Ermployee laws case study analysis
- 2. PRESENTED BY : GROUP 3 CHETAN SINGH (16003) HONEY SINGH (16007) SUBHANGI SHARMA (16027)
- 4. • The case study tells us about the malpractices and policies which was followed by NIKE in its various factories of the countries such as South Korea, Taiwan, China , Japan, Indonesia, Vietnam. • NIKE does its business from outsourcing all of its manufacturing • Investing heavily on celebrity endorsement • Formulating and implementing the strategies to get an identity of its logo in the minds of the consumer and lastly violating the rules and exploiting their workers. • They hired Ernst & Young (accounting Firm) to conduct formal audit of its overseas factories.
- 6. • Nike sees corporate responsibility as a catalyst for growth and innovation. • By 1990, China and Indonesia were the main outsourcing countries for Nike as they were the low cost regions. • Currently, the products of Nike are made by approx. 600 contract factories that employ more than 8 lakh workers in 46 countries. • Nike’s policy of competing on the basis of cost fostered and even encouraged the contractors to mistreat their workers in pursuit of unrealistic quotas. • Ballinger’s findings gained the interest of media groups and stories became big news and that is when the Indonesian and US government had to pay attention.
- 7. Contd.. • Most of the workers were not the primary wage earners. 1.67$ were paid to Vietnamese workers, so criticism continued to mount. • 82% of the workers surveyed, either saved wages or contributed each month to their families after incurring essential expenditures. • Indonesians put typically their excess wages in banks while Vietnamese likely hold their savings in form of rice or cows. • There was a series of sweeping reforms such as raising the minimum age limit of sneaker workers to 18, expand monitoring and educational programs, availability of micro loans to workers and significant restructuring charges and lay off to 1600 workers.
- 9. • Nike was one armed with an inimitable attitude, phenomenal growth and the apparent ability to dictate fashion trends to some of world’s most influential customers. • Nike’s CEO came up with two logical business strategies, which were reducing costs by outsourcing the whole manufacturing and channelling savings from outsourcing into marketing. • Nike aimed to have their products manufactured where the labour costs were low such as China, Indonesia, South Korea and Taiwan. • By adopting this strategy i.e. by outsourcing Nike achieved the operating target with no physical assets. • Because of globalization, Nike was fully utilizing outsourcing in developing countries and increased its profitability.
- 10. CONTD.. • Along with outsourcing savings, Nike used celebrities to promote their products. • Diversity came from models designed from different foot types, body, weight, gender, speed, running, training schedules and skills level. • By 1981, Nike led all the athletic shoemakers with approximately 50% of the total market share. • The corporate governance model of Nike talks about eliminating excessive overtime, tailored human resources management systems, encourage other brands to join as partners, 90% of footwear lines to lean manufacturing processes.
- 13. • International outsourcing operations – Status Quo of outsourcing without external pressures – Difficulty controlling international suppliers • Non Governmental Organizations – Increased organization and respect – Increased funding and power – International presence – Power of the Media: Film, Print and Television
- 14. Contd.. • Powerful Image – The strengths and power can also be source of extreme pressures – Image and support are everything for Nike • Government Interaction – Increasing Pressures from US Senate – Increased pressures from Asian (Indonesian) Governments
- 15. Contd.. • Labor Unions – Increasing influence in operations – Increasing expenses • Follow Up – Continued mistakes and lack of perceived actions to fix problems – Poor Public Relations – Research Results Flawed – Poor Stakeholder Engagement
- 17. Contd.. • Lack of understanding, regarding stakeholder management • Disconnection between company, brand awareness, and manufacturing plants • Public relations failure • Poor labor standards
- 19. • Phil Knight announced a series of sweeping reforms including raising the minimum age of all sneaker workers to 18 and apparel workers to 16; adopting U.S. OSHA clean air standards in all its factories; expanding its monitoring program; expanding educational programs for workers; and making micro loans available to workers. • Nike’s second step was to get more involved with Washington-based reform efforts. The Apparel Industry Partnership (AIP) lay deadlocked over the ever-delicate issues of factory monitoring and wages. • To allow independent monitoring done by an organization that was not on a corporate payroll, such as an NGO or a religious group • To get associated with Fair Labor Association (FLA) a private entity controlled evenly by corporate members and human rights or labor representatives. It would support a code of conduct that required its members to pay workers the legal minimum wage or the prevailing local standard, whichever was higher.
- 20. • Nike was running extensive training programs for its contractors’ factory managers. All managers and supervisors were required to learn the native language of their workers, and received training in cultural differences and acceptable management styles • The company partnered with the National University of Vietnam in a program designed to identify and meet worker needs. It also helped found the Global Alliance, a partnership between the International Youth Foundation, the MacArthur Foundation, the World Bank, and Mattel, that was dedicated to improving the lives of workers in the developing world.
- 24. Thank You