...REV: SEPTEMBER 6, 2002 DEBORA L. SPAR Hitting the Wall: Nike and International Labor Practices Moore: Twelve year olds working in [Indonesian] factories? That’s O.K. with you? Knight: They’re not 12-year-olds working in factories... the minimum age is 14. Moore: How about 14 then? Does that bother you? Knight: No. — Phil Knight, Nike CEO, talking to Director Michael Moore in a scene from documentary film The Big One, 1997. Nike is raising the minimum age of footwear factory workers to 18… Nike has zero tolerance for underage workers. 1 — Phil Knight, 1998 In 1997, Nguyen Thi Thu Phuong died while making sneakers. As she was trimming synthetic soles in a Nike contracting factory, a co-worker’s machine broke, spraying metal parts across the factory floor and into Phuong’s heart. The 23 year-old Vietnamese woman died instantly.2 Although it may have been the most dramatic, Phuong’s death was hardly the first misfortune to hit Nike’s far-flung manufacturing empire. Indeed, in the 1980s and 1990s, the corporation had been plagued by a series of labor incidents and public relations nightmares: underage workers in Indonesian plants, allegations of coerced overtime in China, dangerous working conditions in Vietnam. For a while, the stories had been largely confined to labor circles and activist publications. By the time of Phuong’s death, however, labor conditions at Nike had hit the mainstream. Stories of reported abuse at Nike plants had been carried in publications such...
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...markets for Nike. They are my sponsor. Nike Inc. produces footwear, clothing, equipment and accessory products for the sports and athletic market. It is the largest seller of sports garments in the world. It sells to approximately 19,000 retail accounts in the US, and then in approximately 140 countries around the world. Just about all of its products are manufactured by independent contractors with footwear products in particular being manufactured in developing countries. Nike developed a strong working relationship with Japanese shoe manufacturers, but Nike moved on to other countries seeking after alternative, lower-cost producers. Today the company manufactures in China, Taiwan, Korea, Pakistan, Vietnam, Indonesia, and Mexico as well as in the US and in Italy. Nike has around 700 contract factories, within which around 20% of the workers are creating Nike products. Conditions for these workers have been a source of heated debate, with allegations made by campaigns of poor conditions, with commonplace harassment and abuse. As its founder and Chief Executive Officer, Phil Knight lamented in a May 1998 speech to the National Press Club, “the Nike product has become synonymous with slave wages, forced overtime, and arbitrary abuse.”(HBS Case # 9-700-047) “Hitting the Wall: Nike and International Labor Practices,” HBS Case # 9-700-047 Problem Statement Is Nike doing just enough to clear bad publicity or are they really fixing their factory issues? How can Nike work toward...
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...Hitting the Wall: Nike and International Labor Practices 1. Does Jeff Ballinger have a convincing argument about Nike? Does Nike have a convincing response? There is no denying of the fact that Jeff Ballinger has a convincing argument about Nike. As he was assigned to run AAFLI office in Indonesia, he was very much inclined to investigate the labor practices and minimum wage compliance by overseas American companies. Moreover, Nike was in news at that time regarding its critical labor practices, so it became the only prominent target. Ballinger, during the course of his studies about the company and research about the labor practice, revealed that Nike encouraged its contractors to hit some unrealistic production quotas by mistreating the labors. It was also revealed that there were heavy traces of corruption which was degrading the law practices and there were hardly any prosecutions made. According to him, Indonesian workers were paid so low that it hardly fulfilled their basic necessities. The comparison between the pay stub of Indonesian factory and Michael Jordan endorsement contract was even harder hitting based on his technical calculations. According to his report, an average Indonesian worker would take 44,492 years to match the money made by Michael Jordan's one endorsement contract. Followed by the extreme media coverage on this, CBS found that Indonesian workers were only paid 19 cents an hour. Despite hiring Ernst & Young to carry on the audits in the factories...
