INDUSTRY REPORT ON

NIKE

Submitted in Partial fulfillment of the requirements for the award

of Degree

Bachelor of Business Administration

(BBA)

Submitted by: Under Guidance of:

MADHUP GOYAL NEHA RALLI

Bharati Vidyapeeth University, School of Distance Education,

Academic Study Center: BVIMR, New Delhi

2009 – 2010

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Undertaking

I MADHUP GOYAL have completed the Industrial Exposure in (NIKE)

under the guidance of Mr./Ms. (NEHA RALLI) in the partial fulfillment of

the requirement for the award of BBA of BVU, SDE, Academic Study

Center BVIMR, New Delhi.   This is an original piece of work & I have

neither copied and nor submitted it earlier elsewhere.

MADHUP GOYAL

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Acknowledgement

 

To acknowledge all the persons who had helped for the fulfillment of the

project is not possible for any researcher but in spite of all that it becomes

the foremost responsibility of the researcher and also the part of research

ethics to acknowledge those who had played a great role for the

completion of the project.

So in the same sequence at very first,

I would like to acknowledge my parents because of whom I got the

existence in the world for the inception and the conception of this project.

Later on I would like to confer the flower of acknowledgement to Ms.

NEHA RALLI and other faculty members who taught me that how to do

project through appropriate tools and techniques.

Rest all those people who helped me are not only matter of

acknowledgment but also authorized for sharing my success.

MADHUP GOYAL

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Preface

 

Decision making is a fundamental part of the research process. Decisions

regarding that what you want to do, how you want to do, what tools and

techniques must be used for the successful completion of the project. In

fact it is the researcher’s efficiency as a decision maker that makes project

fruitful for those who concern to the area of study.

Basically when we are playing with computer in every part of life, I used it

in my project not for the ease of my but for the ease of result explanation

to those who will read this project. The project presents the role of

financial system in life of persons.

I had toiled to achieve the goals desired. Being a neophyte in this highly

competitive world of business, I had come across several difficulties to

make the objectives a reality. I am presenting this hand carved efforts in

black and white. If anywhere something is found not in tandem to the

theme then you are welcome with your valuable suggestions.

  MADHUP GOYAL

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INDEX

TOPIC PAGE NO.

1 CHAPTER 1

1.1 INTRODUCTION

1.2 ORIGIN & HISTORY

1.3 COMPANY PROFILE

1.4 CONCERN & CONDITION

1.5 MISSION & VISION

1.6 MANUFACTURING HISTORY

2 CHAPTER 2

2.1 NIKE FACTORY

2.2 FACTORY VISIT

2.3 FACTORY CONDITION

2.4 PROCESS & SYSTEM

2.5 ABUES OF WORKER & VIOLATION OF HUMAN

RIGHT

2.6 WAGES AND LIVING STANDARD

2.7 NIKE CODE OF CONDUCT

2.8 FOOTNOTES

3 CHAPTER 3

3.1 MARKETING STRATEGIES

3.2 NIKE MARKETING STRATEGIES AND CURRENT

COMPANY STATU

3.3 NIKE 4P`S

3.4 ADVERTISMENTS

3.5 PRODUCTS

3.6 PRODUCT STRATEGIES

3.7 SPONSORSHIP

3.8 CONSUMER BUYE BEHAVIOUR

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3.9 NIKE CREATION LEADERSHIP CRITISIM

4 CHAPTER 4

4.1 SWOT ANALYSIS

4.2 STRENGHT

4.3 WEAKNESSES

4.4 OPPORTUNITIES

4.5 THREAT

5 CHAPTER 5

5.1 NIKE DOCUMENTATION

5.2 TERM OF USE

5.3 COPYRIGHT

5.4 TRADEMARK

5.5 PRODUCT ORDER

5.6 USE OF INFORMATION SUBMITTED

5.7 INDEMINIFICATION

5.8 LIMITATION OF LIABILITY

6 CHAPTER 6

6.1 RECOMMENDATION

6.2 IMPLEMENTATION OF RECOMMENDATION

6.3 CLOSING

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CHAPTER 1

Introduction

     Six months ago, I was contacted by the leadership of NIKE and asked if I would be

willing to make an independent assessment of their Code Of Conduct and evaluate their

company's effectiveness in applying that Code to those factories where NIKE apparel and

footwear products are manufactured.

 Over the past year, I - like most Americans - have seen the highly publicized news

accounts of "sweatshops" and "child labor" used by the footwear and apparel industries in

their workplaces in this country and around the world. As a lifelong supporter of trade

unions, from South Georgia to South Africa, my heart and sympathies were with the

workers.

 Having just completed a strenuous, six-year assignment as Co-Chair of the Atlanta

Committee for the Olympic Games, remarried after the death of my first wife and having

recently started a new business, I was not inclined to get involved in the public

controversy between this important global company and my many friends in the human

rights and labor communities.

     However, after an in-depth meeting with the leadership of NIKE, I became convinced

that NIKE was sincere in its desire to have me conduct a totally independent assessment

of their Code of Conduct and how it was being applied.

 I realized that there was public relations value to NIKE in having me perform an

"independent evaluation" of their Code Of Conduct, especially if it tended to support

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their point of view. Therefore, I made it absolutely clear to NIKE at every stage of our

discussions that, if I undertook this study, I would reveal the truth publicly, whatever that

truth might be.

If NIKE were doing a poor job in its labor practices, I would insist that it should be made

known to consumers generally, to NIKE's own employees, to NIKE shareholders and,

particularly, to the corporate leadership, because they seemed genuinely convinced that

they were doing a good job.

     If NIKE were doing a merely adequate or even a good job in the application of its

Code, I believed that my report and recommendations - publicly aired - would encourage

them to do better and that NIKE's progress on these issues might be emulated by others in

the industry.

NIKE, INC. Introduction This rese

This is an excerpt from the paper...

This research analyzes the strategic position of Nike, Inc. The time frame of the case is

1992.

At the beginning of 1992, Nike was the world leader in the athletic shoe market in terms

of overall market share. Nike was not the market share leader in each global regional

market, nor was Nike the market share leader in each segment of the athletic shoe market.

Nike's primary objective, however, was to become the global market share

leader--overall, in each region, and in each segment.

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At the beginning of 1992, Nike was organized as a marketing and research and

development company that depended on independent contracting firms to produce the

goods developed and marketed by Nike. It is this organizational focus that is at the heart

of both Nike's strength and the company's vulnerability. The major problems and issues

confronting Nike at the beginning of 1992 were as follows:

1. Marketing and research and development:

a. Distribution. A key Nike objective is the development of control of the distribution of

the company's products on a global basis. While the company has made significant gains

in this area, problems remain.

b. Product/target market relationship. Nike defines its athletic shoes as performance

products, and identifies the target market for these products as persons pursuing fitness

regimes. There are indications that Nike may be misreading the

common stock (Rindos, 1992a, p. 1661). Reebok International went from absolutely

nowhere in 1979 to the dominant firm in the athletic shoe market by 1985 (Sedgwick,

1989, pp. 30-31). The company achieved this success through the application of three of

the procedures employed by Japanese firms in the development of market dominance.

These procedures are (1) the creation of opportunity, (2) adapting to latent consumer

preferences, and (3) marketing creativity. As stated above, the original Reebok shoe did

not sell well in the United States. In 1982, however, Reebok discovered that women were

asking shoe retailers for something called an aerobics shoe. Reebok set out to develop

such a shoe; thus, adapting its strategy to consumer preferences. Initially, the shoe did not

sell much better than had the original Reebok athletic shoe. Reebok then, however,

employed marketing creativity; the company placed its new shoe on the feet of the "slim

and sexy" instructors of aerobics classes (Sedgwick, 1989, p. 31). Reebok, significantly,

did not attempt to place its shoes on television aerobics instructors, but, rather, on those

instructors who were in front of actual aerobics classes around the country. Sales zoomed

in the last-half

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Nike was founded on January 25, 1964 as Blue Ribbon Sports by Bill Bowerman and

Philip Knight.

it is pronounced as "Nye-Kee" and it is based on Nike, the greek goddess of victory.

It has the swoosh logo and a slogan of "Just do it" with headquarters in Beaverton,

Oregon.

The company's range of products includes sporting jersey, shoes and other foot gears.

Its key competitors are Adidas and Reebok.

