Chapter 05 - Culture, Management Style, and Business Systems

Chapter 5 – Culture, Management Style, and Business

Systems

2. “More than a toleration of an alien culture is required . . . there is a need for affirmative acceptance
as different but equal.” Elaborate.
Adaptation is one of the key concepts for success in international marketing. Through this
“affirmative acceptance as different but equal,” adaptation becomes easier. One gains an appreciation
of the outlook of those with whom one is dealing.
3. “We should also bear in mind that in today’s business-oriented world economy, the cultures
themselves are being significantly affected by business activities and business practices.” Comment.
The business activities and the culture of a nation are intermixed. A change in one results in a change
in another. When a foreign culture encounters the domestic culture, there is a mixing of cultures.
When a foreign business encounters another, the result is the same because business and culture are
inextricably intertwined.
4. “In dealing with foreign businesses, the marketer must be particularly aware of the varying objectives
and aspirations of management.” Explain.
The marketer cannot judge what he feels that the objectives of management of a foreign firm are by
what they are in a similar firms of his own country. With every firm in our country, the objectives and
aspirations of management are different. Therefore, it is quite likely that they are quite different in
foreign countries. The marketer must deal with a company in a way to correspond with the objectives
of the company, or it is possible that he might lose his dealings with that company.
5. Suggest ways in which persons might prepare themselves to handle unique business customs that may
be encountered in a trip abroad.
The businessman should:
a. Learn all he can about foreign cultures by reading, visiting with foreigners and those who
have traveled or lived in the countries he will visit.
b. Condition and sensitize himself by projecting himself into possible situations and analyzing
his learned belief patterns.
c. Seek advice from consultants, ambassadors, and others who can provide professional
guidance.
6. Business customs and national customs are closely interrelated. In what way would one expect the
two areas to coincide and in what ways would they show differences? How could such areas of
similarity and difference be identified?

5-1
Chapter 05 - Culture, Management Style, and Business Systems

COINCIDE
a. Language used
b. Methods of carrying on business must coincide with local customs
c. Religious effect
d. Political effect
1. Laws
2. Taxes

DIFFER
a. Subject matter
b. Degree of technicalities involved
c. Business customs are continually changing—national customs do not
d. Business customs cause some change in national customs

One would have to examine each possible difference and similarity to determine whether or not they
exist.
7. Identify both local and foreign examples of cultural imperatives, adiaphora, and exclusives. Be
prepared to explain why each example fits into the category you have selected.
Domestic examples:
a. Cultural imperatives: It is imperative that one pay income tax, license one’s car, or wear a
coat and tie to a fine restaurant, not belch in public, etc.
b. Cultural adiaphora: One may or may not attend church, one may eat local foods, but doesn’t
have to.
c. Cultural exclusives: An African wouldn’t join the KKK. A foreigner couldn’t sell firearms for
the purpose of overthrowing the government.
Foreign examples:
a. Cultural imperatives: Not wearing shorts in Mazatlan, Mexico; not doing business on
Saturday in Israel.
b. Cultural adiaphora: An American businessperson in Mexico may or may not drink tequila or
eat burritos.
c. Cultural exclusives: It would be inappropriate for an American to go to Vietnam and act like a
Moslem.
8. Contrast the authority roles of top management in different societies. How will the differing views of
authority affect marketing activities?
There are three main different types of authority patterns: (1) top management decision making, (2)
decentralized decision making, and (3) committee decision making. In Europe, top management
makes most of the major decisions. One of the reasons for this is their belief that subordinates are
generally inadequate people. In the United States, the subordinates are given more responsibility and
top management doesn’t have complete responsibility of decision making. This is what can be called
more decentralized decision making. In the Far Eastern countries, group decision making
predominates because of their culture.
The marketing approach to each of these different situations is quite varied. The problem is to
determine what system is being used, and who is in authority.

