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Abstract

Nike Inc. is the leading supplier of athletic shoes and equipment, as well as a key producer of sports equipment in the world. Its major products include Nike Football, Nike Sportswear, and Nike Volleyball among others. As of 2008, the company’s revenue was over $ 18.6 billion. Nike has been faced with a series of problems, which has negatively affected the company’s business image, and consequently, its performance. Some claims include the violation of child labour laws and poor working conditions, such as low wages, long overtime hours without guaranteed payment, forced overtime work, no consultation with workers on matters that concern them, poor medical services and others. This research will to be carried out to assess the working conditions at Nike Vietnam. The methodology of doing the research will involve interviewing 500 randomly selected employees of the Nike factory in Vietnam to get their own version of the claims and what they would like to be done to improve their working conditions. Respondents will be asked the following research questions: 1) Under what working conditions do you work? 2) What would you like to be done for the improvement of your working conditions? Data collection will be done by recording the various responses of workers to the above questions and their respective numbers. The findings of this research will be used to recommend appropriate measures that Nike Vietnam can take to improve its working conditions in order to redeem its tainted image.

Assessing the Working Conditions at Nike Vietnam Company

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Introduction

Nike Inc. is the leading supplier of athletic shoes and equipment, as well as a key producer of sports equipment in the world (Marina 2008). The company is based in the United States, and its head office is in Beaverton, Oregon. Most people are familiar with various products offered at Nike stores, such as Nike Football, Nike Sportswear, and Nike Volleyball etc. It was from the sale of these products coupled with the company’s slogan “Just Do It” that Nike could get a profit of $15 billion in 2006 (Marina 2008). As of 2008, the company’s revenue was over $18.6 billion, an indication of its business success. It also has an excess of 30,000 workers globally. However, over the past few years, Nike has been faced with a series of problems, which have negatively affected the company’s business image, and consequently, its performance. Some issues of concern include paying low wages to its workers, and using child labour among others. As expected, such grave claims are bound to affect the successful establishment of any business both locally and internationally, and Nike is not an exception. For instance, Nike’s sweatshop labour case resulted in numerous controversial debates concerning its ethical business practices. That painted a bad image of the company in the public eye. It is what Nike has been still struggling to overcome among American and other customers worldwide, even if it has tried to recover from bad press coverage.

Research Objectives

The objectives of research are as follows:

1)      to evaluate working conditions at the Nike factory in Vietnam;

2)      to find out what measures Nike Vietnam should take to provide better working conditions for its workers.

Problem Definition

Over the past few years, Nike has been faced with a series of problems, which have negatively affected the company’s business image, and consequently, its performance. The following is an in-depth analysis of various challenges that Nike Inc. has faced in the recent past.

Nike’s problems started when the company decided to outsource its manufacturing plants from numerous countries with an intention of lessening costs and improving its productive efficiency. It resulted in widespread protests and outrage far beyond the expectations of the company. The protesters stereotyped the company as “forcing children to slave away in hazardous conditions for below-subsistence wages” (Hill 2009, p. 57). Workers at the factories were forced to work extremely long hours to fill quotas. In addition, they had to follow stringent rules throughout working hours, while being paid minimal wages, despite the fact that 77% of employees of Nike Vietnam had respiratory problems (Hill 2009). Consequently, human rights and globalization activists criticized the company for exploiting workers abroad and placing them under very poor working conditions. What angered them most was the fact that Nike was cashing in billions of dollars, but still failed to provide a safe environment for its workers. There were complaints against globalization and numerous protests against poor working conditions, which made the company, realize the importance of providing a safe working environment to its employees, as well as adhering to specific standards for everyone at its factories abroad.

The key challenges that Nike had to confront were ethical, cultural and legal. It is a good thing that the company has provided numerous jobs to people across the world. However, that does not justify its maltreatment of workers. For instance, while the average daily wage in Vietnam was about $3, Nike Vietnam paid only $ 1.60 daily to its workers (Hill 2009). This problem could have been avoided through paying each of company’s employees a wage that corresponded to the payment in their home country, in order to be able to afford basic items. Besides, a decent living wage is a cultural expectation. Since the company failed to meet it, people protested.