Some common words found in the essay are:

Reebok International, United Rindos, Issue Identification, Europe Nike, Gear Nike,

Recommended Actions, Nike Reebok, Production Nike, Republic China, Similarly

Nike's, athletic shoe, rindos 1992a 1661, rindos 1992a, 1992a 1661, sedgwick 1989,

athletic shoes, rindos 1992b, reebok international, rindos 1992b 1662, 1992b 1662, shoe

market, market share, value line investment, line investment survey, sedgwick 1989 31,

Origins and history

Nike, originally known as Blue Ribbon Sports, was founded by University of Oregon

track athlete Philip Knight and his coach Bill Bowerman in January 1964. The company

initially operated as a distributor for Japanese shoe maker Onitsuka Tiger, making most

sales at track meets out of Knight's automobile.

The company's profits grew quickly, and in 1966, BRS opened its first retail store,

located on Pico Boulevard in Santa Monica, California. By 1971, the relationship

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between BRS and Onitsuka Tiger was nearing an end. BRS prepared to launch its own

line of footwear, which would bear the newly designed Swoosh by Carolyn Davidson.

The Swoosh was first used by Nike in June 1971, and was registered with the U.S. Patent

and Trademark Office on January 22, 1974. Today the Onitsuka Tiger brand is owned by

one of Nike's competitors, ASICS.

The first shoe to carry this design that was sold to the public was a soccer shoe named

"Nike", which was released in the summer of 1971. In February 1972, BRS introduced its

first line of Nike shoes, with the name Nike derived from the Greek goddess of victory.

In 1978, BRS, Inc. officially renamed itself to Nike, Inc. Beginning with Ilie Nastase, the

first professional athlete to sign with BRS/Nike, the sponsorship of athletes became a key

marketing tool for the rapidly growing company.

The company's first self-designed product was based on Bowerman's "waffle" design.

After the University of Oregon resurfaced the track at Hayward Field, Bowerman began

experimenting with different potential outsoles that would grip the new urethane track

more effectively. His efforts were rewarded one Sunday morning when he poured liquid

urethane into his wife's waffle iron. Bowerman developed and refined the so-called

'waffle' sole which would evolve into the now-iconic Waffle Trainer in 1974.

By 1980, Nike had reached a 50% market share in the United States athletic shoe market,

and the company went public in December of that year. Its growth was due largely to

'word-of-foot' advertising (to quote a Nike print ad from the late 1970s), rather than

television ads. Nike's first national television commercials ran in October 1982 during the

broadcast of the New York Marathon. The ads were created by Portland-based

advertising agency Wieden+Kennedy, which had formed several months earlier in April

1982.

Together, Nike and Wieden+Kennedy have created many indelible print and television

ads and the agency continues to be Nike's primary today. It was agency co-founder Dan

Wieden who coined the now-famous slogan "Just Do It" for a 1988 Nike ad campaign,

which was chosen by Advertising Age as one of the top five ad slogans of the 20th

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century, and the campaign has been enshrined in the Smithsonian Institution. San

Franciscan Walt Stack was featured in Nike's first "Just Do It" advertisement that debuted

on July 1, 1988. The "Just Do It" trademark was filed by Nike, Inc. on October 3, 1989

with the description attributed to sports clothing, on which the mark was to be affixed.

Throughout the 1980s, Nike expanded its product line to include many other sports and

regions throughout the world.

Acquisitions

This section is in a list format that may be better presented using prose. You can help

by converting this section to prose, if appropriate. Editing help is available. (February

2010)

As of November 2008, Nike, Inc. owns four key subsidiaries: Cole Haan, Hurley

International, Converse Inc. and Umbro.

Nike's first acquisition was the upscale footwear company Cole Haan in 1988.

In February 2002, Nike bought surf apparel company Hurley International from

founder Bob Hurley

In July 2003, Nike paid US$305 million to acquire Converse Inc., makers of the

iconic Chuck Taylor All Stars.

On March 3, 2008, Nike acquired sports apparel supplier Umbro, known as the

manufacturers of the England national football team's kits, in a deal said to be

worth £285 million (about US$600 million).

Other subsidiaries previously owned and subsequently sold by Nike include Bauer

Hockey and Starter.

NIKE, Inc. Company Profile

Nike, the Greek goddess of victory, helped

others succeed in times of war. NIKE, the

world's #1 shoemaker, does more

Contact Information

Address: 1 Bowerman Dr.

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dominating than assisting, to capture a

hefty share of the US athletic shoe market.

It designs and sells shoes for a variety of

sports, including baseball, cheerleading,

golf, volleyball, hiking, tennis, and

football. NIKE also sells Cole Haan dress

and casual shoes, as well as athletic apparel

and equipment. In addition, NIKE operates

NIKETOWN shoe and sportswear stores,

NIKE factory outlets, NIKE Women shops

and sells its shoes and apparel online.

Overall, it sells its sportswear in some 675

NIKE-owned retail stores in the US and

abroad. Nike acquired soccer star Umbro in

2008.

Headlines for NIKE, Inc.

• Tiger the Pitchman far from out of the

woods

AP - Fri Feb 19

• Stocks edge higher after Fed eases bank

supports

AP - Fri Feb 19

• Analyze This: Tiger Trade

at CNBC - Fri Feb 19

• [external] UPDATE - Contrite Woods

keeps return to competition on hold

at Reuters - Fri Feb 19

More Headlines...

Beaverton, OR 97005-6453

Phone: 503-671-6453

Fax: 503-671-6300

Financial Highlights

Fiscal Year End: May

Revenue (2009): 19176.10 M

Revenue Growth (1 yr): 2.90%

Employees (2008): 32,500

Employee Growth (1 yr): 7.60%

Key People

• Chairman: Philip H. Knight

• President, CEO, and Director: Mark G.

Parker

• President, Global Operations: Gary M.

DeStefano

Industry Information

Sector: Consumer Goods

Industry: Textile - Apparel Footwear &

Accessories

Top Competitors

• adidas AG (addyy.pk)

• New Balance Athletic Shoe, Inc.

• PUMA AG Rudolf Dassler Sport

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More on NIKE, Inc.

• Quote • Msgs

• Chart • Insider

• Profile • Financials

• Reports • Analyst Ratings

• Research    

 

Concerns & Conditions

     Before I agreed to conduct this evaluation of NIKE's Code Of Conduct, I insisted on

four conditions:

1. No conditions or limits would be placed on my activities, my travel and my

access to information and people.

2. I would be allowed to visit any factory I chose and talk with any worker without

the presence of NIKE management.

3. I would have access to any confidential audits and internal NIKE memoranda

requested.

4. NIKE would agree in advance to make my report public, regardless of the

findings and recommendations.

     When I raised these issues with NIKE, CEO Phil Knight pledged total cooperation,

promising me that I could, "Go anywhere, see anything and talk with anybody". Knight

recommended that the entire written report be made "public" after NIKE's management

had an opportunity to review it. (This same report was given to NIKE's management last

week in Beaverton, Oregon.)

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     Finally, Phil Knight sent me a letter stating these commitments in writing.

Going Forward

     Armed with these assurances, I agreed to undertake this assignment with the full and

active support of my firm, GoodWorks International LLC.

     GoodWorks Co-Chairman Hamilton Jordan and CEO Carl Masters supported my

efforts with their own advice and counsel. GoodWorks staff members Maggie Womack,

Dianne Wisner and Marva Boea helped in important ways.

     Others contributed as well.

     Doug Gatlin, a longtime associate and friend, assisted in our work which included

traveling with us on our extensive tour of NIKE factories in China, Vietnam and

Indonesia and in ongoing discussions with the non-governmental organizations or NGOs.

     My wife, Carolyn Young, who teaches fifth grade in the Atlanta public schools,

accompanied me on our Asian trip and contributed her own thoughts and perspectives

which were very helpful. All of the photographs displayed throughout this report were

taken by Carolyn, Doug Gatlin or myself with my pocket camera.

     Ultimately, however, the views presented here are mine and mine alone. They are

expressed with humility, candor and with the hope that it might help NIKE and others in

their industry to improve the conditions for factory workers all over the world.

The Assignment:

NIKE's Code Of Conduct

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     I was asked to provide NIKE management an independent evaluation of its Code Of

Conduct and its application at the factory level and to make specific suggestions going

forward as to how their Code Of Conduct could be more effectively applied and possibly

enhanced.

