The Nike brand name is most commonly associated with trainers, but Nike also produces a range of leisure and sports gear, with several leading sports personalities endorsing these products. The company is profitable, and, arguably in part for this reason, has been targeted by environmentalists and other campaign groups. Nike, like its leading competitors such as Adidas and Reebok, focuses on design and marketing and outsources manufacturing from around the world. In fact, Nike purchases supplies from 700 different factories in 50 countries. It is typical and perhaps logical to use low-cost labour around the world, as long as exploitation is not an issue. Lower production costs allow for lower prices – but then there is the issue of what constitutes an acceptable margin for the brand owner.

Nike has been accused of condoning worker exploitation in some of these factories. Under-age child labour and sexual harassment have been cited. Nike has, not unexpectedly, been worried by the allegations, flagging how campaigners have been making greater use of the Internet to spread their allegations and generate adverse publicity for the company. Moreover, Nike employees in the US have been targeted, when realistically they can have little personal influence on working conditions in developing countries. However, such targeting makes for an effective campaign to which the company must react. And Nike has admitted that making trainers is routine and tedious.

One story that became prominent concerned a student customer who wanted to take up Nike’s offer of customizing his trainers. The student wanted ‘Sweatshop’ printing on his shoes. Nike refused. The customer appeared to accept the rejection, but then e-mailed the company with a letter that he also put on the Internet – he asked for a photograph of the 10-year old Vietnamese girl who made his shoes.

Nike has responded.

•It has required sub-contract manufacturers to stipulate a minimum age for workers it employs.

•It has helped to set up and has part-funded The Global Alliance for Workers and Communities, which monitors and criticizes some of the practices it sees – experience shows it does not spare its funders.

•It has invested in training for factory managers and supervisors, highlighting employees’ rights but really focusing on the links between productivity and employee satisfaction.

In September 2018, Nike hit the press in a big way with their ad campaign centered around the American quarterback for the San Francisco 49ers, Colin Kaepernick. This followed his refusal to stand during the national anthem as an act of protest against police brutality and racism in the US. Business-wise, this was a risky move, but the response was mostly positive, with Nike witnessing a supplementary increase in profit by 10%. Despite the supportive public response, some viewers placed credence on Nike’s checkered past and accused the company of hypocrisy: referencing the allegations of worker exploitation and sexual harassment. The accusation of Nike feigning an ethical business culture for a marketing ploy is an interesting viewpoint, as these sorts of inconsistencies often crop up in big-name brands.

Reference: Skapinker, M (2002), Why Nike has broken into a sweat, Financial Times, 7 March.

CASE STUDY QUESTIONS

1. Do you think Nike had been sufficiently responsible and ethical? If not, what else do you think it should have done?

2. Critically discuss the potential impact this issue may have on the company’s competitive position.