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How far down the supply chain does Nike's responsibility go?

How far down the supply chain does Nike's responsibility go?

Understanding Business
Understanding Business
12th Edition
ISBN:9781259929434
Author:William Nickels
Publisher:William Nickels
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
Problem 1CE
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How far down the supply chain does Nike's responsibility go?

Smart VoWiFi 4:16 PM 19 43% AA Not Secure – Ims.dwcc.edu.ph CASE STUDY Good Governance and Social Responsibility Just how does Nike do it? Say “Just do it" and people automatically think Nike. As one of the biggest and most important brands in the world, and a market leader when it comes to athletic shoes and apparel, everyone knows and has an opinion about Nike. But being among the big and famous brings with it responsibility as well as exposure to criticism. To Nike this, suddenly became very obvious in 1996 when Life magazine published a story on child labor in Pakistan. The article showed a picture of a young boy stitching leather pieces on the floor, surrounded by scraps of fabric and a couple of footballs with the Nike swoosh. In the article it said that the children received as little as 60 US cents to make one ball which would take most of one full day. Immediately, Nike was on the hook, with the article and the photo becoming the topic of the nation, leading to protests outside the factory to stop the child labor practices. Nike had previously been accused of bad working conditions in its overseas subcontractor factories, for example with a case about sub-subsistence wages and slave-like conditions in Indonesian factories in the early 1990's, but this was the first time Nike had felt a public relations impact of that size, and with it the reputational pressures to change and deal with its global responsibility. In 1997, for example, it was revealed that workers in one of the contract factories in Vietnam were being exposed to toxic fumes 177 times the Vietnamese legal limit. For years, criticism from civil society organizations and other parties continued to put Nike on the spot in the debate about child labor and sweatshop production, for example, through boycotts of Nike products, sit-ins and demonstrations in front of Nike-town stores, distribution of flyers, campaigns etc. Nike's first response to the exposure was an attitude of denial. The company had started to produce sports equipment, including soccer balls in the mid-1990s, and there were few places where hand stitching of balls was done in the world. Sialkot in Pakistan is one of the most important industrial cluster for this kind of production, and so Nike had begun to source footballs from contractors in the city in 1995. They thought they had tied up with responsible companies, but soon learned that part of the work subcontracted further into the local villages
Transcribed Image Text:Smart VoWiFi 4:16 PM 19 43% AA Not Secure – Ims.dwcc.edu.ph CASE STUDY Good Governance and Social Responsibility Just how does Nike do it? Say “Just do it" and people automatically think Nike. As one of the biggest and most important brands in the world, and a market leader when it comes to athletic shoes and apparel, everyone knows and has an opinion about Nike. But being among the big and famous brings with it responsibility as well as exposure to criticism. To Nike this, suddenly became very obvious in 1996 when Life magazine published a story on child labor in Pakistan. The article showed a picture of a young boy stitching leather pieces on the floor, surrounded by scraps of fabric and a couple of footballs with the Nike swoosh. In the article it said that the children received as little as 60 US cents to make one ball which would take most of one full day. Immediately, Nike was on the hook, with the article and the photo becoming the topic of the nation, leading to protests outside the factory to stop the child labor practices. Nike had previously been accused of bad working conditions in its overseas subcontractor factories, for example with a case about sub-subsistence wages and slave-like conditions in Indonesian factories in the early 1990's, but this was the first time Nike had felt a public relations impact of that size, and with it the reputational pressures to change and deal with its global responsibility. In 1997, for example, it was revealed that workers in one of the contract factories in Vietnam were being exposed to toxic fumes 177 times the Vietnamese legal limit. For years, criticism from civil society organizations and other parties continued to put Nike on the spot in the debate about child labor and sweatshop production, for example, through boycotts of Nike products, sit-ins and demonstrations in front of Nike-town stores, distribution of flyers, campaigns etc. Nike's first response to the exposure was an attitude of denial. The company had started to produce sports equipment, including soccer balls in the mid-1990s, and there were few places where hand stitching of balls was done in the world. Sialkot in Pakistan is one of the most important industrial cluster for this kind of production, and so Nike had begun to source footballs from contractors in the city in 1995. They thought they had tied up with responsible companies, but soon learned that part of the work subcontracted further into the local villages
