HITTING THE WALL :NIKE &

INTERNATIONAL LABOUR PRACTICES

Founded in June 25’th, 1964
Formerly known as “Blue “Nike” meaning Greek
Ribbon Sports” Goddess of Victory.
Founders- Bill Bowerman &
Phil Knight

.
Acquisitions
Headquarters- Beaverton, Cole Haan(1988)
Oregon Bauer Hockey(1994)
Converse(2003)
 1
9 • One of the worlds first “virtual” corporation
6
1
2 • Pushed it revenue from $60,000 to a startling $49 million
9 in just ten years.
7
1
2 • Went public and astounded the wall street in the 1990s as
9
revenues soared to $9 billion.
8
0
19 • 86% of Nike sneakers came from South Korea and Taiwan.
82
19 • One of the best known brand in the world, as a global
90 symbol of athleticism and urban cool.
s
• Nike controlled over 40% of the $14.7 billion U.S athletic
19 footwear market.
98
Taking care of business
Their first contract-
Japanese
manufacturers

Shifting their base into

South Korea and
Taiwan-1982

Reshifting their base

into-China & Indonesia-
1990
 OCASSIONAL HINTS OF
ACTIVISM,
MORE UNION
DEMANDS,112 STRIKES
IN 1991 COMPARED TO
19 IN 1989

IN COUNTRIES LIKE
INDONESIA THE DAILY
WAGES WERE LOW AT $1
AS COMPARED TO
SOUTH KOREA-$24.40 &
US-$8(HOURLY WAGE)
AND LAOBOR DEMANDS
WERE MINIMAL
Into the spotlight
Portland CBS
Oregonian and INTERVIEW-
the 1992 First
Barcelona mainstream
Olympics coverage-1993

Editorial in
Child Labor
business
issue-
week-NIKE a
coverage in
key company
Life magazine
to watch
 JEFF BALLINGER
• A labour activist since childhood
1
• 1988 – Charged with investigating labour conditions and
2 minimum wage compliance by American companies

• Nike encouraged contractors to mistreat workers in pursuit of

3 unrealistic production quotas

• Indonesia had worker protection laws in place but corruption

4 made them useless

• He found that out of 17000 violations that were reported only

5 12 prosecutions were made
 Ballinger’s approach

• Drawing • Nike was his • Publication –

Reach
Focus

Why Nike
worldwide ideal target Nike’s
attention to competitive
the • Marketing advantage
exploitation and branding into strategic
of third world power used vulnerability
factory by Nike to
workers drive moral • His
outrage arguments
coincided
with labour
strikes
 Reaction to Ballinger

Government Nike’s
responded by response –
increasing the Not Nike’s
wage rage to concern or
$1.24 responsibility

Nike – Drafted
Reebok
regulations
however went
and composed
farther than
into Code of
Nike was
Conduct &
willing go
MOU
 Responsibilities
What was Nike accused of ?

Underage Workers

Coerced Overtime

Dangerous Working Conditions

Low Wages

Nike had a policy of competing on the basis of cost and that

encouraged contractors to mistreat their workers in pursuit
of unrealistic production quotas
 Nike was outsourcing everything,
then why was there an issue?
Nike’s company line on the issue was clear
Nike insisted that the labour conditions in its and stubborn: since they weren't the
contractor’s factories were not or COULD NOT manufacturers, they simply could not be held
be of Nike’s concern and responsibility responsible for the actions of the
independent contractors.

Why the sudden change?

Due to criticism from Jeff Ballinger, activists
Various labour laws introduced like Apparel
and after intervention from government itself,
Industry Partnership to make sure of the
Nike realized the severity of the labor issue
acceptable labour standards for foreign
and decided to draft a series of regulations for
countries
its contractors.
 So what were the
responsibilities ?
• Formulating laws
1.To prevent the exploitation of
the employees
2.To provide safe working conditions for the employees
3.To regulate the wages of employees.
• They needed to work on human rights, where their
competitors were ethical or smart enough
to move onto the human rights arena and hold audits
for their contractors, Nike wasn't willing to go.
DAMAGE CONTROL MEASURES BY
NIKE
AND THE CONSEQUENCES THAT
FOLLOWED:
APPOINTMENT OF ANDREW YOUNG TO
REVIEW NIKE’S CODE OF CONDUCT

RELEASE OF YOUNG’S REPORT

HIGHLIGHTS OF YOUNG’S REPORT

 VARYING VIEWS ON YOUNG’S REPORT:

• The company’s • Inviting of • Nike should

CRITIC’S POINT OF VIEW

NIKE’S POINT OF VIEW

HIGHLIGHTS OF YOUNG’S REPORT

critics took a more outsiders to look improve their
cynical view, into their affairs systems for
contending that signals their reporting workers
just as Nike pays commitment grievances
Michael Jordan to towards • publicize their
sell its basketball improving their code widely and
shoes, Mr. Young operations or clearly
has been hired to resolving claims of • Implementing
promote Nikes wrong doing. cultural awareness
image. and language
training programs
for expatriate
managers.
•
CRITICISM AND CONTROVERSIES SURROUNDING
YOUNG’S REPORT
During the interviews,
Wages weren’t given much Young relied on Nike’s
focus, which was for many translators which was
observers the crux of the found by many, as a major
issue. lapse in human rights
research technique

Critics felt the report to

Leaked Report
be superficial
 Recovery Actions:

Transparency

Code of Conduct

Management Efficiency
 Recovery Actions:

Add
r k itio
Wo rs Ben nal
Ho u efit
s
Re ctor c

Le ltie
Fa iodi

Pe
vie y
ws

vyi s
na
r
Pe

ng
 The Path Forward

 Adhering to OSHA standards.

 Banning the use of Toulene (toxic Adhesive).

 Raising the minimum age.

 Expansion of education programmes.

.

Micro-Enterprise Loan Programme.

Formation Of AIP (Apparel Industry Partnership).

 Formation of FLA (Fair Labour Association)

Conclusion: This case highlighted the issue of Labor
Exploitation in Asia.

Even though Nike assumed a policy for

reformation in its practices, these changes didn’t
come as quickly as many would’ve hoped.

Nike and it’s CEO Phil Knight ardently denied the

accusations against them, their reputation took a
major hit and drew major criticism globally.

The whole issue could’ve been handled more

effectively with ethical & efficient Corporate
Governance.
 THANK YOU

Anjali Kishanchandani 18020841049

Ankit Addya 18020841050
Antara A Chakraborty 18020841051
Bhargav Mulakaluri 18020841052
Zeel Choksi 18020841055
Saifali Dalvi 18020841056
Amber De Melo 18020841057