5-2
Chapter 05 - Culture, Management Style, and Business Systems

9. Do the same for aspirational patterns.

In the United States, management tends to emphasize profit or high wages. In foreign countries,
managers are more likely to emphasize security, good personal life, acceptance status, advancement,
or power. Individual goals vary from country to country and from manager to manager. By knowing
the goals of management, a marketing man can aim the marketing of his product toward these
different goals.
10. What effects on business customs might be anticipated from the recent rapid increases in the level of
international business activity?
Business customs are bound to be altered in all countries. It is axiomatic in anthropology that when
two cultures meet, there is a blending rather than an elimination of one or the other. We would
therefore expect business practices to become more standard because of the necessity of dealing in
the same ways. This would take much time.
11. Interview some foreign students to determine the types of cultural shock they encountered when they
first came to your country.
Individual project.
12. Differentiate between:
Private ownership and family ownership.
Decentralized and committee decision making.
“Private ownership” means ownership by private investors and not government ownership.
“Family ownership” refers to a business dynasty controlled by one or a few families.
“Decentralized decision making” means subordinates have the authority to make certain decisions,
with top management making the most important decisions.
“Committee decision making” means emphasis is placed on group participation, with endorsement
of a decision by a group.
13. In which ways does the size of a customer’s business affect his business behavior?
The large organizations of the different countries have a professionalized management which is much
the same from country to country. In medium-sized businesses, the management is likely to be in
direct contact with the workers and customer. The management of the smaller firms is likely to be
closely tied to the customs and attitudes of the country. Management is directly responsible for the
supervision of employees and comes into direct contact with the customers.
14. Compare three decision-making authority patterns in international business.
The top management decision making is the centralized decision making whereby only the people at
the top make the decisions. The reason for this is management’s distrust of the ability of the
subordinates.
The decentralized decision making is the system whereby executives at various levels of the business
hierarchy are given rather complete decision making authority over their own functions.
The committee decision-making places great emphasis on group participation, group harmony, and
group decision making.

5-3
Chapter 05 - Culture, Management Style, and Business Systems

15. Explore the various ways in which business customs can affect the structure of competition.
The customs would affect the structure of competition mainly by determining whether or not there is
competition in that country. If the industries are government controlled, then there is obviously no
competition. There may be different policies on how competition may occur in different countries.
Some countries might have a rigid competition requirement, whereas another could have a quite loose
competition requirement.
16. Why is it important that the business executive be alert to the significance of business customs?
The business executive must be very sensitive to the cultural variations; he must be alert and prepared
to adapt when necessary; he must realize that he is not a native and will always be treated as an
outsider. If he does not follow these points, he will be excluded from doing business or will lose out
in doing business in different countries.
17. Suggest some cautions that an individual from a high-context culture should take when dealing with
someone from a low-context culture. Do the same for low- to high-context situations.
An individual from a high-context culture operating in a low-context culture should be careful about:
a. assuming that he has communicated when he has not.
b. leaving out major elements of communication.
c. depending too much on the spoken word and not enough on writing.
d. becoming frustrated by lack of feedback in interpersonal communication.
An individual from a low-context culture operating in a high-context culture should be careful about:
a. communicating messages he did not intend.
b. becoming frustrated from the imprecision of his counterpart’s communication.
c. expending too much on reports and letters.
d. missing important communication cues.
18. Political payoffs are a problem; how would you react if you faced the prospect of paying a bribe? If
you knew that by not paying you would not be able to complete a $10 million contract?
The response to this question is obviously, one deals with an individual’s own code of ethics. In
discussing the question, it should be stressed that paying the bribe or any other illegal act is not
permissible by most company rules. Further, to do so would violate U.S. law as well as a law in many
host countries.
19. Differentiate among the following:
Subornation
Lubrication
Extortion
Bribery
Subornation generally involves large sums of money, frequently not properly accounted for, which
are designed to entice an official to commit an illegal act of magnitude on behalf of the one paying
the bribe.

