ASSIGNMENT 01

CASE STUDY IN SWEATING THE SWOOSH: NIKE, THE

GLOBALIZATION OF SNEAKERS, AND THE QUESTION OF

SWEATSHOP LABOUR

Submitted by
Surya Santhosh & Anna Jinu Kattapuram Paily
(150731214) (178031217)

Course code: GSL 275

Submitted to: Marsha Carbon

SEPTEMBER 21ST 2022

1
 Table of Contents

Executive Summary 3

Identification of problem 4

Situation analysis 5

Identification of alternatives 6

Recommendations 7

Bibliography 8

2
Executive Summary

This case study deals with the production and marketing strategies of a multinational

corporation – Nike. The case explains how the company’s profit skyrocketed after its evolution.

However, improper labor laws and crooked strategies to make money strongly affected the

reputation of the brand. There were many allegations raised against the brand which mainly

focused on inadequate wages, corporal punishments, forced overtime, child labor, sexual

harassment, etc. The growing criticism against the company affected the sales and profit, there

was a major setback for the company where they had lost its target market due to the allegations

raised against them. There were several negative press reports which stung the image of the

company and sporadic protests broke out. The countries mainly affected by Nike’s unethical

policies are Vietnam, Indonesia, South Korea, Taiwan, etc. Until 1991, these unethical

practices never caught the attention of the public. Jeff Ballinger (an activist) prepared a report

regarding sweatshops and the poor condition of the laborers which got a vivid image of the

brand and human rights scrutiny which continues today. However, Nike strongly disagreed

with the claims regarding the brand. Later in 2002, auditing took place with regard to the

occupational health and safety of the workers working in their factories.

The adverse reaction and its public relation impact enforced Nike to identify new methods in

order to improve the condition of the workers and to begin implementing social responsibility

reports in 2005. Nike ensured to improve its monitoring efforts, raising the minimum wage of

workers and increasing factory audits. Since then, it has been working to uplift factory

conditions. ("Nike Sweatshop," 2022)

In March 2021, Nike participated in a coalition of over 200 unions and labor rights

organizations to negotiate an agreement on severance, assurance, and basic labor rights to help

the workers who had been terminated from service, and also to fill the pandemic-era wage gap.

3
Identification of Problem

Nike shoes were manufactured in underdeveloped countries which lead way to causing

problems for the brand. Nike has been accused of being a sweatshop corporation. The

problem faced by Nike was due to improper control and management of its production units.

Nike shoes are produced by subcontracted factories and are not under the supervision of

Nike,Inc. Nike did not take any responsibility for the working conditions of the factories, it

mainly focused on advertising, marketing, research and development, etc. This became a

major problem that eventually affected the reputation of the brand.

Nike failed to review the conditions of the sub-contracted factories based on the lowest bid.

Some of the major problems that the firm had to face are as follows:

• Inadequate wages

• Improper working hours

• Hazardous working conditions

• Physical treatment of workers

• Child labor

• Gender discrimination

• Many female employees left devastated and felt unsafe working at Nike

All these controversies impacted the image of the firm and they were confronted as

sweatshop labor.

Phil Knight, founder and chairman of Nike, Inc., denied all the allegations made

against them and did not take any initiative to improve the factory conditions.

4
Situation Analysis

The internal and external factors affecting Nike’s business could be analyzed by performing

SWOT analysis. (Xu & Leibold, 2020)

STRENGTHS (internal factors) WEAKNESSES

Strong brand awarness Poor labor conditions in poor countries

Huge customer base Pending debts
Low manufacturing cost Lack of diversification
Aimed for sustainablity Depending on US markets
Iconic relationships Lawsuits

SWOT
ANALYSIS
Emerging products Counterfeit products
Innovative Products Increased competitive pressure
Efficient integration Economic uncertainity
Consumer direct strategies Marketing budget pressure
Cutting ties with big retailers Patent disputes

OPPORTUNITIES (external factors) THREATS

Current situational analysis of Nike shows that it has grown dramatically in the last decade, it

is still on top of the sneaker world. The brand has eradicated the middleman and now sales

are directly dealt with consumers. Nike is capable of establishing a global presence,

outsourcing, and releasing new product lines in order to build new brands. (Salpini,2021)

5
Organizational Objectives

Nike has a financial plan as well as some strategic plans. It focuses on forming a partnership

with stakeholders to keep the core value alive and to share best practices within the

organization in order to keep the workflow steady. In order to balance business operations

and legal requirements, Nike seeks to forge a solid relationship with the government and

legal authorities. It guarantees revenue growth that outpaces net income and upholds a 7% to

13% revenue growth rate. (Staff writer,2020)

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Identification of Alternatives

First of all, Nike should have administered or assigned a group of directors or managers to take

care of working conditions in the factories. In addition, it helps the managers to use specific

techniques in mediating and to anticipate ethical dilemmas in the market. Ineffective human

resource management has led pathway to the exploitation of employees who were the poor

inhabitants of the area surrounding the factory. The cultural environment could be improvised

within the company by implementing HR programs.

Secondly, Nike being an international brand still follows a closed type of organizational

structure which could harm the functioning of the firm. Nike should focus on implementing

new policies which could benefit employees as well as the brand. All the workers should be

bound together in order to enhance employee satisfaction which in turn helps to gain fame and

profit for the entity.

Thirdly, the idea of just making profits should be changed. The company has to foresee the

needs and wants of the workers, and provide them with adequate working conditions which are

the basic policies that a firm should follow. Currently, it is the product and profit-oriented

management, which is not either an effective or efficient way of handling a business that has

attained international attention. This phase of management should be changed to person and

performance-oriented management which not only benefits the firm but also the people

(workers, customers) involved in it.

Finally, there should be some amendments made to the policy of sales.

(Trompenaars and Hampden-Turner 15)

7
Recommendations

Nike only imposed profit-oriented strategies which were the weaknesses that they possessed.

The company should ensure to implement alternative strategies to maintain regulation of

communication within the company. Strategies to be implemented should provide favourable

conditions for the advancement and development of both parties i.e., workers and entity.

Nike should assure to monitor the working conditions of the factories where their products

are produced.

Government should take strict policies to ensure that human rights are protected within the

organization, inspection should be made by the human rights group to investigate the working

conditions, wages and to speak personally to the workers in order to understand the

functioning of the firm.

Implementation Plan

• Once every six months, managers must go to the factories to check on the

working conditions of the staff.

• Once a year, government representatives should visit the factories and

speak with the workers to make sure the business complies with human

rights laws.

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Bibliography

• Trompenaars, Alfons, and Hampden-Turner, Charles. Riding the waves of culture:

understanding cultural diversity in global business. US: McGraw Hill, 1998.

• Woodball, Jean, and Douglas, Danielle. Winning hearts and minds: ethical issues in

human resource management. Ethical issues in contemporary human resource

management. US: Palgrave McMillan, 2000

• Cara Salpini(2021, Nov 4). Nike is on track to make $50 billion this year. How much
is that, really? Retail Dive

• Xu, V. (2020, March 17). Your favorite Nikes might be made from forced labor.
Here’s why. The Washington Post.

• Nike sweatshops. (2022, August 4). In Wikipedia.

https://en.wikipedia.org/wiki/Nike_sweatshops

• Staff writer. (2020, March 25). What are Nike’s Aims and Objectives?