UNETHICAL BUSINESS PRACTICES OF

WALLMART AND NIKE

A PROJECT REPORT




SUBMITTED TO
Prof. Ratna Bali Mitra


SUBMITTED BY
Name of Students Roll No.
G.Prathap B/031
Jayesh N Patel B/059
Jenin Solomon B/020
M. Balaji B/011
Abhijeet Chatterje B/057
B.K.M.Bhargavi B/013




October 2013



ISBR BUSINESS SCHOOL
BANGALORE

INTRODUCTION OF WALLMART

Wal-Mart Stores, Inc., branded as Walmart is an
American multinational retail corporation that runs chains of large discount department stores
and warehouse stores. The company is the world's second largest public corporation,
according to the Fortune Global 500 list in 2013, the biggest private employer in the world
with over two million employees, and is the largest retailer in the world. Walmart remains a
family-owned business, as the company is controlled by the Walton family, who own a 48
percent stake in Walmart. It is also one of the worlds most valuable companies.
The company was founded by Sam Walton in
1962, incorporated on October 31, 1969, and publicly traded on the New York Stock
Exchange in 1972. It is headquartered in Bentonville, Arkansas. Walmart is also the
largest grocery retailer in the United States. In 2009, it generated 51 percent of its
US$258 billion sales in the U.S. from grocery business.

It also owns and operates the Sam's
Club retail warehouses in North America.
In the late 1980s and early 1990s the company rose from a regional
to national giant. By 1988, Wal-Mart was the most profitable retailer in the US

and by
October 1989 it had become the largest in terms of revenue.

Geographically limited to the
South and Lower Midwest up to the mid 1980s, by the early 1990s Walmart's presence
spanned coast to coast - Sam's Club opened in New Jersey in November 1989 and the first
California outlet opened in Lancaster on July 28, 1990. A Walmart in York,
Pennsylvania was opened in October 1990 bringing the main store into the Northeast.
Walmart has 8,500 stores in 15 countries, under 55 different names.
The company operates under the Walmart name in the United States, including the 50 states
and Puerto Rico. It operates in Mexico as Walmex, in the United Kingdom as Asda, in Japan
as Seiyu, and in India as Best Price. It has wholly owned operations in Argentina, Brazil, and
Canada. Walmart's investments outside North America have had mixed results: its operations
in the United Kingdom, South America, and China are highly successful, whereas ventures in
Germany and South Korea were unsuccessful.












Wal-Marts Unethical Business Practices
Allegations of bribery in Mexico & India:
In 2012 The New York Times reported that Walmart had been made
aware eight years earlier that executives of Walmart Mxico, its subsidiary in that country,
had paid millions of dollars in bribes to local officials to expedite permits for construction
and operation of its many stores in that country. The company had opened many stores in
Mexico in the late 1990s and early 2000s, attempting to widely establish itself before
competitors could. Sergio Cicero, a lawyer who had been responsible for obtaining those
permits and was bitter about being passed over for the position of general counsel with
Walmart Mxico provided the company's corporate general counsel's office with evidence
showing that the company had made large payments to gestores, workers who deal with
bureaucracies on behalf of citizens and businesses, with coded indications that the money was
being passed on to officials to expedite permits.
Company officials hired a veteran FBI agent to conduct a preliminary inquiry, instead of
hiring an outside law firm as it usually did for major inquiries, such as a similar one in 2003
which found that Walmart Mxico had been helping high-volume customers evade that
country's sales taxes. The special investigative team found evidence corroborating almost all
of Cicero's allegations, and evidence suggesting that the bribery had been even more
extensive, including $16 million in "donations" to local politicians and their organizations.
They recommended opening a full investigation, and possibly notifying the Justice
Department, as it appeared that both Mexican law and the U.S. Foreign Corrupt Practices
Act (FCPA) had been violated.
Executives at Walmart Mxico chafed at the investigation, reportedly complaining that that
was how business was done in the country. They told their counterparts at corporate
headquarters that the investigators were being too aggressive, and some of the company's top
executives apparently agreed. Feeling Walmart had had enough bad publicity in recent years,
they allowed the investigation to be concluded by a short report from Jos Luis
Rodrguezmacedo, the head of Walmart Mxico, who had himself been suspected of
involvement. It largely blamed Cicero, claiming he had fabricated the allegations to conceal
his own embezzlement from the company with the help of the gestores, one of whom was his
wife's law partner. Some Walmart executives found the report incomplete and contradictory,
but the investigation was closed. None of the Mexican executives investigated were ever
disciplined, and some were even promoted afterwards.
In December 2011, several months before the story broke, Walmart announced it had begun
an internal review of its FCPA compliance procedures. It was unclear how the Justice
Department might respond. While the FCPA's five-year statute of limitations appeared to bar
prosecution under that statute, falsified financial statements in the years since could be seen
as obstruction of justice under the Sarbanes-Oxley Act, and acts taken to conceal the bribery
investigation subsequent to 2007 could constitute conspiracy.
Where as in India, for nearly six years, Wal-Mart, which has been running wholesale stores in
India since 2009, lobbied with the government to change the rules in order to gain access to a
lucrative $350 billion retail market. Bharti Enterprises is the companys local joint venture
partner. The retail chain has not opened a single new wholesale store in the country since
October last year despite announcing plans to open eight this year. It has 20 such stores in
India. And even as the Union Cabinet permitted up to 51 percent FDI in multi-brand retail
last September, Wal-Mart is yet to make a proposal to the government for setting up retail
stores in the country.
According to media reports, speculation is rife that Jain was under pressure to quit ever since
a global internal investigation was launched to find out whether Wal-Mart units, including in
India, paid bribes as part of their business operations. The investigation was triggered after
cases of bribery surfaced from its Mexico subsidiary that spent millions of dollars to bribe
government officials there to expand faster.
The probe put brakes on the Indian ventures aggressive expansion plans. Last September,
Bharti Wal-Mart had suspended its chief finance officer and the entire legal team as part of
this investigation. A company source told the Business Standard that the investigation might
have been completed now, but many more heads might roll as part of a clean-up act. Even the
Indian government has set up an enquiry committee to probe if the company made lobbying-
related payments in India, whose report is yet to be made public.
Another case that has hogged the limelight is the Enforcement Directorates probe into Wal-
Marts Indian investments. The agency is investigating the alleged violations of foreign direct
investment norms by the company. The company had invested Rs 455.8 crore in Cedar
Support Services, a subsidiary of Bharti Ventures and the holding company for Bharti Retail,
which runs the front-end Easyday stores. The investment was made allegedly before the
government put in place the law regarding FDI in the multi-brand retail. The investment was
termed illegal because it went against FDI rules under the Foreign Exchange Management
Act and the Prevention of Money Laundering Act.

Unfair Treatment of Women Employees:
WAL-MART has been accused of discriminating against women. They
are underpaid, that is men are more paid than women. There are over 70 percent of women
working at Wal-Mart, but only a small amount of those women are managers. So, men are
holding more management positions than women. A group of 6 women (current and former)
employees in California prosecute Wal-Mart for discrimination. According to Hoovers
handbook of American Business: In June 2001 a group of six current and former female
Wal-Mart employees filed a sex discrimination lawsuit (seeking to represent up to 1.6 million
current and former Wal-Mart workers) against the company.An U.S judge certified that
these 6 women represent all female employees of Wal-Mart.
Wages:
The activist group Los Angeles Alliance for a New Economy (LAANE)
said "in 2006 Walmart reports that full-time hourly associates received, on average, $10.11
an hour." It further calculated that working 34 hours per week an employee earns $17,874 per
year and claimed that is about twenty percent less than the average retail worker. (The
number of hours the "average retail worker" worked was not specified.) The report from
LAANE further opines that this pay is "over $10,000 less than what the average two-person
family needs. Walmart managers are judged, in part, based on their ability to control payroll
costs. Some say this puts extra pressure on higher-paid workers to be more productive.
Walmart insists its wages are generally in line with the current local market in retail labour.
Other critics have noted that in 2001, the average wage for a Walmart Sales Clerk was $8.23
per hour, or $13,861 a year, while the federal poverty line for a family of three was $14,630.
Walmart founder Sam Walton once said, "I pay low wages. I can take advantage of that.
We're going to be successful, but the basis is a very low-wage, low-benefit model of
employment."
In August 2006, Walmart announced that it would roll out an average pay increase of 6% for
all new hires at 1,200 U.S. Walmart and Sam's Club locations, but at the same time would
institute pay caps on veteran workers. While Walmart maintains that the measures are
necessary to stay competitive, critics believe that the salary caps are primarily an effort to
push higher-paid veteran workers out of the company.
In 2008, Walmart agreed to pay at least $352 million to settle lawsuits claiming that it forced
employees to work off the clock. "Several lawyers described it as the largest settlement ever
for lawsuits over wage violations."
Because Walmart employs part-time and relatively low paid workers, some workers may
partially qualify for state welfare programs. This has led critics to claim that Walmart
increases the burden on taxpayer-funded services. A 2002 survey by the state of Georgia's
subsidized healthcare system, PeachCare, found that Walmart was the largest private
employer of parents of children enrolled in its program; one quarter of the employees of
Georgia Walmarts qualified to enroll their children in the federal subsidized healthcare
system Medicaid. A 2004 study at the University of California, Berkeley charges that
Walmart's low wages and benefits are insufficient, and although decreasing the burden on the
social safety net to some extent, California taxpayers still pay $86 million a year to Walmart
employees.
On September 4, 2008, the Mexican Supreme Court of Justice ruled that Wal-Mart de
Mexico, the Mexican subsidiary of Walmart, must cease paying its employees in part with
vouchers redeemable only at Wal-Mart store.
Poor working conditions:
Walmart has also faced accusations involving poor working conditions
of its employees. For example, a 2005 class action lawsuit in Missouri asserted
approximately 160,000 to 200,000 people who were forced to work off-the-clock, were
denied overtime pay, or were not allowed to take rest and lunch breaks. In 2000, Walmart
paid $50 million to settle a class-action suit that asserted that 69,000 current and former
Walmart employees in Colorado had been forced to work off-the-clock. The company has
also faced similar lawsuits in other states, including Pennsylvania, Oregon and Minnesota.
Class-action suits were also filed in 1995 on behalf of full-time Walmart pharmacists whose
base salaries and working hours were reduced as sales declined, resulting in the pharmacists
being treated like hourly employees.
Walmart has also been accused of ethical problems. It is said that the Walmart employees are
gender discriminated when trying to be hired and discriminated against in the work
area. Wal-Mart v. Dukes was a discrimination case on behalf of more than 1.5 million current
and former female employees of Walmarts 3,400 stores across the United States. (9th circuit
2007) Dr. William Bliebly who evaluated Walmarts employment policies "against what
social science research shows to be factors that create and sustain bias and those that
minimize bias (Bliebly) and he finished by saying, the men and women not being created
equal in the workforce is what Walmart is doing and what they should essentially not be
doing.
On October 16, 2006, approximately 200 workers on the morning shift at a Walmart Super
Center in Hialeah Gardens, Florida walked out in protest against new store policies and
rallied outside the store, shouting "We want justice" and criticizing the company's recent
policies as "inhuman." This marks the first time that Walmart has faced a worker-led revolt of
such scale, according to both employees and the company. Reasons for the revolt included
cutting full-time hours, a new attendance policy, and pay caps that the company imposed in
August 2006, compelling workers to be available to work any shift (day, swing or night), and
that shifts would be assigned by computers at corporate headquarters and not by local
managers. Walmart quickly held talks with the workers, addressing their concerns. Walmart
asserts that its policy permits associates to air grievances without fear of retaliation.
The 2004 report by U.S. Representative George Miller alleged that in ten percent of
Walmart's stores, night time employees were locked inside, holding them prisoner. There has
been some concern that Walmart's policy of locking its night time employees in the building
has been implicated in a longer response time to dealing with various employee emergencies,
or weather conditions such as hurricanes in Florida. Walmart said this policy was to protect
the workers, and the store's contents, in high-crime areas and acknowledges that some
employees were inconvenienced in some instances for up to an hour as they had trouble
locating a manager with the key. However, fire officials confirm that at no time were fire
exits locked or employees blocked from escape. Walmart has advised all stores to ensure the
door keys are available on site at all times.
In January 2004, The New York Times reported on an internal Walmart audit conducted in
July 2000, which examined one week's time-clock records for roughly 25,000
employees. According to the Times, the audit, "pointed to extensive violations of child-labor
laws and state regulations requiring time for breaks and meals," including 1,371 instances of
minors working too late, during school hours, or for too many hours in a day. There were
60,767 missed breaks and 15,705 lost meal times. Walmarts vice president for
communications responded that company auditors had determined that the methodology used
was flawed, and the company "did not respond to it in any way internally."
Walmart has been accused of allowing undocumented immigrants to work in its stores. In one
case, federal investigators say Walmart executives knew that contractors were using
undocumented immigrants as they had been helping the federal government with an
investigation for the previous three years. Some critics said that Walmart directly hired illegal
immigrants, while Walmart claims they were employed by contractors who won bids to work
for Walmart.
On October 23, 2003, federal agents raided 61 Walmart stores in 21 U.S. states in a
crackdown known as "Operation Rollback", resulting in the arrests of 250 nightshift janitors
who were undocumented. Following the arrests, a grand jury convened to consider charging
Walmart executives with labour racketeering crimes for knowingly allowing undocumented
immigrants to work at their stores. The workers themselves were employed by agencies
Walmart contracted with for cleaning services. Walmart blamed the contractors, but federal
investigators point to wiretapped conversations showing that executives knew some workers
did not have the right papers. The October 2003 raid was not the first time Walmart was
found using unauthorized workers. Earlier raids in 1998 and 2001 resulted in the arrests of
100 workers without documentation located at Walmart stores around the country.
In November 2005, 125 alleged undocumented immigrants were arrested while working on
construction of a new Walmart distribution center in eastern Pennsylvania. According to
Walmart, the workers were employees of Walmart's construction subcontractor.
Allegations of wrongful termination:
On January 13, 2011, four employees at a Walmart in Layton, Utah were
confronted by a shoplifter who pulled out a handgun and took one of the employees hostages
in an attempt to leave a small, closed office. The other three employees disarmed and
subdued the shoplifter, and all four held onto the man until police arrived. A week later, the
four employees were fired for violating a company policy requiring employees to
"disengage" and "withdraw" from any situation involving a weapon. The four fired
employees, together with two other Walmart employees fired after subduing violent
customers, filed a lawsuit against the company in U.S. federal court in June 2011.
On July 9, 2013, an employee at a Walmart in Kemptville, Ontario confronted a customer
who had left his dog locked in his truck with the windows rolled up in the store's parking lot,
and she then called police when the customer refused to rectify the situation. The employee
was fired later the same day, reportedly on the grounds of "being rude to a customer", after
rejecting instructions from her manager that such incidents should be reported to the store
management rather than directly to the police.
Sweatshop Conditions:
The world's largest retailer, Wal-Mart Stores (WMT), is being accused of
buying school uniforms that were made under extreme sweatshop conditions at a factory in
Bangladesh.
The JMS Garments Factory in Chittagong, Bangladesh, produces school uniforms that are
sold in Wal-Mart stores under the Faded Glory brand name. A report from Sweat Free
Communities, an anti-sweatshop activist group based in Bangor (Me.), found that workers at
the factory work up to 19-hour shifts to finish Wal-Mart's orders under tight deadlines; are
made to stand for hours as punishment for arriving late to work; and are frequently subject to
verbal abuse and kicking or beatings. Some workers earn as little as $20 each month, the
group sayseven lower than the country's legal minimum wage of $24 per month.
Employees using prescription drugs:
In November 2009, Joseph Casias was fired from Walmart in Battle Creek,
Michigan, for using medical marijuana. Joseph Casias was a cancer patient with a
prescription for marijuana. Wal-Mart spokesman Greg Rossiter claimed that Walmart policy
is to terminate employees who take certain prescription medications, and he believed that this
policy complied with the law.