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...Hitting the Wall: Nike and International Labor Practices CEO Phil Knight took a different approach than competitors when it came to his original strategy for Nike. One of the noticeable differences was the outsourcing of all manufacturing; no in-house production or dedicated manufacturing lines. None of the products or manufacturing would be done within the United States, meaning there were no physical assets. The plan to outsource specifically targeted low cost parts of the world. With the amount of money saved by outsourcing they could pour it all into marketing the brand. Celebrity endorsements were used, but in a different fashion because they only used high profile athletes as a representation for Nike. While this strategy was unique and worked well for a while, in the 1990’s problems began to surface. Jeff Ballinger’s main concern was the large gap in wage rates between developed and developing countries. As part of his research he interviewed workers and noted their dissatisfaction with the conditions they worked under. Ballinger believed Nike was more focused on competitive pricing that it led to mistreating workers and expecting unrealistic production. He was concerned Nike employees were not being paid enough in order to fulfill everyday necessities. Ballinger’s work went fairly unnoticed until Indonesia had a sweep of strikes that matched up with his arguments of the company. Nike’s response to the criticism and negative publicity was the contract factories were...
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...Nike Case Study Shiffaun L. Alston Jack Welch Management Institute Professor R. Chua JWMI 550 Sunday, December 7, 2014 Executive Summary Nike’s business model was based in outsourcing its manufacturing, then using the money it saved on aggressive marketing campaigns. However, the process of outsourcing work internationally proved to be problematic for Nike in a variety of ways particularly in regards to low wages provided workers and poor working conditions and environment. This paper intends to evaluate Jeff Ballinger’s argument against Nike, as well as determine how convincing Nike’s response was to Ballinger’s allegations. Lastly, strategies are provided as to how Nike moves forward after the smoke of the crisis has cleared. Evaluation of Jeff Ballinger’s argument against Nike Ballinger’s main argument that “any company has a significant obligation towards even its lowliest workers” is a very convincing one on many levels—social, ethical, and financial. Companies, such as Nike, make large profits and benefit tremendously from workers’ low wages in their international manufacturing companies. After reviewing Exhibit 1 (Nike Inc. Financial History 1989-1999) and Exhibit 4 (Summary of Revenue and Expense Profile of Minimum Wage Workers by Demographic Type) it would appear that Nike could indeed offer its workers higher wages at least to a level where workers can survive and help their families, some additional benefits, and provide...
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...employees at the company ceasing to do their jobs and the outside service provider presents these services. In the IT management data centers and networks could be examples of traditional outsourcing (Robbins,34). 2. Greenfield outsourcing is all about is the corporate change without hiring any external employees or service providers. In other words, the company like Nike in our case may hire independent contractors or startup companies to provide some services that the company did not do inhouse (Caroselli, 113). The following essay will speak about the NIKE company and its outsourcing business practices that although proved to be very profitable for Nike at some point of time would attract international attention with respect to the ethics involved in the corporate management, working conditions and compensation. According to corporate website (www.nike.com) Nike, Inc. is principally engaged in the personal design, development and worldwide marketing of stylish fashionable footwear, apparel, equipment and accessory products. The Company is a seller of athletic footwear and athletic apparel worldwide. Nike sells its products to approximately 18,000 retail accounts in the United States alone and through a mix of numerous independent distributors, licensees and subsidiaries in approximately 140 countries worldwide. Virtually all of its products are manufactured by independent contractors located in the third world countries like Indonesia, China and Thailand, and virtually...
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...Hitting the Wall: Nike and International Labor Practices Synopsis of The Situation Based in Beaverton, Oregon, Nike had been a corporate success story for more than three decades. It was a sneaker company, but one armed with an inimitable attitude, phenomenal growth, and the apparent ability to dictate fashion trends to some of the world’s most influential consumer. Selling a combination of basic footwear and street-smart athleticism, Nike pushed its revenues from a 1972 level of $62,000 to a starting $49 million in just 10 years. In the 1980s and 1990s, Nike had been plagued by a series of labor incidents and public relations nightmares; underage workers in Indonesian plants, allegations of coerced overtime in China, dangerous working conditions in Vietnam. For a while, the stories had been largely confined to labor circles and activist publications, until a young female worker had died in a Nike contracting factory in 1997, the labor conditions at Nike had hit the mainstream. While the marketing of Nike’s products was based on selling a high profile fashion item to affluent Americans, the manufacture of these sneakers was based as an arms-length and often-uneasy relationship with low paid, non-American workers. Key Issues Nike's strategy of shaving costs caused ethical dilemmas that ultimately damaged its reputation. Nike outsources all of its manufacturing. This approach has provided Nike with huge profits, from a 1972 level of $60,000 to a startling $49 million in...
