BUSSINESS ETHIC ESSAY

PT NIKE’S BUSSINESS ETHICS VIOLATION CASE

Oleh:
MIKA RIZKY UTAMI
C2C017056

KEMENTRIAN RISET,TEKNOLOGI DAN PENDIDIKAN TINGGI

UNIVERSITAS JENDERAL SOEDIRMAN
FAKULTAS EKONOMI DAN BISNIS
MAGISTER MANAJEMEN
PURWOKERTO
2019
I. Introduction
Required in business ethics, business ethics standards are the guiding values or reference
manager and all employees in decision-making and operating a business ethics. In this era of
intense competition, good corporate reputation which is based on business ethics is a competitive
advantage (or Competitive Advantage Competitive Advantage) that are difficult to duplicate. In
business not infrequently apply the concept of ends justify the means, even criminal purpose.
Companies that have a good reputation is not necessarily not violated business ethics, both
national and international companies. For example NIKE, is one of wistful American company
producing footwear, apparel and sports equipment. NIKE has a contract for the manufacture of
their products made by a global network of 600 plants owned by subcontractors that employ
more than 550,000 people. These large corporations have made a Knight among the richest men
in America. Nike marketing phrase "Just Do It!" Has become as their identity and in popular
culture known as the "swoosh" logo or face celebrity sponsors, such as Tiger Woods.
NIKE is not only famous as a producer of sports equipment, but also often employ children
under age. Poor working conditions have been present for centuries. This situation often triggers
a tragedy in the community to mobilize action for workers' rights. This happened in the United
States during the Industrial Revolution and even at the end of the 20th century. However,
internationally, especially in third world countries is poor, which is far from justice. Large
companies from the United States have moved most of their factories overseas to avoid strict
working regulations in the United States.
Third world countries such as Vietnam, China, South Korea, and Taiwan provide access to
cheap labor is plentiful. These companies can now reap the benefits of the US consumer market,
while keeping their costs are very low in freelance production. The media has awakened the
public of the fact that leading companies have masterminded some activities that could be called
malpractice.
Nike became the main target of some companies that are considered unethical actions. This
illustrates that conditions in some areas of Nike factories overseas and away from the critical
minimum standards set for all employees. Many people investigating Nike and how they have
exploited workers in Asia for financial gain only.
II. Discussion
A. Business Ethics
Ethics in etymology, derived from the Greek word is "Ethos", which means the character
of decency or custom (custom). Meanwhile, business ethics is the science devoted about moral
right and wrong. This science concentrates on moral standards as applied to policies, institutions
and business behavior (Velasquez, 2005).
By simple definition of business ethics are ways to do business, which covers all aspects
relating to individuals, companies, industries and communities.
All this includes how we conduct business fairly, in accordance with applicable law, and does
not depend on the position of individuals and companies in the community.
In creating business ethics, there are several things to consider, among other things:
1. Self-control.
2. Development of social responsibility (social responsibility).
3. Maintaining identity and not easy to be swayed by the rapid development of information and
technology.
4. Create a healthy competition.
5. Applying the concept of "sustainable development".
6. Avoid 5K properties (note, collusion, Connection, collusion, and the Commission).
7. Being able to express the true true.
8. Fostering mutual trust between powerful businessmen and faction groups entrepreneurs
down.
9. Consequent and consistent with the rules that have been agreed.
10. Develop awareness and sense of belonging to what has been agreed.
11. Need for the majority of business ethics as outlined in a positive law in the form of
legislation.

Business ethics have principles that should be taken by the company to achieve its
objectives and should be used as guidelines in order to have a standard that prevents inaccuracies
in regard of moral ethics as a working standard operating ataua Musilich company (1998: 31-22)
suggests its principles as follows:
1. Principles of Economics
Integration of measures taken should be directed to the development of the vision and
mission oriented company prosperity, welfare of employees and komunitasnnya.
2. Principle of Honesty
3. The principle is not malicious
Strict application of the principle of honesty will be meerendam evil intentions of the
company itself.
4. Principles of Justice
Companies must be fair to the parties related to the business system. Examples: Upanh fair
to the employees according to their contribution.
5. The principle of self-respect
The need to maintain a good image of the company through the principle of honesty, not
mean-spirited, and justice.

