Ethical And Legal Issues Of Multinational Enterprises: An Ethical Analysis

The purpose of this task is to identify and evaluate ethical issues and recognise legal issues related to multinational enterprises. You will construct arguments based on principles and theories of ethical reasoning.

Find an action of a multinational company operating in a developing country and argue, using at least two ethical theories, whether this action is ethical or not. Your work should be in the format of an argumentative essay, i.e. you should argue for OR against the action of the company being ethical. In your introduction of the situation which led to the action, you need to determine whether the action was legal or illegal.

1. Quality of critical reflection and argument with reference to relevant ethical theories and recognition of legal issues

2. Degree of clarity of arguments presented and ability to analyse and draw valid conclusions

3. The extent of research

4. The overall structure of the essay with reference to conventional academic writing criteria

Note : how multinational company of your own choice affected the developing country in which it exists and the company issue should be recent
you can take apple supplier company foxconn issue in china as unethical behaviour by company and how it affected people in the factory it would be great.                                                                               

Legal Analysis

In the present era, all the corporate entities are required to operate on the ethical basis by considering their responsibilities toward society and environment in which they are working. Contradiction to these ethical principles results in significant adverse consequences like reputation loss and loss of customer base (La Ferle, 2015). The present study is based on analysis of ethical and legal aspects of Nike. This company is considered to famous franchises for selling sportswear for all ages in the world. However, they are primarily known for athlete shoes and apparels. Nike is considered to be a reputed company but facing various legal and ethical issues. Detailed analysis of these issues has been provided in this report.

A legal analysis is a legal responsibility which concerns about society’s thinking, along with respect proper behaviour. Managerial authority’s main purpose is to fulfil their financial and economic goals within the lawful structure. National and international regulatory systems have imposed these legal requirements (Cooper, Clapham and Kemp, 2015). The legal aspect refers to the universal environment of the business firms which includes central, state and local rules and regulations that assist firms in managing the behaviour of the workforce. Following issues face by Nike faced due to which there reputation has been significantly affected:

In Asian countries, laws are major obstacles to beneficial operations. Countries like India and China have adopted their laws so as to invite more international brands. Human resource laws related to quality and quantity of product-related laws differs for business to business and has a great impact on the market (Martin, 2015). Management of Nike has faced various legal issues regarding employee’s violence and compensation. Another important issue is work safety which has been faced by Nike in the past. However, Nike is a reputed brand, but it has faced several problems which have impacted its position.

Opportunities are provided by external factors to the authorities of management to improve employment laws and amend higher standards for employment. One way Nike can recover its brand image by giving priority to customer satisfaction and by providing quality products. Similarly, Nike has many opportunities to develop its security and health measures by dealing with increasing safety and health regulations (Johnson, 2017). Correspondingly, the company is required to avail opportunities for making improvement in their health and safety measures in order to address intensifying regulations related   to health and safety.

Although it is impossible to control all external factors, as company can try to amend these forces to survive in the market as to gain more benefits. If a company desires to maintain a strong bottom-line, then it must adapt all external factor including legal, technological and political.

The company must perform the right thing at a right time which is ethically responsible it must first analyse ethical and legal aspects. The code of moral principles can be referred as ethics, and its values help in controlling the behaviour of company’s employees (DesJardins and McCall, 2014). Decision makers of Nike could do with fairness, equality and impartiality, and provide right to every individual and must offer different treatment to its workforce related to the objects and goals of the company. In the present study, three viewpoints are applied to express the fair and unfair behaviour of Nike. Description of these theories is enumerated as below:

Ethical Analysis

According to this theory, it has been said that if people wanted to act fairly then, they have to act according to their duty. Further, it is considered that company has to focus on its own personal objectives instead of concern with the other objectives. For example in the case of Nike If the workers are having a fear of losing their job then they will be de-motivated, and it will consequently affect their performance and behaviour.

