Case Analysis: Nike's Controversy And Growth

Bill Bowerman and Phil Knight started Nike Inc. in 1971, formally known as Blue Ribbon Sports. Bill Bowerman was a former track and field coach at the University of Oregon, and Phil Knight was a student-athlete at the University of Oregon. After numerous years of supplying under Blue Ribbon Sports, the two decided to enter the athletic shoe manufacturing business. The first employee of the company was Jeff Johnson, who helped them with branding what is known today as NIKE Inc.

Nike is one of the top sports clothing industry in the world. However, for years there are fresh allegation for Nike, which dogged by sweatshops and child labour (Daily Mail Reporter, 2011). On the 13 July 2011, Nike has revealed several cases of worker abused at factory.

Nike is one of the world’s largest producers, marketers, and sellers of athletic footwear, apparel, equipment, and accessories. The company manufactures Nike products in 142 factories across 15 countries. Most of its product is manufactured in foreign nations, including Vietnam, China, and Indonesia, followed by Argentina, India, Brazil, and Mexico (Nike, 2016). In 1991, activist Jeff Balling raised national concern over Nike’s business practices in Indonesia. In a Harper’s Bazaar expose in 1992, Balling called out Nike for using an Indonesian subcontractor who paid workers 14 cents an hour, while working in dismal factory conditions. The report created a near-immediate backlash against Nike, which continued until 1998, when Nike CEO,

Nike started to open up manufacturing factories in countries like Indonesia, Pakistan and Vietnam. Due to the wants of Nike to increase their revenue they tried to outsource the labor of their products since labor work in the US is very high and expensive. This was a bad idea due to that Indonesia pays their workers extremely low wages. Pakistan doesn’t have an age limit for them to be able to legally to work so many children in Pakistan were making

Since the 1990s, Nike has been embroiled in controversy over its use of sweatshops. Including numerous media reports of workers earning very little an hour (14 cents per hour), and even workers abused by sub-contractor (Allarey, 2015). Incidents such as these are ingrained in Nike’s history and not quickly forgotten. However, as CEO I would like to attempt to correct wrongs.

The highly recognized name brand—Nike— fails to notice the faults that are happening in factories that are violating a few disturbing rules. The company’s reputation has decreased due to demands and claims Nike; implying that they utilize sweatshops to produce more products at a lower pay. The company has been sued numerous times for abusing and exploiting their employees in factories for years. Another problem that Nike has faced throughout the years was making employees work in poor environments that affected the health of many— which contributed to being abused by the manager for not going to work. Nike distributes and sells merchandise of high quality for a high value. The company is giving the satisfaction of quality service to their

I am writing this letter to express my concerns over Nike's labor practices in Asia. There has been much debate and controversy recently concerning Nike's Asian labor practices. It is very difficult to determine which side of the argument to defend, as both acknowledge the problems yet put a completely different spin on the facts. I will try to show that Nike has created a cloud of smoke in Asia that the public cannot see through.

Internationally recognized companies such as Nike make use of sweatshops and aid in the exploitation of labor workers in many parts of the world. A sweatshop is an industrialized provision that is known to have poor working conditions, infringement of labor law, and long hours coupled with low wages. In today’s world, sweatshops are prevalent all across the globe; however they raise the most concern in developing nations. Nike is one of the world’s most renowned sportswear companies, but has been involved in several controversies in relation to the possibility of them making profit out of sweatshop labor. In the late 1900’s most Nike products were manufactured in countries like South Korea and Taiwan, however, this changed when the labor

1. What responsibility does Nike have for conditions of work at foreign factories making its products?

Humm, where to begin? In 1964, Nike started off as dream when founders, Phil Knight and Bill Bowerman, with just $1,200, established Blue Ribbon Sports (O’Reilly, 2014). Originally, they were distributors for Asics, but in 1971 they became known as Nike. Uniquely, they chose the name Nike because it is the name of the Greek goddess of victory (O’Reilly, 2014). Interestingly, the first patented Nike shoe was the Nike Waffle Trainer, which was made using a waffle iron and was patented in 1974 (O’Reilly, 2014). Creatively, the “Just Do It” campaign, in 1988, was featured in an ad with Walt Stack, the 80 year old runner, as he ran across the Golden Gate Bridge (O’Reilly, 2014).

Nike a global fashion and sport icon to the world is branded as one of if not the best athletic company in the world. Nike produces athletic gear for every sport imaginable. They are known as well for there one of a kind products but as well as the brand that the best athletics wear and advertise for. The founders of Nike Phil Knight and Bill Bowerman meet when Bill Bowerman was the training coach for Phil Knight when he ran track for Oregon. It was there at the University of Oregon where Bill Bowerman always looked for ways to amplify the track shoe to enhance a student’s performance but was unsuccessful. Phil Knight who later went to study at Stanford followed the same mindset of creating a shoe himself. Knight alternated his decision

The company Nike operates in over 50 different companies. This makes them a very large global company. Nike makes all kinds of products including gym shoes, clothing and apparel, equipment and accessories. “In 2004, Nike products were manufactured by more than 800 suppliers, employing over 600,000 workers in 51 countries” (Locke, Kochan, Romis & Qin, 2007, p. 6). Nike came under fire because of their workers that work outside the United States. In other countries, labor laws are unlike those within the United States. Large corporations often exploit the fact that they can pay laborers significantly less outside of the United States. Companies may also provide less than favorable working conditions to its labor force outside of the United States.

In 1997, the Vietnam Labour Watch (VLW) accused Nike of violating numerous labour laws of that country. According to the report, Nike did not pay the minimum wages, did not provide proper working conditions, and did not take adequate health and safety measures. And neither did it act on reports of child labour and sexual harassment in its factories.

During the late 80s and early 90s Nike was faced with a series of labor strike back at home due to unethical labor practices by its independent countries in third world countries. It is well known for Nike to outsource almost all its production from third world countries at cheap prices and sell them in U.S. market at an abnormal profit. The company began outsourcing its products from Japan where labor was competent and wages were very low. The living standards were raised which prompted Nike to outsource its products from Thailand, Pakistan and Indonesia since wages in these countries were extremely low and labor for these products were competent due to rapid development of the Japanese economy. The outsourcing of footwear products from Asian countries enables Nike to earn high profits and enjoy a competitive advantage over its rivals in the footwear industry. The company invests the high profits realized in marketing its products through celebrities. For instance, Michael Jordan was used to advertise the positive image of Nike Company (Lipschutz and James, pp. 87-96).

Nike began as Phil Knight’s semester-long project to develop a small business, which included a marketing plan. This project was part of Phil Knight’s MBA course at Stanford University in the early 1960s. Phil Knight had been a runner at the University of Oregon in the late 1950s. His idea for his project was to develop high quality running shoes. He thought that high quality/low cost products could be produced in Japan and then shipped to the United States to be sold at a profit. His professor thought that Knight’s idea was interesting, but not much more than a project.