There are 3 types of problems encountered in the Ethics, namely:

1. Systematic
Systematic issues in business ethics ethical questions that arise regarding the economic
system, political, legal and social system in which the business operates.
2. Corporations
Problems corporation in business enterprises are questions in specific companies. These
issues include the question of the morality of the activities, policies, practices and
organizational structure of the individual company as a whole.
3. Individuals
Individual issues in business ethics are questions concerning specific individuals within the
company. These problems include questions about the morality of the decision, actions and
individual character.

Causes of Breaking Business Ethics

1. Lack of moral consciousness utilarian (moral relating to maximize the best thing for people
as much as possible)
2. The reduced formalism ethical (moral focusing on behavior and certain rights)
3. The view was wrong in running a business
4. Lack of understanding of the principles of business ethics
5. Low social responsibility or CSR
6. Weak position of institutions that protect rights - the rights of consumers

B. Company Profile
NIKE, Inc. (NIKE), is a multinational company that produces the world's largest sports
equipment. This company was founded in 1964 by entrepreneurs who are at once an athlete is
Bill Bowerman and Phil Knight. Nike Inc., based in the USA and has subsidiaries scattered
around the world including Asia, namely China, Thailand, Malaysia, India and Indonesia. NIKE
is a company that competes with Adidas and Puma.
NIKE is a seller of athletic shoes and sportswear in the world. The company focuses its
product offerings in the seven major categories: Running, Basketball, Football (Soccer), Training
Male, Female Training, NIKE Sports (sports-inspired products) and Action Sports. It is also
market products designed for children, as well as for athletics and other sports, such as baseball,
cricket, golf, lacrosse, outdoor activities, football (American), tennis, volleyball, running and
wrestling.
NIKE athletic footwear products are designed primarily for specific athletic use. The
Company sells sports apparel and accessories, as well as athletic bags and accessory items. It
also markets apparel with licensed college and professional team, and league logos.

C. Cold case
In the 1970s, Nike concentrating its production in Japan because wages in Japan are
cheaper than at its headquarters in the United States. Subsequently in 1982, the majority of Nike
products produced in Korea and Taiwan attracted by cheap labor there.
However, labor costs in those countries more expensive, Nike relocate his company to
Indonesia, China, and Vietnam. In the 1980s when Nike tried to make production in China, in
partnership with state-owned enterprises, but this proved disastrous. Nike then move its
investments into Taiwan. Nike then take advantage of labor costs are cheaper there.
In the late 1980s with the labor unrest in South Korea, -Increased level of wages and loss
of control of the workplace by the Korean authorities - has made the country less attractive to
investors, both foreign and domestic, who began to look for another location more fun. Nike then
moved their operations to southern Thailand and Indonesia, in search of cheaper labor and less
hassle. Wages in these countries was mentioned as one of the cost because it only uses a quarter
of the fare paid in South Korea. Some associations Nike is headquartered in Taiwan was
established in Southeast Asia.
Another reason for this shift is that in 1988, both South Korea and Taiwan lose
preferential access to the US market, they have long enjoyed a status of "developing country"
under the General System of Preferences (GSP), the US. Korea and Taiwan investors and then
moved to a factory in Thailand, Indonesia and China by making use of GSP privileges from poor
countries.
Nike has a top supplier of sports shoes in 1992, three is a Taiwanese company that
manufactures its products in China, the other three operations in South Korea, and also in
Indonesia, one is a company in Thailand (Anonymous, 2011).

D. NIKE Policy
In the early 1990s, Nike products produced by six factories employing 25,000 workers.
Four of them belong to the supplier of Nike Korea. Nike has a factory standard company policy
guidelines form an ideal deal on labor such as:
1. Nike will not employ underage workers,
2. Will provide decent wages,
3. Providing many advantages for workers,
4. Provide all labor rights whenever overtime,
5. Contractor employees do not work more than 60 hours per week, or the regular and overtime
hours allowed by law in the country of manufacture, select the least,
6. Overtime hours are approved by both parties and get compensated with premium pay
7. Employees are entitled to a minimum of 24 hours rest in a row for every period of seven
days.

