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Harvard International Business - Team 1Monday 30th of June 2009 ”A company that makes nothing but money is a poor business” Henry Ford.

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Presentation on theme: "Harvard International Business - Team 1Monday 30th of June 2009 ”A company that makes nothing but money is a poor business” Henry Ford."— Presentation transcript:

1 Harvard International Business - Team 1Monday 30th of June 2009 ”A company that makes nothing but money is a poor business” Henry Ford

2 Harvard International Business - Team 1Monday 30th of June 2009 2 …currently […overskrift, formuleret aktivt IKKE passiv] What are we recommending - Salt water reverse Osmosis(SWRO) is the way to move forward, but… […] Applications Grundfos is the market leader and has vast domain competencies to be taken advantage of […] Grundfos has significant expertise and could easily provide additional services proactively Additional growth opportunities available by utilising existing competencies on other servies Strategic position and plan […] Tasks ….But a company that does not make profit is no business at all….

3 Harvard International Business - Team 1Monday 30th of June 2009 … the question being raised…. Introduction – The Nike Sweatshop debate 3 Overview of the case and updates The theoretical framework A) Is Nike responsible? Further perspectives Conclusion and Q&A B) Nike’s response C) The global perspective and issue 1 2 3 4 5 The Agenda of todayPresenters… Team Alexandra Bustros Stu Haigh Christian S. Hein Jin Ji 1

4 Harvard International Business - Team 1Monday 30th of June 2009 Source: The case Company background Established in 1972 by Phil Knight Leading marketer of athletic shoes and apparel Annual revenue (2006): $15B, same size amunt of the GDP of Island and Uganda Designs and Markets, but not manufactures Decade-long Debate Accusation “sweatshop” – low wage, long hours, poor conditions Nike’s Response commit to improve working conditions 1996, Fair Labor Association (FLA) – independent monitoring association More… United Students Against Sweatshop - Workers Rights Consortium (WRC) What is being presented in the case….. June 8, 2006, The anti-sweatshop legislation was introduced in the Senate (S.3485) by Senator Byron Dorgan (ND) 2008, EFJ Co-Director, Jim Keady, reports that the status of the two key issues for workers – wages and collective bargaining – has gone largely unchanged since EFJ’s research in Indonesia began in 2000. … and what has happened since Overview and updates: Nike - A Quintessential Global Corporation - and where is the Debate now? 4 1

5 Harvard International Business - Team 1Monday 30th of June 2009 5 Source: World factbook Straw Men Milton Friedman – ‘SR is to ↑ profit and play by rules’ Cultural Relativism – ‘when in Rome’ The Naive Immoralist – ‘if everyone else is, we can’ The Righteous Moralist – ‘Home = host’ Utilitarian Moral worth of actions determined by consequences Kantian People are treated as ‘ends’ not ‘means to the end’ Rights Theories Humans rights transcend boundaries and cultures Justice Theories ‘Just distribution’ is considered fair and equitable Overview The theoretical framework- Ethics - Approaches and Arguments 2

6 Harvard International Business - Team 1Monday 30th of June 2009 6 The whole spectra The Drawbacks The theoretical framework – Questionable or Ethical? Source: Naive Immoralist Milton Friedman Righteous Moralist Cultural Relativism Utilitarian Ethics Kantian Ethics Rights Theories Justice Theories 1.Milton Friedman – Rules can be grey with International Business 2.Cultural Relativism – is what’s in Rome right? 3.The Naive Immoralist – Defeatist 4.The Righteous Moralist – Competitiveness compromised 5.Utilitarian – Too hard to measure costs/benefits 6.Kantian – Incomplete, absence of substance 7.Rights Theories – Costs and competition 8.Justice Theories – Many theories of ‘Just distribution’, often conflict QUESTIONABLE ETHICAL 2

7 Harvard International Business - Team 1Monday 30th of June 2009 7 Transition in the way civil society functions CSR defines a new way for business to act in civilsociety The theoretical framework – Where does CSR come into play? Source: Christian Hein, Paper on CSR in Denmark US Embassy Copenhagen 2