Health insurance:
As of October 2005, Walmart's health insurance covered 44% or
approximately 572,000 of its 1.3 million U.S. workers. In comparison, Walmart rival and
wholesaler Costco insures approximately 96% of its eligible workers. Walmart spends an
average of $3,500 per employee for health care, 27% less than the retail-industry average of
$4,800. When asked why so many Walmart workers choose to enrol in state health care plans
instead of Walmart's own plan, Walmart CEO Lee Scott acknowledged that some states'
benefits may be more generous than Walmart's own plan: "In some of our states, the public
program may actually be a better value with relatively high income limits to qualify, and
low premiums." Critics of Walmart argue in Wal-Mart: the High Cost of Low Price that
employees are paid so little they cannot afford health insurance.
According to a September 2002 survey by the state of Georgia, one in four children of
Walmart employees were enrolled in PeachCare for Kids, the state's health-insurance
program for uninsured children, compared to the state's second-biggest employer, Publix,
which had one child in the program for every 22 employees. A December 2004 nationwide
survey commissioned by Walmart showed that the use of public-assistance health-care
programs by children of Walmart workers was at a similar rate to other retailers' employees
and at rates similar to the U.S. population as a whole.
On October 26, 2005, a Walmart internal memo sent to the firm's Board of Directors advised
trimming over $1 billion in health care expenses by 2011 through measures such as attracting
a younger, implicitly healthier work force by offering education benefits. The memo also
suggested giving sedentary Walmart staffers, such as cashiers, more physically demanding
tasks, such as "cart-gathering," and eliminating full-time positions in favour of hiring part-
time employees who would be ineligible for the more expensive health insurance and several
policy proposals which may violate the Americans with Disabilities Act of 1990. The memo
also accused Walmart's lower paid employees of abusing emergency room visits, "possibly
due to their prior experience with programs such as Medicaid," whereas such visits may
actually be due to the reduced ability of uninsured or underinsured people to make timely
appointments to see a regular physician. Critics point to this internal memo as evidence that
Walmart purports to be generous with its employee benefits, while in reality the company is
working to cut such benefits by reducing the number of full-time and long-term employees
and discouraging supposedly unhealthy people from working at Walmart.
Labor union opposition:
Walmart has been criticized for its policies against labor unions. Critics
blame workers' reluctance to join the labor union on Walmart anti-union tactics such as
managerial surveillance and pre-emptive closures of stores or departments who choose to
unionize. Walmart states that it is not anti-union but, "pro-associate," arguing that its
employees do not need to pay third parties to discuss problems with management as the
company's open-door policy enables employees to lodge complaints and submit suggestions
all the way up the corporate ladder. In 1970, company's late founder Sam Walton resisted a
unionization push by the Retail Clerks International Union in two small Missouri towns by
hiring a professional union buster to conduct an anti-union campaign. On the union buster's
advice, Walton also took steps to show his workers on how the company had their best
interests in mind, encouraging them to air concerns with managers and implementing a profit-
sharing program. A few years later, Walmart hired a consulting firm, Alpha Associates, to
develop a union avoidance program.
In 2000, meat cutters in Jacksonville, Texas voted to unionize and Walmart subsequently
eliminated in-house meat-cutting jobs in favor of pre-packaged meats on the claims that it cut
costs and was a preventive measure to lawsuits. Walmart claimed that the nationwide closing
of in-store meat packaging had been planned for many years and was not related to the
unionization. In June 2003, a National Labor Relations Board judge ordered Walmart to
restore the meat department to its prior structure, complete with meat-cutting, and to
recognize and bargain with the union over the effects of any change to case-ready meat sales.
Walmart's anti-union policies also extend beyond the United States. The documentary Wal-
Mart: The High Cost of Low Price, shows one successful unionization of a Walmart store
in Jonquiere, Quebec (Canada) in 2004, but Walmart closed the store five months later
because the company did not approve of the new "business plan" a union would require. In
September 2005, the Qubec Labor Board ruled that the closing of a Walmart store amounted
to a reprisal against unionized workers and has ordered additional hearings on possible
compensation for the employees, though it offered no details.
In March 2005, Walmart executive Tom Coughlin was forced to resign from its Board of
Directors, facing charges of embezzlement. Coughlin claimed that the money was used for an
anti-union project involving cash bribes paid to employees of the United Food and
Commercial Workers Union in exchange for a list of names of Walmart employees that had
signed union cards. He also claimed that the money was unofficially paid to him, by
Walmart, as compensation for his anti-union efforts. In August 2006, Coughlin pleaded guilty
to stealing money, merchandise, and gift cards from Walmart, but avoided prison time due to
his poor health. He was sentenced to five years probation and required to pay a $50,000 fine
and $411,000 in restitution to Walmart and the Internal Revenue Service. A U.S. attorney has
stated that no evidence was found to back up Coughlin's initial claims, and Walmart
continues to deny the existence of the anti-union program, though Coughlin himself
apparently restated those claims to reporters after his sentencing.
Poorly-run and understaffed stores:
An April 2013 article in Time Business & Money reported that some
Walmart stores have cut labor hours so much that they are having trouble physically moving
merchandise from the back of the store onto shelves. This is crucial for retail efficiency, for
the quicker merchandise is sold, the less carry time Walmart or its suppliers have to finance.
However, even with these problems, Walmart is still currently performing better than Target
in this regard, turning over its entire inventory 8 times a year as compared to 6.4 for Target.
In February 2013, Walmart received an American Customer Satisfaction Index rating of 71 as
compared to 81 for Target, placing Walmart last for the year among retail and department
stores. According to Bloomberg News, this marks the sixth year in a row Walmart has either
finished last or tied for last.
An April 2013 New York Times article cites Supermarket News that Walmart's grocery prices
are usually about 15 percent cheaper than competitors. At the start of 2007, the company had
an average of 338 employees for each Walmart and Sam's Club store in the United States,
and by April 2013, this had reduced to an average of 281 employees per store. Terrie
Ellerbee, associate editor of grocery publication The Shelby Report, traced the problem to
2010 when Walmart reduced the number of different merchandise items carried in an attempt
to make stores less cluttered. Customers did not like this change, and Walmart added the
merchandise back, but did not add employees back.
According to a March 2013 Bloomberg News article, during the last five years Walmart
added 455 U.S. stores for a 13% increase. During this same period, its overall U.S.
employees including Sam's Clubs employees went down ever so slightly at 1.4% which
translates to a reduction of 20,000 employees. In Wisconsin, an employee who oversees
grocery deliveries and who is a member of OUR Walmart reports that the store is a long way
from the previous mantra of in the door and to the floor. Instead, merchandise ready for the
sales floor remains on pallets and in steel bins in the back of the store with no passable
aisles. Zeynep Ton, a visiting assistant professor in the operations management group at
MIT's Sloan School of Management, states that companies can get in a downward spiral
where too few labor hours can lead to operational problems and lower sales, and these
reduced sales then become a rationale to reduce labor hours even further. It requires a wake-
up call at a higher level, she said. A customer in California said, You wait 20, 25 minutes
for someone to help you, then the person was not trained on mixing paint. It was like; you
have to help them help you. This same customer reported he could not find products he
wanted to buy, such as men's dress shirts which were only available in unpopular colours and
in very large or small sizes. He said, Pretty soon, they were even out of those. I would
literally check every so often at different Wal-Marts. They would go two or three months
with the shelves looking exactly the same.

