Stakeholders

1
Stakeholders

• Consumers low-priced, high-quality products that
  fit their individual needs. And products that
  cause less harm to others.
• Stockholders and employees maximizing wealth
  together with maximizing Nikes profitability
• Subcontractors apparently exploitative practices
  on their vulnerable workers

2
Stakeholders II

• Competitors benefit from criticism of Nike
  because such criticism affect them less than it
  does Nike.
• Nongovernmental org cause the market leader to
  improve workers compensation and conditions so
  that other competitors may follow.
• Socially responsible workers for subcontractors,
  influences on competitors, responses to concerns
  of nongovernmental org

3
Current policy, to change or not?

• Moral rights model best maintains and protects
  the fundamental rights and privileges of
  stakeholders
• Some stakeholders interests are at odds
  subcontractors, stockholders vs. subcontractors
  employees and non-government orgs and society in
  general
• Make a judgment on moral principles long-run
  maximization vs. short-run
• Establish moral intent, place some concerns ahead
  of others, the violated rights first?

4
Current policy, to change or not?

• Hazardous working conditions, violations of
  overtime laws, and violation of wage lawsNike
  has to change
• The real problem the division of surplus between
  Nike, subcontractor and workers
• Global competitiveness of Nike global logistic
  and distinctive competences in marketing labor,
  a small proportion of the value chain

5
Ethics, within firm boundary?

• Reach out of boundary
• substantial market share
• bargaining power over subcontractors
• Change the difference across countries or abuse
  them?

• Within boundary
• Arms-length transactions between Nike and
  subcontractors
• Different countries have different tolerance of
  labor practices

6
Solutions

• Negative publicity to take defensive or
  corrective actions?
• Global solution
• Franchising and licensing why not learn?
• Toward developing distinctive competencies in
  managing third-world labor?

7
Rhetoric, only?

• Globalization Is Raising Living Standards
  Everywhere
• When Nike opened a shoe-manufacturing plant in
  Vietnam 10 years ago, the workers walked for
  hours to reach the factory. Three years later
  they could afford bicycles, and three years after
  that they all drove scooters. Today, they can
  afford to buy a car, says Johan Norberg, the
  award-winning author of In Defence of
  Globalization. - The Canadian Press, April 29,
  2003
• Source http//www.nike.com/nikebiz/nikebiz.jhtml?
  page43year2003month04m

8
How does Nike monitor its contract factories?

• Nikes approach has been to build a global system
  of monitoring. Nike uses a multi-layered
  monitoring and oversight process that is a
  combination of internal Safety, Health, Attitude,
  People and Environment (S.H.A.P.E.) inspections,
  Nike Compliance staff monitoring visits,
  monitoring by external professional auditors and
  independent external monitoring conducted under
  new Fair Labor Association (FLA) protocols.
  Nikes internal compliance program, or
  S.H.A.P.E., identifies the status of specific
  conditions within a contract factory. S.H.A.P.E.
  inspections are carried out by Nike production
  and/or Corporate Responsibility Compliance
  representatives on an ongoing basis. Nike
  Compliance staff members also make additional
  monitoring visits to raise the internal
  compliance capabilities of factories. Factories
  also receive visits from external professional
  auditors to conduct book reviews, worker
  interviews and health, safety and environmental
  inspections.
• Source http//nike-store.custhelp.com/cgiin/nike_
  store.cfg/php/enduser/std_adp.php?p_faqid251

9
Code of Conduct

• The core standards are set forth below.
• Forced Labor. The contractor does not use forced
  labor in any form -- prison, indentured, bonded
  or otherwise.
• Child Labor. The contractor does not employ any
  person below the age of 18 to produce footwear.
  The contractor does not employ any person below
  the age of 16 to produce apparel, accessories or
  equipment. If at the time Nike production begins,
  the contractor employs people of the legal
  working age who are at least 15, that employment
  may continue, but the contractor will not hire
  any person going forward who is younger than the
  Nike or legal age limit, whichever is higher. To
  further ensure these age standards are complied
  with, the contractor does not use any form of
  homework for Nike production.
• Compensation. The contractor provides each
  employee at least the minimum wage, or the
  prevailing industry wage, whichever is higher
  provides each employee a clear, written
  accounting for every pay period and does not
  deduct from employee pay for disciplinary
  infractions.
• Benefits. The contractor provides each employee
  all legally mandated benefits.
• Hours of Work/Overtime. The contractor complies
  with legally mandated work hours uses overtime
  only when each employee is fully compensated
  according to local law informs each employee at
  the time of hiring if mandatory overtime is a
  condition of employment and on a regularly
  scheduled basis provides one day off in seven,
  and requires no more than 60 hours of work per
  week on a regularly scheduled basis, or complies
  with local limits if they are lower.

10
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