Hitting the Wall: Nike and International Labor Practices Harvard Case Solution & Analysis

Introduction

Nike, a famous brand name across the world was based in the Beaverton, Oregon. For the last three decades, Nike had been writing corporate accomplishment stories. Nike has been endorsed by some famous personalities which enhance the customers' trust and experience in a more optimistic manner. Nike gained a gigantic boost back in 1970s and in just a decade, its profit reached to millions of dollars.  They have an exceptional range of footwear and other related accessories. Nike has completely outsourced the manufacturing operations which are helping the company to achieve extraordinary profits by focusing on marketing and branding. The reason for outsourcing was quite simple, to save cost and expand it on marketing activities. Its slogan “Just Do It” represent its intention to be aggressive in capturing the market share by maintaining the extraordinary quality and brand image.

Problem Statement

Nike has been famous for offering one of the best footwear products in the industry. Somewhere around in 1990s Nike faced a disturbing situation and hit by a dramatically worst publicity. From its initial days, Nike had been enjoying the outstanding brand image having a slogan of “Just Do It” but unexpectedly, activists started criticizing the company and started portraying Nike as a company who heavily relies on cost saving and exploited labor in its plants working in overseas. Nike officials straight away disowned these allegations and explained that the company has no influence on their autonomous contractors who independently manufactures shoes for them. But the trouble continued and therefore it was mandatory for Nike to face these claims, and dealt with the situation by “fair” or “living” wage concept.

Analysis

Without any doubt, it can be said that Nike had been quite successful in establishing its positive brand image across the world. The things that are needed to be given special importance are the ethical and social responsibilities of the Nike, specifically towards the labor working in its overseas plants.  Although the manufacturing of the Nike products has been completely outsourced, but Nike cannot be exempted from such allegations related to the ethical and social responsibilities. Nike’s core strategy of saving the cost has been a key reason for the development of such ethical dilemmas, specifically related to labor wages and child labor.  Its outsourcing approach has served the company with exceptional profits. In the year 1972, Nike had a profit of around $60,000 that raised to $49 million in the span of just ten years. This hunger for exceptional profits makes Nike, an irresponsible organization from both an ethical and social perspectives because it wasn’t concerned about the poor working standards and low wages of the labor working in the independent overseas factories. The approach from a business perspective sounds optimistic because it was helping Nike to make outstanding profits and allowing them to focus on their marketing rather than social and ethical issues.

Issues related to worker's safety and business ethics has been the core part of the Nike’s history. Back in the year 1997, a 23-year-old young lady named Nguyen Thi Thu Phuong accidently lost her life while working in the Nike contracting factory. Moreover, in the 1980s and 1990s Nike had been facing such issues related to the public relations and labor incidents. Famous magazines like Time and Business Week had published several reports related to these issues and students from different universities had organized boycotts for the Bike products. The problems became more painful for Nike when a labor activist or organizer named Jeff Ballinger raised questions about the strategy and practices of Nike across the world. Ballinger primarily possesses an approach named “one country-one company” which allows him to keep his entire focus on one single company. Ballinger possesses a quiet sound and justified belief against the Nike’s cost saving strategy because it allows the independent contractors to mistreat or misuse the labor work force by paying them less and by neglecting the moral values.

In Indonesia, Ballinger found that the laws are neglected because of the immense corruption, which led Ballinger to reach the massive figure of 17,000 employees out of which only 12 were led to the prosecution in the year 1988. For the several years, Ballinger kept his focus on this particular issue, and his arguments got the success when they were endorsed by the....................

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In the mid-1990s, Nike, one of the most successful companies in the world of shoes, hit by a wave of anxiety publicity. After several years of high-profile media attention, as the company that can "just do it," Nike suddenly portrayed as a company that relies on low-cost, exploited labor in its overseas plants. Nike officials strongly denied the allegations, claiming that Nike has no control over the independent contractors that produce shoes Nike. But activists do not give up. After all, Nike must learn to deal with the claims of activists and a tangle of conflicting data that surrounds the concept of "fair" or "living" wage. "Hide
by Debora L. Spar, Jennifer Burns Source: HBS Premier Case Collection 23 pages. Publication Date: January 19, 2000. Prod. #: 700047-PDF-ENG

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