Imports and globalization:
As a large customer to most of its vendors, Walmart openly uses its
bargaining power to bring lower prices to attract its customers. The company negotiates
lower prices from vendors. For certain basic products, Walmart "has a clear policy" that
prices go down from year to year. If a vendor does not keep prices competitive with other
suppliers, they risk having their brand removed from Walmart's shelves in favor of a lower-
priced competitor. Critics argue that this pressures vendors to shift manufacturing jobs to
China and other nations, where the cost of labor is less expensive.
While Sam Walton was alive, Walmart had a "Buy American" campaign, but it was exposed
shortly after he died that signs saying "Buy American" were on bins of Asian made products.
Yet by 2005, about 60% of Walmart's merchandise was imported, compared to 6% in 1984,
although others estimated the percentage was 40% from the beginning. In 2004, Walmart
spent $18 billion on Chinese products alone, and if it were an individual economy, the
company would rank as China's eighth largest trading partner, ahead of Russia, Australia, and
Canada. One group estimates that the growing U.S. trade deficit with China, heavily
influenced by Walmart imports, is estimated to have moved over 1.5 million jobs that might
otherwise be in America to China between 1989 and 2003. According to the American
Federation of Labor and Congress of Industrial Organizations (AFL-CIO), "Walmart is the
single largest importer of foreign-produced goods in the United States", their biggest trading
partner is China, and their trade with China alone constitutes approximately 10% of the total
U.S. trade deficit with China as of 2004.

