Nike Sweatshop

Introduction

Established in 1972, Nike was founded by University of Oregon former track star Phil Knight. Nike is a global corporation that designs and markets athletic shoes and apparel. Nike does not manufacture the shoes and apparel but contracts over 600 factories globally to manufacture the athletic shoes and apparel. In 2006, the company had $15 billion in annual revenues and sold its products in over 140 countries (International Business: Competing in the Global Marketplace).

Describe the legal, cultural, and ethical challenges that confront the global business presented in your selected case study.

The legal challenges that surround Nike is the age limit an employee can work and the minimum wage an employee can receive. In countries such as Indonesia and China, the labor laws are not as stringent and often have children working in the factories making as little as 40 cents an hour. A cultural challenge Nike faces is setting up factories in different countries. Before setting up a factory in a foreign country, Nike needs to ensure the company does not upset the government or the people. An ethical challenge Nike faces is similar to the legal challenges. Is it ethical to allow factories in foreign countries employ children or pay wages lower that the amount necessary to sustain basic living? In the United States, these factors are not only unethical, but also illegal. Foreign countries have different laws, but to the American people, this is unethical.

Determine the various roles that host governments played in this particular global business operation.

Setting up manufacturing factories for Nike's shoes and apparel is the main role of the host countries. Along with setting up factories, host countries also provided employees to manufacture the shoes and apparel. These two roles are crucial both for Nike and the host country. Nike needs factories to manufacture their products and in turn the host country receives financial compensation and their economy increases in wealth due to more money being spent.

Summarize the strategic and operational challenges facing global managers illustrated in your selected case.

Phil Knight and his management team face challenges from organizations in the United States and host countries. San Francisco based, Global Exchange, is a human rights organization that opposes unfair labor practices. Global Exchange has challenged Phil Knight to reevaluate the country Nike contracts the manufacturing to and call on the host government to practice safe conditions for their employees. Phil Knight has tried to answer back buy hiring third party personnel to audit factory working conditions. In 1996, Nike hired one-time ambassador to the United Nations and former Atlanta Mayor, Andrew Young, to audit working conditions in contracted factories