5-4
Chapter 05 - Culture, Management Style, and Business Systems

Lubrication, on the other hand, involves a relatively small sum of cash, gift, or service made to a
low-ranking official in a country where such offerings are not prohibited by law; the purpose of such
a gift being to facilitate or expedite a normal, lawful performance of a duty by an official.
Extortion is payment extracted under duress by someone in authority from a person seeking only
what one is lawfully entitled to.
Bribery is money voluntarily offered by someone seeking unlawful advantage. Lubrication payments
are a request for a person to do a job more rapidly or more efficiently, whereas subornation is a
request for officials to turn their heads, not do their job, or to break the law. An example of extortion
would be a Finance Minister of a country demanding heavy payments under the threat that millions of
dollars of investment would be confiscated.
20. Distinguish between P-time and M-time.
Edward Hall defines two kinds of time systems in the world – monochronic and polychronic time.
M-time (monochronic) typifies most North Americans, Swiss, Germans, and Scandinavians. In these
Western cultures, they tend to concentrate on one thing at a time. They divide time into small units
and are concerned with promptness. M-time is used in a linear way and it is experienced as being
almost tangible in that we save time, waste time, bide time, spend time and lose time. Most low
context cultures operate on M-time.
P-time is more dominant in high context cultures where the completion of a human transaction is
emphasized more than holding to schedules. P-time is characterized by the simultaneous occurrence
of many things and by “a great involvement with people.” P-time allows for relationships to build and
context to be absorbed that are a part of high-context cultures. In Japan there is a mix between P-time
and M-time. For appointments, Japan is very M-time but for all other interaction, they are more P-
time.
The American desire to “get straight to the point,” to “get down to business” and other indications of
directness are all manifestations of M-time cultures. While the P-time system gives rise to looser time
schedules, deeper involvement with individuals and a “wait and see what develops” attitude. For
example, two Latins conversing would likely opt to be late for their next appointments rather than
abruptly terminate the conversation before it came to a natural conclusion.
21. Discuss how a P-time person reacts differently from an M-time person in keeping an appointment.
When business people from M-time and P-time meet, adjustments on both sides need to be made for a
harmonious relationship. P-time is characterized by a much “looser” notion of what is “on time” or
“late.” Interruptions are routine, delays to be expected. It is not so much putting things off until
“manana” but the concept that human activities are not expected to proceed like clockwork.
One study comparing perceptions of punctuality in the U.S. and Brazil found that Brazilian
timepieces were less reliable and public clocks less available than it was in the United States.
Researchers also found that Brazilians more often described themselves as late arrivers, allowed
greater flexibility in defining early and late, were less concerned about being late, and were more
likely to blame external factors for their lateness than were Americans.
Often clarity can be gained by specifying tactfully, for example, whether a meeting is to be on
“Mexican time” or “American time.” An American who has been working successfully with the
Saudis for many years says he has learned to take plenty of things to do when he travels. Others
schedule appointments in their offices so they can work until their P-time friend arrives.