Another challenge that the company had to face was the issue of unsafe working conditions. Nike hired an accounting firm Ernst & Young to carry out an audit of its business practices. The audit report discovered that employees with breathing and skin problems had been left to continue working in departments with chemicals despite harmful conditions (Fass 2010). This was in addition to the claim that more than a half of those workers, who worked at departments dealing with chemicals were not provided with protective clothing, such as masks and gloves. The findings of the report were meant to be confidential, but somehow they reached the public. That triggered a lot of rage and anger from all corners of the world. While it continued to make even higher profits, it exploited its own workers that enabled them to succeed.

Nike’s problems were not far from over. It was again accused of failing to adhere to child labour laws. The company hired children, and forced them to work long hours, while paying them wages below the required minimum wage rate. For instance, according to Global Exchange, one factory, owned by a Korean subcontractor working for Nike, was hiring children approximately thirteen years old forcing them to work for up to seventeen hours daily under enforced silence, while being paid only 10 cents per hour (Sage 2008). The exposure of workers to harsh and toxic chemicals, such as carcinogens, also placed the company at odds with human rights activists. In an attempt to redeem its badly tainted image, the company stated that it had formulated an action plan for dealing with various problems indicated in the report, and that it had improved safety and ventilation, reduced overtime hours and lessened the use of toxic chemicals.

Attempts to redeem the bad image of the company resulted in Nike hiring Andrew Young, a one-time U.S. Ambassador to the UN, the former mayor of Atlanta and congressional representative. His responsibility was to evaluate working conditions at various Nike’s subcontractor plants around the world. Unfortunately, the company accused his report of having discrepancies, in addition to a questionable method, by means of which the investigation had been conducted (Hill 2009). The idea of audits done on oversees factories by independent auditors came from the organization “United Students against Sweatshops” in an attempt to obtain an accurate independent audit. However, it seemed that even independent auditors did not deliver accurate results.

Despite numerous attempts, Nike has been still under the focus of protests with regard to unsafe working conditions and the violation of child labour laws. In addition, the widely recognized brand name of the company has led to a number of governmental organizations working with it to make sure that it provides safe and ethical business practices, as well as to monitor its sweatshops established in foreign countries (Rutenberg 2002). Several challenges facing the brand show how important it is for companies to follow the rules and regulations established in a particular country in order to successfully operate its business there.

Literature Review

Numerous research studies have been conducted with regard to the working conditions of Nike Inc. Company. For instance according to Greenhouse (1997), an inspection report by Ernst & Young on the working conditions of shoe manufacturer’s factories in Vietnam revealed that employees at Nike Vietnam next to the city of Ho Chi Minh were exposed to carcinogens, which surpassed the local lawful standards by one hundred and seventy seven times in some parts of the plant. Accordingly, about 77% of the employees were suffering from respiratory complications. In addition, workers were compelled to work for sixty five hours per week for just $10; hours that are far much more than what the Vietnamese law permits.

The above findings were confirmed by Nguyen, whose 16-day research at Nike shoe factories situated in Vietnam revealed serious violations of labor rights and laws. Despite the good code of conduct that Nike had, Nguyen found out that the company had no control over its contractors, who severely exploited employees with regards to working conditions and wages. According to Nguyen (2004), a majority of workers at Nike Vietnam were women from poor Vietnamese families. A lengthy discussion with the employees revealed that several of them worked close to twelve hours daily, in a noisy and hot environment, which is filled with the odour of glue and paint. In addition, workers were only permitted to visit the bathroom and drink water once during an eight-hour shift. The management practices at the factory were even worse than the working conditions; factory supervisors constantly engaged in acts that humiliated the women. Nguyen (2004) reported that some personnel management compelled women to do acts like kneeling on the ground with hands held in the air, writing down their mistakes repeatedly, and standing in the sun among others.

According to Nguyen (2004), a majority of the workers he interviewed reported to have lost weight significantly since they began working at the factory. They complained of exhaustion from working 10-12 hours daily, and meeting extremely high quotas. Out of fear of sexual harassment and corporal punishment, they were forced to endure the inhuman working conditions. Despite the cost of food being $2, they were only paid a basic wage of $1.60 daily; hence, they were unable to save money to assist their families.

