Advertising or Free Speech
- What ethical issues faced by MNCs in their treatment of foreign workers could bring allegations of misconduct in their operations?
There are several ethical issues that multinationals may face when it comes to how they treat foreign workers. One of these issues is the low wages or the compensation terms, as in the case of Nike, which would pay 0.60 dollars in Pakistan to have a boy make a ball (Luthans & P. Doh, 2018). There are other issues such as job security that the company provides, the working conditions which involve working hours, vacations, sick leaves, among others. These companies also need to be careful and ensure that they do not violate human rights since this could also provide the ground for an ethical issue. Multinationals could also face the problem of discrimination based on gender, race, and even religious affiliations.
- Would the use of third-party independent contractors insulate MNCs from being attacked? Would that practice offer MNCs a great defensive shield against charges of abuse of “their employees”?
From a personal perspective, the use of third-party contractors would defend MNCs from attack. These third contractors take on the responsibility of hiring employees for the company. Thus, technically, these employees do not belong to the MNC. The third-party contractor discussed all the terms and conditions of work. If there are any abusive practices, then the contractor is responsible and not the MNC. The strategy protects them from legal implications. However, the legal attacks could come in other plans. The suing party may argue that the MNC has a social responsibility to monitor the activities of the third-party contractor. One example of such an attack is the case of Apple and Dell, who used Foxconn as their third contractor (Luthans & P. Doh, 2018). The companies came under fire when there were allegations of abuse at Foxconn. The allegations led to the companies pressuring Foxconn to change its methods.
- Do you think that statements by companies that describe ethical social and moral conduct in the treatment of their workers are part of the image those companies create and therefore are part of their advertising message? Do consumers judge companies and base their buying decision on their perceptions of corporate behavior and values? Is the historic “made in” question (e.g., “Made in the USA”) now being replaced by a “made by” inquiry (e.g., “Made by Company X” or “Made for Company X by Company Y”)?
Part of the image of any company is usually what they communicate to the public. Thus, from a personal perspective, statements that describe good moral and social behavior in the treatment of workers are a significant part of the advertising message. Every consumer wants to be associated with a company that upholds good working terms. It is highly unlikely that a consumer will be comfortable buying from a brand that promotes child labor or abuse of employees. About the ‘made in’ and ‘made by’ query, organizations are slowly changing made in to made by. The reason for this is due to globalization. Companies now make their products from different countries and therefore cannot list all those countries. They, therefore, opt to quote the company, which ultimately brings in the ‘made by’ element.
- Given the principles noted in the case, how can companies comment on their positive actions to promote human rights so that consumers will think well of them? Would you propose that a company (a) do nothing, (b) construct a corporate code of ethics, or (c) align itself with some of the universal covenants or compacts prepared by international agencies?
Companies should and must comment on their positive actions to promote human rights. Doing nothing, therefore, is not a viable option in this case. Positive effects make consumers view an organization in a positive light. The companies should construct corporate codes of ethics and align themselves with the universal covenants or compacts prepared by international agencies. In the construction of the corporate code of ethics, the companies must ensure that they remain transparent in the implementation of those codes (Luthans & P. Doh, 2018). The alignment with universal covenants provides an advantage in that they will understand the requirements of doing business in various regions before even venturing into them. They will also have a better brand reputation and image due to their compliance with international standards.
- What does Nike’s continued financial success, despite the lawsuit, suggest about consumers’ reactions to negative publicity? Have American media and NGOs exaggerated the impact of a firm’s labor practices and corporate social responsibility on its sales? How should managers of an MNC respond to such negative publicity?
Before coming to a conclusion on the effects of the lawsuit to Nike’s success, it is imperative to consider the period in which the incidents occurred. First, the published article was in 1996. The trial did not happen until 2002. In 1996, there was little usage of the internet as an information dissemination mode. Thus, the news could have failed to reach the broad consumer base that Nike had reducing the impacts of such a case to the company.
Additionally, it took a long time before the lawsuit happened, meaning that the urgency or the intensity of the case was below what it would have been had it been immediately after publishing the incident. However, if such a scenario were to happen today, there are likely to be more adverse effects due to the quick spread of information. Consumers would even call for the boycott of Nike’s products. Thus, the consumer’s reaction to negative publicity depends also on the advertising that the issue gets and the number of people that it reaches.
From a personal perspective, America’s media and NGOs have exaggerated the impact of a firm’s labor practices and CSR initiatives on its sales. Most of these firms usually take precautions if they analyze and realize that their methods will affect their sales. Therefore most of the time, the impact is quite minimal.
Unfavorable publicity could efficiently finish off a company that does not address it. Thus, managers should always be ready to address these issues. They can do this by touting around the problem and providing information about the incident. Sometimes, they will have to admit to wrongdoing but ensure that they magnify the positive traits of the company while at it. Accepting responsibility helps the company gain favor with the public as they view the organization as one willing to make a mence for their wrong actions.
Luthans, F., & P. Doh, J. (2018). International Management Culture, Strategy, and Behavior. New York: Mc Graw Hill