Nike - Mission And Vision

Nike’s mission statement is what they, as a company, would like to achieve.   Nike’s

vision is how Nike wishes to achieve their mission.   Nike’s mission statement is “to

bring inspiration and innovation to every athlete in the world.   If you have a body, you

are an athlete” Nike works toward succeeding this mission, by bringing sport to

everyone, athlete and non-athletes, as “the world's #1 shoemaker” doing “more

dominating than assisting, to capture more than 20% of the US athletic shoe market”

Nike’s mission is recognized in the way products are marketed, and in the social

responsibility Nike feels to the world.   With their mission statement, Nike addresses the

individuals of the world with regards to sports.   Nike’s social involvements and

corporate responsibility are seen “as a catalyst for growth and innovation” (Zanger,

2008).   Nike uses the “power of our brand, the energy and passion of our people, and the

scale of our business to create meaningful change” (Zanger, 2008).   For example, Sam

McCracken is the manager of Nike’s Native American business program.   McCracken

and Nike are “aware of the growing health issues facing Native Americans” and designed

a shoe specific for this community.   In addition to the development of this shoe, Nike is

reinvesting the proceeds into healthcare programs geared towards Native Americans.  

“The company focuses its efforts on core impact areas tied to its long-term growth and

innovative strategies” (Zanger, 2008.).

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Nike creates exciting and innovative campaigns, both for social responsibility and for

market share.   Nike’s “Just Do It.” Campaign continues their inspiration to sport and

creating meaningful change.   “"Just Do It" expresses a deep yearning that many of us

have – to succeed, to make our mark on the world.

NIKE: Manufacturing History

     NIKE has historically produced the bulk of its footwear products in Asia; originally in

Japan, Taiwan and South Korea and more recently in China, Indonesia and Vietnam.

Today, NIKE and the other major footwear companies manufacture in these same

countries.

     One may approve or disapprove of the fact that the global footwear and apparel

industries are manufacturing in these developing countries of Asia, but any evaluation of

labor practices in these countries must be considered in light of that reality - which

includes the recognition that these countries do not have a long tradition of workers rights

and trade unions.

     Some argue that the presence of these factories will, over time, provide economic

development that moves these countries toward a market economy and true democracy.

Taiwan and South Korea are recent examples of economies that have been the site of

"light manufacturing" and which have, over time, been transformed - arguably for the

better - by the presence of the footwear and apparel industries.

     Others argue that these factories have only been used to prop up, economically, the

regimes of thinly-disguised dictatorships which, over time, undermines the development

of a strong economy, a true democracy and the principle of workers' rights.

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CHAPTER 2

NIKE FACTORY

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 From its beginning, NIKE made a decision that its core competencies were the design,

marketing and technology of footwear and apparel, not the manufacture of products.

Consequently, NIKE does not own or operate the factories where its shoes and apparel

are produced and has traditionally contracted with others to produce their products.

     While considered "NIKE factories", the factories we visited in Vietnam, Indonesia and

China are totally owned and operated by Asian companies who have contracts with NIKE

(and others). In several sites we visited, for example, there would be a huge factory

complex where the owner would produce goods for NIKE in one building, Reebok in the

next and for Adidas in another.

     While NIKE does not have technical or legal ownership of these factories or even

direct control of the management, it has enormous leverage - some would argue "de

facto" control - because of the factory's dependence on the huge NIKE contracts.

     NIKE does have "quality control" personnel at work in these factories and more

recently an expanding labor practices staff in-country, but the active, day-to-day line

management of these factories rests entirely in the hands of its various Asian owners and

the individual factory management in place at each site.

     This is one of the great challenges for NIKE and others in this industry who produce

in these same factories - relying on absentee owners and largely expatriate managers  to

implement and enforce work standards created by corporate leadership half way around

the world.

     For example, at the factory in Vietnam which was the site of the "running" incident,

the owner of that factory is a Taiwanese company, the plant manager is a Taiwanese and

most of the line managers are Taiwanese. The lack of indigenous management in these

factories contributes to a lack of easy communication between management and workers

and is addressed in some detail later in this report.

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3. Factory Visits

     We visited four factories in China, four factories in Vietnam and four factories in

Indonesia. These factories represented the "work sites" of forty per cent (40%) of the total

NIKE contract employees in Vietnam, twenty-five per cent (25%) in Indonesia and forty-

five per cent (45%) in China.

     I went to the factories considered their "best" and their "worst" based on the audit

reports which we had reviewed.

     I also insisted on going to places where there had been highly publicized "incidents"

reported in the press.

Factory Conditions

     The factories that we visited which produce NIKE goods were clean, organized,

adequately ventilated and well lit.

     The twelve NIKE "factories" that I visited in Vietnam, Indonesia and China were

physically as clean and modern as any manufacturing sites I have seen in the USA and

certainly did not appear to be what most Americans would call "sweatshops."

Living Conditions At Factories

     In some factories, workers are offered housing as an additional benefit, but it is

entirely voluntary. The housing is usually organized like "dorms" with bunk beds and

common toilets and shower areas. By Western standards, the dorm rooms are small and

the furnishing sparse. The workers I talked with said that it was "better than their home".

     Several of the twelve factories we visited had living quarters for their workers. These

were usually organized in a dorm setting with six bunk beds which slept twelve people

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who shared a common bathroom area. Many rooms in the Indonesian factory we visited

had televisions paid for by the pooled savings of the workers. These dorm rooms were

like a summer-camp environment in the United States with clothes hung out to dry,

pictures on the wall and radios blaring. But I had to remind myself that these small rooms

were "home" for these workers year round.

     Most of the employees at these factories are female, and several told me that they

came to work and live at the factory for a year or two to save up a "dowry", then return

home to marry. While a few complained that factory housing was "crowded", most said

the "dorm" room in the factory was better and cheaper housing than they could afford in

the area near the factory.

     Some of these factories have sports fields and common areas for use by their

employees. One factory owner in China (at the Pegasus factory) is building a theater for

his workers. He told us that it was in his interest for his workers to be happy and satisfied

so that they would work at his factory for a long time, and he could reduce "turnover".

Processes & Systems

     There should be a better system or process in place in these factories that would allow

an individual worker to file a complaint or grievance and know that it will be seriously

considered and/or investigated and that will not leave the worker vulnerable to retribution

by factory management.

Education & Training

     The NIKE Code Of Conduct should be the basis of the relationship between NIKE,

the plant ownership and management and the workers. The Code is not visible on the

factory floors and not well understood by the workers.

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     This is - in my opinion - an acute need and goes to the heart of NIKE's challenges at

these factories where its goods are produced.

     Current and new plant managers and workers should undergo special training sessions

focused on the Code Of Conduct. On a regular basis, there should be required training

sessions that focus on different elements of the Code, with particular focus on workers'

rights and the process for a worker to make a complaint or to file a grievance.

     NIKE should work with its manufacturers to recruit, train and promote more

indigenous factory management. Many of the problems we discovered in the audits and

on our visit were largely a result of expatriate management who did not speak the

language of the workers, creating communications barriers between the workers and the

managers that are the usual sources of problems on the factory floor. If a line manager is

unable to explain a need or effectively encourage or discipline a worker in their own

language, this frustration can sometimes lead to inappropriate actions.

     Special human relations and cultural sensitivity programs should be designed and

organized. Participation should be mandatory for all expatriate management.

Abuse Of Workers & Violations Of Human Rights

     I found no evidence or pattern of widespread or systematic abuse or mistreatment of

workers in these twelve factories.

     With more than three hundred fifty thousand workers in their contract factories in

Asia, it is not surprising that there have been instances of worker abuse and violations of

human rights. While not a single abuse is acceptable - and there have been such abuses -

there was no evidence of widespread and systematic abuse of workers at these factories.

     There have been specific instances of abuse documented in the confidential Ernst &

Young's audits which I reviewed (See "Third Party Reporting & Monitoring"), in some

highly publicized incidents reported by the news media and by NGOs, and in firsthand

reports I have received from workers and NIKE managers I met on my Asian trip.

~ 22 ~

     I did not find in the audit reports or in my own conversations with workers at these

factories or in our other research a pattern of these factories violating national laws, local

laws or the Code Of Conduct as relates to age or working conditions.

     Indeed, I found considerable evidence that NIKE and its labor practices staff led by

Mr. Dusty Kidd are deeply committed to the Code Of Conduct and are working hard to

address these problems.

Plant Management - Worker Relationships

     Generally speaking, these twelve factories are controlled by absentee owners,

managed by expatriates, who, in Vietnam in particular, do not speak the local language

fluently and are overseen by a relatively small number of NIKE technical supervisors

focused largely on quality control.

     While one can make some judgments about physical conditions at NIKE plants and

dorms after spending sixty to seventy hours wandering the factory floors and talking

randomly with workers, I realize that what happens day-to-day on the production line is

not easily understood by an outside observer on an occasional visit. The quality of the

individual worker's life depends on the relationship between the worker and the

management and the commitment of that management to a set of principles which will

govern the operation of the factory.

     I was disappointed at how few of the plant managers actually spoke the local

language. This obviously works against easy communication and a strong relationship

between the workers and the management.