Overseas labor concerns:
Walmart has been criticized for not providing adequate supervision of its
foreign suppliers. It has also been criticized for using sweatshops and prison labor. For
example, in 1995, Chinese dissident Harry Wu charged that Walmart was contracting prison
labor in Guangdong Province. However, Walmart says it does not use prison labor. There
have also been reports of teenagers in Bangladesh working in sweatshops 80 hours per week
at $0.14 per hour, for Walmart supplier Beximco. The documentary film Wal-Mart: The High
Cost of Low Price shows images of factories that produce goods for Walmart that appear in
poor condition, and factory workers subject to abuse and conditions the documentary
producers consider inhumane.
According to Walmart and many self-described advocates of free trade, comparisons of wage
levels between vastly different countries is not a useful way to assess the fairness of a trade
policy. The company also points out that wages paid to overseas workers are comparable to
or exceed local prevailing wages. In that case, the company claims that the overseas
manufacturing jobs it creates are often an improvement in the quality of life for its
employees. They have also drawn attention to the fact that factory jobs with its suppliers are
often safer and healthier than local alternatives, which may include prostitution, the drug
trade, or scavenging.
Walmart currently uses monitoring which critics say is inadequate and "leaves outsiders
unable to verify" conditions. Since Walmart will not release its audits or factory names,
outside organizations are left to simply take Walmart's word. Critics suggest an agency such
as Social Accountability International or the Fair Labor Association should do the
monitoring. In 2004, Walmart began working with Business for Social Responsibility, a San
Francisco, California-based nonprofit organization, to reach out to groups active in
monitoring overseas plants.
In June 2006, Walmart was excluded from the investment portfolio of The Government
Pension Fund of Norway, which held stock values of about $430 million in the company, due
to a social audit into alleged labor rights violations in Walmart operations in the United
States, Canada, Latin America, Africa, and Asia. Although Walmart did not respond to
questions from the fund's auditors, it later claimed the decision "[doesn't] appear to be based
on complete information".
On November 24, 2012 a fire in a Bangladesh clothing factory resulted in the death of 112
workers. Survivors said that fire extinguishers didn't work, an exit door was locked, and that
when the fire alarm went off, bosses told workers to return to their sewing machines. Victims
were trapped or jumped to their deaths from the eight-story building, which had no fire
escapes or exits. Initially Walmart said it could not confirm that it had ever sourced apparel
from the factory, however photos taken by Bangladeshi labor activists showed Walmart-
branded clothing present in the factory after the fire. Walmart later said that a supplier had
subcontracted work to the factory "in direct violation of our policies." However, on
December 4, documents revealed that at least five supplier companies had been using the
Bangladesh factory to provide apparel for Walmart and its subsidiary Sams Club during the
past year. It was also disclosed in a November 24, New York Times article that officials who
had attended a 2011 Bangladesh meeting to discuss factory safety in the garment industry
said that the Walmart official there had played the lead role in blocking an effort to have
global retailers pay more for apparel to help Bangladesh factories improve their electrical and
fire safety.
Taxes:
Until the mid-1990s, Walmart took out corporate-owned life
insurance policies on its employees including "low-level" employees such as janitors,
cashiers, and stockers. This type of insurance is usually purchased to cover a company
against financial loss when a high-ranking employee (i.e. management) dies, and is usually
known as "Key Man Insurance". Critics derided Walmart as buying what they called "Dead
Peasants Insurance" or "Janitor Insurance." Critics, as well as the U.S. Internal Revenue
Service, charge that the company was trying to profit from the deaths of its employees, and
take advantage of the tax law which allowed it to deduct the premiums. The practice was
stopped in the mid-1990s when the federal government closed the tax deduction and began to
pursue Walmart for back taxes.
Product selection:
Walmart's product selection has been criticized by some groups in the
past, primarily as viewed as a promotion of a particular ideology or as a response to its
original rural, religious and conservative target market. In 2003, Walmart removed
certain men's magazines from its shelves, such as Maxim, FHM, and Stuff, citing customer
complaints regarding their racy content. Later that year, it decided to partly obscure the
covers of Cosmopolitan, Marie Claire, and Redbook on store shelves due to "customer
concerns", and refused to stock an issue of Sports Illustrated's swimsuit special because it
took exception to one photograph. It has also refused to sell the December 2011 issue
of WWE Magazine due to its controversial cover depicting The Rock doused with fire.
Since 1991, Walmart also has not carried music albums marked with the Recording Industry
Association of America's (RIAA's) Parental Advisory Label (contradictory to the allowance
of R-rated movies and video games rated Mature), although it carries edited versions of such
albums, with obscenities removed or overdubbed with less offensive lyrics. In one example in
2005, Walmart rejected the original cover of country singer Willie
Nelson's reggae album, Countryman, which featured marijuana leaves, in an apparent pro-
marijuana statement. To satisfy Walmart, the record label, Lost Highway Records, issued the
album with an alternative cover, without recalling the original cover. Walmart has never
carried Marilyn Manson albums, solely because of the controversy surrounding the group, but
recently began selling Nine Inch Nails albums after rejecting them for years. In fact, some
albums that do not carry "Parental Advisory" stickers include profanities and are not edited.
Such albums include Pink Floyd's The Dark Side of the Moon and Arctic Monkeys' Whatever
People Say I Am, That's What I'm Not. In 2009 Green Day refused to make an edited version
of their album 21st Century Breakdown for Walmart, with front man Billie Joe
Armstrong claiming "You feel like you're in 1953 or something", thus the album is not
carried by Walmart stores. However, Walmart's policy on carrying albums with the Parental
Advisory Label seems to vary by country, as albums containing the label can be found in
Canadian Walmart stores, for example.
In 1999, Walmart announced that it would not stock emergency contraception pills in its
pharmacies, not citing any particular reasons except for a "business decision" that was made
earlier. The move was criticized by family planning advocates, citing that women in small
towns where Walmart pharmacies had little competition would have greater difficulties in
obtaining the drug. The decision was challenged in 2006, as three Massachusetts women filed
suit against the company after they were unable to purchase emergency contraception at their
local Walmart stores, resulting in a ruling that required Walmart to stock the drug in all of its
pharmacies in Massachusetts. Expecting that other states would soon do the same, Walmart
reversed its policy and announced that it would begin to stock the drug nationwide, while at
the same time maintaining its conscientious objection policy, allowing any Walmart
pharmacy employee who does not feel comfortable dispensing a prescription to refer
customers to another pharmacy.
Walmart has also been criticized for selling some controversial products. For example, in
2004 Walmart carried the anti-Semitic hoax The Protocols of the Elders of Zion in its online
catalogue. The Jewish civil rights organization Anti-Defamation League wrote to the
President of Walmart on September 2008 noting the text "has been the major weapon in the
arsenals of anti-Semites around the world," and called on Walmart to, "unequivocally state
the nature of the book and to disassociate itself from any endorsement of it." Walmart
stopped selling the book shortly thereafter.












