Nike: The Sweatshop Debate analyzes the legal, cultural and ethical challenges confronted by global business and will also examine the roles that host governments have played while summarizing the strategic and operational challenges facing global managers at Nike. Having standards in place will protect the organization from a major crisis like the one formally faced by Nike.
Philip Knight and Bill Bowerman created the world's largest sportswear company, Nike, in 1962. Nike now controls more than 40% of the U.S. Market for sports related goods. However, Nike does not have one shoe factory in the United States (Miller, 1995). As Nike continues to make millions, they continue to employ workers from overseas and paying them very little wages and requiring long hours without overtime pay in their factories. The controversial issues are why the majority of Nikes labor is conducted in Third World countries. Nike subcontractors employ nearly 500,000 workers in plants located in Indonesia, China and Vietnam (Saporito, 1998).
Many challenges must be considered within the case study of which many include legal, cultural and ethical differences. "The majority of Nike shoes are made in Indonesia and China, countries with governments that prohibit independent unions and set the minimum wage at rock bottom (Hill, 2009, p.155)." When discussing ethics, Third World countries have a different standard on what is ethical when it comes to working conditions, wages and labor practices. The average pay in Indonesia of a Nike factory worker in 1997 was $2.46 per day. Labor groups estimate that a livable wage is about $4 a day in Indonesia. In Vietnam, the pay is $1.60 a day. The average living wage is about $3 a day in Vietnam (Hill, 2009). Compared to the United States this wages are very low in comparison to the overall cost of living.