RUSSELL ATHLETIC

HONDURAN SWEATSHOPS
Brittany Loveless
Sarah Moore
Tasha Haight
Gabriella Avivi

SITUATIONAL ANALYSIS:
ENVIORNMENT
Rich forest resources
silver, lead, zinc, iron, gold, and copper
Poor road and rail systems
undeveloped country
Unable to export resources and minerals

Governed under constitution as amended in 1982

National Congress unicameral legislative, 182 members, 4-year terms

Elected President 4-year term, Head of State & Head of Government
18 Departments in Administrative Branch
Liberal and National parties head parties, both center-right, few differences

SITUATIONAL ANALYSIS:
ENVIRONMENTAL/FINANCIAL
Over 66% of population lives in poverty
2nd poorest country in Central America
One of poorest countries in Western Hemisphere

Agricultural economy
Bananas and coffee
Mainly 2 American Monopolies
United Fruit Company
Standard Fruit Company

Recently opened to apparel and automobiles

SITUATIONAL ANALYSIS:
FINANCIAL
United States is Honduras largest trade & economic partner
U.S. exports to Honduras were $5.3 billion in 2013
About 80 percent of U.S. goods now enter the region duty-free
Honduran currency, the lempira has floated in a band system since 2011
The lempira depreciated by 3.2% percent against the U.S. dollar in 2013
More than 200 American Companies currently operating in Honduras

SITUATIONAL ANALYSIS:
INDUSTRY
Russell Corporation is an athletic & sporting goods company owned by
Fruit of the Loom.
Nike, Adidas, Puma = biggest competitors
Target consumer age group: 12-25 year olds
Seeking brand improvement
Promoting at the local level (AFL)

SITUATIONAL ANALYSIS:
INDUSTRY
Challenges:

Security
Corruption
Lengthy due process
Inefficient systems

Opportunities
Perfect location
Promising growth sectors

SITUATIONAL ANALYSIS: FIRM

1902 Russell Brands LLC founded
1932 started making athletic apparel
1941 Benjamin Russell died and company was passed down
1960s largest supplier of athletic apparel
2006 joined Fruit of the Loom
Largest apparel company in Honduras

SITUATIONAL ANALYSIS: FIRM

2009 ANTI-SWEATSHOP CAMPAIGN
Fired 145 workers in 2007 for joining a union
Revised decision, but still under fire for threats and original firing
89 colleges suspended their contracts
65 congressmen wrote to express concerns to Russell
Fair Labor Association put Russell Athletic on probation for noncompliance
with FLA standards
November of 2009, the Honduran workers union concluded an agreement
with Russell that put all of the workers back to work, provided
compensation for lost wages, recognized the union, agreed to collective
bargaining and provided access for the union to all other Russell plants in
Honduras

MARKET STRATEGY

MARKET STRATEGY

PRIMARY PROBLEM
Russell Athletics did not allow the Honduran workers to form a union.
Primary Problem/Opportunity would be allowing workers the freedom to form a union or to not
allow them.
They did not allow it.

Evidence:
145 workers sent in detailed reports by WRC
the company continued violating workers rights in 2008 by constantly harassing the union
activists & making threats to close the Jerzees de Honduras factory

Effects:

The USAS, WRC, & FLA began to focus & investigate Russell Athletic
Led to the cutting of ties with large universities
created a bad reputation for the brand
Customer loyalty was lost

SECONDARY PROBLEM

STRATEGIC ALTERNATIVE 1
Put more effort into original contract
Costs
Timely
Increase labor costs

Benefits
creates a good relationship b/w employees & corporate
builds reputation that the company takes cares of their employees

STRATEGIC ALTERNATIVE 2
Invest in a Corporate Office in Honduras
Costs:
More costly at the start

Benefits:
more control over the 8 factories in Honduras
allows there to be more face-to-face negotiations, making sure that the working
conditions are acceptable
Easier to communicate
Cheaper to employ Hondurans to run the local administration than to employ an
American to do it
The Honduran would also know whats going on locally better than someone in America

STRATEGIC ALTERNATIVE 3
Subcontract to Manufactures
Costs:
Production not under Russell Athletic

Benefits:
Not liable/responsible for working conditions, wages, etc.