INTRODUCTION OF NIKE
Nike, Inc is an American multinational corporation that is engaged in the
design, development and worldwide marketing and selling of footwear, apparel, equipment,
accessories and services. The company is headquartered near Beaverton, Oregon, in
the Portland metropolitan area, and is one of only two Fortune 500 companies headquartered
in Oregon. It is one of the world's largest suppliers of athletic shoes and apparel and a major
manufacturer of sports equipment, with revenue in excess of US$24.1 billion in its fiscal year
2012 (ending May 31, 2012). As of 2012, it employed more than 44,000 people worldwide.
The brand alone is valued at $10.7 billion, making it the most valuable brand among sports
businesses.
The company was founded on January 25, 1964 as Blue Ribbon Sports by Bill
Bowerman and Phil Knight, and officially became Nike, Inc. on May 30, 1971. The company
takes its name from Nike (Greek , pronounced), the Greek goddess of victory. Nike
markets its products under its own brand, as well as Nike Golf, Nike Pro, Nike+, Air
Jordan, Nike Skateboarding, and subsidiaries including Hurley International and Converse.
Nike also owned Bauer Hockey (later renamed Nike Bauer) between 1995 and 2008, and
previously owned Cole Haan and Umbro. In addition to manufacturing sportswear and
equipment, the company operates retail stores under the Niketown name. Nike sponsors many
high-profile athletes and sports teams around the world, with the highly recognized
trademarks of "Just Do It" and the Swoosh logo.
Nike's world headquarters are surrounded by the city of Beaverton, but are
within unincorporated Washington County. The city attempted to forcibly annex Nike's
headquarters, which led to a lawsuit by Nike, and lobbying by the company that ultimately
ended in Oregon Senate Bill 887 of 2005. Under that bill's terms, Beaverton is specifically
barred from forcibly annexing the land that Nike and Columbia Sportswear occupy in
Washington County for 35 years, while Electro Scientific Industries and Tektronix receive
the same protection for 30 years.