5-5
Chapter 05 - Culture, Management Style, and Business Systems

22. What is meant by “laws are the markers of past behavior that society has deemed unethical or socially
irresponsible?”
It means that to be ethical does not mean just abiding by the law. Most laws reflect societies’ concern
that some type of behavior is not proper and that people do not voluntarily refrain from the offensive
behavior, thus, laws are passed. In many countries, the law may help define the borders of minimum
ethical or social responsibility, but the law is only the floor above which one’s social and personal
morality is tested. Ethical business conduct should normally exist at a level well above the minimum
required by law.
23. What are the three ethical principles that provide a framework to help distinguish between right and
wrong?
Explain.
There are three ethical principles that provide a framework to help the marketer distinguish between
right and wrong, determine what ought to be done, and properly justify his or her actions. They are:
- Utilitarian ethics, i.e., does the action optimize the common good or benefits of all
constituencies?
- Rights of the parties, i.e., does the action respect the rights of the individuals involved?
- Justice or fairness, i.e., does the action respect the canons of justice or fairness to all parties
involved?
Answers to these questions can help the marketer ascertain the degree to which decisions are
beneficial or harmful, right or wrong, or whether the consequences of actions are ethical or socially
responsible.
24. Visit Transparency International Web page and check to see how the CPI Index for countries listed in
Exhibit 5-5 has changed. Searching TI’s databank, explain why the changes have occurred. The site
is found at: http://www.transparency.de.
25. Discuss the pros and cons of “there is no controlling legal authority,” as a basis for ethical behavior.
In many countries, the law may help define the borders of minimum ethical or social responsibility,
but the law is only the floor above which one’s social and personal morality is tested. The statement
that “there is no controlling legal authority” may mean that the behavior is not illegal but it does not
mean that the behavior is morally correct or ethical. “Ethical business conduct should normally exist
at a level well above the minimum required by law” or “controlling legal authority.” In fact, laws are
the markers of past behavior that society has deemed unethical or socially irresponsible.
One researcher suggests that regardless of how corrupt a society might be, there are core human
values that serve as the underpinning of life, no matter where a person lives. Participants in 43
countries and more than 50 faiths were given 17 values and asked to rate each as a core value. Five
values—compassion, fairness, honesty, responsibility, and respect for others—were the most often
selected regardless of culture. 1 The researcher suggests that an action should only be taken if the
answer is no to the question, “Is the action a violation of a core human value?” When people are clear
about their own values and can identify the principles and core values that make up ethical behavior,
they have the tools for looking at potential decisions and deciding whether or not a decision is ethical.

1
Patricia Digh, "Shades of Gray in the Global Marketplace," HRMagazine, April 1997, p. 90.

5-6
Chapter 05 - Culture, Management Style, and Business Systems

26. “The company.com page is a company’s front door and that doorway should be global in scope.”
Discuss. Visit several Web pages of major multinational companies and evaluate their “front door” to
the global world.
The company.com page is a company’s front door and that doorway should be global in scope. Not
only can you select and purchase goods through a company’s Web page, but support services, training
programs, additional product literature, even career information, are all being moved to the home
page. Thus, the precept, “think globally, act locally, applies not only to global marketing strategies but
to the World Wide Web as well.”
The message on a Web site is an extension of the company and should be as sensitive to business
customs as any other company representative would be. Once a message is posted, it can be anywhere
at any time. As a consequence, the opportunity to convey an unintended message is always present.
Nothing about the Web will change the extent to which people identify with their own languages and
cultures, thus, language should be at the top of list when examining the viability of a company’s Web
site.
The solution to the problem is to have country specific Web sites such as IBM, Microsoft and others
have. Dell Computer, for example, makes its Premier Pages Web sites, built for its business clients,
available in 12 languages. There are a host of companies that specialize in Web site translations and,
in addition, there are software programs to translate the company message into another language.
However, cultural and linguistic correctness can be a problem with machine translation. If not
properly done, there is the likelihood that English phrases will be translated in a way that will
embarrass or even damage a company. One way to avoid this is to prepare the original source material
in easy-to-translate English devoid of complicated phrases, idioms or slang. Unfortunately, no
machine translation is available to manage all the nuances of language or syntaxes.
In addition to being language friendly, a Web site should be examined for any symbols, icons, and
other non-verbal impressions that could convey an unwanted message. Icons that are frequently used
on a Web site can be misunderstood. For example, an icon such as a hand making a high-five sign
will be offensive in Greece; an image of a thumb-to-index finger, the A-OK gesture, will infuriate
visitors in Brazil, a two-fingered peace sign when turned around has a very crude meaning to the
British and AOL’s “You’ve Got Mail” looks a lot like a loaf of bread to a European. Colors can also
pose a problem; green is a sacred color in some Middle Eastern cultures and should not be used for
something frivolous like a Web background.
Besides being language and icon friendly, is the site customer friendly? A European could not
understand why his on-line order from an American company was repeatedly rejected. It took him
some time to determine that since he couldn’t fill out the “state” section, the order form was
incomplete and thus, rejected. He sent the company an e-mail describing his trouble but it didn’t
respond. The company probably doesn’t realize its address information is preventing it from getting
as much business as it could.