BEST ALTERNATIVE &

IMPLEMENTATION
Alternative 2, investing in a corporate office in Honduras
Less conflicts, due to less lack of communication
More acceptable working conditions, due to availability of administration
(meaning changes may be made faster to improve situations)
Implement by sending American Administration to Honduras to select/hire
Honduran Adminstration

SUMMARY

QUESTION #1
Assume that you are an executive of a large U.S. multinational corporation
planning to open new manufacturing plants in China and India to save on
labor costs. What factors should you consider when making your decision?
Is labor outsourcing to developing countries a legitimate business strategy
that can be handled without risk of running into a sweatshop scandal?

ANSWER #1
Be aware of what is going on in the factories
Labor outsourcing is a very efficient business strategy that can save
money for the producer and consumer, however, it is very important that
the factories be self-monitored and also monitored by multiple parties to
ensure that the codes of conduct are being met
Cooperate with NGOs
Other countries may not enforce labor laws, so be aware of what is going
on in the factories

QUESTION #2
Do you think that sweatshops can be completely eliminated throughout the
world in the near future? Provide an argument as to why you think this can
or cannot be achieved.

ANSWER #2
No, wont be eliminated
Trouble monitoring them in other countries
Will be more outsourcing as source of income
Impossible for countries to catch every sweatshop

QUESTION #3
Would you agree that in order to eliminate sweatshop conflicts large
corporations such as Russell Athletic should retain the same high labor
standards and regulations that they have in the home country (for example
the US) when they conduct business in developing countries? How hard or
easy can this be to implement?

ANSWER #3
Corporations should retain same standards as in the United States, even
when in other countries
Difficult to implement
Corrupt countries such as China
Self-monitor, 3rd party monitors

QUESTION #4
Do you think that the public and NGOs like USAS should care about labor
practices in other countries? Isnt this a responsibility of the government of
each particular country to regulate the labor practice within the borders of
its country? Who do you think provides a better mechanism of regulating
and improving the labor practices: NGOs or country governments?

ANSWER #4
Public and NGOs should care about labor practices in other countries
Governments dont always do the best job
NGOs better method of regulating
Private companies must monitor

QUESTION #5
Would you agree that Russell Athletic made the right decision by conceding
to USAS and union demands? Isnt a less expensive way to handle this sort
of situation to ignore the scandal? Please state your pros and cons
regarding Russells decision to compromise with the workers union and
NGOs as opposed to ignoring this scandal.

ANSWER #5
Made the right decision
89 colleges stopped producing business with Russell Athletics, would hurt
business anyways
Trust was lost, could have completely went out of business
Provide union access to all plants, provide compensation wages
Result created more trust

WORKS CITED
Cuer, Laura. "Student Advocacy: Russell Athletics." Prezi.com. Laura Cuer, 20 Sept. 2012. Web. 16 Sept. 2014.
Greenhouse, Steven. "Labor Fight Ends in Win For Students." The New York Times. The New York Times, 17 Nov. 2009. Web. 16 Sept. 2014.
USAS. "Washing Russell's Hands Clean." United Students Against Sweatshops. USAS, n.d. Web. 16 Sept. 2014.
Farr, Sarah. "Labor Is Not a Commodity." 'Labor Is Not a Commodity' International Labor Rights Forum, 12 Aug. 2009. Web. 16 Sept. 2014.

Company Overview of Russell Brands, LLC. Bloomberg Businessweek. Bloomberg LP, 16 Sep. 2014. Web. 16 Sep. 2014.
<http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=33950>.

Luthans, Fred, and Jonathan Doh. International Management: Culture, Strategy, and Behavior. Ninth edition. New York: Mcgraw-Hill Education, 2015. Print.

Russell Athletic (brand). Wikipedia. Wikimedia Foundation, 10 Jul. 2014. Web 14 Sep. 2014. <http://en.wikipedia.org/wiki/Russell_Athletic_(brand)>.
Golen, Jimmy. "Some Schools Cutting Ties with Russell Athletic | The Honolulu Advertiser | Hawaii's Newspaper." Some Schools Cutting Ties with Russell
Athletic | The Honolulu Advertiser | Hawaii's Newspaper. N.p., 19 Mar. 2009. Web. 17 Sept. 2014.