     Nevertheless, I saw tens of thousands working very hard in the factory lines. The

workers I met and observed appeared relaxed, pausing from time to time to smile or talk

with one another. While the factories were highly organized and the workers very

focused, there was not an oppressive atmosphere in any of the factories that we visited.

~ 23 ~

Workers' Rights

     The concept of "workers' rights" is not a well-developed or well-understood principle

in the three Asian countries where NIKE and its major competitors produce shoes and

apparel.

     Because of my own background, I understand what happens on the factory floor. Even

with the most enlightened management with the very best of intentions, when the

pressure is on to meet production quotas, managers sometimes do cut corners to squeeze

maximum production out of their line or shift.

     When this happens, there has to be a system and safeguards in place that discourages

and penalizes managers from cutting corners, protects workers from abuse and provides

an adequate system so that workers can report grievances with a reasonable assurance

that their complaint will be heard and acted upon without fear of retribution.

     In these Asian countries that do not have a mature trade union movement or a long

tradition of "workers' rights", the responsibility for protecting the workers must fall

increasingly on the large companies - like NIKE - that have production contracts with

these factories. This means that NIKE - and its competitors - must pro-actively take steps

that contribute to the creation of systems and processes that protect its workers in these

"contract factories".

     

Third Party Reporting & Monitoring

     Some system of third party monitoring is necessary because of the ownership structure

of these Asian factories.

     With absentee ownership and expatriate plant management, it is important that there

be a regular and sustained way to monitor conditions in these factories.

~ 24 ~

     It is an indication of the distrust that exists that the professional audit work of an

international accounting firm like Ernst & Young would be discounted so completely as

it has been by some of NIKE's critics. I found the Ernst & Young audit reports which we

reviewed to be professionally sound, aggressive and precise in documenting

shortcomings at these work sites. In every instance, they cited specific problems and

suggested very specific remedies which NIKE requires to be completed by a target date.

     These citations ranged from reports that a certain bathroom lacked adequate toilet

paper to complaints about certain unpopular meals to more serious allegations, which

included:

That a factory shift was made to work overtime against their will;

That reduced "training" and "probationary" pay rates were paid to workers beyond the

time of actual training;

That a particular worker was consistently paid less than the minimum wage over an

extended period of time; and,

That religious holidays and "days off" were regularly denied to certain workers.

     These audits paint a picture of certain factories that excel in their efforts to create the

best possible work environment for their employees, other factories which do better than

average and a very small number of factories which seem to have, disproportionately,

many of the more serious allegations and problems.

     These reports demonstrated to me that the NIKE contractors were running far less than

perfect factories, that NIKE was well aware of these problems because of these very

same "audits" and that NIKE was insisting that the factory management address these

problems on a systematic basis.

~ 25 ~

     There still needs to be an additional level of "monitoring" and a better way for an

individual worker to file a complaint or grievance within the factory. This is the subject

of a specific "recommendation".

Wages & Standards Living

     I was not asked by NIKE to address compensation and "cost of living" issues which

some in the human rights and NGO community had hoped would be a part of this report.

This subject deserves some comment.

     Understanding and establishing what is a "fair wage" in a foreign country is a very

complicated process. It requires an understanding of national and local labor laws,

variances in the costs of food, housing and transportation from region to region, the

ability of local governments to enforce local and national laws, factory cooperation and

so forth. Such an exercise was well beyond the technical capacity of our small firm.

     But even if you had that capacity, I had no desire or intention of addressing wages and

standards of living in the countries where NIKE goods are produced. Let me explain why.

     Are workers in developing countries paid far less than U.S. workers? Of course they

are. Are their standards of living painfully low by U.S. standards? Of course they are.

This is a blanket criticism that can be leveled at almost every U.S. company that

manufactures abroad.

     Many people believe that U.S. firms should not be allowed to "export jobs" to

countries with lower wages and standards. While sympathetic to this argument in the

abstract, I realize that this is simply not practical in an increasingly global economy.

     Others, myself included, believe that minimal global wages and standards are

desperately needed.~ 26 ~

     But it is not reasonable to argue that any one particular U.S. company should be

forced to pay U.S. wages abroad while its direct competitors do not. While it is tempting

to criticize a few highly visible and successful companies for paying "low wages,"

meaningful reform can only be achieved through national law or international standards

that enforce a "level playing field" for all companies, not just a few.

     The bottom line is that a national economy can not be transformed one factory at a

time or even one industry at a time. Instead, these economic reforms and improvements

will only come when there are international trade agreements and understandings in place

which support global standards.

     There is important work that has been and is being done by international economists

in organizations like the International Labor Organization (ILO) on minimum labor

standards. While this is very important and timely work, discussion here of those

proposals is beyond the scope of this report and well beyond the technical capacity of our

firm.

     Consequently, we are focusing our study on the important subject of NIKE's Code Of

Conduct and its application.

~ 27 ~

The Credibility Of Our Report

     We have been hired to study a problem and - based on our analysis - to render a

subjective opinion.

     Some NIKE critics have suggested that we might be "duped" by NIKE.

     Have we been shown only the "good" NIKE factories? Systematically misled by

carefully selected interpreters in the hundreds of conversations, meetings and dinners that

we had in three different countries? Given false factory audit reports by Ernst & Young -

when some of the real audits we reviewed were critical of certain factories? Shown

sweatshops that have been "disguised" by NIKE?

     I took careful and reasonable steps to be sure I saw, heard and discovered the truth. I

do not know how - for example - someone can "disguise" a factory that has fifteen

thousand employees or "hide" inferior physical working conditions in building that are

tens of thousands of square feet in size.

     I also have seen insinuations that NIKE is paying me huge sums of money to produce

a favorable report which glosses over the truth. In fact, I have devoted at least forty days

to this project, trying to understand these issues, and my GoodWorks colleagues have

spent over a hundred days in support of our efforts.

     The total compensation I have personally received for this report is less than I am

usually paid for one speech.

     But I have found the effort extremely rewarding. These are global economic and

human rights issues which are some of the more complex challenges we face in the

coming century. They are not just NIKE issues, or shoe and apparel issues. They are

questions which go to the heart of the evolving global economy which is shaping our

future.

     These are concerns which all of us must begin to understand as participants in the

global economy of the 21st Century. Seldom, if ever, does history stand still, and the

~ 28 ~

forces of communications and technology are not likely to be controlled by isolationist

reactions.

How We Conducted Our Study

     We realize that over three hundred fifty thousand people who work in factories

producing NIKE products are looking to us to hear their voice, to understand their needs

and to help them by airing any legitimate grievances that we could identify.

     Conversely, we understand what is at stake for NIKE, whose global brand and

reputation for integrity has been directly challenged by some.

     We accepted this challenge, resolved to seek the truth and report the facts, without

regard for the consequences. Toward that goal, we took advantage of every possible

resource, which included:

1. Briefing By NIKE

     We spent the day at NIKE headquarters being briefed on every aspect of the

manufacturing process with particular emphasis on the Code Of Conduct. We asked for

and received a variety of documents, audits and internal reports from NIKE.

~ 29 ~

2. Review Of Third Party Reports

     We asked for and received confidential audit reports conducted by Ernst & Young,

LLP., which has been working since 1994 for NIKE to provide them a way to monitor

labor practices in the factories manufacturing their products. Price Waterhouse has

recently begun to conduct audits for NIKE in Chinese factories.

     These "spot audits" were conducted by trained professionals (who spoke the local

language) at the manufacturing site and without prior notification of the plant

management. In addition to using a long "check-list" of items which could be tracked

over time, these audits also featured the random selection of employees who were

interviewed without plant management present - about conditions in the plant, the attitude

of management, satisfaction with their job, living conditions, etc. The individual

responses of the workers interviewed were treated confidentially and reported

anonymously.

     We also reviewed the "follow-up" reports which measured the manufacturer's

"compliance" and implementation of the audit recommendations. Generally speaking, we

found these audits were rigorous in their analysis and follow-up.

4. Time "On The Ground"

     We spent - on average - up to three to four hours at each factory and talked

individually with employees at each factory - randomly selected by me - and usually

without NIKE management around. We often had lunch or took a break with the "labor

representative" in the factory, the workers or with the factory management.

~ 30 ~

5. Meetings With Interested Third Parties

National & In-Country NGO's

     In each country, I had conversations with NGOs, usually without NIKE personnel

present. These meetings were very useful and constructive as it was important to me to

hear first hand the problems they saw in local factories. Occasionally, someone would

make a charge or allegation which seemed to be ideological and emotional, but my

overwhelming reaction was that most of these critics were serious and sincere, although

the facts were supplied only by the aggrieved party.

