico, which has experienced serious problems leading to labor dispute (Mallenbaker.net, 2012).

Analysis on Nike's CSR issue

After I have done some research on Nike Company, I can conclude that there are two major factors which made Nike be the target of NGOs and journalists in regards to human rights and workers conditions in developing countries. The first factor is they have too much subcontractors throughout the world and the second is they are a well-known company.

At the present, Nike has the market share in the footwear industry at 47%, with sales of $3.77 billion. Nike has been producing their products in the Asia continent for over 25 years, and there are more than 500,000 labors today directly involved in their manufacturing processes. They are the professional of outsourcing strategy, using only independent contractors throughout the world. Now a day, majority of Nike's products is manufactured in Vietnam, Indonesia and China and as mentioned earlier they also have production plants in South Korea, Taiwan, Philippines and Italy. These plants are completely owned by independent contractors, with most of its output consisting solely of Nike products. Nevertheless, Nike does send a group of expatriates to their three major countries including: Vietnam, China and Indonesia (4 expatriates per country) so that they can control the quality of working conditions as well as quality of their products. In order to set the standard for their contractors, Nike came out with the code of conduct in 1992 and has applied it to all of their contractors. Nevertheless, due to a huge of Nike's production network, they are not able to avoid vast violations in regards to human rights and factory conditions issues that have been widely publicized by Non Government Organization (NGOs). Nike has counter acted to these issues through the Dartmouth Study, the Andrew Young report, and Ernst & Young's continual monitoring. However, they are still two years behind from completely solving these problems throughout the world (Dusen, 1998).

Why NGOs or journalists are always target on Nike? I think the answer is simple because they are a well-known company. Firstly, we heard a lot of complaints from local labor groups and Nike workers. For example, Indonesia's AFL-CIO office reported that the labors of Nike factory has complaints regarding wage violations more than any other company in