5-7
Chapter 05 - Culture, Management Style, and Business Systems

27. Visit the Web sites of Shell and Nike at: http://www.shell.com/static/src-
en/downloads/annual_reports/2006/ar2006_sd_commitment.pdf for Shell and
http://www.nikeresponsibility.com/#home for Nike and compare their statements on corporate values.
What are the major issues each address? Do you think their statements are useful as guides to ethical
and socially responsible decision-making?
The following is an excerpt from the Shell Web site as of May 2001
Our values – an introduction
Having unshakable moral values and sound business principles means we take pride in what we do. It
gives us clarity when making decisions, unifies and motivates staff, and it allows society to measure
our performance beyond the generation of wealth.
Since our earliest days, we have been guided by a passionate commitment to honesty, integrity and
respect for people. We believe in the promotion of trust, openness, teamwork and professionalism.
But in the last few years we’ve had to tackle some particularly difficult issues, and we realize we have
not always taken enough care to show how they were resolved in line with our core values. So this
section looks at each of our General Business Principles, and how they apply to a series of topical
issues and dilemmas.
This section is also about dialogue. We want you to know more about how we work and how we
strive to live up to our principles. We also want to know your views on the many difficult issues and
dilemmas we are all faced with as we enter a new millennium. You can join in the debate by entering
the various forums that are attached to each subject or by sending us your view by email. We promise
to listen.

Our General Business Principles

1. Objectives
The objectives of Shell companies are to engage efficiently, responsibly and profitably in the oil,
gas, chemicals and other selected businesses and to participate in the search for and development
of other sources of energy. Shell companies seek a high standard of performance and aim to
maintain a long-term position in their respective competitive environments.
2. Responsibilities
Shell companies recognize five areas of responsibility:
a. To shareholders
To protect shareholders’ investment, and provide an acceptable return.
b. To customers
To win and maintain customers by developing and providing products and services which
offer value in terms of price, quality, safety and environmental impact, and which are
supported by the requisite technological, environmental and commercial expertise.

5-8
Chapter 05 - Culture, Management Style, and Business Systems

c. To employees
To respect the human rights of their employees, to provide their employees with good and
safe conditions of work, and good and competitive terms and conditions of service, to
promote the development and best use of human talent and equal opportunity employment,
and to encourage the involvement of employees in the planning and direction of their work,
and in the application of these principles within their company. It is recognized that
commercial success depends on the full commitment of all employees.
d. To those with whom they do business
To seek mutually beneficial relationships with contractors, suppliers and in joint ventures and
to promote the application of these principles in so doing. The ability to promote these
principles effectively will be an important factor in the decision to enter into or remain in
such relationships.
e. To society
To conduct business as responsible, corporate members of society, to observe the laws of the
countries in which they operate, to express support for fundamental human rights in line with
the legitimate role of business and to give proper regard to health, safety and the environment
consistent with their commitment to contribute to sustainable development.
These five areas of responsibility are seen as inseparable. Therefore, it is the duty of
management continuously to assess the priorities and discharge its responsibilities as best it
can on the basis of that assessment.

Principle 3: Economic principles

Profitability is essential to discharging these responsibilities and staying in business. It is a measure
both of efficiency and of the value that customers place on Shell products and services. It is essential
to the allocation of the necessary corporate resources and to support the continuing investment
required to develop and produce future energy supplies to meet consumer needs. Without profits and
a strong financial foundation, it would not be possible to fulfill the responsibilities outlined in this
section.
Shell companies work in a wide variety of changing social, political and economic environments, but,
in general, they believe that the interests of the community can be served most efficiently by a market
economy.
Criteria for investment decisions are not exclusively economic in nature but also take into account
social and environmental considerations and an appraisal of the security of the investment.

