Description
Part one due is 9/2/2024 (30hours)
For this week’s discussion, read the brief case study about Nike (p.101 in the textbook).
You have three questions to develop for this Discussion:
Identify key issues and underlying issues of the Nike case
Describe in detail the action you would take to address or correct the situation.
Consider how you would support your solution with examples.
Make sure you cite your resources in proper APA reference citations.
Make sure your post is not over 500 words.
Make sure you respond to the 3 questions above (use APA headings)
the book (use in-text citations) : Luthans, F., & Doh, J. P. (2021) International management: Culture, strategy, and behavior (11th ed.) McGraw-Hill Education, New York, NY ISBN 978-1260260472
PART TWO ( i will send you my colleagues discussions so you can reply to it)
: due is 10/2/2024
Reply to at least two discussion posts with comments that further and advance the discussion topic.
(250words each)
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Brief Integrative Case 1.1
Page 101
Advertising or Free Speech? The
Case of Nike and Human Rights
Nike Inc., the global leader in the production and marketing of sports and
athletic merchandise including shoes, clothing, and equipment, has enjoyed
unparalleled worldwide growth for many years. Consumers around the world
recognize Nike’s brand name and logo. As a supplier to and sponsor of
professional sports figures and organizations, and as a large advertiser to the
general public, Nike is widely known. Nike was a pioneer in offshore
manufacturing, establishing company-owned assembly plants and engaging
third-party contractors in developing countries. As an early adopter of this
manufacturing model, Nike has faced a variety of ethical and moral
challenges over the last three decades.
In 1996, Life magazine published a landmark article about the labor
conditions of Nike’s overseas subcontractors, entitled “On the Playgrounds
of America, Every Kid’s Goal Is to Score: In Pakistan, Where Children Stitch
Soccer Balls for Six Cents an Hour, Their Goal Is to Survive.”
Accompanying the article was a photo of a 12-year-old Pakistani boy
stitching a Nike-embossed soccer ball. The photo caption noted that the job
took a whole day, and the child was paid US$0.60 for his effort. Up until this
time, the general public was neither aware of the wide use of foreign labor
nor familiar with the working arrangements and treatment of laborers in
developing countries. Almost instantly, Nike became a poster child for the
questionable unethical use of offshore workers in poorer regions of the
world. This label continued to plague the corporation as many global human
interest and labor rights organizations have monitored and often condemned
Nike for its labor practices around the world.
In the years following, Nike executives were frequent targets at public
events, especially at universities where students pressed administrators and
athletic directors to ban products that had been made under “sweatshop”
conditions. Indeed, at the University of Oregon, a major gift from Phil
Knight, Nike’s CEO, was held up in part because of student criticism and
activism against Nike on campus.1
Nike took immediate action to repair its damaged brand. In 2001, the
company established a Corporate Responsibility and Sustainability
Committee to ensure that labor practices were ethical across its supply chain.
By 2003, the company employed 86 compliance officers (up from just three
in 1996) to monitor its plant operations and working conditions and ensure
compliance with its published corporate code of conduct. In 2005, Nike
became the first among its peers to release a complete listing of all of the
overseas factories that it contracts for labor. That same year, Nike released
the pay scales of the factory workers and addressed actions it was taking to
further improve conditions. Even so, the stigma of past practices—whether
perceived or real—remained emblazoned on its image and brand name. Nike
found itself constantly defending its activities, striving to shake this
reputation and perception.
In 2002, Marc Kasky sued Nike, alleging that the company knowingly
made false and misleading statements in its denial of direct participation in
abusive labor conditions abroad. Through corporate news releases, full-page
ads in major newspapers, and letters to editors, Nike defended its conduct
and sought to show that allegations of misconduct were unwarranted. The
action by the plaintiff, a local citizen, was predicated on a California state
law prohibiting unlawful business practices. He alleged that Nike’s public
statements were motivated by marketing and public relations and were
simply false. According to the allegation, Nike’s statements misled the public
and thus violated the California statute. Nike countered by claiming its
statements fell under and within the protection of the First Amendment,
which protects free speech. The state court concluded that a firm’s public
statements about its operations have the effect of persuading consumers to
buy its products and therefore are, in effect, advertising. Therefore, the suit
could be adjudicated on the basis of whether Nike’s pronouncements were
false and misleading. The court stated that promoting a company’s reputation
was equivalent to sales solicitation, a practice clearly within the purview of
state law. The majority of justices summarized their decision by declaring,
“because messages in question were directed by a commercial speaker to a
commercial audience, and because they made representations of fact about
the speaker’s own business operations for the purpose of promoting sales of
its products, we conclude that these messages are commercial speech for
purposes of applying state laws barring false and misleading commercial
messages” (Kasky v. Nike Inc., 2002). The conclusion reached by the court
was that statements by a business enterprise to promote its reputation must,
like advertising, be factual representations and that companies have a clear
duty to speak truthfully about such issues.2
In January 2003, the U.S. Supreme Court agreed to hear Nike’s appeal
of the decision in Kasky v. Nike Inc. from the California Supreme Page 102
Court. In particular, the U.S. Supreme Court agreed to rule on
whether Nike’s previous statements about the working conditions at its
subcontracted, overseas plants were in fact “commercial speech” and,
separately, whether a private individual (such as Kasky) has the right to sue
on those grounds. Numerous amici briefs were filed on both sides.