     I also took advantage of opportunities along the way to meet and talk with other

interested parties whose perspective on this problem could inform and guide our work.

International & USA NGO's

     Early in the process, I wrote and called a number of the important international and

U.S. NGO's - both to inform them of our assignment and to solicit their input and advice.

Following our Asian trip, we met in Washington with representatives of the key groups

and talked by phone with others who could not attend.

     Like the meetings in Asia, these discussions were tremendously helpful. Several

representatives in the Washington meeting had been part of the leadership group that

produced the Apparel Industry Partnership and had important and relevant insights on the

successful collaboration and interaction that had taken place between the NGOs and the

apparel industry which had led to the agreement.

~ 31 ~

Disclaimer

     While my colleagues and I have immersed ourselves in this evaluation for the past six

months, there are limits to what any lay person can understand in a relatively short period

of time. Obviously, we do not claim to be labor practices "experts".

     While I do not exaggerate what one person can see and absorb in a short period,

neither do I diminish it. For all of my political life, I have enjoyed the strong support of

organized labor and understand the dynamics and realities of factory work. I believe that

the observations and recommendations presented here are balanced and fair.

Findings & Observations

     In this section, we present our own points of view in two forms. As used here,

     A "finding" is a strongly held belief based on what I/we have seen, heard, read or

learned. We believe our findings to be statements of fact based on what we know.

     An "observation" is important information that we have developed or learned that

should be known by NIKE and appropriately belongs in this report. As used here, an

"observation" does not have the weight of a "finding."

~ 32 ~

But NIKE can and should do better.

     It is an awesome accomplishment to build a global business and brand as NIKE has

done, but it is an equally tremendous responsibility to employ (albeit indirectly) almost

half a million people and to know that these people and their families are ultimately

dependent on NIKE for fair treatment, fair compensation and some measure of dignity

and self-respect in the workplace.

     Just as NIKE expects much of the designers who create its products and much of the

athletes who use its products and promote its brand, NIKE must continue to hold itself to

a high standard in the way it treats the factory workers who make its shoes and apparel.

The fact that so many footwear and apparel manufacturing jobs today are in countries that

lack a tradition of "worker rights" is an additional challenge for NIKE and others in this

industry, but it can never be an excuse, nor justification, for sub-standard working

conditions or abuses of any kind.

     I take seriously NIKE's stated commitment - as the largest producer of athletic

footwear and apparel in the world - to be an industry leader and an example in providing

the best possible working conditions for its employees around the world.

     We should and will hold NIKE to that promise. My friends and colleagues in the

human rights and labor communities should give NIKE a fair opportunity to demonstrate

the sincerity of that commitment.

     I hope and believe that NIKE will build on the progress of the Apparel Industry

Partnership, accept and act upon the recommendations in this report and continue to

strive to improve the working conditions for its people all over the world.

  

~ 33 ~

NIKE Code of Conduct

     Nike, Inc. was founded on a handshake.

     Implicit in that act was the determination that we would build our business with all of

our partners based on trust, teamwork, honesty and mutual respect. We expect all of our

business partners to operate on the same principles.

     At the core of the NIKE corporate ethic is the belief that we are a company comprised

of many different kinds of people, appreciating individual diversity, and dedicated to

equal opportunity for each individual.

     NIKE designs, manufactures and markets products for sports and fitness consumers.

At every step in that process, we are driven to do not only what is required, but what is

expected of a leader. We expect our business partners to do the same. Specifically, NIKE

seeks partners that share our commitment to the promotion of best practices and

continuous improvement in:

     1. Occupational health and safety, compensation, hours of work and benefits.

     2. Minimizing our impact on the environment.

     3. Management practices that recognize the dignity of the individual, the rights of free

association and collective bargaining, and the right to a workplace free of harassment,

abuse or corporal punishment.

     4. The principal that decisions on hiring, salary, benefits, advancement, termination or

retirement are based solely on the ability of an individual to do the job.

     Wherever NIKE operates around the globe, we are guided by this Code of Conduct.

We bind our business partners to these principles. While these principles establish the

spirit of our partnerships, we also bind these partners to specific standards of conduct.

These are set forth below:

~ 34 ~

     1. Forced Labor. (Contractor) certifies that it does not use any forced labor - prison,

indentured, bonded or otherwise.

     2. Child Labor. (Contractor) certifies it does not employ any person under the age of

15 (or 14 where the law of the country of manufacturing allows), or the age at which

compulsory schooling has ended, whichever is greater.

     3. Compensation. (Contractor) certifies that it pays at least the minimum wage, or the

prevailing industry wage, whichever is higher.

     4. Benefits. (Contractor) certifies that it complies with all provisions for legally

mandated benefits, including but not limited to housing; meals; transportation and other

allowances; health care; child care; sick leave; emergency leave; pregnancy and

menstrual leave; vacation, religious, bereavement and holiday leave; and contributions

for social security, life, health, worker's compensation and other insurance.

     5. Hours of Work/Overtime. (Contractor) certifies that it complies with legally

mandated work hours; uses overtime only when employees are fully compensated

according to local law; informs the employee at the time of hiring if mandatory overtime

is a condition of employment; and, on a regularly scheduled basis, provides one day off

in seven, and requires no more than 60 hours of work per week, or complies with local

limits if they are lower.

     6. Health and Safety. (Contractor) certifies that it has written health and safety

guidelines, including those applying to employee residential facilities, where applicable;

and that it has agreed in writing to comply with NIKE's factory/vendor health and safety

standards.

     7. Environment. (Contractor) certifies that it complies with applicable country

environmental regulations; and that it has agreed in writing to comply with NIKE's

specific vendor/factory environmental policies and procedures, which are based on the

concept of continuous improvement in processes and programs to reduce the impact on

the environment.

~ 35 ~

     8. Documentation and Inspection. (Contractor) agrees to maintain on file such

documentation as may be needed to demonstrate compliance with this Code of Conduct,

and further agrees to make these documents available for NIKE or its designated auditor's

inspection upon request.

 

Itinerary For Asian Trip

 

March 27th      Beaverton, Oregon

March 28th       Beaverton/Travel

March 29-30th      Hong Kong

March 31st       China

April 1st       China

April 2nd       China

April 3rd       Vietnam

April 4th       Vietnam

April 5th       Vietnam

April 6th       Indonesia

April 7th       Indonesia

April 8th       Indonesia

April 9th       Indonesia

Non-Governmental Organizations

With Whom GoodWorks Met or Spoke

~ 36 ~

Abigail Abrash     R.F.K. Memorial Center for Human Rights

 

Jeff Ballinger     Press for Change

 

Medea Benjamin

Director

   

Global Exchange

 

Jacques Bertrand     Development and Peace

 

Ambassador Vu Khac Bong

Deputy Foreign Minister

   

Government of Vietnam

 

Anita Chan     Australia National University

 

Cicih Sukaesih

Worker dismissed after strike

   

NIKE critic

 

William Conklin     Asian American Free Labor Institute

 

Bob Dunn

President

   

Business for Social Responsibility

 

Linda Golodner     National Consumers League

 

Pharis Harvey

Executive Director

   

International Labor Rights Fund

 

Selma Widhi Hayati     Indonesian Legal Aid Foundation

 

R. Kyle Horst    

~ 37 ~

Vietnam Specialist The Specialist Group

 

Michael Jendrzejczyk

Asia Director

   

Human Rights Watch Asia

 

Dr. Le Xuan Khoa

President

   

S.E. Asia Regional Action Center

 

Apo Leong

Executive Director

   

Asia Monitor Resource Center

 

Conrad MacKerron

Director, Social Research

   

Progressive Asset Management Inc.

 

Lou Mitchell     PACT

 

Indera Nababan

President

   

Indonesian Sport Shoe Monitoring Network

 

Maniza Naqvi     World Bank

 

Thuyen Nguyen     Vietnam Labor Watch

 

Maria Pakpahan

Assistant Secretary

   

International NGO Forum on Indonesian

Development

 

Dwight Perkins

Professor-Political Economy

   

Harvard Institute for International Development

 

Jennifer Porges    

~ 38 ~

Newsletter Editor Asia Monitor Resource Center

 

Brian Quinn

Country Coordinator

   

Harvard Institute for International Development

 

Soumodip Sarkar

Fulbright Economics Teaching

Program

   

Harvard Institute for International Development

 

David Schilling     Interfaith Center on Corporate Responsibility

 

Ping Kwan Shek     Hong Kong Christian Industrial Committee

 

Jim Silk     R.F.K. Memorial Center for Human Rights

 

Dr. Payaman Simanjuntak

Assistant Minister of Manpower

   

Government of Indonesia

 

Valentin Suazo

Local Representative

   

AFL-CIO

 

Joseph Tham

Fulbright Economics Teaching

Program

   

Harvard Institute for International Development

 

Hien Dai Tran

Coordinator for the South

   

Southeast Asia Resource Action Center

 

Sesto Vecchi

Business & Corporate Law

   

Russin & Vecchi

Ernst & Young

~ 39 ~

Footnotes

1. NGOs are usually non-profit organizations with public concerns and goals. Those who

tend to follow labor practices issues closely include human rights groups, religious

organizations, labor organizations, etc.