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...Nike, Inc. Where Nike has no limits, only goals Child Labor Activist 09/02/2015 Table of Contents I. Executive Summary ………………………………………………………….. 1 II. Introduction ………………………………………………………………....... 2 III. Roots ………………………………………………………………………….. 3 IV. Taking Care of Goals ………………………………………………………… 4 V. Labor Scandal ………………………………………………………………… 5 VI. Wages ………………………………………………………………………… 6 VII. Boiling Water ……………………………………………………………….... 7 VIII. The Stakeholders …………………………………………………………...... 10 IX. Conclusion ……………………………………………………………………. 11 I. Executive Summary Nike is a name brand known for its sports athletic gear. This report will examine the issues of Nike on a controversial dilemma in which Nike is ethically responsible for manufacturing its goods. Nike has been known to be a sponsor for the highest paid names in the sports industry. Michael Jordan and Tiger Woods are two of many that benefit from the Nike endorsements. Analytically speaking large corporations like Nike Inc. tend to contract a large portion of factories overseas to avoid the strict working regulations in the United States. These third world countries like Cambodia, Vietnam, Pakistan, China, Korea, and Taiwan provide access to readily abundant cheap labor. Nike believed investing in developing countries to manufacture their products which led them to their current multi-billion dollar success. The exploitation scandal of Nike’s success includes labor issues, under age child...
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...Study Analysis (Hitting the Wall: Nike and International Labor Practices ) Business Ethics (MBA-513) Section: 02 Case Summary Nike is global footwear for athletes and non-athletes. It is still a highly successful athletic shoemaker today. Based in Beaverton, Oregon, Nike had been a corporate success story for more than three decades. It was a sneaker company, but one armed with an inimitable attitude, phenomenal growth, and the apparent ability to dictate fashion trends to some of the world’s most influential consumers. Selling a combination of basic footwear and street-smart athleticism, Nike pushed its revenues from a 1972 level of $62,000 to a startling $49 million in just ten years. Many researchers believe that Nike went in decline due to two reasons: Michael Jordan’s final retirement and the slowing economy. Another aspect of Nike that has brought a negative image upon them is the negative accusations of exploiting foreign child labor with lower wage. Poor labor conditions and low wages have been an issue for many years, and are still present in 2011.In the 1980s and 1990s, Nike had been plagued by a series of labor incidents and public relations nightmares: underage workers in Indonesian plants, allegations of coerced overtime in China, dangerous working conditions in Vietnam. For a while, the stories had been largely confined to labor circles and activist publications, until a young female worker had died in a Nike contracting factory...
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...” This case was prepared with the active involvement and research assistance of the following Sloan MBA students: Vanessa Chammah, Brian Curtis, Elizabeth Fosnight, Archana Kalegaonkar, and Adnan Qadir. I would also like to thank Miguel Alexander, Maria Eitel, Dusty Kidd, Joseph Tomasselli and Dara O’Rourke for their helpful comments and assistance during this project. 1 1. Introduction How should global corporations behave in the new international world order? What constitutes good corporate citizenship in a world where the stakeholders are diverse and dispersed around the globe and where no clear or consensual rules and standards exist? These questions shape the behavior of most multinational corporations (MNCs) today. Although multinationals are eager to pursue the opportunities of increased global integration, they are increasingly aware of the reactions which their strategies induce – both at home and abroad. Thus, they tread warily, lacking clear and agreed-upon definitions of good corporate citizenship. Through a case study of Nike, Inc. – a company that has come to symbolize both the benefits and the risks inherent in globalization – this paper examines the various difficulties and complexities companies face as they seek to balance both company performance and good corporate citizenship in today’s global world. 1. The Athletic Footwear Industry The athletic footwear industry experienced an explosive growth in the last two decades. In 1985, consumers in the United...
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...Hitting the Wall: Nike & international labor practices How well and how responsibly do you think she has handled these issues to date? What advice would you give her about how she should now proceed? What principles should guide the company’s policies and practices? What opportunities, constraints, and risks does the firm face? What are the scope and limits of its social responsibilities? There are two aspects to look at how Nike has acted: 1) The intension with which it has acted: any corporate’s acts are a manifestation of the values of individuals responsible for making decisions. In my view the most relevant reading that applies to Nike is Kant’s philosophy of acting in good will to others and out of moral duty. Kant believes people should respect the rights and dignity of others. However, by having a supplier selection criterion, which focuses on lowest cost and does not include any information on how the goods are manufactured, by who, where they come from, and how the supplier manages such a low cost, Nike has committed a serious oversight of its duties and moral responsibilities. In the process it has acted in sheer self-interest and has ignored the workers’ rights and dignity. It becomes even more important in Nike’s case because it commands a really high bargaining power and could have easily got any information it wanted. Even though, Nike has done a commendable job at course correcting in response to the public criticism - by employing outside firms to...
