How far down the supply chain does Nike's responsibility go? Smart VoWiFi4:16 PM19 43%AANot Secure – Ims.dwcc.edu.phCASE STUDYGood Governance and Social ResponsibilityJust how does Nike do it?Say “Just do it" and people automatically think Nike. As one ofthe biggest and most important brands in the world, and amarket leader when it comes to athletic shoes and apparel,everyone knows and has an opinion about Nike. But beingamong the big and famous brings with it responsibility as wellas exposure to criticism. To Nike this, suddenly became veryobvious in 1996 when Life magazine published a story on childlabor in Pakistan. The article showed a picture of a young boystitching leather pieces on the floor, surrounded by scraps offabric and a couple of footballs with the Nike swoosh. In thearticle it said that the children received as little as 60 US cents tomake one ball which would take most of one full day.Immediately, Nike was on the hook, with the article and thephoto becoming the topic of the nation, leading to protestsoutside the factory to stop the child labor practices. Nike hadpreviously been accused of bad working conditions in itsoverseas subcontractor factories, for example with a case aboutsub-subsistence wages and slave-like conditions in Indonesianfactories in the early 1990's, but this was the first time Nike hadfelt a public relations impact of that size, and with it thereputational pressures to change and deal with its globalresponsibility. In 1997, for example, it was revealed that workersin one of the contract factories in Vietnam were being exposedto toxic fumes 177 times the Vietnamese legal limit. For years,criticism from civil society organizations and other partiescontinued to put Nike on the spot in the debate about child laborand sweatshop production, for example, through boycotts ofNike products, sit-ins and demonstrations in front of Nike-townstores, distribution of flyers, campaigns etc.Nike's first response to the exposure was an attitude ofdenial. The company had started to produce sports equipment,including soccer balls in the mid-1990s, and there were fewplaces where hand stitching of balls was done in the world.Sialkot in Pakistan is one of the most important industrial clusterfor this kind of production, and so Nike had begun to sourcefootballs from contractors in the city in 1995. They thought theyhad tied up with responsible companies, but soon learned thatpart of the work subcontracted further into the local villages ll Smart VoWiFi4:16 PMO 1 0 43%Not Secure – Ims.dwcc.edu.ph-TospolsIoImy. III 17TT,in one of the contract factories in Vietnam were being exposedto toxic fumes 177 times the Vietnamese legal limit. For years,criticism from civil society organizations and other partiescontinued to put Nike on the spot in the debate about child laborand sweatshop production, for example, through boycotts ofNike products, sit-ins and demonstrations in front of Nike-townstores, distribution of flyers, campaigns etc.Nike's first response to the exposure was an attitude ofdenial. The company had started to produce sports equipment,including soccer balls in the mid-1990s, and there were fewplaces where hand stitching of balls was done in the world.Sialkot in Pakistan is one of the most important industrial clusterfor this kind of production, and so Nike had begun to sourcefootballs from contractors in the city in 1995. They thought theyhad tied up with responsible companies, but soon learned thatpart of the work subcontracted further into the local villageswhere the balls would be stitched by home workers, includingchildren. Nike claimed they did not know about this and to showsome action, they decided to only work with one supplier, sagasports, from then on. This company could allegedly guaranteecertain 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 becomeclear that the work was still outsourced to home workers,meaning bad- or at least no control of working conditions andpotentially child labor. They engaged with a new supplier whichshowed commitment to ensuring proper conditions andpotentially child labor. They engaged with a new supplier whichshowed commitment to ensuring proper conditions, through theuse of full-time employees only and prohibiting the use ofpiecework rates per ball.Later on, Nike acknowledged that their initial response tothe accusations both in the Sialkot situation and to other supplierrelated cases like the one in Vietnam denying the claims was notoptimal. In an interview that same year, Nike director TomMcKean stated that their initial attitude had been that theCAanipTC, It waS TOVCATCU that WOIKCIScompany did not own the factories and therefore had no controlof what went on. Today however, Nike has developed anelaborate program to deal with their supplier factories across theworld. Being big and famous, Nike has learned the hard waythat they need to deal with labor issues rather than just operatingwith a crisis mentality. On Nike's website it is possible to download the Code of Conduct which the company follows inauditing contracting factories on labor.

Nike was founded in 1964. It is an American multinational company that is involved in thebusiness of…

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

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

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