2. NIKE has had two U.S. plants in the past and currently has a plant in Beaverton that

produces the "air soles" for their footwear. Generally, NIKE has relied on contract

factories inside and outside of the U.S. for production of its footwear and apparel. More

than half of NIKE's U.S. apparel sales come from goods manufactured in the USA.

3. Personnel from toher countries - often the home country of the owner - who live in-

country and manage the plant.

4. I visited the factory in Vietnam where a supervisor had forced sixty-one women to run

two laps around the plant as a way to discipline them for failing to meet production

quotas and for wearing improper footwear. I talked with 11 of the women and with the

supervisor who had been suspended, pending disposition of the case by the Vietnamese

court.

5. The Appendix lists the individuals and groups we met with on our trip.

6. There is a listing in the Appendix of these people and organizations as well.

7. In Vietnam, our group walked, unannounced, into a government-operated factory

~ 40 ~

which was making shoes for another company. It was strikingly less modern and less

clean than the factories where NIKE produces its goods. It came much closer to the

public's image of a "sweatshop"

8. Asian women generally and Vietnamese women in particular appear very young by

American standards. In one factory in Vietnam, I asked a number of young girls their age.

All pulled out their IDs, and I was surprised to find that most were over twenty years old.

Some factories did report problems with underage job applicants submitting false

identification but they indicated that this was a small and manageable problem.

9. Of factories producing NIKE products, none in Vietnam presently offer housing to

workers, one of thirteen in Indonesia and about forty percent (40%) of the footwear

factories in China offer housing to workers.

10. On my Asian trip, Labor Practices chief, Dusty Kidd and I discussed some of my

ideas for improving the awareness of the Code. It is my understanding that some of those

suggestions have been or are being acted upon. It deserves attention and focus as less

than half of the workers making NIKE product (according to the audit reports and to my

own personal "survey") knew what the Code was, could explain it or was able to

understand how it might help them with their particular problem or grievance.

~ 41 ~

CHAPTER 3

Marketing strategy

Nike's marketing strategy is an important component of the company's success. Nike is

positioned as a premium-brand, selling well-designed and expensive products. Nike lures

customers with a marketing strategy centering around a brand image which is attained by

distinctive logo and the advertising slogan: "Just do it". Nike promotes its products by

sponsorship agreements with celebrity athletes, professional teams and college athletic

teams. However, Nike's marketing mix contains many elements besides promotion. These

are summarised below.

In 1982, Nike aired its first national television ads, created by newly formed ad agency

Wieden+Kennedy, during the New York Marathon. This would mark the beginning of a

remarkably successful partnership between Nike and W+K that remains intact today. The

Cannes Advertising Festival has named Nike its 'advertiser of the year' on two separate

occasions, the first and only company to receive that honor twice (1994, 2003).

Nike also has earned the Emmy Award for best commercial twice since the award was

first created in the 1990s. The first was for "The Morning After," a satirical look at what a

runner might face on the morning of January 1, 2000 if every dire prediction about Y2K

came to fruition. The second Emmy for advertising earned by Nike was for a 2002 spot

called "Move," which featured a series of famous and everyday athletes in a stream of

athletic pursuits.

In addition to garnering awards, Nike advertising has generated its fair share of

controversy:

~ 42 ~

Beatles song

Nike was the focus of criticism for its use of the Beatles song "Revolution" in a 1987

commercial, against the wishes of Apple Records, the Beatles' recording company. Nike

paid $250,000 to Capitol Records Inc., which held the North American licensing rights to

the Beatles' recordings, for the right to use the Beatles' rendition for a year.

Apple sued Nike Inc., Capitol Records Inc., EMI Records Inc. and Wieden+Kennedy

advertising agency for $15 million Capitol-EMI countered by saying the lawsuit was

'groundless' because Capitol had licensed the use of "Revolution" with the "active support

and encouragement of Yoko Ono Lennon, a shareholder and director of Apple."

According to a November 9, 1989 article in the Los Angeles Daily News, "a tangle of

lawsuits between the Beatles and their American and British record companies has been

settled." One condition of the out-of-court settlement was that terms of the agreement

would be kept secret. The settlement was reached among the three parties involved:

George Harrison, Paul McCartney, Ringo Starr; Yoko Ono; and Apple, EMI and Capitol

Records. A spokesman for Yoko Ono noted, "It's such a confusing myriad of issues that

even people who have been close to the principals have a difficult time grasping it.

Attorneys on both sides of the Atlantic have probably put their children through college

on this."

Nike discontinued airing ads featuring "Revolution" in March 1988. Yoko Ono later gave

permission to Nike to use John Lennon's "Instant Karma" in another ad.

~ 43 ~

Minor Threat ad

In late June 2005, Nike received criticism from Ian MacKaye, owner of Dischord

Records, guitarist/vocalist for Fugazi & The Evens, and front-man of defunct punk band

Minor Threat, for appropriating imagery and text from Minor Threat's 1981 self-titled

album's cover art in a flyer promoting Nike Skateboarding's 2005 East Coast demo tour.

On June 27, Nike Skateboarding's website issued an apology to Dischord, Minor Threat,

and fans of both and announced that they tried to remove and dispose of all flyers. They

state that the people who designed it were skateboarders and Minor Threat fans

themselves who created the ad out of respect and appreciation for the band. The dispute

was eventually settled out of court between Nike & Minor Threat. The exact details of the

settlement have never been disclosed.

Chinese-themed ad

In 2004, an ad about LeBron James beating cartoon martial arts masters and slaying a Chinese dragon in martial arts offended Chinese authorities, who

called the ad blasphemous and insulting to national dignity and the dragon. The ad was later banned in China. In early 2007 the ad was reinstated in China

for unknown reasons.

 Nike Marketing Strategies and Current Company Status

    Uploaded by Doraemon (426) on Jan 2, 2005

Who would have imagined it? After years on top, Nike suddenly looks like a world-

class marathoner who, in midrace, questions whether he's got what it takes to keep on

running. Nike's symptoms of distress: a global glut of shoes, flat sales in key markets,

and declining profits. Moreover, the global brand champ that captured its own winning

corporate mindset with the "Just do it" ad slogan has a new pitch, "I can"--to which

investors seem to be retorting, "No, you can't." Losing faith, they have knocked Nike

~ 44 ~

stock from its all-time high of $76 about a year ago to a recent $46.

What happened? While Nike has tripped on fickle fashion trends and heightened

competition before, its main obstacle today appears to be its own success. Here's why:

BIG-BRAND BACKLASH. When he founded Nike in 1972, CEO Phil Knight

contended that if "five cool guys"--the best and most popular athletes--wore his shoes,

other people would want to as well. The strategy worked wonderfully, of course, and

now Nike controls an astounding 47% of the U.S. athletic-shoe market. But the brand

has become too common to be cool. "I call it the Izod syndrome," says John Horan,

publisher of Sporting Goods Intelligence, referring to the once-hip golf shirt. "Nike is

everywhere." Brand expert Watts Wacker, chairman of the consulting firm FirstMatter,

believes that the ubiquity of the Nike logo--the over-Swooshing of America--turns off

important core consumers, the 12- to 24-year-olds. "When I was growing up, we used

to say that rooting for the Yankees is like rooting for U.S. Steel," Wacker says.

"Today, rooting for Nike is like rooting for Microsoft."

THE MARLBORO MISTAKE. Indeed, many cool-conscious youngsters have

gravitated to other brands such as Adidas (which sells sneakers at lower prices) and

Timberland (a leader in the outdoorsy "brown shoe" trend). Instead of responding with

hotter products or lower prices, Nike did what many overconfident giants do (think

Marlboro, pre-Marlboro Friday): It raised its prices ahead of inflation. "Retailers

loaded up, but the products weren't necessarily reaching consumers' closets," says Josie

Esquivel, who follows Nike for Morgan Stanley Dean Witter. Now, Nike is paying

with price cuts--in the 50% range--on last year's models (except the irrepressible Air

Jordan line).