Principle 4: Business integrity

Shell companies insist on honesty, integrity and fairness in all aspects of their business and expect the
same in their relationships with all those with whom they do business. The direct or indirect offer,
payment, soliciting and acceptance of bribes in any form are unacceptable practices. Employees must
avoid conflicts of interest between their private financial activities and their part in the conduct of
company business. All business transactions on behalf of a Shell company must be reflected
accurately and fairly in the accounts of the company in accordance with established procedures and
be subject to audit.

5-9
Chapter 05 - Culture, Management Style, and Business Systems

Principle 5: Political activities

a. Of companies
Shell companies act in a socially responsible manner within the laws of the countries in
which they operate in pursuit of their legitimate commercial objectives.
Shell companies do not make payments to political parties, organizations or their
representatives or take any part in party politics. However, when dealing with governments,
Shell companies have the right and the responsibility to make their position known on any
matter which affects themselves, their employees, their customers, or their shareholders. They
also have the right to make their position known on matters affecting the community, where
they have a contribution to make.
b. Of employees
Where individuals wish to engage in activities in the community, including standing for
election to public office, they will be given the opportunity to do so where this is appropriate
in the light of local circumstances.
Some of the issues in this Principle are hard to measure, and little quantified evidence is
available. We are trying to develop suitable measures so that we can track and publish our
future performance. If you have any suggestions on the sort of evidence you would like to
see, please send us an e-mail or participate in the relevant forum.

Principle 6: Health, safety and the environment

Consistent with their commitment to contribute to sustainable development, Shell companies have a
systematic approach to health, safety and environmental management in order to achieve continuous
performance improvement.
To this end, Shell companies manage these matters as any other critical business activity, set targets
for improvement, and measure, appraise and report on performance.

Principle 7: The community

The most important contribution that companies can make to the social and material progress of the
countries in which they operate is in performing their basic activities as effectively as possible. In
addition, Shell companies take a constructive interest in societal matters which may not be directly
related to the business. Opportunities for involvement—for example, through community, educational
or donations programs will vary depending upon the size of the company concerned, the nature of the
local society, and the scope for useful private initiatives.

Principle 8: Competition
Shell companies support free enterprise. They seek to compete fairly and ethically and within the
framework of applicable competition laws; they will not prevent others from competing freely with
them.

5-10
Chapter 05 - Culture, Management Style, and Business Systems

Principle 9: Communication
Shell companies recognize that, in view of the importance of the activities in which we they engaged
and their impact on national economies and individuals, open communication is essential. To this end,
Shell companies have comprehensive corporate information programs and provide full relevant
information about their activities to legitimately interested parties, subject to any overriding
considerations of business confidentiality and cost.
Note:
For excerpt from Nike Web site see question 29 below.
28. Go to your favorite Web reference source and access some recent news articles on Nike and alleged
human rights violations. Access the Nike statement on corporate values at
http://www.nikebiz.com/responsibility/ and write a brief statement on the alleged violations and
Nike’s statement of corporate values.
The following is an excerpt from the Nike Web site as of May 2001.
NIKE Inc. was founded on a handshake.
Implicit in that act was the determination that we would build our business with all of our partners
based on trust, teamwork, honesty and mutual respect. We expect all of our business partners to
operate on the same principles.
At the core of the Nike corporate ethic is the belief that we are a company comprised of many
different kinds of people, appreciating individual diversity, and dedicated to equal opportunity for
each individual.
Nike designs, manufactures and markets products for sports and fitness consumers. At every step in
that process, we are driven to achieve not only what is required, but also what is expected of a leader.
We expect our business partners to do the same. Specifically, Nike seeks partners that share our
commitment to the promotion of best practices and continuous improvement in:
1. Occupational safety and health, compensation, hours of work and benefits standards
2. Minimizing our impact on the environment.
3. Management practices that recognize the dignity of the individual, the rights of free
association and collective bargaining, and the right to a work place free of harassment, abuse
or corporal punishment.
4. The principle that decisions on hiring, salary, benefits, advancement, termination or
retirement are based solely on the ability of an individual to do the job. There shall be no
discrimination based on race, creed, gender, marital or maternity status, religious or political
beliefs, age or sexual orientation.
Wherever Nike operates around the globe, we are guided by this Code of Conduct. We bind our
manufacturing partners to these principles. Our manufacturing partners must post this Code in all
major workspaces, translated into the language of the worker, and must endeavor to train workers on
their rights and obligations as defined by this Code and applicable labor laws.
While these principles establish the spirit of our partnerships, we also bind these partners to specific
standards of conduct. These standards are set forth below.