Based on the above findings, it is imperative to assess the working conditions at Nike Vietnam to confirm numerous complaints against the company, as well as what the company can do to improve the situation. Despite the fact that the company’s brand is well-known in the whole world, it is true that if it does not react fast to deal with the above problems, the business might eventually go down due to numerous people distancing themselves from the company (Rutenberg 2002). As of 2007, retailers of Nike products, both small and large, reported that a significant number of their customers did not want anything to do with the brand because of the allegations raised against the company over worker exploitation overseas. As a result, their sales dropped considerably, affecting the overall performance of the company.

This research is aimed at assessing company’s working conditions, and what measures the company can take to improve the situation for its workers in order to redeem its tainted image and reclaim the success it has had in the recent past.

Methodology

The research will be carried out at Nike Vietnam among 500 selected employees of the company to get their own version of the claims and what they would like to be done to improve the situation. My choice of Nike Vietnam is based on the fact that it is one of the company’s overseas factories, where poor working conditions have been reported. My choice of Nike’s employees as a research sample is based on the fact that they are the ones affected by poor working conditions, and therefore, their input is extremely important when the company makes critical decisions that concern them. The fact that some of my relatives reside in Vietnam will help to reduce my maintenance expenses during the data collection period, as I will be staying at their place instead of a hotel, and commuting to the factory daily until my research is complete. I am aware of the fact that gaining access to big companies like Nike to have an interview with their employees may not be an easy task, but I am determined to explain to the CEO of Nike Vietnam my reasons for wanting to interview his employees, and how my research can benefit his company. Being a loyal customer of the company, I am certain that the CEO will consider my sincere concern for Nike and the benefits of my research, and will consequently grant me permission to interview his employees. The research method will involve an intercept survey, during which the following research questions will be asked:

Research Questions

 1) Under what working conditions do you work?

2) What would you like to be done for the improvement of your working conditions?

To get answers to the above questions, I will conduct a brief interview with employees of the Nike factory in Vietnam. As they will be answering the questions, which I will ask them, I will fill their answers in questionnaires, which I will construct. Since my target is to interview 500 (250 men and 250 women) workers, my strategy will be to interview twenty workers daily for the next twenty-five days. With the permission from the management of the factory, I will interview workers at one of their offices, talking to each one at a time. Being the only research participant, I expect that the whole process will be long and tiring, but I am determined to complete the research in order to attain my research objectives.

Research Limitations

A small sample size may be a major limitation to my research. This is because poor working condition claims at Nike Inc. do not only affect its factory in Vietnam, but also its other oversees companies, and therefore, the opinions of 500 hundred people cannot satisfactorily represent the opinions of the rest workers. However, working alone on the research, I may not be able to interview additional employees, owing to the limited time, during which I have to accomplish the research. In addition, research findings need should thoroughly analyzed using appropriate statistical tools in order to come up with conclusive suggestions that will help the company to redeem its bad image in the public eye. However, I do not have access to any statistical tool and this can limit my analysis.

Materials

Materials needed for this research will include: a computer to type my proposal and report; a ream of foolscaps, 10 biro pens, storage device, for example, a flash disk; and transport costs to Nike Vietnam to conduct interviews.

Research Findings

Data collection will be done by recording the various responses of workers to the research questions against their respective numbers. The findings of this research will be used to recommend appropriate measures that Nike Vietnam can take to improve its working conditions in order to redeem its tainted image     

Ethics

I am aware of the fact that some employees may shy away from disclosing information concerning working conditions at their company for the fear of being sacked. That is why ethical considerations will be vital during the whole data collection process. I will handle the information they will give with utmost confidentiality to ensure that no one will lose his or her job.

Conclusion

The famous brand name of Nike is at risk from diminishing working resources in the coming years, if the company continues with its current poor working practices of paying low wages to its workers, long working hours and the failure to provide protective clothing to its employees. The company should realize the value of its workers and start treating them with respect as human beings, and not as working tools. It is also important for the management of Nike Vietnam to realize that the public image is very important and the way the public views the company greatly determines whether it will succeed or fail. The findings of the research will be very instrumental in drawing appropriate conclusions and recommendations to help Nike Vietnam redeem its bad public image.

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