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...M ultinational Strategy «In the current economic climate it is critical that the increased regulation of business should be considered more than ever to protect workers rights» Table of Contents Introduction 3 4 The globalisation and its impact on the Labour Globalisation and the new international division of labour in East Asian countries 4 The regulation of the labour market in the world, which are the actors ? 4 6 The regulation issue for the labour market Labour law, and government policies 6 Responsive regulation, a solution to the deregulation policy problems ? 7 Conclusion 8 2 Introduction Globalisation represents a set of elements that have profoundly altered the world economy, the international trade, and the relations between each country. The globalisation has also changed the labour market and work in all countries, creating a "global work" market. The labour market is divided into two parts around the world: the labour force in developed post-industrial economies, which is a very expensive labour and less productive but provided high quality goods and a labour of works from developing countries, which offered low wage rates and few workers rights. In their search for economy and profits, multinationals have become increasingly interested in the potential offered by developing countries in terms of manpower often less expensive than in their countries of origin. Moreover, the deregulation policies pursued in United States during...
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...Elsevier’s archiving and manuscript policies are encouraged to visit: http://www.elsevier.com/copyright Author's personal copy Organizational Dynamics (2010) 39, 353—356 a v a i l a b l e a t w w w. s c i e n c e d i r e c t . c o m journal homepage: www.elsevier.com/locate/orgdyn Why Nike kicks butt in sustainability Marc J. Epstein, Adriana Rejc Buhovac, Kristi Yuthas Nike Inc. has a unique combination of capabilities and competencies that position the company as a leader in sustainability. Nike is among the world’s most prominent sustainable corporations, and is regularly recognized by organizations that rank sustainable performance. For example, Nike has been named one of 100 most sustainable corporations in the world by Innovest, ranked third in Corporate Responsibility Officers 100 Best Corporate Citizens list, and named one of the World’s Top Sustainable Stocks by Sustainable Business. Nike possesses a unique combination of strengths and capabilities that enable the company to make rapid advancements in sustainability that are ahead of other firms in its industry, and that increasingly contribute to the financial performance of the company. Nike believes that we are at the beginning of a shift from a service- or...
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...| | |GENERAL MANAGEMENT & STRATEGY | |Fall Semester, 2010 | |[pic] | |MANAGEMENT 374 (Unique No: 04570) | |Class Times: Monday and Wednesday, 08:00-09:30 am | |Location: UTC 1.118 | Instructor: David Chandler E-mail: david.chandler@phd.mccombs.utexas.edu Office: CBA 3.332K Tel: (512) 471-2548 Office hours: Monday, 10:00-11:00 am Wednesday, 10:00-11:00 am Immediately after class and at other times by appointment. REQUIRED COURSE MATERIALS (Available at the University Co-op) 1. Course reading packet: Selection of Harvard Business School case-studies, Harvard Business...
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...studying this chapter, you should be able to 1. define what marketing is and discuss its core concepts 2. explain the relationships between customer value, satisfaction, and quality 3. define marketing management and understand how marketers manage demand and build profitable customer relationships 4. compare the five marketing management philosophies 5. analyze the major challenges facing marketers heading into the next century Our first stop: Nike. This superb marketer has built one of the world’s most dominant brands. The Nike example shows the importance of — and the difficulties in — building lasting, value-laden customer relationships. Even highly successful Nike can’t rest on past successes. Facing “big-brand backlash,” it must now learn how to be both big and beautiful. Ready? Here we go. T he “Swoosh” — it’s everywhere! Just for fun, try counting the swooshes whenever you pick up the sports pages, or watch a pickup basketball game, or tune into a televised golf match. Nike has built the ubiquitous swoosh (which represents the wing of Nike, the Greek goddess of victory) into one of the best-known brand symbols on the planet. The power of...
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