1. What are the challenges regarding corporate social responsibility that companies in the apparel industry face in its supply chains around the world?

The apparel industry is perhaps particularly vulnerable to issues of social responsibility. The industry is still somewhat labor intensive and operates in a low wage environment. The industry is sometimes referred to as a “suitcase industry” in that it frequently moves from one low wage country to the next, constantly seeking the lowest wage level. The industry also has a lot of contract manufacturing in which a foreign firm is contracted to do all the production for the firm owning the brand. Frequently there is little oversight and control over the foreign manufacturer. All of this can lead to the problems we see in this case.

2. Discuss the meaning and implications of the statement by a Nike representative that “consumers are not rewarding us for investment in improved social performance in supply chains.”

While this statement may appear to sound socially irresponsible, it is probably true. Nevertheless, it isn’t a good excuse for not “doing the right thing.” While competitors may be engaging in unethical practices, and consumers may not care about the working conditions of foreign employees, it is still not a justifiable situation to engage in socially irresponsible actions. In the case of Nike, the company is not competing with the low end of the market, and one would assume that the premium pricing of the brand could allow for improvements in wages and working conditions. It should be pointed out that consumer perceptions and concerns can change and a firm can find itself dealing with a successful PR campaign directed towards its practices. Consumer “rewarding” can change and make such companies vulnerable due to their foreign employment