Nike-Background Notes

Advertising: Olympic campaign 1996, uses sports models to display clothing, media – satellite TV has enhanced sales, involved in many sports e.g. football, basketball(Michael Jordan), Golf Tiger Woods etc Used these since 1970’s. Struggled in football. Controversial e.g. You don’t win silver you lose gold (Winning is the only important thing.

Growth: Fastest growing brand of sportswear, increased sales by 40% from 1995-96. 10 billion dollar business. Phil Knight one of the 10 richest individuals in the US.

R&D important, over 330 new designs a year.

Continued Manufacturing: Mainly cheap labour from Asia (low

costs), ad over competition e.g. China and Indonesia pays workers $2.4 a day (could double and still make profits. Indonesia has a corrupt military dictatorship, some subcontractors have abused employees e.g. clean toilets or wear the trainers that they have made faults on, or run around the block.

Products: seen as a status, kids are victims of aggressive advertising. Trainers are now banned in some schools as poorer kids cannot compete. 70% are worn for fashion (look cool) Sponsorships: Now include some school teams, kids seen as marketing models.

Biggest shoe company in the world.

How does NIKE operate? Contracts production to South Korean and Taiwanese

companies. These companies also operate in countries where labour

prices are cheaper e.g. Vietnam and indonesia 1991-Total Sales=$9.5billion & Profits = $590 million Phil Knight is the cofounder and chief executive Contractors are paid $18 a shoe-11(materials), 2(labour),

4(other costs) Sells to retailers at $36, they at least double their profits. Other costs include-Shipping, R&D. Marketing,

advertising, business costs, taxes and profits

Factories Produces in 800 factories employing 600,000 people, in

more than 50 countries. In 2003, Nike acquired Retro Shoe maker-Converse

Video Questions-Globalisation Winners and Losers

Why does Nike not manufacture purely in the USA?

Tasks: Nike: A Case study of a Transnational Company     Use the Nike sites and the FAQ at Global Exchange to write an introduction to Nike and its overseas production.   Nike: www.nike.com Nike Biz: http://www.nike.com/nikebiz/nikebiz.jhtml?page=0 Global Exchange : Frequently Asked Questions: http://www.globalexchange.org/campaigns/sweatshops/nike/faq.html   Why are people boycotting Nike? Visit some of these sites and list the different reasons listed.   Adbusters: The Smell of Swoosh: http://www.adbusters.org/creativeresistance/36/1.html   Boycott Nike Home Page: http://www.saigon.com/~nike/   Boycott Nike Info : End Sweatshops & Child Labor: http://boycott-nike.8m.com/   Educating for Justice - NikeWages.org: http://www.nikewages.org/   Mike & Nike: http://www.dogeatdogfilms.com/mikenike.html   NIKE - Clean Clothes Campaign: http://www.cleanclothes.org/companies/nike.htm     How has Nike responded to these criticisms?   Nike Biz: http://www.nike.com/nikebiz/nikebiz.jhtml?page=0   Global Alliance Background: http://www.theglobalalliance.org/background.htm Global Exchange : Still Waiting For Nike To Do It: http://www.globalexchange.org/campaigns/sweatshops/nike/stillwaiting.html   What is the current situation?   JohanNorberg.Net: http://www.johannorberg.net/?page=articles&articleid=53   SocietyGuardian.co.uk | Society | Nike's big ticking-off: http://society.guardian.co.uk/givinglist/story/0,10994,1087134,00.html

Nike’s Policy

What is Nike Doing Right ????

Environmental Policies !

• Establishment of NEAT and MESH to answer the problems the sports industry poses to the environment.

• Consistent environmental responsibility across global market

• Other companies have followed Nike’s lead.

Nike’s Policy

What is Nike Doing Wrong?

Sweatshop Labour !

• Criticized for contracting with factories that use sweatshop labour in countries such as China, Vietnam, Indonesia and Mexico.

• As late as 1996 Nike has violated minimum wage and overtime laws in Vietnam.

• Criticised for use of child labour in Cambodia and Pakistan.

• Accused of poor working conditions, exploitation of cheap overseas labour and forced labour camp like work conditions.

Nike’s Policy

“A RIGHT DOES NOT MAKE A

WRONG RIGHT”

• Environment, employees, contractors, suppliers are stakeholders

• Nike has an ethical and moral responsibility to all stakeholders

• Doing right for one side does not allow Nike the right to do wrong to another side (not a mutually exclusive tradeoff).

• Nike ethical reputation is built on the consistency of its policies (not just the environment at the detriment of labour policies)

Why no greater leeway in Labor Policies????