5-11
Chapter 05 - Culture, Management Style, and Business Systems

1. Forced Labor: The manufacturer does not use forced labor in any form—prison, indentured,
bonded or otherwise.
2. Child labor: The manufacturer does not employ any person below the age of 18 to produce
footwear. The manufacturer does not employ any person below the age of 16 to produce
apparel, accessories or equipment. Where local standards are higher, no person under the
legal minimum age will be employed.
3. Compensation: The manufacturer provides each employee at least the minimum wage, or the
prevailing industry wage, whichever is higher; provides each employee a clear, written
accounting for every pay period; and does not deduct from worker pay for disciplinary
infractions, in accordance with the Nike Manufacturing Leadership Standard on financial
penalties.
4. Benefits: The manufacturer provides each employee all legally mandated benefits. Benefits
vary by country, but may include meals or meal subsidies; transportation or transportation
subsidies; other cash allowances; health care; child care; emergency, pregnancy or sick leave;
vacation, religious, bereavement or holiday leave; and contributions for social security and
other insurance, including life, health and worker’s compensation.
5. Hours of Work/Overtime: The manufacturer complies with legally mandated work hours;
uses overtime only when each employee is fully compensated according to local law; informs
each employee at the time of hiring if mandatory overtime is a condition of employment; and,
on a regularly scheduled basis, provides one day off in seven, and requires no more than 60
hours of work per week, or complies with local limits if they are lower.
6. Management of Environment, Safety and Health (MESH): The manufacturer has written
health and safety guidelines, including those applying to employee residential facilities,
where applicable; has a factory safety committee; complies with Nike’s environmental, safety
and health standards; limits organic vapor concentrations at or below the Permissible
Exposure Limits mandated by the U. S Occupational Safety and Health Administration
(OSHA); provides Personal Protective Equipment (PPE) free of charge, and mandates its use;
and complies with all applicable local environmental, safety and health regulations.
7. Documentation and Inspection: The manufacturer maintains on file all documentation
needed to demonstrate compliance with this Code of Conduct; agrees to make these
documents available for Nike or its designated auditor to inspect upon request; and agrees to
submit to labor practices audits or inspections with or without prior notice.
Minimum Age Requirements
“Nike has zero tolerance for under-age labor.” Nike CEO Phil Knight. In May 1998, Nike
increased the minimum age of footwear factory workers to 18 years old, and the minimum age for
all other light-manufacturing workers (apparel, accessories, and equipment) to 16 years old.
These new minimum age requirements in footwear factories are equal or in some cases higher
than those in the United States because these jobs require heavier machinery and more complex
manufacturing processes.
“At 18,” says Knight, “workers are generally more mature, have more work experience, are easier
to train in health and safety issues, and are therefore better suited to work in a footwear factory
than a younger person.”
In many regions of the world where our products are made, Nike’s age standards exceed those
mandated by the local government. In some rare cases, local standards are more strict. Our
contract manufacturers must adopt the strictest standard—either the local minimum age, or the
Nike minimum age standard.

5-12
Chapter 05 - Culture, Management Style, and Business Systems

To ensure these standards are being met on a continuous basis, Nike production and labor staff are
trained to look for younger-age workers, and to report that possibility to the labor management
staff In addition, all factories making Nike products around the world are subject to labor
practices monitoring visits and audits by teams of independent inspectors. Those inspectors verify
all workers meet the Nike age standards through documented records and interviews with
workers.
Adults should work. Children should study and play. We do everything we can to ensure this
happens. Setting the highest age standards in the industry, and requiring independent certification
that factories meet those standards, is our best practice to make it so.

5-13