According to Marina (2008) Nike Inc. is the leading supplier of athletic shoes and equipments, as well as a key producer of sports equipment in the world. The company is based in the United States, and it’s headquarter is in Beaverton, Oregon. A majority of people are familiar with the various products offered by Nike store line, for instance, NIKE Football, Nike Sportswear, Nike Volleyball etc. It is from the sale of these products, coupled with the company’s slogan, “Just Do It” that, Nike was able to get a profit of $15 billion, in the year 2006 (Peters 2009). As at 2008, the company’s revenue was over US$ 18.6 billion, and indication of its business success. It has also employed in excess of 30,000 workers globally. However, over the past few years, Nike has been faced with a series of problems, which has negatively affected the business image, and consequently, its performance. Some of the issues of concern include paying low wages to its workers, using child labor, and the effect of outsourcing on its sales. 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 (Madeley 1999). For instance, Nike’s sweatshop’s labor case resulted in numerous controversial debates concerning its ethical business practices. That painted a bad image of the company in the public’s eye; something that Nike is still struggling to overcome among Americans and other customers worldwide, even if it has tried to recover from the bad press it received. The following in-depth analysis into the various challenges that Nike Inc. has faced in the recent past, gives a better definition of its problems.
Nike’s problems started, when it decided to outsource its manufacturing plants to numerous countries, with an intention of lessening costs, and improving its efficiency in productivity. What followed was widespread protests and outrage, far much beyond the expectation 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). The factories forced their workers to work, extremely long hours to fill the quotas. In addition, they had to follow stringent rules throughout the working hours, while being paid minimally, despite the fact that 77% of employees in Nike Vietnam had respiratory problems (Sun 2010). 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. It was the complaints against globalization, and the numerous protests against poor working conditions that made the company realize the importance of providing a safe working environment to its employees, as well as, adhering to specific standards for every one of its factories abroad.
The key challenges that Nike had to confront include ethical, cultural and legal challenges. 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 its workers. For instance, while an average daily living wage in Vietnam in about $3, Nike Vietnam was paying only $ 1.60 daily to its workers (Hill 2009). This problem could have been avoided by the company paying each and every one of its employees the living wage that corresponds to the pay in their home countries, in order to be able to at least afford basic items. Besides, decent living wage is a cultural expectation, and 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 their conditions Fass (2010). This was in addition to a claim that over half of those workers who worked in 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, which triggered a lot of rage and anger from all corners of the world. While it continued to make even higher profits, it exploited its very 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 labor laws. The company hired children, and forced then to work for long hours while paying them wages below the required minimum pay. For instance, according to Global Exchange, one factory, owned by a Korean subcontractor for Nike, was hiring children as young as thirteen years, and forcing then to work for up to seventeen hours daily under enforced silence, while being paid only 10 cents per hour (Sage 2008). 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 it’s badly tainted image, the company stated that it had formulated an action plan for dealing with the 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 of redeeming the bad image of the company saw, Nike again hiring Andrew Young, a one-time U.S. Ambassador to the UN, and the Ex- Mayor of Atlanta, and Congressional representative. His responsibility was to evaluate the working conditions in the various Nokia’s subcontractor plants around the world. Unfortunately, his report was accused of having discrepancies, in addition to the questionable method in which the research was conducted (Hill 2009). The idea of audits done on oversees factories by independent auditors came from “United Students Against Sweatshops”, in an attempt to obtain an accurate independent audit. But it seems that even independent auditors, did not deliver accurate results.
Despite numerous attempts as discussed above, Nike still remains the focus of protests with regard to unsafe working conditions and child labor laws. In addition, the widely recognized brand name of the company has seen 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). The several challenges that the brand is facing shows just how important it is for companies to follow the rules and regulations established by a particular country in order to successfully do its business there.
It is based on the above challenges that I realized that Nike would benefit from a marketing research. Despite the fact that the company’s brand is well known in the whole world, it is true that if it does not act fast to deal with the above problems, the business might eventually go down due to more and more people distancing themselves from the company (Egan 1998). As at 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 due to allegations on the company, over worker exploitations overseas. As a result, their sales dropped considerably, affecting the overall performance of the company.
This research was aimed at assessing the companies working conditions, and what measures the company should take to improve the working conditions for its workers in order to redeem its tainted image and reclaim the success it used to have in the previous years. The objectives of the research was as follows
- To evaluate the working conditions of Nike Vietnam factory.
- To find out what measures Nike Vietnam should take to provide better working conditions for its workers.
Research Method and Limitations
In order to find answers to the above questions, a research was carried out among selected employees of the company, to get their own version of the claims and what they would like to be done to improve the situations. The choice of the Nike’s employees was based on the fact that they are the ones affected by the poor working conditions, and therefore their input is very important when the company is making critical decisions that concern them. The research sample was 500 randomly selected employees of Nike Vietnam, since it is one of the company’s overseas factories where poor working conditions have been reported to a great extent. The research method involved an intercept survey, where questionnaires were constructed with the questions; 1) under what working conditions do you work? 2) What would you like to be done to improve the working conditions?
