Adidas: Business Ethics, Sweatshops, and Organisational Analysis

This report provides an analysis of Adidas's business ethics, particularly focusing on the company's use of sweatshops and its impact on workers. The report highlights the ethical issues arising from Adidas's manufacturing practices, including the exploitation of workers and the violation of labor laws i...Read More

Running head: ADIDAS 0
Business Ethics

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Organisational Level Analysis
In terms of revenue and market share, Adidas is one of the largest apparel brands, and it
offers its products across the globe. The company has achieved this success by providing
high-quality products to its customers and reducing their production costs. From an
organisational perspective, the corporation is required to maintain a positive brand image for
maintaining its profitability and sustaining its future growth. However, the scandal of Adidas
Sweatshops has negatively affected the reputation of the company. Although the success of
corporations depends upon the way, they handle their operations which allow them to
minimise their costs and expand their profitability. But, they are often required to take
unethical measures to reduce their production costs. Adidas uses sweatshops to fulfil the
growing demand for their products across the globe while at the same time maintaining low
production costs. The company did not take proper care of their workers, and it often exploits
the rights of employees to meet its manufacturing targets. In Frieder (2013) provided in its
study that Adidas closed its manufacturing facility which was situated in Indonesia in 2011
which resulted in depriving over 2,800 workers of $3.4 million in severance pay. Frieder
(2013) provided that large corporations such as Adidas are responsible for adverse working
conditions of workers in sweatshops. These workers are poor, and they cannot find another
job due to illiteracy, and these large enterprises took advantage of these factors and resulted
in exploiting their workers.
Most workers did not receive a legal minimum wage in these nations which is enough to
fulfil their basic human needs such as food, shelter or cloths. They work in a harsh
environment which is negative for their health so that these companies can save few bucks.
From an organisational perspective, it is usual for enterprises to focus on reducing their
manufacturing costs by whatever means necessary. However, it is ethically wrong to exploit
workers for gaining profits. According to Merk (2011), these enterprises select countries such
as India, China, Sri Lanka and Indonesia because they know that labour laws in these
countries are not strict as compared to the United States or the United Kingdom. Even after
exploiting the rights of their labours, these companies are not breaking any laws because they
use their power to keep themselves away from the whole situation. Merk (2011) provides that
these companies often pay third-party manufacturers to handle all their production operations.
They did not get involved in the everyday proceeding of these factories; instead, they force
factory managers to implement strict conditions so that they are able to get the most out of

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workers at lowest costs. Most workers are illiterate, and they did not know about their rights.
Moreover, if they decide to take any action by creating a labour union, then they threaten to
fire them (Frieder, 2013). By following these policies, Adidas is able to save itself from the
law even after breaching the labour laws.

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References
Frieder, A. (2013) Putting Out the Fuel to the Fire: Deterring Cor-porations From
Subcontracting Manufacturing to Sweatshops Abroad. The Cornell Roosevelt Institute Policy
Journal Center for Foreign Policy and International Studies, p.6.
Merk, J. (2011) Production beyond the horizon of consumption: spatial fixes and anti-
sweatshop struggles in the global athletic footwear industry. Global Society, 25(1), pp.73-95.