Nike in Southeast Asia

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Abstract

Nike is the world leader in the manufacturing of sports wear and gear. So at first, Nike didn't pay attention to the criticism it was receiving because it was coming from a small group of activists, although later on, the social pressure became very high that Nike was forced to take some measures to quiet down the public who wanted to know what was going on. In this paper we will examine the various difficulties Nike faced as they tried to balance both, the company performance and good corporate citizenship. We will also discuss what I would have done if I was in that position.

Summary

Nike, was founded in 1964 by Phil Knight, Nike's business model was developed by Knight while attending Stanford Business School in the early 1960's. In 1998, Nike was the leader in the sports shoe industry, with annual sales of $9.5 billion and a 40% share of the American sneaker market. It became a lightning rod for protest when alleged “sweatshop” conditions where happening in Southeast Asia. May 1998 is when Phil Knight, the founder and CEO, admitted that “the Nike product has became synonymous with slave wages, forced overtime, and arbitrary abuse.” What people couldn’t understand was how Nike could get associated with deplorable labor practices.

The strategy that Knight developed involved outsourcing all manufacturing to contractors in low wage countries and pouring the companies resources in high profile marketing. They where trying to take the blame off by saying that “We don’t know the first thing of manufacturing. We are marketers and designers.” They did manage to be marketing a lot by placing the Nike “swoosh” on the uniforms of athletes such as Michael Jordan and Tiger Woods.

When manufacturing started it was done in Japan, but as wages rose, they transferred production to Korea and Taiwan. Later on, in 1982 more than 80% of Nike shoes where made in those two countries. But once again as wages...
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