Pro Side

Ike Utilitarian
Making a lot of money outsourcing to countries with lower minimum wage laws and less
regulations in factories.
o Business model of any successful company is making as much money as possible
while limiting expanses of producing the service and or good.
o Nike outsourcing to countries like Indonesia lowers operational and labor costs,
hence making nike a powerhouse company that has a 40% share of the American
sneaker market and annual sales of 9.5 billion in 1998.
o If nike were to manufacture their goods in America they would be losing out on a
lot of profit manufacturing in America. Paying minimum wage in America vs
underdeveloped economy. Americans just dont wanna make shoes Phil Knight
o The total sums of benefits of nike outsourcing to these underdeveloped far
outweighs the benefits of manufacturing in America. Nike is going create a lot
larger profit. Nike is producing jobs and steady wages for those wouldnt without
them.
you wouldnt imagine underdeveloped countries workers rights in factories without nike being
there.
Rebuttal Response: Rights Theory
o Nike is producing jobs and a steady pay by outsourcing their business to
underdeveloped countries. They are producing the right to work for thousands of
people who otherwise wouldnt have jobs because of their countries unstable and
poor economy. And since 1998 nike has been working to improve the working
conditions in these countries as well.

Josh Care Theory

Care theory states that people who are closer to the person should be taken care of before
others are taken care of
Contractor employees are not technically Nikes employees
One of the reasons Nike is so successful and has had longevity is because they utilized
professional athletes as advertisement
o They pay Michael Jordan more than what Indonesian workers make because
Michael Jordan is more relevant to keeping Nike afloat
Keeps prices lower/competitive for the customers
Therefore, Nike is correctly applying care theory to their business because they are taking
care of their employees before the needs of other workers and are taking care of
customers
 Rebuttal: Why pay Jordan $2 million? Nikes business model is based on marketing
not manufacturing
Distributive Justice Theory

- Treating similar individuals in relevant respects similarly and dissimilar individuals in

relevant respects dissimilarly
o Employees in the US and Third-World Countries are clearly dissimilar based on
economic/wage factors
Right to pay them comparable wage to skill-level
Paying low-skilled workers high-skill pay turns over economy
Refutes argument about wage based on justice theory
- Customer : Contracted Employee Relationship
o Contractual Relationship is between vendor and contractor for product
o Employees are out of Nikes hands
o Conditions are similar to expectations
o Factory conditions are responsibility of contractors more than vendor
o Refutes argument about working conditions based on working conditions

Rebuttal: Why would the army suppressing labor unions affect Nike? Nike chose to be in
Indonesia therefore they should be responsible at least somewhat.

Cons Arguments

Catholic Social Teaching

Definition: An action/policy is morally correct if it is respectful of, and guided by, the fact that
human beings
Is Nike really trying to work to achieve the common good?
o They have had a track record of such issues dating back to the early 1990s when
young Indonesian women working in Korean-owned plants under contract with
Nike started at 15 cents an hour with mandatory overtime. More experienced
workers might make $2 for a grueling 11-hour day.

Nike has gone from country to country looking for the lowest standard of living in which
they hope to maximize profit. This means theyre taking advantage of the financial state
of a countrys economy. They first started in Japan, but as wages increased they
 transferred production to contractors in Korea and Taiwan, and later moved to Indonesia,
Vietnam, and China. How is this working to achieve the common good?

o Rebuttal: It costs Nike about $28.50 to make a sneaker that will retail for about
$100. Although the standard of living is very different in other countries such as
Indonesia, isnt Nike still taking advantage of their living situation? In the end,
wouldnt it be more productive to pay them a little more which would ultimately
get the employees to spend more.

Is Nike showing a fundamental dignity and worth for the people who work for them?
o It's been said that Nike has single-handedly lowered the human rights standards
for the sole purpose of maximizing profits. And Nike products have become
synonymous with slave wages, forced overtime, and arbitrary abuse. One
columnist said, "Nike represents not only everything that's wrong with sports but
everything that's wrong with the world."
Rebuttal: Although Phil Knight has toured the factories in counties such as Indonesia
and has said that the working conditions were better than most other factories around,
how can he feel good about the reports saying workers often toiled in crowded, poorly
ventilated factories, surrounded by machinery and toxic chemicals? This relates to
having fundamental dignity and worth. Would he approve of these same conditions if
they were in the U.S.?

