Section D(Case Study) (2 x 3 marks = 6marks)

For Economic Stakeholders

Relation of Supply Chain of a Company.

Issue:

To what extent do business practices contribute to the community in which the organization is based and operating? As organizations are become more global, so to minimize the cost the organizations are relocating their production facilities. It results in loss of jobs at home and these jobs are taken by low paid employees in different part of the world. The positive point about the globalization is that firms can produce the products where it makes most of sense. So, a product which is transported from Hong Kong to USA at different stages of production at least workers of 10 countries are involved in production process. The negative point of this more globalized world is that you cannot take account of how at different subcontractors employees are treatedand there is more employee abuse overseas.

As such, while advocates of offshoring or outsourcing often point to the benefits the process brings to the workers in developing countries who have now some jobs, ultimately, it is not clear if people who are employed because of this globalization are get benefit or not. The people in US are also not happy with loss of blue-collar and white-collar jobs to human resource of other countries as they feel they are denied of an opportunity. Still some of the jobs may have been lost to advance system of manufacturing but still when company works in foreign lands it must also take care of cultural and social issues of a country. The company not only faces the strategic issues but implementation of CSR procedure throughout the organization become difficult due to cultural differences. It also effects companies implantation of CSR in its supply chain operations. To what extent company can implement its ethical values from ethical purchasing to proper disposal of the end product, and if it become a force for positive change?

How firm will deal with a conflict in CSR issue in the supply chain of the company? Also, what will be the effect of the perceived abuse of labor and other CSR related issues on the image of organization at home soil. The people in developing countries are looking as opportunity when any foreign company install its production facility in their country but for people in west the working condition in these countries are not good and, in their view, many fundamental rights of human are compromised.

An important component of this argument, therefore, is the idea of cultural relativism --- to what extent should actions in overseas countries be judge by home countrys moral, ethical and religious standards, and by what extent it has to be judged in historical and cultural context in which they occur? Western NGOs, in particular in particular are accused of actively campaigned against the opening of Western operations in developing countries based on Western notions of acceptable working conditions but they are not able to provide alternative source of investment if the company is forced to withdraw.

In short, while there are instances of either extreme, it is not clear whether outsourcing and other foreign involvement in local communities overseas is absolute good or bad.

Answer the following Questions Related to Case Study

12- Why does NIKE continue to source its production overseas? What advantages does this generate for the firm? What are the disadvantages that result from the decision? Overall, do the benefits of NIKEs decision outweigh the costs? (3)

13- It is fair to make a comparison between the amount NIKE pays its factory workers in Vietnam and the salaries of its CEO and the athletes that endorse the companys products? Give your opinion on the issue.(3)