Nike

Nike is an internationally recognized American brand of athletic equipment, apparel and

footwear. The company was founded by the athlete Philip Knight in !"# and has its
headquarters in $regon. Nike products are manufactured by independent contractors and are
a%ailable in &' countries the world o%er (Nike )nc*. Nike has around !'' suppliers in ++
countries in ,astern ,urope, -entral America and Asia. Product de%elopment and marketing is
done at the headquarters while subcontracting of product manufacturing to factories is being
done since !.. (Tulder, /wart, 0''"*. At present there are more than 1.,''' employees
working for Nike in different locations around the world (People 2 -ulture*. The past decade
saw Nike3s name associated with one scandal or the other which has ad%ersely affected its
reputation as well as the profits.
Controversies faced by Nike
The a%ailability of skilled yet cheap labor in Asian countries such as -hina has caught the
attention of a number of brands and they ha%e established manufacturing units here to cut the
cost of production. Nike too has subcontracted the manufacturing of its products to factories in
-hina, 4ietnam and )ndonesia (5errell et al, 0'0*. )n the early nineties howe%er the stories of
the e6ploitation of Asian workers for monetary gains by Nike shocked the world. 7iring of
underage employees, poor working conditions and poorer pay scales of Asian workers were the
main accusations hurled at Nike. The workers complained of %erbal (frequent* and physical
abuse by the super%isors and long working hours for little o%ertime. The condition in the
)ndonesian factories was worse as the company that pays a king3s ransom to celebrities such as
8ichael 9ordan, Andre Agassi, Tiger :oods, 8onica ;eles etc (<eder, 0''0* did not e%en pay
minimum wages to its workers (5errell et al, 0'0*. Another allegation against Nike was the
use of hazardous adhesi%e called toluene in the manufacturing of shoes which had detrimental
effect on the health of the workers. ,n%ironmental pollution and usage of considerable amount
of energy were other charges Nike faced (5errell et al ,0'0*. Nike tried to get out of this ugly
situation with the claims that =it was >ust the buyer? but this claim was dismissed as a lame
e6cuse and Nike was forced to accept responsibilities of whate%er happened in the factories
because being the retailer, it made the ma6imum profit (Tulder, /wart, 0''"*. )n the beginning
Nike refused to accept the accusations and e%en withdrew its sponsorship to some uni%ersities
which openly criticized the inhuman practices carried out in the factories but later under the
pressure of its stakeholders Nike acti%ely demonstrated its corporate responsibilities (@arcia,
0'0*.
Nike adopts Corporate Social Responsibilities
The contro%ersies brought a bad name to the company and business suffered as share price fell,
sales declined and uni%ersities cancelled sponsorships. Nike took immediate action to repair the
damage done by implementing a code of conduct and making it compulsory for all suppliers to
follow it. )t also started monitoring the working conditions in the factories along with @lobal
Alliance. Nike became a member of the Apparel )ndustry PartnershipA a >oint %enture between
human rights groups and companies formed under the -linton administration to chalk out a code
of conduct to be followed by industries (:ilsey, Bichtig, n.d*. To impro%e the working
conditions at the factories it first of all completely prohibited the use of toluene. )t increased the
wages of the factory workers in )ndonesia and set it higher than that fi6ed by the go%ernment,
child labor was banned and it was mandatory for the employees to be at least . years old to be
employeed in the shoe factories and " years old for employment in apparel factories (:ilsey,
Bichtig, n.d*. Nike also launched an e6tensi%e public relations campaign to promote itself as a
responsible corporation of the society.
To fulfill its corporate social responsibility Nike introduced the 8icro ,nterprise Boan Program
in countries like )ndia, Pakistan and )ndonesia, Thailand and 4ietnam where unemployed women
were offered loans to start small businesses (:ilsey, Bichtig, n.d*. Through this act the company
intended to help women supplement the family income and contribute positi%ely towards the
de%elopment of the community.
The company also decided to educate its workers by offering educational programs such as
middle school and high school equi%alency courses within the factory premises. The workers
could attend these free classes in their nonCworking hours and those workers who successfully
completed the course were to be rewarded with an increase in wages.
Nike also offered the nonCgo%ernment organizations (N@$s* to %isit the factories inspect them
and make the findings public. )t e%en hired Andrew Doung a former mayor of Atlanta and a strict
opponent of child labor and sweatshop practices to %isit its factories in -hina, 4ietnam and
)ndonesia and a compile a report of the reforms done by Nike. The report was later made public
(-arroll, <uchholtz, 0''.*.