THE (ASIAN) ECONOMY, STUPID. Nike's inventory glut is messiest in Asia,

largely because the company operates few outlet stores there. (In the U.S., Nike sells

almost half of its leftover shoes through its 41 factory stores and the rest through

discounters like T.J. Maxx.) Also, Nike was particularly ill prepared for Asia's

~ 45 ~

economic collapse because Knight has long believed his company's sales are recession-

resistant. Management expected revenues in Asia to almost double this year, from $1.2

billion, but retailers canceled orders at alarming rates. It looks as though sales will rise

marginally at best.

WAFFLING ON WALL STREET. Nike worsened its woes by failing to acknowledge

them soon enough. "Early last year, there was a major crack in the dam," says analyst

Esquivel. "It took them over two months to say, 'Oops, we have problems.' " She

lowered her rating on the stock from buy to hold last May, just before Nike warned

that profits would fall short of expectations. As more negative news followed, some

analysts complained that management was hard to reach for information. One

executive, CFO Robert Falcone, antagonized major shareholders and left in January.

Will Nike get back up to speed? Probably--it's one of the world's most powerful

brands, and Knight is resilient as well as smart. But the recovery will be long and

painful. Knight and his senior managers are currently working on a plan to close

facilities and reduce Nike's work force worldwide. A big restructuring charge will hit

profits hard this year, and growth will likely be slow during the next few years.

In order to recover, Nike will certainly need fresh products to excite bored consumers.

"The lineup for the coming year looks okay," says Ralph Parks, president of Foot

Action, the second-largest athletic-shoe specialty retailer. "It looks better than 1997's,

but I'm not sure the core consumer is quite ready to jump back in."

Most important, Nike needs a new vision--of itself and its brand. This task belongs to

Knight, who turned 60 a few weeks ago and says he plans to work until he dies. That's

a good thing, because the boss's favorite motto, "There is no finish line," seems more

appropriate now than ever.

~ 46 ~

After publishing posts during 7 weeks, our school project is now over. This project was

very innovative. I find interesting the idea of creating a web page on a precise marketing

topic. Moreover, we had the opportunity of chosing the subject, which was very

rewarding.

First of all, I learnt a lot of information about the sponsorship of Nike from my blog.

But a blog has to be updated regurlarly. That's the major difficulty: you have to organise

yourself and to publish posts as soon as possible. If a blog always contains new posts,

people will often visit it.

I think that this project is a good idea because it allows students to develop topics they're

familiar with. It can also help students who are not familiar with Internet too.

To conclude, I think that this project has to be continued but it would be better if all

students post more comments on blogs.

A miracle shot for everybody

Originally uploaded by jerome76110.

After his five-year endorsment in 2000 with Nike for $100 million, Tiger Woods was the

world highest paid athlete in 2004. For its next ad campaign, Nike will use the image of

the golfer and its miracle shot at the 16th hole of the US Masters last week. The shot

would suggest Tiger Woods is worth every cent. You can watch the video here. You

~ 47 ~

easily understand why Tiger Woods is smiling....

The domination of Nike

The domination of Nike

Originally uploaded by jerome76110.

For the first time in history, Nike has become last year the first equipments supplier for

football. Nike, with 32% of marketshare, has taken the first place to Adidas thanks to

partnerships with prestigious teams like Arsenal and Manchester and famous players like

Henry, Ronaldo, Figo and Roberto Carlos. Just remember that Nike was only the 7th

brand on the market after the World Cup 1994.

The target of Nike in Europe: Football

~ 48 ~

The target of Nike in Europe: Football

Originally uploaded by jerome76110.

In Europe, the most famous sport is Football. Nike seems to have understand it. That's

why expensive contracts have been signed with great Football clubs like Arsenal,

Juventus, F.C. Barcelone, PSG... For example, in 2000 a $550 million contract for 13

years has been signed between Nike and the English club of Manchester United.

LeBron James: the future

LeBron James: the future

Originally uploaded by jerome76110.

He was only 17 and he was still in high school but Nike offered him a $90 million

contract over 7 years. Why? Because in only two years Lebron James has become one of

the best NBA players and now everybody see him as the new Michael Jordan. When

Jordan signed in 1984 a shoe contract with Nike, it was "only" for $2.5 million over five

~ 49 ~

years. It shows how much Nike believes in LeBron James...

Michael Jordan: the beginning

Michael Jordan: the beginning

Originally uploaded by jerome76110.

During the 90's, Nike became the number one brand in Basketball thanks to one player:

Michael Jordan. The best player of all times allowed Nike to become what it is

nowadays. From this partnership is born a brand called Jumpman23. Even if Jordan is

today retired, this brand still sells millions of products all around the world.

PSG-Metz

PSG-Metz

Originally uploaded by jerome76110.

~ 50 ~

This is a picture of the supporters of Paris Saint Germain taken in "Le parc des princes"

in 2001.

Nike 4ps

Nike implemented a number of marketing strategies to sell its products. One of

the most important consideration is its marketing mix, better known as the 4Ps.

Nike is a global sports shoe giant company. It is the largest seller of athletic

footwear in the world, holding the lion share of 33% of the global market. The

company has production facilities in Asia, sales facilities in almost 200

countries, and customer service and other operational units worldwide.

The marketing mix or the 4 Ps of Marketing are Product, Price, Place

(distribution) and Promotion. Nike's 4Ps are the following:

1. Product

Nike offers a wide range of shoe, apparel and equipment products, all of which

are currently its top-selling product categories. Nike started selling sports apparel,

athletic bags and accessory items in 1979. Their brand Cole Haan carries a line of

dress and casual footwear and accessories for men, women and children.

They also market head gear under the brand name Sports Specialties, through

Nike Team Sports, Inc. They sell small amounts of plastic products to other

manufacturers through Nike IHM, Inc. Bauer Nike Hockey Inc. manufactures

~ 51 ~

and distributes ice skates, skate blades, in-roller skates, protective gear, hockey

sticks and hockey jerseys and accessories.

Buy Sports Goods Online

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. Price

Nike’s pricing is designed to be competitive to the other fashion shoe retailers.

The pricing is based on the basis of premium segment as target customers. Nike

as a brand commands high premiums. Nike’s pricing strategy makes use of

vertical integration in pricing wherein they own participants at differing channel

levels or take part in more than one channel level operations. This can control

costs and influence product pricing.

3. Place

Nike shoes are carried by multi-brand stores and the exclusive Nike stores across

the globe. Nike sells its product to about 20,000 retail accounts in the U.S. and in

almost 200 countries around the world. In the international markets, Nike sells its

products through independent distributors, licensees and subsidiaries. Independent

distributors need not adapt to local pressures because the 4Ps of marketing are

managed by distributors.

4. Promotion

Promotion is largely dependent on finding accessible store locations. It also avails

of targeted advertising in the newspaper and creating strategic alliances. Nike has

a number of famous athletes that serve as brand ambassadors such as the Brazilian

~ 52 ~

Soccer Team (especially Ronaldino, Renaldo, and Roberto Carlos), Lebron James

and Jermane O’Neal for basketball, Lance Armstrong for cycling, and Tiger

Woods for Golf.

Nike also sponsors events such as Hoop It Up and The Golden West Invitational.

Nike’s brand images, the Nike name and the trademark swoosh, make it one of

the most recognizable brands in the world. Nike’s brand power is one reason for

its high revenues. Nike’s quality products, loyal customer base and its great

marketing techniques all contribute to make the shoe empire a huge success

~ 53 ~

We Are What We Wear

In the late 20th century American, the cultural capital of corporations has replaced many

human forms of capital. As we buy, wear, and eat logos, we become the henchmen and

admen of the corporations, defining ourselves with respect to the social standing of the

various corporations. Some would say that this is the new form of tribalism, that in sport

corporate logos we ritualize and humanize them, we redefine the cultural capital of the

corporations in human social terms. I would say that a state where culture is

indistinguishable from logo and where the practice of culture risks infringement of

private property is a state that values the corporate over the human. (Susan Willis, 1993:

132-133 per Cole, 1995: 365)

Have we come to this? In light of the rash of killings over Nike shoes in 1991 and the

continued market dominance of the brand, clearly Nike exerts a significant social and

psychological force on the American consumer. It is my assertion that Nike appeals to a

buying public that treats fitness as a worthy individual goal which simultaneously imparts

social identification. The question remains, how? Nike ads, when first released were

"treated like new plays or books" (Katz, 1994:153). Through semiotic analysis of a

number of Nike advertisements, I hope to uncover at least the clues to Nike's pull on

public imagination. (The Media and Communications Site concerning semiotic analysis

informs this discussion and stands as a great study aid and interesting read)

~ 54 ~

Unlocking Nike's Ads

I plan to work with a small number of Nike ads that speak to the entire genre, though a

thorough analysis would include the Air Jordan series, the women-oriented

"Empathy"campaign, and All Conditions Gear ads to name a few. I hope to incorporate a

wider variety of Nike advertisements at a later date.

