Initial video

NIKE
 Undisputed market leader in athletic
footwear, apparel, equipment and
accessories for sports enthusiastic.
 With its expanded operations in 110
companies.
 Started in 1972 by its CEO Phil Knight after
its predecessor blue ribbon sports.
 First shoe launched under brand name Nike
was “Cortez” which was very successful.
Success factors behind Nike
 Innovative products and groundbreaking
marketing strategy.

 Nike’s use of offshore manufacturing-

 Started manufacturing at Japan.
 In mid 80s focus shifted to Taiwan and
Korea.
 In early 90s shifter domestic production to
South Asia.

 Benefit of international trade.

Just do it 1st campaign

 Unfair Practices in Vietnam
Negative publicity lasted for 3 years (1989-92)
Nike disregarded the issue, Blamed subcontractors
Watchdog groups accused, articles were published, media &
activists became active
By mid 1997, “national days of consciousness” campaign rallied
the participation of key target markets
International Nike day of protest
Demonstrations all over the world
High profile critic, Michael Moore, labeled Knight as “corporate
crook no.3”
Corporate responsibility division,
1998
 To deal with community affairs, labor practices and
environmental actions
 Maria Eithel, VP of corporate responsibilty (ethics
manager)
 Despite less success of Reebok’s similar move
 Another controversy generate- PR move, not
solving the real issue
 Dusty Kidd, director of labor practices, to manage &
train contract labor managers
 Vada Manager hired as senior manager, corporate
communication
 Educated both internal & external customers on
Nike’s efforts
Employee morale
 The controversies were affecting the employees, (difficult
situation)

 The issue needed to be addressed internally in a systematic so

that the employees are aware.

 Defending the brand internally and externally was becoming

difficult for Corporate responsibility
 Nike corporate standards and practices
 Nike implemented Corporate std programs to bind its manufacturing
partners
 Corporate standard program included MESH (manufacturing-
environment- Safety- Health), Manufacturing leadership standards, Code
of conduct etc.
 Senior Management at Nike referred to the code of conduct to show
their serious commitment
 Manufacturing partners had to adhere to the Manufacturing leadership
standards
 Included compensation for their training period and fair wage structure
 If failed, relationship terminated
 Despite this, they were not able to persuade the public that it was serious
in eradicating the poor labor conditions
 NIKE`S POSITION
MANAGEMENT
PERSPECTIVE
CRITICS PERSPECTIVE
 Illogical to draw comparison
 Below sustenance
between wages in Vietnam,
wages ( evidence China and U.S.
shown by TRAC)  Ernst & Young audit and
 Factory workers wage
Tuck School of Business
is US$5 for a US$100 reports were affirmative
pair of shoe  Parker, chief economist at
 Violating the contract
the Asia Foundation San
of offering minimum Francisco said Asian
wages workers do not work for
 The reports of Ernst & starvation wages.
Young and Tuck  Only shoe manufacturer
School were who provides paying above
sponsored by Nike average wages.
itself.
When merry Christmas worried
them
 New York Times article revealed an internal audit report which
showed unhealthy factor situation and overtime policies.

Steps taken-
 Manager confronted that it shows their interest in third party
monitoring
 It was actually conducted to take corrective measures
 Result shown- healthy and comfortable workplaces, sufficient
wages, the factory conformed with Vietnamese law
 Welcoming the critics and students of the University of North
Carolina to the factories but that was also criticized as cherry picking
 Corporate web site started addressing labor issues, standards and
practices extensively and asked for viewer`s opinion via e-mail when
activists started using electronic media for anti- publicity
Why did Nike’s attempt to address it critics
proved unsuccessful?

 Nike ignored the problems & denied their

responsibility toward their contractor
manufacturing.

 Nike was unable to balance between business

objective and labor practices issues.

 The watchdog group were not convinced with

implementation of their code of conduct and
human resources management issues.
Did Nike react appropriately?
Or Did it overreact?

The team answer is No,

Nike failed to react appropriately.

In fact team thinks Nike actually

“under-reacted”.

Michael Jordan - Nike Air Jordan XII Ad - Chal

lenge Me (1996-1997).mp4
Why was only Nike singled out by human rights
and labour right activist?
Majorities of the human rights and activists were
US-based .
Nike was a US brand/ product.
Nike is associated with “luxury” products.
Nike is also seen as the leader among its
competitors.
What damage, if any, has been done To
Nike?
 Nike’s Image Got Shattered
 More “Negative News About Nike’s Labor Practices”
Emerged
 Series of “Anti-Nike” Demonstration, Tarnishing Nike’s
Image
 Nike’s Logo and Tagline were Associated With Bad Labor
and Ethic Practice

 Out of Court Settlement Confirmed Nike’s Bad Labor

Practice
What could have Nike done to improve
Nike’s public image?
 Conducting press conference and issuing press
release outlining the steps that Nike
had taken to ensure compliance with its
code of conduct.

 Establishing & posting progress on improving

labour conditions on the corporate web site.

 Responding to each inquiry from the media or

watchdog group & trying to openly communicate
with them.