ll Smart VoWiFi 4:16 PM O 1 0 43% Not Secure – Ims.dwcc.edu.ph - TospolsIoImy. III 17TT, in one of the contract factories in Vietnam were being exposed to toxic fumes 177 times the Vietnamese legal limit. For years, criticism from civil society organizations and other parties continued to put Nike on the spot in the debate about child labor and sweatshop production, for example, through boycotts of Nike products, sit-ins and demonstrations in front of Nike-town stores, distribution of flyers, campaigns etc. Nike's first response to the exposure was an attitude of denial. The company had started to produce sports equipment, including soccer balls in the mid-1990s, and there were few places where hand stitching of balls was done in the world. Sialkot in Pakistan is one of the most important industrial cluster for this kind of production, and so Nike had begun to source footballs from contractors in the city in 1995. They thought they had tied up with responsible companies, but soon learned that part of the work subcontracted further into the local villages where the balls would be stitched by home workers, including children. Nike claimed they did not know about this and to show some action, they decided to only work with one supplier, saga sports, from then on. This company could allegedly guarantee certain basic conditions for its workers and most importantly, they would not hire anyone under the age of 18. In late 2006, however, Nike stop working with this supplier as it had become clear that the work was still outsourced to home workers, meaning bad- or at least no control of working conditions and potentially child labor. They engaged with a new supplier which showed commitment to ensuring proper conditions and potentially child labor. They engaged with a new supplier which showed commitment to ensuring proper conditions, through the use of full-time employees only and prohibiting the use of piecework rates per ball. Later on, Nike acknowledged that their initial response to the accusations both in the Sialkot situation and to other supplier related cases like the one in Vietnam denying the claims was not optimal. In an interview that same year, Nike director Tom McKean stated that their initial attitude had been that the CAanipTC, It waS TOVCATCU that WOIKCIS company did not own the factories and therefore had no control of what went on. Today however, Nike has developed an elaborate program to deal with their supplier factories across the world. Being big and famous, Nike has learned the hard way that they need to deal with labor issues rather than just operating with a crisis mentality. On Nike's website it is possible to down load the Code of Conduct which the company follows in auditing contracting factories on labor.
Transcribed Image Text:ll Smart VoWiFi 4:16 PM O 1 0 43% Not Secure – Ims.dwcc.edu.ph - TospolsIoImy. III 17TT, in one of the contract factories in Vietnam were being exposed to toxic fumes 177 times the Vietnamese legal limit. For years, criticism from civil society organizations and other parties continued to put Nike on the spot in the debate about child labor and sweatshop production, for example, through boycotts of Nike products, sit-ins and demonstrations in front of Nike-town stores, distribution of flyers, campaigns etc. Nike's first response to the exposure was an attitude of denial. The company had started to produce sports equipment, including soccer balls in the mid-1990s, and there were few places where hand stitching of balls was done in the world. Sialkot in Pakistan is one of the most important industrial cluster for this kind of production, and so Nike had begun to source footballs from contractors in the city in 1995. They thought they had tied up with responsible companies, but soon learned that part of the work subcontracted further into the local villages where the balls would be stitched by home workers, including children. Nike claimed they did not know about this and to show some action, they decided to only work with one supplier, saga sports, from then on. This company could allegedly guarantee certain basic conditions for its workers and most importantly, they would not hire anyone under the age of 18. In late 2006, however, Nike stop working with this supplier as it had become clear that the work was still outsourced to home workers, meaning bad- or at least no control of working conditions and potentially child labor. They engaged with a new supplier which showed commitment to ensuring proper conditions and potentially child labor. They engaged with a new supplier which showed commitment to ensuring proper conditions, through the use of full-time employees only and prohibiting the use of piecework rates per ball. Later on, Nike acknowledged that their initial response to the accusations both in the Sialkot situation and to other supplier related cases like the one in Vietnam denying the claims was not optimal. In an interview that same year, Nike director Tom McKean stated that their initial attitude had been that the CAanipTC, It waS TOVCATCU that WOIKCIS company did not own the factories and therefore had no control of what went on. Today however, Nike has developed an elaborate program to deal with their supplier factories across the world. Being big and famous, Nike has learned the hard way that they need to deal with labor issues rather than just operating with a crisis mentality. On Nike's website it is possible to down load the Code of Conduct which the company follows in auditing contracting factories on labor.
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