E. Human Resource Management Errors

Although he has set the standard in the form of a policy guide the company's factory ideal
deal on labor but NIKE lot of mistakes on his human resources, as follows:
1. There is no justice for the workers' performance.
2. There is no reward whatsoever received by workers after carrying out its duties.
3. The Company does not facilitate the employees when they want to organize through unions.
4. The manager does not respect the rights of workers to receive overtime pay, get a day off,
and treated as human beings.
5. Managers tend to force workers meet production targets, without providing adequate
facilities.
6. The Company does not motivate employees to work well, but tend to be threatening.
7. The company never hear complaints and aspirations of workers.
8. Workers feel threatened and forced to work for fear of receiving lower wages.
9. The wages received by workers under decent living standards, even though they work on
normal working hours.
10. Nike employs many minors, in order to increase production capacity at a low price.

F. As a result of the HR Management Mistakes

All of these errors will be bad for the company either in the short or long period of time.
The following consequences may be received by the company:
1. The quality and quantity of product produced decreases continuously.
2. Workers are not loyal to the company and by any means expect the company goes bankrupt.
3. Workers will move quickly when offered jobs with higher wages.
4. Workers at the company's very calculating, and tend to be lazy if it is not in accordance with
their job description.
5. small internal conflict will occur infuriated workers and massive demonstrations.
6. Workers tend to skip work if there is a chance.
7. As was the case the investor (Nike International) will terminate the employment because of
declining quality.
8. There was a massive demonstration when workers found that NGOs are able to accept their
aspirations.
9. Workers feel violence is better than sitting berdikusi peacefully.
10. The long-term effects will affect the impression of a foreign investor in Indonesia, if the
Indonesian performance is bad then investors are reluctant to invest their funds.
G. NIKE External Case
At the lower level, there are several other issues to deal with:
1. Athletes Superstar, which mengedalikan request of a sponsor, can create problems with their
behavior, both on and off the field.
2. The exercise pattern shifts from traditional sports to outdoor activities, where this type of
shoe is dominated by other companies.
3. The existing competitors (Adidas, Reebok, New Balance) to be more aggressive, and the
fashion label (Hilfiger) that expand their line to enter the footwear market.
4. Private Wealth Phil Knight came into the spotlight and criticism.
5. Nike central public criticism of promotional premium items to low-income consumers as one
of the causes of crime.

H. Step - Step Improvement

1. The Government
a. Fix player morale government to enforce the regulations.
b. Review the regional minimum wage for workers.
c. Create a skilled workforce by training.
d. Provide an understanding of the workers, that the government will protect their
movements, in so far as it is in accordance with the regulations.
2. Contractor (Manufacturer)
a. Enforce rules that have been set up by foreign companies properly.
b. Do mediation with foreign parties if any regulations deemed burdensome.
c. Provide wages in accordance with the rules, without memanadang local workers or
foreign workers.
d. Provide appropriate reward if workers do a good job compared to the applicable
standards.
3. Workers
a. Encourage yourself to reveal what is happening in the company through the NGO
concerned.
b. Work with loyal and well as regulations of the company.
c. If it is not able to accept the burden of the work, the better off.
III. Conclusion
The problem is a major cause in the case of Nike is the use of labor of the workers are
regarded as labor exploitation. Nike is involved in a controversy over the use of cheap labor in
developing countries to make products with a lower cost.
The outsourcing issue further with the leaking of a confidential report by the Ernst & Young
auditing firm Nike and Nike-Vendor-owned subcontractor in Vietnam are informed through the
media that beranama Global Exchange. The report revealed a grim picture of Susana work is not
conducive to hiring underage youth with long working hours, but with the minimum wage or
less, as well as contamination of the workers by the chemicals that cause suffering from
respiratory problems.
Countries that made production by applying low wages for the workers, it is guided by
reason: the quality of workers is still low, the unemployment rate much, and strengthen the
competitive advantage of nations as a place for investment can reduce production costs.
There needs to be a good resource management between the government, the contractor
(producer), and workers to achieve the target and meet the regulations of a foreign company
investors. But it must still be criticized if there is a local party burdensome regulations.