588:Business Ethics

g.3. According to you what is the final objective in this deal?

.4. Various state VCAs have come in for criticism what is the
role of the VCA? Would you like to see CARA being given more
powers?
(Frontline, June 3, 2005)
Voluntary Coordinating Agencies (VCAs) in the states are
supposed to ensure that children are first offered for Indian
adoption )in line with the Supreme Court Guidelines) and if this
fails to happen within a stipulated time frame, clear the children
to (Centa adoption resource agencies) CARA for intercountry
adoption. Noagency in India can proceed with ICA (Inter country
adoption) without a no objection certificate from CARA. There
are several checks and balances to ensure that intercountry
adoptions are done in the best interest of the child.
Andhra Pradesh was the first state to ban voluntary agencies from
placing children in adoption, the government is under tremendous
pressure to reverse the situation.

2. Operations of Nike in South East Asia (A leading Sports

company)
Nike is a leader in the sports sl:oe industry. The company had a
sales of US §9.5 billion in 1998 with a 40% share of the American
Sneaker market. The company also became a lightening rod for
worldwide protests over alleged "Sweat Shop" conditions in factories
across South east Asia. Phil, Knight, the founder of Nike and also a
CEO, admits that "Nike product has become synonymous with stave
wages, forced overtime and arbitrary abuse". n less developed countries
(LDCs), company is paying wages and impose working conditions that
are shockingly low by US Standards, and yet they operate well above
the standards of local firms. Nike is a well known company, whose
"Swoosh" logo is a symbol for the "Just Do It" spirit, come to be associated
strangely with deplorable labour practices?
Phil Knight an able administrator of the company had a phenomenal
success on account of his visionary strategy, developed from his student
days visions at the Stanford Business School. His strategy at Nike
involves outsourcing all manufacturing to contractors in low wage
countries and pouring the company's resources into high profile
marketing. One of the vice presidentS expressed 'we do not know the
first thing about manufacturing. We are basically good marketers and
designers'. The central effort to Nike's marketing effort is placing the
Nike "Swoosh" on the uniforms of collegiate and professional athletes.
Nike enlisted such superstars like Michael Jordan (Great Basket Ball
Player) and Tiger Woods.
Nike started the operations in 1964, contracted with
manufacturers in Japan when the wages were low in Japan. Later on
 Case Studies :589

they transferred their operations to Korea and Taiwan in view of the

wage rise in Japan. By 1982, 80% of the Nike shoes were supplied from
Korea and Taiwan. Again the shifts was to South East Asia as the wage
raise was found in Korea and Taiwan. By 1990, Nike production was
based in Indonesia, Vietnam and China. The Indonesian wages were
so low, their women used to work at 15 cents an hour. Some of the
experienced women who were working at Korean owned plants got a
maximum of $2 for a l1 hour day. The Indonesian minimum wage was
ralsed in 1991 from $1.06 for a7 hour day to $1.24 (the government
estimated $1.22 as necessary wage for "minimum physical needs").
The Korean managers acted brutal on Indonesian women. Koreans
berated those women for failing to meet quotas and withheld pay to
enforce discipline. Indonesian labour laws, 1lax to begin with, were
flouted with impunity by contractors, since the government was eager
to attract foreign investment workers suffered much. They toiled in
crowded, poorly ventilated factories, surrounded by machinery and toxic
chemicals. Union activities in Indonesia to fight out justice was not in
Vogue and any labour strikes found were firmly suppressed by the army.
The labour was exploited to the maximum.
When Nike was under growing criticism, it denied any
responsibility for the practices of its contractors. Nike argued
that it
situated in those
merely buys shoes from independent companies the
Nike and
countries. Further the workers are not employees of
minimum and the
salaries what they are getting is above the legal
unrest and poor
prevailing market rate. Commenting on the labour the GM of Nike
NIke,
Working conditions in some factories supplying causes and added I
know the
incharge of Indonesia said that he did not
company by arguing
don't know that I need to know. GM defended his
come in here and given jobs to
Yes, they are low wages. But we have otherwise". He might
thousands of people who would not be working
additional employment to
have added that the company had also givenfee in 1992 was larger than
Michael Jordan whose reported $2 million
production in Indonesia.
ne payroll that year for all Nike
ethicality in favour of the following:
Putforth your arguments of
company Nike going in the proper way to offloud
(i) Is countries where wages are
manufacturing operations to
low. Eg. Indonesia.
worldwide protests over
alleged 'sweat
Nike received
(ii) Why factories across South
Asia.
shops conditions' in Comment.
Nikes marketing efforts?
appreciate
(11) Do you single person like
Michael
your feelings if one thewages
(V) What are money of US $2 million whereas
Jordan gets a together willget
Indonesia put
people in
of thousands ofamount in 1992?
less than that of GM, Nike
incharge
arguments
appreciate the
(v) Do you
of Indonesia.