Williams, Heidi Michele; p. 486, Apr 2004 Smiling and lying: Corporate evasions of responsibility regarding global sweatshops
Aaron Bernstein. Business Week. New York: November 8, 1999. , Iss. 3654; pg. 104
Cynthia Koury. Telegram & Gazette. Worcester, Mass.: Nov 18, 1999. pg. A.1
Kelley Holland, Aaron Bernstein Business Week. (Industrial/technology edition). New York: May 25, 1998. , Iss. 3579; pg. 46. After years of pressure to stop abusive practices in Nike's overseas plants, CEO Philip Knight has decided to revamp labour policies. He is also challenging other US companies to match his new standards. Business Week, a reliable well established source.
Andy Bernstein. Sporting Goods Business. San Francisco: Dec 15, 1997. Vol. 30, Iss. 18; pg. 10, 1 pgs.
Recent report from an Ernst & Young audit of a Nike Vietnamese factory outlined overtime violations and an excessive level of toxic fumes in the workplace. The leak of the report and the ensuing media coverage prompted Nike to hold a rare press conference to address the report and put it in perspective.
Worthy Evans Bobbin. Columbia: Aug 1998. Vol. 39, Iss. 13; pg. 8, 3 pgs. When Nike came under fire for allegedly contracting production to sweatshops earlier this year, the debate over how to best eradicate them surfaced stronger than ever. Nike has committed to a list of several initiatives that would improve factory conditions in all of its contractors' plants. There is, however, scepticism as to whether monitoring programs are going to turn the tide on labour law violators.
Anonymous. Business Asia. New York: Jul 28, 1997. Vol. 29, Iss. 15; pg. 1, 2 pgs. Nike's culpability for poor labour practices at its Asian plants remains an open issue. Other companies operating in Asia should take note and act quickly to prevent similar crises. Nike has been criticized for out-sourcing production to Asian factories that maintain sweatshop conditions. Nike's troubles amount to another example of an age-old dilemma: how to balance the dollars-and-cents demands of business against the enforcement of ethical practices. Hill & Knowlton, a US-based public relations firm, advises companies to be proactive instead of reactive with labour issues. More crucially, Hill & Knowlton strongly advocates the hiring of local managers to break Cultural business barriers and to bridge local customs, something that Nike has acknowledged it failed to do.
Robyn Fontes. Folio: The Magazine for Magazine Management. Stamford: 2000. pg. 112, 2 pgs. To stay competitive, publishers are outsourcing more - including production, circulation and even editorial. For example, last January, trade publisher Penton Media began for the first time to outsource reader service inquiries. Many small and midsize companies outsource to reduce costs or hold down costs of office space or computer equipment. Cost savings alone should not be the only factor driving outsourcing decisions. Delivering quality product and service and bringing in quality people is a critical part of the equation. Magazines large and small find that outsourcing production allows them to take advantage of the latest computer-to-plate technology and improve the look of their magazines. In addition, it alleviates problems brought on by the short shelflife of software and the expense of upgrading equipment.
Stephen A Huth. Employee Benefit Plan Review. New York: Nov 1999. Vol. 54, Iss. 5; pg. 18, 6 pgs. Outsourcing appears to have taken hold in employee benefits departments throughout the country, while rising benefits costs and the threat of further increases dominate the concerns of benefits managers themselves. A recent survey also found an increase in salary levels for benefit managers and for supervisory and clerical staff. The most dramatic increases were for benefits managers in companies with 5,000 or more employees. The top concerns of benefits managers include costs, staffing, and difficulties with outsourcing.
- Company and Market Sector Information from Free Internet Sites.
The majority of Information about Nike can be found on free to view websites the only problem with free to view sites is the quality of data may vary and sometimes be poor and which bits are reliable and which bits not. A massive amount of Nike websites only contain the information that the company wants to portray. This is a negative point as this may not be the whole truth and readers may be misled. The same goes for none company web-sites as these may over exaggerate the truth and portray the company image as worse than it actually is. Outside companies, newspapers or individuals may have a personal grudge against Nike so may also expose irrelevant or nonsense information.
The following websites were searched, and all contained relevant material:
(the Nike business site) , . The home site of one of the most active “anti” sites – Nikewatch , Record of the dialogue between campaign groups and Nike – meeting notes and email correspondence
. Other sources include: , , . In addition, advanced searches run on Google, altavista and other Search Engines dig out information that is valuable if it is used with critical care. ,
, which supports the academic text stated above, and . Reports from Nike can be found at: and
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REAL CASE – Nike
Source: Rugman, Alan M. and Richard M. Hodgetts (3rd ed. 2003) International Business, p. 295.
One of the rules of international production strategy is: manufacture the highest quality product and the world is likely to beat a path to your door. A number of firms help to illustrate this rule. One is Nike, the sports shoe producer. The company makes a wide variety of high quality shoes. The company catalogue lists more than 800 models for use in approximately 25 sports. In 1999 Nike had 35 per cent of the world’s market for training shoes (and 45 per cent in the US). In 2000, its sales were over $9 billion. In an effort to keep ahead of the completion, Nike updates each shoe at least every six months. Most of these ideas are generated by Nike’s R&D centre in Beaverton, near Portland, Oregon, where physiologists and mechanical engineers study the stresses on an athlete’s feet and collaborate with stylists on new shoe ideas.
Although Nike sells it products in over 140 countries and produces in more than 50, it is really a ‘triad’ MNE. Over 92 per cent of its sales are in the triad markets of the US, EU, and “Asia”. In 2000 there was a 15 per cent growth of sales in the EU, due mainly to a new distribution facility in Belgium and a new design house in Holland. Nike is still strong in its home market, with 40 per cent of all sales in the US athletic footwear market and over 65 percent of the basketball footwear market. About 60 percent of its sales are still in its US home base.
Nike’s high quality product is matched by superb marketing skills. The world might be making a path to Nike’s door, but the company makes sure the world knows where they are. Nike spends 11 per cent of its revenue on marketing and its “swoosh” brand is recognised the world over. The company continues to use sports stars to endorse its products. Besides US stars like Tiger Woods and Andre Agassi, it has used European soccer players like Eric Catona, cricket players in India, and is now in China preparing for the 2008 Olympic games in Beijing. The idea is: if you can make the “cool” guys wear your products, then the rest will follow.
Perhaps the only thing that Nike doesn’t like to be remembered for is the bad publicity around its labour practices in Asia. Nike has outsourced all of its production to the low wage areas. In 2000, China produced 43 per cent of its footwear; Indonesia 29 per cent; Vietnam 13 per cent; Thailand 12 per cent. NGOs have criticized the poor working conditions in some of its Asian factories. In 1996, such criticism led to Life Magazine publishing a story on Pakistani children stitching Nike’s soccer balls. Another famous case occurred in 1997 when a Vietnam factory, owned by a Korean subcontractor, was found to have unsafe working conditions. NGOs in the Western world started campaigns to boycott Nike and demonstrators protested in front of Nike’s stores. Allegations of long working hours, bad ventilation, and physical abuse on a mostly young female workforce has tarnished Nike’s reputation.
Nike’s industry dominance was a main reason for its being severely targeted. Many of its competitors were found to have the same labour practices, but were not subjected to the same level of criticism. Nike has a corporate responsibility initiative to improve working conditions in its own factories and to help influence its suppliers. Despite this, the University of Michigan ended use of Nike products in 2001.