Nikes unethical business practices
Love those Nike shoes youre wearing? Have you ever thought how they
were made, who made them, and at what price they were made at? I bet you probably dont. I
bet that you see those Nike shoes at the store, and think to yourself, oh I like those shoes, I
have to have them, and then buy them. What you dont know is that those pair of shoes you
just bought were probably made in a third world factory by employees who are probably
working in harsh working conditions. These factories are not owned and operated by Nike,
but contracted by Nike. Nike chooses to locate the majority of their production in such
countries because of the abundance of cheap labor. Nike contracts factories around the world
in effort to get the best product for the cheapest price made, without concern for contracted
factory employee. Nike has not been concerned about what goes on in these factories only
that the product is made, because Nike is not in the business for Human Rights, theyre in the
business of athletic shoes sales.
The Ethical Dilemma
Nike has been accused with human rights violations. The charges that were made against
Nike include the following: the use of child labor in factories, unsafe working conditions
including exposure to toxic chemicals and the use of machinery without the proper safety
precautions, pay below minimum wage and forced overtime hours. The contracted factories
Nike uses to produce its shoes have not operated in a way as to promote human rights. This
becomes an ethical dilemma for Nike. The ethical dilemma Nike faces is whether or not to
continue to benefit from cheap labor practices or spend more money to allow the contracted
factories to improve its working conditions. Although Nike is profiting from the cheap labor
cost of production, the contracted factory is employing children to make the product. At first
glance Nike turns a blind eye to the business practices; however, once the media is alerted
about the situation, Nike begrudgingly is forced to do something about the matter because of
how the consumers react. Nikes Code of Conduct now states that Nike opposes child labor
and that Nike has set age standards at 16 for apparel and 18 for footwear factories, (Code
of Conduct).
In factories in Vietnam, workers were exposed to Toluene, a reproductive toxin, at 177 times
the legal limit (Nikes Labour Practices). They were also exposed to other chemicals and
glue without proper safety equipment. The factory workers lives have been severely
impacted by this because of the lack of concern for workers safety. By not providing the
proper safety equipment to perform a job and exposing workers to toxic chemicals that will
reduce workers life spans dramatically, this is unethical and a huge human rights violation.
Nike now ensures that all factories provide the right safety equipment for employees to do
their job.
Nike has been accused of not paying a living-wage which is unethical and another human
rights violation. A living wage is considered a pay that is able to supply basic necessities for a
small family (Connor). In Vietnam, workers receive about $37 a month, which is below the
minimum wage of $45 a month (Fact Sheet). In Indonesia, Nike has increased wages for
workers to above the minimum wage set by the government. While this is seen as a step in
the correct direction, workers pay is still roughly one half of what would be considered a
living wage for this country (Frequently). In China, it is common for workers to engage
in a 10 to 12 hour work day before working another two to four hours of overtime (Nikes
Labour Practices). In Vietnamese factories, workers making Nike merchandize have been
found to be forced to work over 600 hours of overtime a year, which is more than 400 hours a
year above the legal limit in Vietnam (Fact Sheet). Workers have reported being coerced
into the overtime hours through threats of unemployment or forced indirectly by the low pay
to volunteer for the hours in order to support their families. This in other words is a form of
slavery. There are only 24 hours in a day and to spend 16 hours or more at work in order to
keep a job is a complete denial of a right to life, or in other words a human rights violation.
Managements Perspective
In America, Nike's owners see the abuse much differently. In front of hundreds of
shareholders, after announcing record earnings and another stock split, Nike's president and
CEO, Phil Knight minimized the problems in Asia as simply an incident in which a single
worker was hit over the head by a supervisor. Nike spokesperson Jim Small, while knowing
that the conditions in the sixteen Indonesian plants are not ideal, said, "The bottom line is: Do
we abuse our workers? Absolutely not." (Levy, "Working conditions protested at the opening
of a new store). Roberta Baskin of CBS News commented that, "It turns out Nike has a great
deal to learn about what goes on inside these factories."
Nike spends between $250-$280 million dollars a year on athletic endorsements. Nike's total
annual payroll at six Indonesian factories is less than what Nike pays superstar Michael
Jordan per year. A pair of Nike's top-of the-line running shoe, the Air Max shoe retails for
$140. Nike admits that the direct labor cost to produce the shoe is about $3.50, which doesn't
account for Nike's marketing or distribution costs. It is not that Nike can't afford to pay it's
workers more, they just don't choose to. It is just recently that the public found out and began
to pressure Nike to raise wages. Wages have gone up a little bit, but not good enough for the
leading sports shoe manufacturer. Nike can still do a lot better. Nike has treated sweatshop
allegations as an issue of public relations rather than human rights. The promises made by
Phillip Knight in his May 1998 speech were an attempt by the company to switch the media
focus to issues it was willing to address while avoiding the key problems of subsistence
wages, forced overtime and suppression of workers' right to freedom of association.
The End Result
Should Nike be involved and concerned about the working conditions in these third world
factories? Yes. Nike has the resources and the ability to influence change in the in the
business agreements with these sub contracted factories. Nowadays as a society we want
businesses to be responsible for their actions towards the environment and society. We want
them to operate ethically and in a socially responsible way. We want to know that our
environment is cared about, and that we as a society are cared about by our Corporate Giants
& Dwarfs.
As stated earlier, Nike should be responsible to those employees of the factories they have
contracted because these people are the ones who are building the shoes for them to sell.
Although most of the subcontracted factories are in third world countries where labor is
cheap and cost of living is low that doesnt mean its ethical for Nike to pay the lowest
possible pay for the production of their shoes, or allow harsh working conditions for these
factory workers. Nike with all the money they make, they have the capability to influence the
factories to operate differently. Nike has a social responsibility to make the factories follow
proper regulation. Nike is the moral agent to its contracted factories and through being so
they have a social contract with society that they will pursue policies that follow the lines of
actions that are desirable objectives and values of our society. Because ultimately business
exist at the pleasure of society and as a result must comply with the guidelines established by
society
Nike today has taken a new approach on the matter of corporate social responsibility, while in
the past it was the black sheep of corporate America, it has taken huge strides to clean up its
image. Nike was named one of the Top Socially Responsible brands by young
adults. Donations to charity, use of green products, and employing fair labor practices were
just a few of the criteria which the students based their opinions of the corporations.
The irony of this is that it seems like just yesterday that Nike was constantly under attack for
their labor practices. They were maligned for much of the 1990s by accusations that they
underpaid their labors, that they took advantage of the cheap labor in third world countries.
Nikes inclusion as the top apparel company on this survey indicates that those hard feelings
are not affecting generation Y. That speaks volumes to the job Nike has done over the past
decade to turn themselves into a more socially responsible corporation.