reni hapsari angie bernadine niken satya wahyu
TRANSCRIPT
NIKE INTERNATIONAL LABOUR
PRACTICES
GROUP 6
Reni Hapsari
Angie
Bernadine Niken
Satya Wahyu
CONTENTSBRIEF HISTORY
OVERVIEW
OUT SOURCINGCORPORATE STRATEGY
CSRMAJOR ISSUES
SAVING THE SWOOSHCONCLUSION
RECOMMENDATIONS
Bill Bower man and Phil Knight founded
NIKE Inc.
as Blue Ribbon Sports in 1962.
The partners began their relationship at
the University of Oregon where Bower
man was Knight’s track and field coach.
While attending Stanford University, Knight wrote a paper about breaking the
German dominance of the U.S. athletic shoe
industry with low-priced Japanese shoes.
BRIEF HISTORY
BRIEF HISTORY
In an attempt to realize his
theory, Knight visited Japan and
engineered an agreement with
the Onitsuka Tiger company, a manufacturer
of quality athletic shoes, to
be their sole distributor in the
United States.In 1962, Knight received the first shipment of 200 pairs
of Tiger shoes to his parent’s garage in Oregon
Capital of $1000, sales of $8000 in first year
Named the shoe “NIKE”
Introduced “SWOOSH” ,conceived by the
Greek goddess of victory.
BRIEF HISTORY
GOVERNMENT INTERVENTION
OVERVIEW
The company is headquartered near Beaverton, Oregon, in
the Portland metropolitan area
It is the world's leading supplier of athletic shoes and apparel and a major manufacturer of sports
equipment
American multinational corporation that is engaged in the design, development and
worldwide marketing and selling of footwear, apparel, equipment, accessories
and services
“ TO BRING INSPIRATION AND INNOVATION TO EVERY ATHLETE” IN THE WORLD”
“ IF YOU HAVE A BODY, YOU ARE AN ATHLETE.”
MISSION
“ To carry on the legacy of
innovative thinking, weather
to develop products that
help athletes of every level of ability reach
their potential, or to create
business opportunities that set Nike
apart from the competition and to provide value
for our shareholders”
VISION
OUTSOURCINGNIKE basically outsource their overall manufacturing in order to avail the cost cutting strategy in third world
countries.
In 1982 82% Of NIKE product came from South Korea and Taiwan
By 1990 China and Indonesia were the main outsourcing countries for NIKE
Currently the products of NIKE’s are made by approx 600 contract factories that employ more than 800000
workers in 46 countries.
REEBOKADIDAS
PUMA
RIVALS
KICKERS
QUICK SILVER
RALPH LAUREN
PORTER’S FIVE FORCES MODEL
NIKE
New entrants
low
Suppliers low
Rivalry high
Buyers moderat
e
Substitutes low
CORPORATE STRATEGY
Cost cutting Out source all manufacturingNo manufacturing linesLow cost manufacturingIndependent contracting factoriesVirtual corporation
Intensive Marketing
Heavy marketing Celebrity
endorsements
Differentiation strategies Brand identities
Fashion driven The swoosh
STRENGTHS:
Professionally competitive company
No physical factories
Well branded
World wide offerings
Strong marketing campaign
Chains of retail stores
Ventured rebranding opportunities
Incorporating Lunarlite foam material
SWOT ANALYSIS
WEAKNESSES:
Highly depended on foot wears
History of violations of over time laws and minimum wage rates in Vietnam
Accusations of poor conditions in the work place.
Accusation of exploiting workforce that will work for cheap in overseas countries.
Constant focal point for negative criticism by anti globalization groups
SWOT ANALYSIS
SWOT ANALYSIS
OPPORTUNITIES:
Creating sports wear item by incorporating the waste from regular manufacturing
Stepping into the line of economy boosting projects that will encourage recycling
Expansion into sports sun glasses and jewellery lines
Expansion in the global markets to create larger brand recognition
Reducing controversy surrounding their trade and production practices.
SWOT ANALYSISTHREATS:
Currency value fluctuations
Competitors are becoming more aggressive and creating high quality products that are taking from the profits of NIKE
Sensitivity to price among consumers lead them to purchase he most cost effective pair of sports shoes
Maintaining the reputation of being eco friendly
Managing the financial conditions in the economy today.
CSR
NIKE has developed a considered response, supported by corporate website reporting.
It now has a well developed focus for its corporate responsibility on improving conditions in contracted
factories, aiming for carbon neutrality, and making sports available to young people across the world.
NIKE work tirelessly to bring other manufacturers into the
FLA.
