Nine’s business model was based in outsourcing its manufacturing, then using the money it saved on aggressive marketing campaigns. However, the process of outsourcing work internationally proved to be problematic for Nikkei in a variety of ways particularly in regards to low wages provided workers and poor working conditions and environment.
This paper intends to evaluate Jeff Ballerina’s argument against Nikkei, as well as determine how convincing Nine’s espouse was to Ballerina’s allegations. Lastly, strategies are provided as to how Nikkei moves forward after the smoke of the crisis has cleared. Evaluation of Jeff Ballerina’s argument against Nikkei Ballerina’s main argument that “any company has a significant obligation towards even its lowliest workers” is a very convincing one on many levels?social, ethical, and financial.
Companies, such as Nikkei, make large profits and benefit tremendously from workers’ low wages in their international manufacturing companies. After reviewing Exhibit 1 (Nikkei Inc. Financial History 1989-1999) and Exhibits (Summary of Revenue and Expense Profile of Minimum Wage Workers by Demographic Type) it would appear that Nikkei could indeed offer its workers higher wages at least to a level where workers can survive and help their families, some additional benefits, and provide safer working environments in the manufacturing plants in the countries that Nikkei inhibits.
Additionally, from further research and the general tone of the case study it appears that Balling may have personally had some issues with Nikkei and all that it stood for and represented. Furthermore, due to this personal dislike, Balling made an example out of Nikkei although other corporations that utilize Indonesian and Vietnamese laborers were presumably far worse. Furthermore, considering the value chain model by Porter and Kramer, Ballerina’s argument attacks both Nine’s Indonesian Human Resource Management System (SUPPORT ACTIVITIES? compensation) and Operations (PRIMARY ACTIVITIES?sporting apparel and equipment assembly).
Yet, considering Ballerinas perceived dislike for Nikkei, it is not unfair to assume that arguments made were not totally objective. Safety standards and worker age can be universally applied across the globe; forever, “faith wages cannot considering not all countries are developed fully. It’s important to note that a company really has to be careful when interacting with foreign societies. Nine’s response to Ballerina’s allegations?convincing or not? Overall, Nine’s response to Ballerina’s allegations was not convincing at all.
It is not absolutely definitive whether or not consequences of having cheap and irresponsible labor practices abroad could’ve been forecasted; however, extensive research to ensure that policies and culture of international partners are in alignment with your own many is good practice. Nine’s initial response could be summed up as “without an in-house manufacturing facility, the company simply could not be held responsible for the actions of independent contractors”. This response was a total PR blunder, if ever there was one.
All other efforts in the year’s following were half-hearted attempts to address the situation including the internal Code of Conduct & Memorandum of understanding, The Ernst & Young audit, Apparel Industry Partnership, internal Labor Practice Department, and Andrew Young audit. Moreover, had Nikkei proactively cackled the issues immediately before it spiraled out of control the way it did, it is my assumption that a very convincing argument could have been made in regards to Ballerina’s allegations. Crisis is inevitable!
Yet, Jack Welch notes that there are 5 assumptions that can be assumed about how crisis will ) assume the problem is worse than it appears, (2) assume there are no secrets in the world and that everyone will eventually find out everything, (3) assume you and your organization’s handling of the crisis will be portrayed in the worst possible light, (4) assume there will be changes in recesses and people. Almost no crisis ends without blood on the floor, and (5) assume your organization will survive, ultimately stronger for what happened.
Had Nikkei kept these assumptions in the forefront of their mind, then there could have potentially been a more convincing argument presented early on versus years later. There was a terrible lack Of understanding in regards to the situation, as well as foresight on the part of Phil Knight and Nikkei management at the onsite of this crisis. While in the thick of it, it’s hard to see a way out or resolve all that is going on in one single whop.