Through these reforms Nike tried to undo the damage it had done. Although the company3s
intentions were noble, some of the reforms lacked feasibility also Nike a%oided two important
issues that of minimum wages and underage employees. Nike3s educational program was flawed
because family obligations forced the factory workers to work o%erCtime thus lea%ing little and in
some cases no time at all to a%ail the free educational courses offered by the company. The
program was more suited to the needs of the office workers instead of those working in the
factory. )f Nike is committed to educate its workers, it should first find a solution for the
o%ertime work being done. Although Nike offered the N@$s to inspect its factories and make
their findings public, there was a limit to the information Nike was willing to share. The report
by Andrew Doung was also considered biased by some critics (-arroll, <uchholtz, 0''.*.
Nike failed to address the issues of minimum wages and child labor properly. )t claimed that cost
of li%ing %aried from country to country and thus a minimum wages bar was difficult to
establish. )t also argued that in order to attract foreign in%estment the go%ernment of some
countries set the minimum wages slab quite low (:ilsey, Bichtig, n.d*. Although the company
set the least age of employees to be " years, it hired # year old employees in countries where
children aged fourteen are allowed to work in factories (:ilsey, Bichtig, n.d*..
To combat the en%ironmental pollution caused by the factories, Nike has started to recycle its
products. )n the 0'' 5ootball :orld -up in ;outh Africa it introduced recycled shirts and
claimed that it sa%ed more than ++',''' pounds of polyester from being wasted (5errell et al,
0'0*.
Nike and its Stakeholders
Nike was under intense pressure from stakeholders to take concrete steps to address unethical
labor practices in its supply chain (@arcia,0'0*. Through its efforts to bring about a positi%e
change in the society, Nike has gradually impro%ed its image and has got into the good books of
many including its stakeholders. The main stakeholders of Nike are the suppliers, the N@$s,
employees and consumers although it has mentioned management, en%ironment and community
to be its main stakeholders in its -ode of -onduct (:allace, 0''*. Nike is stri%ing hard to
satisfy both its primary stakeholders (in%estors, partners, shareholders, employees and
consumers* and secondary stake holders (communities*. Eifferent stakeholders ha%e different
demands for instance primary stakeholders like shareholders, in%estors and partners are more
interested in the profits while employees demand good wages and workplace satisfaction. The
consumers on the other hand want %alue of their money in terms of ease of a%ailability, quality
and safety of products. The progress of Nike is affected if these stakeholders ha%e complaints.
The secondary stakeholders are the communities, the reputation of Nike is at stake if
communities are not satisfied. 5or instance when the reports of unethical practices in the
factories surfaced, most college communities cancelled their sponsorship deals with Nike.
,n%ironment is one of the most important stakeholders of Nike and the company has taken
measures to protect it. )n a bid to sa%e the en%ironment, Nike achie%ed an eighteen percent
decrease in its carbon emissions in 0'' as compared to that of !!. (:allace,0''*. Nike has
also done work for the benefit of the global community for instance during the 0'' :orld -up
it conducted an 7)4FA)E; awareness campaign to address the serious issue of 7)4FA)E;. )n
0''. it conducted a 7omeless :orld -up in 8elbourne thereby using sports as a tool to bring
about social changes (:allace, 0''*. The corporate responsibilities practiced by Nike ha%e not
only impro%ed its image in the society but has brought about social benefits as well as financial
gains.
The Counter Campaigns by Nike
Nike launched a compelling counter campaign to rebuild its reputation as a company that cared
for its workers and where human %alues came first. $ne of such steps was setting up of the
website nikebiz.com where e%ery effort of the company especially those to empower poor
women were published (:aller, -onaway, 0'*. Nike undertook an e6tensi%e stakeholder
dialogue and stakeholder engagement program in order to understand their needs and demands
better (5reeman et al*.
Nike sent its representati%es to colleges and uni%ersities to e6plain the steps taken by the
company to make the working conditions in the supplier factories better. ;tudents were in%ited to
%isit the factories at the e6pense of the company to gain firsthand knowledge.
Conclusion
Nike the leading American brand of athletic apparel and footwear came under se%ere criticism
from all corners when reports of gross unethical practices in its supplier factories. Although Nike
refused to shoulder any responsibility of what was happening in its supplier factories, aggressi%e
campaigns from people and human rights acti%ists including a boycott of the Nike products and
the pressure from stakeholders forced the company to accept its social responsibilities. Nike then
launched a series of reforms to become a good corporate citizen and has succeeded in its
attempts to quite an e6tent. )t took measures to protect the en%ironment, impro%e the working
conditions in its factories and pro%ided free education to its employees. )t tried to make the li%es
of the people better by offering loans for small businesses to poor women. Nike3s efforts to bring
about social changes indicate that it is not >ust a brand that caters to the needs of the celebrities
but is also sensiti%e to the needs and rights of the underCpri%ileged.
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