8 Harvard International Business - Team 1Monday 30th of June 2009 8 Source: World factbook Nike should be held RESPONSIBLE for working conditions in foreign factories because: Obvious point: Outsourcing was the solution to cutting cost But also because: Might be pressuring the subcontractors to meet unrealistic goals They chose to deal with the geographical distance Did not incorporate ethical considerations into its decision making SO Nike is responsible of the unethical working conditions Themes: A) Is Nike responsible? What should be done? 3

9 Harvard International Business - Team 1Monday 30th of June 2009 9 Source: World factbook Overview Themes: A) Is Nike responsible? YESNO Minimum wage of Indonesia is not met Minimum wage of Indonesia is met Also, employment practices should be taken into consideration Standard working hours are NOT met (might be working with overtime >> need to be paid extra ) Standard working hours are met Poor working conditions might be in practice (health insurance might be needed) Healthy working conditions are met What if, in Indonesia paid an income of $2.28 a day, the base of Nike factory workers, which is double the daily income of about half the working population. Should we criticize Nike for the low pay rates of the subcontractors in Indonesia ? 3

10 Harvard International Business - Team 1Monday 30th of June 2009 10 Source: World factbook Focus on min Wage as well as min Age More robust audit process – Not just 1 team (PWC) – Better methods Provide Industry with thought leadership, eg. GM and The Sullivan Principles for South Africa Conduct Focus Groups to determine price elasticity subject to price increase borne out of increasing wages Better support sub-contractors by providing Management Consulting and direction on HRM Improve Nike’s Organisational Culture: Employee Ethical People Ethical Culture Ethical Leadership Ethical Decision Making Instil Moral Courage What should be done? Themes: B) Nike’s response? 3

11 Harvard International Business - Team 1Monday 30th of June 2009 11 Source: World factbook, Wikipedia If one believe in the theory of competitive advantages and believe that international trade is NOT a zero sum game then the present of transnational companies is good, since they represents a substantial part of the world trade. And therefore the abandonment of free trade like presented in the case by the foundation “MADE in the USA” would NOT be the right solution, if world inequality at the same time should be mitigated. The correct way would be to lay it in the hands of global governance like WTO, UN, (among others) and make them monitor that the developing countries got sufficient safe guards and legal enforcement to prevent the most severe case of bad work conditions and further offer consultancy in how to govern it. Is sweatshop a global problem, and what is the solution? Themes: C) The global perspective and issue 3

12 Harvard International Business - Team 1Monday 30th of June 2009 12 Source: World factbook, http://en.wikipedia.org/wiki/ Official_development_assista nce http://en.wikipedia.org/wiki/ Official_development_assista nce What is the alternative if these people was not employed by NIKE’s subcontractors? Isn’t it better to work for a low pay than no pay at all? Doesn’t the presents of Nike (transnationals/multinationals) help the development of the countries? (taxes, income, infrastructure, education, ect.)? How is the salaries compare to average salaries in the country/countries? PPP vs. Nominal figures - Yes people live for a dollar a day but if transnational's where not there would you think that the number would increase or decrease? In the eagerness to do good is a better place to start not rather the amount of paid “Official development assistance” only 5 countries in the world live up to the requirement of UN When the low salaries is being mentioned doesn't the PPP and thereby relative disposable income have to be taken into account? This could be measured in many ways; we have made the calculation based on the GDP pr. Capital figures, and the showing that the standard deviation is 24,7% higher for nominal GDP pr capital compare to PPP. Making up for part of the low salary. Isn’t the competitiveness of these countries lying within the low salaries? Insights: Further perspectives Wouldn’t a relative perspective not be more appropriating? 4

13 Harvard International Business - Team 1Monday 30th of June 2009 Conclusion Conclusion and Summing up Questions? 5 No cut & dry answer Each case is different Stakeholders vs. Shareholders Short term vs. Long term Global governance is the way to create a level playing field


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