Care Theory
Definition: An action/policy is morally correct if it is consistent with the obligations that flow
naturally from the concrete relationship(s) (which are relevant to the action/policy in question)
between the person doing the action/establishing the policy and those with whom he/she is most
closely related.

Nikes initial response to growing criticism was to deny any responsibility for the
practices of its contractors stating that the workers are not Nike employees, and their
wages are above the legal minimum.
John Woodman, Nike GM for Indonesia even came out and saying that the company had also
given additional employment to Michael Jordan, whose reported $2 million fee in 1992 was
larger than the payroll that year for all Nike production in I
Utilitarian (Anti Nike)
After reviewing this case and taking into consideration the utilitarian, natural rights, and catholic
social teaching moral standards, we have compiled relevant information that shows Nikes use of
overseas labor IS NOT morally acceptable.
First, lets take a look at how the Utilitarian perspective shows Nikes actions are not morally
acceptable.
Important to remember that in the utilitarian perspective, actions and policies should be
evaluated on the basis of costs and benefits they produce for EVERYONE in society. Not
just consumers, but the producers as well.
Its easy to assign a numerical or dollar value to benefits like profit margins, but its not
as easy to assign dollar values to the costs that come from Nikes southeast Asia
operations
We would argue that, if put into numerical value, the costs of Nikes operations in SE
Asia outweigh the benefits
Here are some of the costs associated with Nikes operations in SE Asia
In reference to sweatshop workers
-a lack of benefits of any kind (healthcare, OT pay, vacation time, etc)
-long and exhausting work days usually lasting 10+ hours
-Dangerous working conditions in crowded, poorly ventilated factories often surrounded by loud
machinery and toxic chemicals)
-----------------May lead to serious injury or even death (no healthcare or inability to purchase it)
-poor or no representation in wage and employment negotiations
-Verbal abuse and intimidation from managers
-withheld pay as a form of punishment

*all of the previous examples violate many of the workers natural rights*

Costs In reference to the company as a whole

-Products must be shipped back to the US and around the world (cost), also increases risk of
damaging the product
-Nike must become familiar with local business customs/ethics and may be forced to deal with
corrupt government officials, which could lead to legal implications.
-a natural disconnect due to contracting manufacturing duties: Along with language barriers can
lead to security issues such as stealing, poor product quality, and other legal issuesall of
which could cost Nike money. That is, if the contracted boss chooses to communicate these
issues.

-As mentioned earlier, assigning a numerical or dollar value to these costs may be extremely
tough. However, If you could somehow do that, we believe the costs of Nikes operations in SE
Asia would outweigh the benefits.

Questions:
-Although wages and working conditions in Nike plants in southeast Asia are consistent (or
slightly higher) with those in the region does this make Nikes treatment of sweatshop workers
acceptable? Especially if the standards in many of those countries are so low.
-Under the utilitarian standard, Profit margins are definitely higher when outsourced, but
couldnt one argue that (if you could translate it into a numerical value), costs of working
conditions and the issues coming from those conditions for thousands of workers far outweighs
the benefits
In a way, I think Nike has avoided a connection with the manufacturing processes in order to
separate themselves from ethical issues. Moving to countries with the lowest moral standards has
seemed to work for them.
Moving around the manufacturing of their products is indicative that nike is exploiting
everywhere where the moral standards are lowest. As soon as those standards gets too high, nike
moves
May not be employees, but without them, nike has no product
According to the (Natural) Rights Theory, an action/policy is morally correct if it respects the
natural rights of human beings. An action/policy is not morally acceptable if it violates the
natural rights of those affected by the policy.
Some of the natural rights being violated in Southeast Asia are:
Right to a just wage/Right to sufficient health care
o The women lived in fear of their brutal Korean managers, who berated them for
failing to meet quotas and with-held pay to enforce discipline.
Right to adequate working conditions/Right to security of the person
 o Workers often toiled in crowded, poorly ventilated factories, surrounded by
machinery and toxic chemicals.
Right to assembly and association/ Right to freedom of expression
o There was little effective union activity in Indonesia, and labor strikes were
firmly suppressed by the army.
Yes, they fulfill the right to work but the conditions are not healthy or safe