Nike Case Study

Words: 2576

Morgan K. Oliver        

F  With a growing pressure to meet the demands of its consumers, Nike formulated a tactical business plan.  The business plan originated from Phil Knight during his years at Stanford Graduate School. He proposed running shoes could be made for a margin of the cost in Japan then be distributed in the United States.   Upon graduation he traveled to Japan where he persuaded the Onitsuka Company to let him be a distributor of their Tiger shoes (nikeinc).  Although, the production of shoes and apparel in Asia is significantly cheaper than what can be produced in the United States, this outsourcing of labor has been met with public scrutiny time and time again for Nike. Nike has obtained a horrible reputation over the years for its use of Asian sweatshops, child labor, and the use of Chinese women in inappropriate ways in their factories thus condemning Nike’s corporate social responsibility repeatedly.  

        Nike’s corporate social responsibility has been less than ideal causing a major headache since 1996 when the media became interested in methods of production in factories overseas.  China houses company contracts with Nike from 700 different manufacturers with 20% of the employees producing Nike products (mallenbaker.net).   With the growth of such a large organization “Nike’s control over and awareness of the factory conditions decreased with each successive production level outsourced to sub contractors,” (DeTienne and Lewis).  Nike was amongst one of the first businesses to realize that one could make and import products from Asia cheaper than they could have them made in the United States.  Business Weekly writes, that the Chinese are willing to take on jobs from every nation and produce products in factories where workers earn very low wages. Because they exploit these workers and can produce products for up to 50% less than what you could in the United States, they have become very powerful economically creating a phenomena now being called “The China Price” (Engardio and Roberts).  The use of such labor conditions by Nike has caused some serious corporate social responsibility problems specifically in light of recent research, which indicates “almost three quarters of American investors consider social responsibility when they make investment decisions,” (DeTienne and Lewis). Evidence of investor concern can easily be found in stock market historical data. Drops in Nike stock prices often correlate with news stories regarding Nike’s exploitation of the Chinese workforce (investorguide).

        This problem for lack of control and awareness of conditions in Asia has continually been one of the biggest corporate social responsibility issues for Nike.  One of the first major allegations brought up against Nike was in 1996 when the media started to discover some of the abusive behavior that employees in these factories have to endure.  Some of the media included a young Pakistan boy making a Nike football and another eight various New York Times articles regarding the factories conditions (guardian).  Some of the observations made were: