I. Summary of case facts
Nike is one of the leading athletic footwear companies. Nike has had a dramatic increase in revenue in the last two decades. In 1985 the U.S. spent $5 billion dollars on Nike apparel and in 2001 that increased to $13 billion.
Nike decided to do some outsourcing for their labor. This decision caused much controversy. 1994 a lot of criticism was pointed at Nike, Inc. Many criticisms came from publications such as: The New Republic, Rolling Stones, The New York Time, and The Economist. The criticisms involved Nikes outsourcing for labor. The critics stated that Nike was responsible for where there products were created. The countries/factories paid low wages, had poor working conditions, and had young child laborers
They decided they needed to change the way they do business. In 1992 Nike created a Code of Conduct, which set forth many rules to cleaning up the way their outsourcing had been done. Nike hired employees to inspect/check on the factories that were doing business with Nike in-order to assure a good work environment. Nike has also contributed too many non-profit organizations.
Nike is involved in the United Nations Global Compact, founders of the Global Alliance for Workers and Communities, and active in the Fair Labor Association. Nike knew many changes had to be made in order to keep a good image for their company and increase revenue.
II. Statement of problem
Nike wanted to increase their revenue by outsourcing the labor of their products. By outsourcing Nike would not have to pay as much to have their products created. Other countries outside the U.S. do not charge/pay as much for labor. Nike moved factories around from a lot of countries trying to get the best profit for their production.
Nike started opening up factories in countries like Indonesia, Pakistan, and Vietnam. This was a bad idea because Indonesia paid workers extremely low wages, not enough for people to live on. Pakistan does not have an age limit where children can work; so many children in Pakistan were making Nike apparel. In addition Vietnam had very poor work conditions.
Many publications found out about these labor acts and started making people aware of how Nike is doing business. Nike was criticized for how they produce their products. This was giving Nike a bad image to the public.
III. Alternative Solution
Nike was telling these critics that they were not responsible for how the products were created, because they were simply managers and marketing. This was not a very productive solution.
In 1992 Nike had created a Code of Conduct for all the factories that produced their product. This was a start in monitoring how labor and production was done; however, that was not enough because Nike also needed to hire employees to monitor the factories and make sure the Code of Conduct was enforced. Then to cover up any misdeeds on their part they decided to involve themselves in many non-profit organizations which benefited labor laws.
I think Nike did very well on making sure that their outsourcing was done in a civilized manner. Though, I think the whole non-profit organization involvement is kind of like a big gesture stating, “Hey look at us, we’re good now. We want everyone working in a civil and healthy environment!” I think that gesture is kind of a hypocritical statement. All in all I do think that this may have saved them from many companies/organizations switching to an alternate athletic apparel brand.
I’m not to sure if this had been done, but I think it would have been very appropriate for Nike representative to give a public speech. Publicly announce that they have changed the way they are doing business and possibly apologize for any misconstrued image or false representation to the consumer.