Utilitarian approach concerns about all the effects which occur due to decision alternatives in support of a solution and then choosing the best alternative among all which will offer maximum satisfaction to the people. Management of the company believes in providing employees better and fair working conditions, giving them proper compensation, with a guarantee of secured and safe employment (La Ferle, 2015). While hiring recruits, management must ensure that the candidate is having the education regarding the job along with it candidate must be experienced, talented and skilled. Candidate must have the ability to communicate with customers as is the most important factor which helps in providing satisfaction to the customer by analysing their needs and demands.

Ethical egoism is concerning about the situation in which the agent has the tendency to do what they want to do on the basis of their personal interest (Cavusoglu and Dakhli, 2017). Egoism approach is like individualism approach which competes with the individual act as an ethically on that time when the company encourages the person for the better and long term interest. In this approach, preference is provided to the action which will result in the utmost betterment of business in comparison to other alternatives.

In the Nike Company, the egoism term played an extreme role, without this term the organisation is not capable of developing and learning. By observing this company will try to make more efforts as to achieve its goals and objectives. The Nike confidently believes and thinks that if the employees of the company getting evolved in the decisions of the company then it will provide them empowerment and the will be motivated to improve their performance as they are satisfied with their jobs.

Nowadays, organisations are facing ethical issues and dilemmas within the company. This challenge takes place in a condition where optional choices and behaviour are unwanted and unnecessary as because of unsafe and risky ethical issues and consequences (de los Reyes, Scholz and Smith, 2016). What is right and what is wrong cannot be determined in this condition. Nike has dealt with some of the ethical challenges which are described below:

One of the big problems faced by Nike was the issue of child labour and the problem of a sweatshop. Another challenge faced by Nike was that the management was providing low compensation to their employees in countries like Vietnam, China and Indonesia. Labours were forced to do overtime and manufacture their goods in poor and neglected working conditions in the manufacturing plants.  .One more challenge faced by the company was the pollution created by the company while manufacturing their goods. It caused environmental damage, noises and change in the weather due to the pollution.

Ethical Issues

The government also played a vital role in these challenges and problems faced by Nike. Government laws and policy differ from nation to nation as this makes manufacturing of goods very difficult task for the global companies like Nike. The host government has implied laws against the protection and security of the customer, information and classification, employment, compensation and security of the workers (Benn, Dunphy and Griffiths, 2014). Multinational organisations should follow these rules and regulations and must abide them all. Major changes and impacts that can be seen in legal and political issues build up and grow out in global trade agreements and the disclosure of international trade agreement among different countries such as EU or GATT.

The government didn’t take action about the very low compensation given to the employees by Nike for example, in Vietnam employees were compensated 20 cents per hour means $1.60 per day, but in real the income wage in Vietnam was actually $3 per day. And it neither took actions about child labour problems and the sweatshop problems.

Nike had five factories in Vietnam which consist of a mostly woman. They are not allowed to go washroom only one time in 8 hours of shift or not even drink water more than 2 times a day. Due to their bad financial condition, they are agreed to work in this condition. They introduce the unique method to give workers card or hat who wants to go to the bathroom (Stewart, 2014). Labours are forced to work overtime for the same wages. In the month of February, there were four national holidays due to Lunar New Year, so the supervisor forced a worker to 70 hours of overtime. Survey highlights that supervisor makes woman labourers run around the factories for not having mandatory shoes.  

Further, it has also been found that Nike did not implement single health-related facilities in the factories which were recommended by the health department of their city and it becomes very common when the worker fainted due to suffocation and heat (Schlegelmilch, 2016). In the name of medical facilities, Nike had one doctor with 2 nurses in among 6000 employees. Nike failed to implement effective controls to bring healthy environment in the factory.

Following corrective action plans are required to be implemented by the management of Nike to ensure ethics in operational activities.

1) Compensation

Best practice is an initiative which conveys that a company can achieve its desired goals and objectives with some kind of new techniques procedures systems, encouragement and incentive.

