Nike, one of the globally established companies representing the perfect example of a class or quality in global corporation was established in 1972 by Mr. Phil Knight, an athlete met who met track coach at the University of Oregon. Both of them together formed Blue Ribbon Sports in 1962 and later launched Nike brand. Nike is one of the leading marketers of American athletic shoes and apparels and in 1978 it was officially known as Nike Inc.
after 1978 its sales started expanding all over South America and Europe.In the early 1990's despite a major economic recession, Nike's turnover surged from US$750 million in 1987 to $4 billion in 1993. Later in 1997 its stock had hit $76, but after the Asian economic crisis 1998, its profits went down by 37%.Still Nike had an annual turnover of $9 billion and net profits of $571 million. Nike has an international headquarter in Beaverton, Oregon which directly employs more than 22,000 people worldwide.Like many other companies, Nike's majority of its supply chain is owned by other companies; i.
e's subcontracted in almost 50 countries with 700 factories and 550,000 working for Nike.The following case study outlines the controversy against Nike and its responses. The case study is based upon publicly-available material, Information provided by Nike and interviews with selected Nike staff and external stakeholders. This information is gathered from Nongovernmental organizations such as San Francisco-based Global exchange, a leading human rights organisation and other social justice organisations and also a visit by reporter of the CBSNews, 48 hours to one of the factories in Vietnam Order a Custom Essay.The case study does not argue the readers to ban the products of Nike, but instead it offers the readers and the students the insights of the working condition of Nike and the developed policies.
Although Nike admits about some problem in the overseas factories, it has taken many steps to the improving working conditions.The Power of the Swoosh The ‘swoosh' logo is one of the worlds known trade mark which has many Sponsorship deals with great athletes from Michael Jordan and Tiger woods. We live in a cultural economy of signs and Nike's swoosh is currently the most recognizable brand icon in that economy. The Nike swoosh is a commercial symbol that has come to stand for athletic excellence, hip authenticity, and playful self-awareness.
While the logo carries the weight of currency, Nike's .Just do it. slogan has become part of the language of everyday life.The Swoosh logo or the power of the swoosh has made Nike as one the major target of using child labour as a source of production and upon that low wages. The anti-Nike movement has tarnished the reputation of Nike in recent years. There were many criticism following Nike that its products were made in the “sweatshop” where workers mostly children were paid below- subsistence wages.
Industry BackgroundThere are many important differences between producing footwear and apparel, as both have their own standards to be maintained be with the factory or the workers. Nike's production of shoes and apparels have been divided like out of 700 factories, 40 factories make shoes in 8 countries, as the other manufacture apparels and equipments. There were import quotas brought out by the U.S in the middle of 1980's and as a result nike came down to around 8 countries from 16 countries, but the trend in the apparels sector were entirely different as U.S current legislation import quota are established for all the production countries. This quota has an end in 2005 as the WTO brings new Agreement on Textile and Clothing.
Dusty Kidd however explained that Today the most important item Nike may have on its inventory may be a knit sweater; tomorrow it might be a woven shirt. Tastes change. However, the factory those made our sweater, cant make our shirts. They are totally different processes, different equipment, different technology, different skills and so as fashions change that dictates to a large extent where we go to get our production done, hence we are in more than 50 countries to make apparel.
Out of 40 footwear suppliers, 37 of them make 100% Nike product as to prevent other competitors to learn how they produce Nike shoes.How the Controversies Started Nike's and has been accused of using child labor in the production of its shoes and apparels in Vietnam. The case study will examine Nike Town, one of the four factories which Nike didn't own but had subcontracted. It would take around 25,000 workers to make a million shoes a month but workers are paid only $40 a month i.
e.20 cents an hour. The workers have a minimum wages and more hours to work. Nike's first attack was on October 17, 1996 that came from a survey by Reporter Roberta basin who visited Saigon, one of the four factories in Vietnam.
A labourer had been interviewed and studies found out that even as a sewing team leader she didn't get the minimum wages. Moreover like all the other women who work there she also had to accept low wages and long hours. There was an annual work limit of 200 hours for all the employees, but she has already crossed that. Also she says that she can't go home unless she has finished her quota even if she was sick or go home to care a sick person.The main cause is that Nike did not directly produce the apparels or the shoes, but had sub-contracted in many different companies.
But according to Nike, it has asked all its subcontractors to obey local laws and improve working conditions and pay. Nike says that it has independent auditors to examine the factories whether they stick to the local laws. Moreover Nike states that it had also terminated contracts with those factories who do not comply with the local standards. All controversies state that Nike is solemnly responsible for allowing such working conditions to prevail. Although Nike was removed from responsible area, it is clearly stated that certain exploration due to subcontractors do not occur.
Possibly all conditions like the pay and the work conditions of the workers of the subcontractors are negotiated by Nike.It is clearly known that if Nike had chosen to make improved conditions, then the workers would have been benefited Another attack on Nike was on June 1996 from the U.S, which was a foundation by the labor unions and domestic apparels that opposes free trade with low wage countries. The controversy related to Nike was that “Air Jordans” a very popular line known for the high priced Nike-Sneakers were made by small children at the age of 11 in Indonesia. This attack was made by Joel Joseph the chairman of the foundation of labor Unions.
He also stated that the small children were paid as less as 14cents per hour which was opposed by Donna Gibbs, a spokeswoman from Nike that the statement was false. She stated that the average worker made around $103 a month i.e's 240,000 rupiah. The average worker worked for a maximum of 54 hours a weeks or can b stated as was paid 45 cents per hour.
This controversy was opposed by Nike stating that they had members in all the subcontractors' factories to constantly check whether they obeyed the local minimum wage and child labor laws.