To get answers to the above questions, I had to conduct a brief interview on the employees of the Nike’s factory in Vietnam. The good thing is that I stay in Vietnam, and therefore, I did not have to incur travelling expenses, as in the case when the company to be researched is located far way. As expected, gaining entry into the company to interview the employees was not easy. First, even seeing the CEO of the factory, was a problem; I went to the company for almost one week, always finding him busy, either with meetings or appointments. The following week, when I finally gained access to his office, I had to explain to the CEO my reasons of wanting to interview their employees, and how my research would benefit his company. I told him of my concern for the numerous challenges that Nike Company has been facing in the recent past, and that I was their loyal customer and would not want to see the company being closed someday because it did not act appropriately in time to find lasting solutions to its numerous problems. I also told him of the importance of considering the input of their workers, who are the ones affected by the poor company working conditions, and that no research done in the recent past has targeted the suggestions of the workers. Though he was reluctant to give me permission to interview his employees, he finally agreed, realizing that it’s his company that would benefit from the findings of my research to a large extent. The next thing was to swing into full action of carrying out the interview.
Since my target was to interview 500 (250 men and 250 women) workers, my strategy was to interview twenty workers daily for the next twenty-five days, a request that the management agreed with so long as it did not interfere with normal work. To avoid creating curiosity among workers wanting to know what is going own, the management gave me one of the offices, where I interviewed the workers, each one at a time, and filling their answers in the questionnaires I had constructed. I must say that the workers were very cooperative and welcoming, which made me realize that my research was not only important to me and their company, but to them as well. All in all, the interviews went well, and after twenty-five days, I had interviewed all the 500 employees I had targeted. Though the process was tiring because I was alone, the course was worth it.
A major limitation of this research was the fact that the research sample size I used was small. Since poor working condition claims of Nike Inc. does not only affect its factory in Vietnam, but also its other oversees companies in other parts of the world, the opinions of 500 hundred people cannot satisfactorily represent the opinions of the rest of the workers. Being alone, I could not have managed to interview more employees, owing to the limited time I was given by the company. In addition, the research findings needed to be thoroughly analyzed using appropriate statistical tools in order to come up with conclusive suggestions that would help the company to redeem its bad image on the public’s eye. However, since I did not have the relevant statistical packages, my analysis was limited.
The 2007 US financial crisis affected many countries all over the world, and Vietnam was not an exception. 50% of the workers interviewed stated that the company was paying them very low wages. The workers said that the low wages paid to them barely met their basic needs; leave alone other responsibilities such as paying school fees for their children, as well taking care of medical expenses. 25% of the workers said that the hours that they had to endure everyday, with minimum pay was taking a toll on the lives. They said that they are forced to work long overtime hours without pay. That consequently, took a toll on their personal lives, as many of them had broken marriages, as their spouses accused them of neglect. The worst part of it is that, their pay is insignificant, and does not justify the long working hours. Out of those who cited long working hours as their major problem, 15 percent of them were living as single parents; due to being left by their spouses, on the basis of their long absence in their homes, while another 10% said that the long hours of work over the years have led to them developing various health complications. For instance, one man said that he was suffering from insomnia, while the other had developed pneumonia, due to working for long hours in the cold.
Another fifteen percent of the workers interviewed said that their health was the most important thing to them and their major concern was handling toxic chemicals without the company giving them protecting clothing. A large percentage of those who had issues with the lack of protective clothing had either genetic health problems, or conditions they had acquired as a result of long exposure to toxic chemicals. The remaining 10 percent of the workers cited low wages, lack of protective clothing and long hours of work. They wished that the company could do something to generally improve the working conditions of the workers.
In answering the question of what measures the company should take to improve its working conditions, 60% of the interviewed workers suggested, that the company should pay them better enumerations, and reduce the total number of working hours from the current 15 hours to the normal 8 hours, and that working overtime should be optional. Another 10% of the interviewees were in support of better pay, but they did not want the overtime hours to be reduced. Instead, they wanted their overtime payment to be guaranteed, citing that they had so many needs to take care of and that, so long as their overtime hours were paid, they were willing to continue working long hours to be able to get more money. 10% said that the company should provide protective clothing for everybody in the company, since only half of them had been provided with the protective wears. In addition, they said that the protective clothing they had currently were old and worn out and therefore needed replacements. The also, wanted the company to include them in the decision making process of the company. The said that the factory does not consult them on anything; that their duty is to work without questioning, an action they said had really demoralized them. Besides, they also supported better pay and access to better medical services within the company. One of the interviewees said that the company had a nurse that offered only painkillers irrespective of the disease that the workers, and that most of the times, they were denied permission to seek treatment outside the company. In fact he said that there is a female worker who died in the company who was suffering from heart attack, who died in the company some time back, because of being denied permission to see go to a proper hospital for medical checkup. Another 15% wanted the company to pay better, reduce the long working hours, provide protective clothing and also provide them with meals at work (breakfast and lunch). The remaining 5% of the interviewed workers suggested the already mentioned points above, in addition to being allowed by the company to join workers union, being allowed to go on paid leaves, being provided with staff training and development programs, to sharpen their skills and knowledge.
From the above findings is evident that the earlier researchers that have reported poor working conditions did not lie; it is real and happening. The results of this research are believable because, it came from the workers themselves. There is one thing that is worth noting about these findings; despite the fact that the research was done in small scale with only a few people only, it unraveled new measures which Nike has not considered in its plan of redeeming its image. Such measures include, seeking the input of workers in decision making, worker training and development, and allowing workers to join workers unions. Even other measures such as increasing the pay of workers, and reducing overtime working hours which the company ha promised to implement have just been theoretical; the company has not fully implemented them.
Conclusions and Recommendations
The famous brand name of Nike, risks diminishing 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 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 working tools. It is also important for the management of Nike Vietnam, to realize that public image is very important; how the public views a company greatly determines whether it will succeed or fail, and therefore they should do everything possible to redeem their bad public image (Brettman 2011). I recommend that the CEO of the company and his management team should take the above suggestions by their workers seriously and implementing them to the letter, as a first step towards redeeming their image.