Compensation refers to the monetary value an employee receives in exchange for their contribution they provide to the business. Compensation is adjusted according to needs of the business, business goals and the resources available (Pritchard and Burton, 2014).  While planning a compensation package for the employees, first a management must follow these steps -

HR managers and experts should calculate the needs and objectives of the business, learning values and principles which are related to training purpose. Initial steps while preparing a training and development program are explained below -

• Actual Program
• Learning Principles
• Evaluation Criteria
• Evaluation

Human resource managers must strictly follow the above steps in sequence while planning training and development programmes. As been understood in the diagram, the person who is in charge of training or development is required to analyse the needs of the workforce and the business (Wilsey & Lichtig, n.d.). If the objectives are set up by the manager, then the learning principles are measured by the trainer

Management must oversee practices of employment and ensure that the company is supporting the policies and procedure on recruitment, guidance, health, security and benefit (Shank and Lyberger, 2014). Management must also keep on checking internal and external environment practices and must strictly follow the policies and procedures regarding wastage avoidance and energy inputs etc.

Management should accomplish and plan guidance, behaviour and training program for its workforce as it will result in increasing efficiency in the employees. One more thing management must keep in mind that training programmes are not the only solution to fulfil every need of the company (Yan, Wang and Huo, 2014). Work designs, assortment, assignment and all other related activities of the Human Resource Branch are also very significant. 

Management should create and design such programmes that may assist in dealing with problems regarding the behaviour of the employees. Cross functional team is used by the companies to develop and expand their goods and services and can solve its issues.

 Management must set its targets and goals and   determine its position and performance in the market. Performance management helps in assisting Nike to build up its skills so as to reach the goal and also helps in increasing profit of the business (Ethical consumer, 2017). The final decision made by Nike was to use a PR campaign so as to build its social image again due to the sweatshop incident.

Conclusion

In accordance with the present study, the conclusion can be drawn that management of Nike must identify and understand their ethical responsibilities because it is their duty to make decisions ethically and take actions that will lead to the benefit of the organisation. This must contain actions and commitments concerning human rights, authority, ethics principles and morals, development of the society as well as the organisation, working hours and compensation to the employees, customer happiness, and relationship with customers and lastly respects social culture and customs.

References

Benn, S., Dunphy, D. and Griffiths, A., 2014. Organizational change for corporate sustainability. Routledge.

Cavusoglu, L. and Dakhli, M., 2017. The Impact of Ethical Concerns on Fashion Consumerism: Case-based Evidence. Markets, Globalization & Development Review, 2(1).

Cooper, R.W., Clapham, S.E., Frank, G.L. and Kemp, R.A., 2015. Ethical Issues for Supply Managers: Then and Now?. Journal of Business and Behavior Sciences, 27(1), p.54.

de los Reyes, G., Scholz, M. and Smith, N.C., 2016. Beyond the'Win-Win': Creating Shared Value Requires Ethical Frameworks.

DesJardins, J.R. and McCall, J.J., 2014. Contemporary issues in business ethics. Cengage Learning.

Ethical consumer. 2017. [Online]. Available through < https://www.ethicalconsumer.org/ethical-company-ratings/nike-ethical-company-ratings.aspx>. [Accessed on 3^rd June 2017].

Johnson, C.E., 2017. Meeting the ethical challenges of leadership: Casting light or shadow. Sage Publications.

La Ferle, C., 2015. The Intersection of Culture and Advertising Ethics in a Global Marketplace. Persuasion Ethics Today, p.162.

Martin, K.E., 2015. Ethical issues in the big data industry. Browser Download This Paper.

Pritchard, M.P. and Burton, R., 2014. Ethical failures in sport business: directions for research. Sport Marketing Quarterly, 23(2), p.86.

Schlegelmilch, B.B., 2016. Global Marketing Ethics and CSR. In Global Marketing Strategy (pp. 195-220). Springer International Publishing.

Shank, M.D. and Lyberger, M.R., 2014. Sports marketing: A strategic perspective. Routledge.

Stewart, K.L., 2014. An ethical analysis of the high cost of low-priced clothing. Journal of Academic and Business Ethics, 8, p.1.

Wilsey, M., & Lichtig, S., n.d. [Online]. Available through < https://web.stanford.edu/class/e297c/trade_environment/wheeling/hnike.html>. [Accessed on 3^rd June 2017].

Yan, L., Wang, H., Ortiz, J. and Huo, D., 2014. A Systemic Examination on Ethical Issues in China's Advertising Industry. International Journal of Business and Social Science, 5(11).