However, now that the smoke has cleared quite a few strategies and policies, if put in place and implemented effectively would ensure that the same crisis will not happen again. Moving Forward It’s important to note that most companies are made up of human beings and as long as human beings are a part of the equation, there will be mistakes, controversy, blowup, accidents, theft, and fraud (Welch, 2005). It’s the ability to be proactive and have a plan set in place from the beginning to effectively address these issues that decides the success or failure of a company and/or TTS leader(s).
Policies should be adopted and measures taken to proactively identify what the weaknesses were in this particular situation and how they can be improved upon moving forward. The first thought that comes to mind is that Nikkei needed an image turnaround and quickly. It wasn’t until 1 998 when Nikkei faced weak demand and unrelenting criticism, which forced the company to lay off workers that it began to realize it needed to change. This was way too late! A great need arose for the company to generate trust among all of its stakeholders to achieve better results in the future.
A few thing needed to happen in order to combat the growing concerns and issues revolving around low wages and poor working conditions in Nikkei manufacturing firms internationally. Some of these include the following: increasing monitoring and auditing, adopting a set of standards and environmental policies in all factories that would improve air quality, acting ethically in order to satisfy society concerns and expectations in terms of integrity, honesty, and justice.
Additional ways to combat crisis in the future is to correct mistakes immediately, listen to public opinion which is very liable, and be more socially responsible at every level realigning company strategy to address socially and ethically responsible business practices. Additionally, Covey, S (2008) has identified 13 behaviors of high trust leaders, which he notes can be learned and applied by any influencer at any level within any organization.
Consequently, moving forward, Nikkei leaders should consider these valuable behaviors, which could help move the organization through a crisis effectively and come out on the other side a much better company. Below are a few of the behaviors that Covey (2008) mentions loud definitely help Nikkei move forward after crisis: Demonstrate Concern Richard Brannon, Founder of the Virgin Group, quotes “If people know you care, it brings out the best in them. ” Covey (2008) further notes “Genuinely care for others. Show you care. Respect the dignity of every person and every role…
Don’t fake caring. Don’t attempt to be efficient with people. ” Create Transparency Lack of transparency, in my opinion, is one of the reasons why Nikkei faired the way it did during the time span Of Ballerina’s allegations and public outcries for justice. Jack Welch comments “Trust happens when leaders are reentrant. ” Covey (2008) notes “… Get real and genuine. Be open and authentic… Don’t have hidden agendas. Don’t hide information. ” Right Wrongs (I immediately) Covey (2008) notes “Make things right when you are wrong. Apologize quickly… Demonstrate personal humility.
Don’t cover things up. ” The lack of transparency in the beginning made Nikkei look like they were trying to hide something. By not really add resting the real problems at the onset, Nikkei did more harm than help to themselves. Confront Reality Covey (2008) notes that issues should be addressed head on, even the “indispensables. He further note that tough stuff should be addressed directly by confronting the reality, not the person. Practice Accountability The final behavior, which I believe is vital is owning up to not only your success, but failures as well.
Covey (2008) notes that leaders should take responsibility for results. Don’t avoid or shirk responsibility or blame others or point fingers when things go wrong. Ultimately, crisis have a positive element to them. They let us know where things are broken and help us identify solutions so that future similar crisis may be avoided. Welch notes that “learning, is why disasters, in business and tauter, have the potential to make the organizations that survive them so much stronger in the long run (Welch, 2005; Welch, 2005; Crisis Management, Leadership, 2008 . Conclusion In conclusion, Ballerina’s allegations while apparently objective were very valid and convincing. Immediate action is always best and in hindsight, Nikkei not speaking up sooner truly hurt the company and showed a lack of respect and understanding for the need to gain higher wages and improving working conditions. Proactive measures and adequate research are required when conducting business internationally to ensure alignment and to forecast tangentially toxic situations or issues that could affect the company.
Furthermore, by taking into consideration some of the strategies and best courses of action provided, Nikkei would most definitely be prepared for the next crisis that comes their way and come out of it no doubt with “blood on the floor”, but a stronger and better company.