INTERNATIONAL LABOR
PRACTICES
FINANCIAL ISSUES
MARKETING ISSUES
STRATEGY FORMULATION
MAJOR ISSUES
• Underage workforce
(child labour)• Coerced
overtime issue• Dangerous
working conditions
• Declined stock market price
• Declined sales revenue
INTERNATIONAL LABOR PRACTICES
FINANCIAL ISSUES MAJOR ISSUES
CHILD LABOUR ISSUE IN PAKISTAN
A PAKISTANI CHILD NAMED TARIQ WHO IS WORKING FOR NIKE IN POOR WORKPLACE CONDITIONS
• Departure of Michael Jordan
• Vague marketing campaigns
• Non traditional athletic companies e.g. old navy
• Poor prediction regarding consumers and fashion trends
• Cyclicality in footwear and apparels
• Offerings were limited to athletes.
MARKETING ISSUES
STRATEGY FORMULATIONMAJOR ISSUES
JEFF BALLINGER’S ROLE1988
Labour activist
AAFLI office in Indonesia
Investigating labour conditions
Conducted crucial research
“Exploitation of third world factory workers by rich US companies”.
JEFF BALLINGER ARGUMENT
Nike's policy of competing on the
bases of cost fostered and even
encourage contractors to mistreat their
workers in pursuit of unrealistic
quotas .
Ballinger’s findings gained the interest of media groups
Stories become big news
Indonesian and US govt had to pay
attention.
EARLY REFORMS
In 1992, Minimum daily wage in Indonesia increased.
(2100Rupiah– 2500Rupiah)
NIKE addressed seven different aspects of working conditions.NIKE’s Response
Denial of responsibil0ity Stubborn attitude
ALTERNATIVES Shift the out sourcing from low wages countries to higher
Leave the countries having poor working conditions.
Evade the criticism through denial and criticism.
Change its business practices.
IN THE SPOT LIGHT
Michael Jordan endorsement contractPortland Oregonian published serious of critical articles during 1992 Barcelona Olympics.Hard to take a leave for women even on Sunday
HITTING THE WALLChild labour issue raised by life magazine.
Michael Jordan asked to investigate the labour conditions.
Doonesbury ,comics strip highlighted the issue for 15 odd days in newspaper
The wall street journal published ,”Nike had been its own worst enemy”.
Embarrassments for Michael Jordan & Jerry Rice at opening of Nike town.
Health and safety issues revealed ho Chi Minh city.
Respiratory ailment caused by poor ventilation and exposure to toxic chemicals.
University of Oregon track team choose Adidas over Nike.NIKE 7.2m endorsement deal with the university of north Carolina was breached in
1997.Soccer coach at St. Jones university James Kead publicly quits his job rather than
wear the swoosh
HITTING THE WALL
STILL WAITING FOR NIKE TO JUST DO IT “ISSUE OF WAGES”
Issue raised again in 1997
Nike arrange a survey at Dartmouth's Amos tuck school of business to conduct
detail survey on “ The suitability of wages and benefits paid to Vietnamese
and Indonesians contract factory workers”.
OUTCOMES
82% of workers
surveyed, either saved
wages or contribute
d each month to
their families
after incurring essential
expenditures.
Most of the workers were not
the primary wage earners.
Indonesians put typically their
excess wages in banks while Vietnamese likely to hold
their savings in form of rice or
cows.
1.67$ were paid to Vietnamese
workers, so criticism
continued to mount.
SAVING THE SWOOSH
• Slave wages• Forced over
time• Arbitrary abuse
• Raising the minimum age limit of sneaker workers to 18
• Raising the minimum age limit of apparel worker to 16
• Adopting US OSHA clean air system in all factories
• Expand monitoring program, educational program
• Availability of micro loans available to workers.
• Significant restructuring charges and lay off to 1600
workers.
NATIONAL PRESS CLUB, MAY 1998 CONFESS OF
PHIL KNIGHT OVER
SERIES OF SWEEPING REFORMS
FAIR LABOUR PRACTICES
Corporation, combination of internal monitoring and audit by accounting firms.
Minimum age of workers was set 15
Workers could not work for more than 60 hours per week.
Companies make compliance, have to monitor internal systems to apply code of conduct.
30% of outsource factories will be audited in first 3 years, rest will be later on
Nike is still not able to understand the main reason
behind all the criticism.
Its not the minimum age that needs raising, its the minimum
wage.
Labour leaders accepted the FLA as the best compromise
possible.
Some still think that it was simply a cover, provided to the
US corporations.
CONCLUSION
Change the business practices to improving condition in foreign manufacturing plants
Consider wages, age requirements and safety issues.
Protect NIKE's image through a code of conduct.
Develop and coordinate strong linkages with country and factory managers.
Proactive approach to become socially responsible.
Allowing opportunity for growth and advancement for child labour.
Ensure transparency and accountability.
Improve public relations.
RECOMMENDATIONS
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