Nike Case Study

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By adopting unethical practices (e.g. false advertisement, worker exploitation, child labour etc.), firms risk their reputation and could lose consumer confidence, ultimately leading to decreased sales and in some cases, boycotts. Beder (2002) reported that Nike has lost significant shares in 1997 after being exposed of utilising ‘sweatshops’ —subpar/ inhumane working environments— and child labour. Under heavy criticism and suffering from diminished sales, Nike was forced to reevaluate its approach and rebuild its reputation by actively seeking endorsement from non-governmental organisations (e.g. the Fair Labor Association) and rectifying their mistakes (Beder, 2002). It is obvious that Nike fared a long way since the scandal as it is now one of the most prominent sportswear brand. This underscores the relevance business reputation— that it is a necessary component, which enables businesses to increase profits. Nevertheless, per UNICEF (2016), child labour remained pervasive in society; it is estimated that there are 150 million children engaging in labour, where one in four child-workers (from the poorest countries) are exposed to hazardous jobs. This fuels arguments that accuse businesses involved in foreign markets for encouraging child labour, challenging the reputations of firms. Moreover, it has been suggested that involvement in the process of globalisation and foreign markets does not guarantee success for businesses. Werhane (2012) found that quite often, there is

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