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The Case of Nike and Human Rights

What ethical issues faced by MNC's in their treatment of foreign workers could bring
allegations of misconduct in their operation?

Answer: The ethical issues faced by MNC's in their treatment of foreign workers are given
a. Employing child labor
b. Using workers overtime
c. Paying unfair salaries
d. Treating inhumanly with workers
e. Providing poor working condition for the employees
f. Women discrimination
g. Unfair business with minorities such as older worker, religious minorities
h. Unlawful business practice

Would the use of the third party independent contractors insulate MNC's from being
attacked? Would that practice offer MNC's a good defensive shield against charges of
abuse of “their employees”?
Answer: Human rights issues is one of the most important issues in this globalization era. There
are no universal or International Standard of what is right or wrong because of the cultural
differences among the countries. For example, some country appreciate child labor but some

country has a strict law of child labor. So when a business organization conducts business in
another country, they are trying to take advantage of that country. The reason for an organization
to do business beyond the border is to maximize their profit. Sometimes some MNC does
offshore or outsourcing to get the job done. So some MNC goes to the third world country to
gain economies of scale. For example Apple Inc. Products are produced by a third party
independent manufacturer Foxconn, which situated in China. They have some controversies
about some unethical human rights issues which brings public attention. Even though Foxconn
produce apple inc. products. But Apple Inc. Face any loss for that. So Yes, the use of third party
independent contractors insulate MNC from being attacked by the customer for ethics.
Yes, this practice would offer MNCs a good defensive shield against charges of abuses of “their

Do you think that statements by companies that describe good social and moral conduct in
the treatment of their workers are part of the image those companies creates and,
therefore, are part of their advertising message? Do consumers judge companies and base
their buying decision on their perceptions of corporate behavior and values? Is the historic
“made in” question now being replaced by a “made by” inquiry?
Answer: Without a doubt the statement that some MNC provide to the public about their good
social and moral conduct in the treatment of their workers are part of their advertising message.
Some MNC company don't want to grab public attention about this issue that's why they give
such false statements. For example: After the child labor incident Nike spends billions of dollar
to regain their reputation. They also did some CSR stuff to get rid of the negativity.

No, I don't think that consumers judge companies and base their buying decision on their
perception of corporate behavior and values. There are some people who might think twice
before purchasing a product. But no one cares how the product is made. They all care how the
product will be. If we see Nike's case, we will see that even though Nike had negative issues, but
they didn't go down financially. No matter what they manage to increase their sales.

Yes, the historic “made in “question now is being replaced by a “made by” inquiry. This is the
globalization era. Big company produce their product through the third party to get the cost
advantage. One of the Walmart cloths maybe produces in Bangladesh. Companies now go
multiple countries to produce their products.

Given the principles noted in the case, how can companies comment on their positive
actions to promote human rights so that consumers will think well of them? Would you
propose that a company (a) do nothing (b) construct a corporate code of ethics,(c) align
itself with some of the universal covenants or compacts prepared by international agencies?
Answer: As a part of the society we have to give something back to the society. An MNC also is
the part of the society. It is their responsibility to take care of the society. CSR is one of the
important factor for an MNC. There is certain positive way that A company can do something
good for promoting human rights, and that deed may help to create a positive image on MNC. I
think to create a positive impact on consumer mind a company should construct a corporate code
of ethics and maintain an agreement that will practice in every corner of the world. A corporate

code of Ethics will help MNC to conduct business well. It will help MNC to create a positive
impact among the Consumer as well as the employees. But if a company fails to maintain the
corporate code of Ethics then it should follow some of universal agreement prepared by some
international agencies like United Nations. Every company does detail market research when
entering a market. So MNC should do a careful research when entering into a region. They
should have known about country's culture, norms and value and what is good and what is bad in
that country before doing business.
What does Nike's continued financial success, in spite of the lawsuit, suggest about
consumers reaction to negative publicity? Have American media and NGO exaggerated the
impact of a firm's labor practices and corporate social responsibility on its sales? How
should managers of an MNC respond to such negative publicity?
Answer: It is clear that consumer are fully aware of the corporate social responsibility. Nike's
continued financial success is the result of their showing responsibility to the society. Today Nike
is one of the popular brands around the world. Nike has spent billions of dollar for promoting
their product every year. But the thing is that those negative issues that arise by some people
cannot create any problem for Nike. It was a big issue but Nike successfully able to handle the
issue. According to their international CSR profile, they donated $1 million to tsunami relief in
2004. So this kind of charity helps Nike to regain consumer trust. But generally when a customer
goes to the Nike store they don't think about all negative issue Nike have. A customer always
cares about the product. That is why Nike is still financially successful.
I don't think that the negative issues of Nike create a problem on their sales. American media and
some NGO's were so conscious about the labor issues of Nike. But the general consumer doesn't

care about it. They care about the product they will going to use. So those negative publicity
don't create any obligation on Nike's sales. The only way to create the problem of Nike's sales is
when the consumer of the world will stop buying goods from Nike, but that is quite impossible.
A manager of an MNC could do certain things to get rid of the negative publicity. Those are
given below.

The manager should focus on the positive thing that company have. For example, Nike

advertises their CSR activities to the consumer.
Maintain a corporate code of ethics so that every one of the company treat fairly.
Promote positive attribute of the company like good products, good deeds, CSR, etc.
Do more charity work to regain the trust of the Media and NGOs.