Supporters of Kasky included California, as well as 17 other states; Ralph
Nader’s Public Citizen Organization; California’s AFL/CIO; and California’s
attorney general. Nike’s friends of the court included the American Civil
Liberties Union, the Business Roundtable, the U.S. Chamber of Commerce,
other MNCs including Exxon/Mobil and Microsoft, and the Bush
administration (particularly on the grounds that it does not support private
individuals acting as public censors).3
Despite the novelty of this First Amendment debate and the potentially
wide-reaching effects for big business (particularly MNCs), the U.S.
Supreme Court dismissed the case (6 to 3) in June 2003 as “improvidently
granted” due to procedural issues surrounding the case. In their dissenting
opinion, Justices Stephen G. Breyer and Sandra Day O’Connor suggested
that Nike would likely win the appeal at the U.S. Supreme Court level. In
both the concurring and dissenting opinions, Nike’s statements were
described as a mix of “commercial” and “noncommercial” speech.4 This
suggested to Nike, as well as other MNCs, that if the Court were to have
ruled on the substantive issue, Nike would have prevailed.
Although this case has set no nationwide precedent for corporate
advertising about business practices or corporate social responsibility (CSR)
in general, given the sensitivity of the issue, Nike has allowed its actions to
speak louder than words in the years since. As part of its international CSR
profile, Nike has assisted relief efforts (donating to tsunami relief in 2004
and Haiti earthquake relief in 2010) and advocated fair wages and
employment practices in its outsourced operations. Nike claims that it has
not abandoned production in certain countries in favor of lower-wage labor
in others and that its factory wages abroad are actually in accordance with
local regulations, once one accounts for purchasing power and cost-of-living
differences.5 The Nike Global Community Impact Fund (formally called the
Nike Foundation), a nonprofit organization supported by Nike, is also an
active supporter of the Millennium Development Goals, particularly those
directed at improving the lives of adolescent girls in developing countries
(specifically Bangladesh, Brazil, China, Ethiopia, and Zambia) through
better health, education, and economic opportunities. The Nike Global
Community Impact Fund partners with more than five dozen international
partners to distribute donated products and funding to a variety of causes
across the globe.6 Environmental impact is also a key component of Nike’s
CSR profile. The company has focused on preserving water in the areas
where its products are manufactured, incorporating new technology that
minimizes the amount of water needed for dyeing processes. In 2018, Nike
achieved 75 percent recycled material in its products, and 96 percent of its
waste from the manufacturing process was either recycled or converted into
energy. In 2019, Nike’s North American energy supply was 100 percent
renewable; by 2025, the company plans to power 100 percent of its
worldwide facilities with renewable energy sources.7
As part of its domestic CSR profile, Nike is primarily concerned with
keeping youth active, presumably for health, safety, educational, and
psychological/esteem reasons. Nike has worked with Head Start and Special
Olympics Oregon, as well as created its own community program, NikeGO,
to advocate physical activity among youth. Partnering with then First Lady
Michelle Obama, Nike worked to implement the “Let’s Move” campaign into
schools across the U.S. In conjunction with the U.S. Olympic Committee,
Nike also sponsors Project Play, which aims to reshape the direction of youth
sports by encouraging children to stay involved and feel included. In
advance of the 2020 Olympics, Nike also launched a free online training
program for volunteer youth coaches. Furthermore, Nike is committed to
domestic efforts such as hurricane relief and bettering education, the latter
through grants made by the Nike School Innovation Fund in support of the
Primary Years Literacy Initiative.
Despite Nike’s impressive CSR profile, if the California State Supreme
Court decision is sustained and sets a global precedent, Nike’s promotion or
“advertisement” of its global CSR initiatives could still be subjected to legal
challenge. This could create a minefield for multinational firms. It would
effectively elevate statements on human rights treatment by companies to the
level of corporate marketing and advertising. Under these conditions, it
might be difficult for MNCs to defend themselves against allegations of
human rights abuses. In fact, action such as the issuance and dissemination
of a written company code of conduct could fall into the category of
advertising declarations. Although Kasky v. Nike was never fully resolved in
court, the issues that it raised remain to be addressed by global companies.
Despite the publicity of the case, at both the state and Supreme Court
levels, and the lingering criticism about its labor practices overseas, Nike has
thrived over the last decade. With strong and growing sales and profits
globally, Nike was ranked as the most valuable apparel brand by Brand
Finance in 2019. It is estimated that the Nike brand is now worth US$32
billion—far ahead of rival Adidas (US$17 billion).8 The company has
expanded its operations into different types of clothing and sports equipment
and has continued to choose successful athletes to advertise its gear. Nike has
shown no signs of slowing down, suggesting that its name and logo have
substantially recovered in the global market.
Questions for Review
1.
What ethical issues faced by MNCs in their treatment of foreign
workers could bring allegations of misconduct in their operations?
Page 103
2.
Would the use of third-party independent contractors insulate
MNCs from being attacked? Would that practice offer MNCs a
good defensive shield against charges of abuse of “their
employees”?
3.
4.
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 create 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 (e.g., “Made in the
USA”) now being replaced by a “made by” inquiry (e.g., “Made
by Company X” or “Made for Company X by Company Y”)?
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,
or (c) align itself with some of the universal covenants or compacts
prepared by international agencies?
5.
What does Nike’s continued financial success, in spite of the
lawsuit, suggest about consumers’ reactions to negative publicity?
Have American media and NGOs 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?
This case was prepared by Lawrence Beer, W. P. Carey School of Business, Arizona State
University as the basis for class discussion. It is not intended to illustrate either effective or
ineffective managerial capability or administrative responsibility.
ENDNOTES
1.
Ericka Cruz Guevarra, “Oregon Student Organizers Protest Nike over
Sweatshops,” The Columbian, July 31, 2017,
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