NIKE CASE STUDY MGMT34001 - A GRG POST 1

 Blog Topic: Nike, Overseas Factories and Workers Right: An Ethical Analysis

POST 1: Ethical Issues 

   
        

   

                                                            IMAGE: Indonesia, Vietnam

(Video: Nike Sweatshop: Behind the Swoosh)

         Nike is one of the largest and most successful global brands in the world. Nike is known for its innovation, marketing, and dominance in the sportwear and athletic apparel industry. However, behind its success the company has faced serious long-standing criticism regarding labor practices and conditions in its overseas factories. Many of Nike's products are manufactured in developing countries such as Indonesia, Vietnam, and Cambodia, where labor costs are significantly lower. While this strategy helps Nike reduce costs, increase profit margins and remain competitive in the global market, it has also raised serious ethical concerns about the treatment of workers. 

The main ethical issue in this case revolves around whether Nike is doing enough to ensure fair and safe working conditions for the people who manufacture its products. Reports over the years have shown that Nike's factory workers have faced low wages, unsafe working conditions, long working hours, and limited labor rights and protections (Locke, 2002).This creates a clear ethical dilemma: Should Nike prioritize maximizing their profit and efficiency, or should it take greater responsibility for protecting workers’ rights, fair treatments, safe working conditions and well-being?

Nike’s business model relies heavily on outsourcing production to third-party manufacturers. This means that Nike does not directly own or operate most of its factories. Instead, it contracts suppliers in different countries around the world where labor is cheaper and labor regulations may be less strict and monitored. While this allows Nike to operate and function its operation globally and reduce production costs, but it also creates challenges in monitoring and controlling working conditions. Because these factories are not directed managed by Nike, enforcing and monitoring ethical standards becomes more difficult.

Historically, Nike has been associated with “sweatshop” labor, especially during the 1990s when reports revealed that poor working conditions in Indonesian factories. Where workers were paid extremely low wages and often required to work long hours in unsafe environments. In addition, a BBC Panorama investigation team found that in 2000 it exposed the use of child labor in Nike’s supply chain where young workers were involved in producing Nike products. As a result, these reports damaged Nike’s brand and reputation and led to more protests, media coverage, and consumer backlash. This forced Nike to begin addressing labor issues and improving its policies (BBC, 2000; Locke,2013; The World, 2016; Stanford University).

Despite these efforts and improvements, recent investigations suggest that these problems still exist. Workers in some countries continue to earn wages that are close to the legal minimum but still insufficient to support their basic living needs (ProPublica, 2023). For example, in Cambodia factory workers have reportedly fainted due to severe heat exposures, long working hours, and poor ventilation (ProPublica, 2025). These findings suggest that while Nike has made efforts and progress, challenges related to worker rights, safety and fair labor practices remain ongoing.

Another important aspect of this issue is the imbalance between Nike’s profits and workers’ compensation. Annually Nike generates profits in billions of dollars, yet many of its workers in its supply chain struggle financially. This raises critical ethical questions about fairness and justice. From an ethical perspective, it is important to consider whether it is acceptable for a company to benefit so greatly while their workers receive bare minimal compensation. According to Immanuel Kant’s ethical theory, “individuals should never be treated merely as a means to an end, but always as end in themselves”. This means that workers should not be used only as a tool and means for company’s profit without respect for their dignity and well-being (Kant, 1775/1193; Bowie, 2017). 

This situation also connects to a broader issue of Globalization. Many companies outsource their production and manufacturing operations to developing countries to reduce operations costs, increase profit and stay competitive in the market but it often leads to weaker labor protections and exploitation of workers. Workers in these regions may have limited labor protection rights and bargaining power, making it more difficult and vulnerable for them to demand better work conditions. As a result, companies like Nike must decide and do their part on how much responsibility they should take for improving their labor standards and practices globally.

          From an ethical perspective, this issue can be analyzed using different ethical frameworks. A Utilitarian perspective would evaluate whether Nike’s action creates the greatest overall benefit. While lower production costs may benefit consumers through lower prices, harm caused to workers raises serious ethical concerns. A deontological perspective would argue that Nike has a duty to treat its workers fairly and respect their rights, regardless of costs. This shows that improving labor practices and working conditions is not just a choice but it’s a moral obligation for companies like Nike. The issue is also an important factor because it has a direct impact on stakeholders. Workers, communities, consumers, and investors are all affected by Nike’s overall decisions. Consumers today are very sensitive and more aware of ethical issues and may choose not to support companies that do not align with their values. For example, a report showed that Nike’s reputation has declined significantly, particularly among well-informed consumers, highlighting how sensitive consumers are to corporate conduct and ethical behavior (Danziger, 2024). Therefore, ethical practices are not only morally important but they’re also strategically important for maintaining brand image, reputation and customer satisfaction and trust.

          In conclusion, Nike’s overseas labor practices represent a complex and ongoing ethical issue. While the company has made progress over time, challenges remain in ensuring fair wages, safe working conditions, and proper enforcement of labor standards. This case highlights the problems between profit and responsibility and it raises important questions about the role of global corporations in protecting human rights. 

References:

Davis, R. (2025). Workers fainted at Nike Clothing Factory despite a vow to reform. Retrieved from https://www.propublica.org/article/nike-factory-cambodia-fainting

How Nike solved its sweatshop problem. (n.d.). Retrieved from https://theworld.org/stories/2016/07/30/how-nike-solved-its-sweatshop-problem

Human rights and labor compliance standards. (n.d.). Retrieved from https://about.nike.com/en/resources/human-rights-and-labor-compliance-standards

Kish, M. (2026). Nike factory workers in Indonesia illustrate misleading portrayal of wages. Retrieved from https://www.propublica.org/article/nike-wages-clothing-shoe-factory-indonesia

Nisen, M. (n.d.). How Nike solved its sweatshop problem. Retrieved from https://www.businessinsider.com/how-nike-solved-its-sweatshop-problem-2013-5

(N.d.-b). Retrieved from https://www.youtube.com/watch?v=M5uYCWVfuPQ

(N.d.-a). Retrieved from https://www.forbes.com/sites/pamdanziger/2024/11/04/nikes-reputation-falls-just-when-it-needs-a-strong-brand-reputation-most/

(N.d.). Retrieved from https://web.stanford.edu/class/e297c/trade_environment/wheeling/hnike.html

Programmes | panorama | archive | gap and Nike: No sweat? October 15 2000. (2000). Retrieved from http://news.bbc.co.uk/2/hi/programmes/panorama/970385.stm

Voa. (2012). Nike to pay Indonesian workers $1 million. Retrieved from https://www.voanews.com/a/nike-to-pay-indonesian-workers-1-million--137173608/150598.html?utm_=

Writer, S. (2023). Vietnam Shoe Maker for Nike, Adidas to cut 6,000 jobs. Retrieved from https://www.zawya.com/en/world/americas/vietnam-shoe-maker-for-nike-adidas-to-cut-6-000-jobs-rcu6tg0k?utm_

10, A., | by                                                  Ian  Chipman, & Chipman, I. (2016). How to improve working conditions in the developing world. Retrieved from https://www.gsb.stanford.edu/insights/how-improve-working-conditions-developing-world?utm_ 

NOTE:

NIKE CASE STUDY MGMT34001 - A GRG POST 1 

This was only POST 1 of the blog.. 

there are 4 other Post's for this part of the blog in separate links 

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