Nike and Corporate Responsibility

Executive Summary Ð'- Nike Inc.

Peretti Vs. Nike:

In January 2001, Peretti choose the word Ð''Sweatshop' to be printed in his Nikes. Nike rejected order citing the company's rules. In retort, Peretti order a pair of shoes with a Ð''colour snapshot of 10-year-old Vietnamese girl who makes my shoes". With the email exchange between Nike and Peretti being forwarded all over the world, it led to a huge PR Nightmare for the organization. All through Mid-1990s, Nike has been subjected to negative press, lawsuits and demonstrations on college campuses alleging that firm's overseas contractors subject employees to work in inhumane conditions for low wages

History of Nike Inc.:

Philip Knight started his own athletic shoe distribution company in 1964 with shoes from Onitsuka Company. After 8 years, Onitsuka Company recognizing the huge potential of the American Shoe market, switched to a larger and more experienced distributor. Knight rather than searching for another shoe manufacturing company started his own new company Ð'- Ð''Nike' Nike started with contract manufacturing from 2 firms in Japan and slowly moved to Taiwan and Korea. Its manufactured facility in the United states were closed down because of the high costs Rather than owing a shoe or apparel factory, Nike contracts the production of its products to independently owned manufacturers Except for New Balance Inc. Most of the Nike's competitors also use overseas contracts

Sweatshop Movement vs. Nike:

"Sweat shop Movement" started when Kathie Lee Gifford, who on hearing that her personal collection Ð'- Ð''Katherine Lee Collection @ WalMart' were being made in sweatshops, vowed to do whatever she could to promote the anti-sweatshop cause. The movement slowly started targeting other brands. Nike being the number-one athletic brand in the world soon found itself under attack by the rapidly growing anti-sweatshop movement. Soon different people started accusing Nike of unethical practices.

Ð'* Joel Joseph, Chairman of the Made in the USA foundation accused Nike of paying only 14 cents an hour to make the Air Jordan shoes

Ð'* In Smith's interview with Philiph Knight for his 1997 movie Ð'- Ð''The Big One'. Knight accepted that children aged 14 are working in Indonesian factories

Nike responded to most of the accusations made by media and anti-sweatshop movements.

Ð'* Total Wages in Indonesia < Michael Jordan's endorsement contract

Ð'* Young Report Ð'- "Nike is doing a good Job"

Ð'* Maria Eitel Ð'- VP for Corporate and Social Responsibility

Ð'* Minimum age increased from 16 to 18

College Students & Organized Labour Vs. Nike:

Union of Needle trades, Industrial and Textile Employees (UNITE) launched the "Stop Sweatshops" campaign in 1996 and involved students in them by recruiting a dozens of college students for summer internships. These students who attended the internship then staged a large number of campus demonstrations against Nike. They formed the United Students Against Sweatshops (USAS).

Fair Labor Association and Worker Rights Consortium:

In 1998, the Presidential task force of industry and human rights representatives created the Fair Labor Association to accomplish the goal of developing a workplace code of conduct and a system for monitoring factories for ensuring compliance. Nike was one of the first companies to join FLA. Members follow the principles set forth in the organization's workplace code of conduct.

WRC asserts that the prevailing industry or legal minimum wage in some countries is too low and does not provide employees with the basic human needs they require. Factories should instead pay a higher Ð''living wage' that takes into account the wage required to provide factory employees with enough income to afford housing, energy, nutrition, clothing, etc. Nike being a member and supporter of FLA opposes the WRC.

Conclusion:

Nike realized late that if it wants to be the brand of choice in 20 years, it had certain responsibilities to fulfil. Nike released its first corporate social responsibility report in October 2001. Not only the report states about the areas in which Nike has shown its responsibility to the society but also the areas in which the company still has to improve. But this was only for a short time. Nike in 2002-2003 rather than realising a CSR report, they released a Ð''Community Investment' report dealing its philanthropic efforts.

Executive Summary Ð'- The Path to Corporate Responsibility

Nike's tagline, "Just do it," is an inspirational call to action for the millions who wear the company's athletic gear. But in terms of corporate responsibility, the company hasn't always followed its own advice. In the 1990s, protesters railed against sweatshop conditions at its overseas suppliers and made Nike the global poster child for corporate ethical fecklessness. Nike's every move was scrutinized, and every problem discovered was touted as proof of the organization's irresponsibility and greed. The real story, of course, is not so simple.

Nike's business modelÐ'--to market high-end consumer products manufactured in cost-efficient supply chainsÐ'--is no different from that of thousands of other companies. But the

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