Nike's ads, like any other business's, require interpretation. Some of this reading goes on

at the conscious level, some unconsciously. As opposed to extremists on either side of the

interpretative question, I fall most nearly to the constructivist point of view in that I view

meaning as an interplay between text and the reader. Chandler writes, "Texts are full of

indeterminacies which require the reader's active interpretation. We must draw not only

on our knowledge of language, but on our knowledge of the world." Thus, readers of

advertisements bring with them a surface knowledge of the language as well as a set of

preconceived ideas about how to relate the ad to themselves. These mental templates are

known as schemata. Examples of these may include ideas of the rebel, corporate

businessman, or avant-garde artist as well as Southern Baptist churches, universities, or

mechanics' garages.

Ads work on a variety of different levels including, but not limited to, sign typology,

paradigmatic meaning, psychological appeals, emotion, roles, values/beliefs, and

knowledge. Again, the impact of an ad comes from the interplay between these various

aspects of make-up and the reader's own notions about him/herself and the world.

So, taking the "Test Your

Faith" ad as our first example:

Straight off, the reader finds

him/herself thrust into the

schema of religious worship.

~ 55 ~

Not only must the viewer literally look up to the runner, but he/she receives the

imperative to "Test your faith." The runner pictured appears in the midst of a run and

rests easy in the knowledge of his own god-like attention to fitness. Likewise, the runner

has no identity beyond his role in the ad. That is, we cannot see his face, giving him an

added element of the unknown divine. The reader feels cowed looking from a subordinate

position at the figure of the runner in his element. The text implies a direct connection

between exercising (in this case, running) and religious questioning. (cp. Nike and the

Sanctification of Sport in the History section of this project) The writers seem to suggest

an element of transcendence possible in exercise, as well as the need to continually

question who we are in relation to our gods and what we hold most sacred. For the runner

in the ad, exercise is the object of sanctity.

Yet the reader might inhabit a different role by placing themselves as the runner in the ad

itself. Transported from reading a magazine to the middle of a run, filled with the sensual

pleasure of using one's body, the reader identifies him/herself as the 'tester of faith.' And

finding the purity of exercise within the soul, the reader can accept a measure of hearty

self-congratulation.

A slightly dissimilar angle for interpretation would be to imagine the set of causes or

drives that propelled the runner in the ad from his home to the streets for a run. Recall

Bauman's statement of drive for fit bodies. The measure of the individual in

contemporary society rests upon the extent to which they exercise their body. Seeing the

runner engaged in a long run should impel the reader to imagine their own set of values

and desires. What would it take to get them on the streets for a run? How important is

exercise to that person? The ad places fitness as a top priority and suggests that the reader

must acknowledge the fitness culture, even if they do not take an active part.

Finally, the gritty gray and white tones of the advertisement insinuate a harsh world in

which running becomes an escape. Reading the ad, perhaps themselves members of such

a life, viewers will immediately seek the release and redemption that running and

exercise offer.

~ 56 ~

Moving on to another example of running

advertising, we look at "You either ran...":

Again placed in the dichotomy between

athletes and spectators, the reader need only

answer one question. Have I run today?

Respondents will fall neatly into two

categories and can take with them the requisite

set of emotions that come with their answer.

Identification and affiliation with others, approval, self-worth, and pride all spring from

the answer 'yes.' Meanwhile, shame (first and foremost) and ostracization from the 'in-

crowd' leave a bitter taste in the mouths of those answering 'no.'

Placing the runner against a neutral background gives the appearance of a void in which

must be placed the sum of viewers' athletic endeavors. They will be judged and given

admittance or refusal to the world that Nike's runner inhabits. The world of the ad is

composed of little more than the runner and the bland sky behind him. For the reader, the

added force of the text--almost taunting, by now--makes the point clear. You must

belong.

Katz asserts that "Nike's ads in track and field and running [magazines] have long been

acknowledged to be as much a way to support the sport's means of communication as

ways to sell gear" (119). While this may be letting Nike off a bit easy, the advertisements

above demonstrably speak to an elite group of readers well-versed in the intricacies of

running.

All these factors tie into the ongoing cultural formation of the fit body discussed in this

project's Fitness Culture section. During the late 1980s, Nike attained a relative saturation

of the U.S. market for athletic goods and apparel, leaving Nike executives wondering

'where do we go from here?' Appealing to a higher sense of excellence (arete, to borrow

another Greek word married to the philosophy of Nike), Nike hoped to inculcate a sense

of individual accomplishment possible in sport as well as play into that very same sense

~ 57 ~

already budding in the breasts of consumers. Herein lies another example of the

indivisibility of the fitness culture and Nike's place in it. Phil Knight on marketing: "What

Nike does well is to interpret what people are doing, what they're interested in, and we've

been lucky enough to align ourselves completely with what we perceive" (Katz, 1994:

150). But one should not imagine Nike as a mere reflector of popular culture, as the

advertising examples above relate. In fact, Jensen (Advertising Age, 12/16/96) imagines

Nike's marketing formula to consist of the integration of the swoosh into the cultural

fabric of sports and harnessing of its emotional power.

Originally, Knight hated ads and spent much more on promotions. For example in 1976,

only $100,000 were allocated for advertising versus $310,000 for promotion (Strasser &

Becklund, 1994: 239). Knight and the other Nike executives knew well "the importance

of owning athlete-endorsed apparel...to youth for the sense of cultural power and

belonging it imparted" (Wilson & Sparks, 1996: 415). And who can deny the success of

such long-term promotional efforts as the Nike Air Jordan campaign

Contact Information

Address: 1 Bowerman Dr.

Beaverton, OR 97005-6453

Phone: 503-671-6453

Fax: 503-671-6300

Financial Highlights

Fiscal Year End: May

Revenue (2009): 19176.10 M

Revenue Growth (1 yr): 2.90%

Employees (2008): 32,500

~ 58 ~

Employee Growth (1 yr): 7.60%

Key People

• Chairman: Philip H. Knight

• President, CEO, and Director: Mark G.

Parker

• President, Global Operations: Gary M.

DeStefano

Industry Information

Sector: Consumer Goods

Industry: Textile - Apparel Footwear &

Accessories

Top Competitors

• adidas AG (addyy.pk)

• New Balance Athletic Shoe, Inc.

• PUMA AG Rudolf Dassler Sport

Nike, Inc.

Type Public (NYSE: NKE)

Founded24 January 1964

1978

Founder(s)William J. "Bill" Bowerman

Philip H. Knight

Headquarters Near Beaverton, Oregon, United

~ 59 ~

States

Area served Worldwide

Key people

Philip H. Knight

(Chairman)

Mark Parker

(CEO) & (President)

Industry

Designing and Manufacturing:

Sportswear

Sports equipment

Products

Athletic shoes

Apparel

Sports equipment

Accessories

Revenue ▲ US$ 18.627 billion (2008)

Operating

income▲ US$ 2.199 billion (2007)

Net income ▲ US$ 1.883 billion (2008)

Total assets ▲ US$ 12.443 billion (2008)

Total equity ▲ US$ 7.825 billion (2008)

Employees 30,200 (2008)

S

Nike, Inc. (pronounced / ̍ na ɪ ki/ ) (NYSE: NKE) is a major publicly traded sportswear and

equipment supplier based in the United States. The company is headquartered near

Beaverton, Oregon, which is part of the Portland metropolitan area. It is the world's

leading supplier of athletic shoes and appareland a major manufacturer of sports

equipment with revenue in excess of $18.6 billion USD in its fiscal year 2008 (ending

May 31, 2008). As of 2008, it employed more than 30,000 people worldwide. Nike and

Precision Castparts are the only Fortune 500 companies headquartered in the state of

Oregon, according to The Oregonian.

~ 60 ~

The company was founded on January 25, 1964 as Blue Ribbon Sports by Bill

Bowerman and Philip Knight, and officially became Nike, Inc. in 1978. The company

takes its name from Nike (Greek Νίκη pronounced [ní ː k ɛ ː ] ), the Greek goddess of

victory. Nike markets its products under its own brand as well as Nike Golf, Nike Pro,

Nike+, Air Jordan, Nike Skateboarding and subsidiaries including Cole Haan, Hurley

International, Umbro and Converse. Nike also owned Bauer Hockey (later renamed Nike

Bauer) between 1995 and 2008.] In addition to manufacturing sportswear and equipment,

the company operates retail stores under the Niketown name. Nike sponsors many high

profile athletes and sports teams around the world, with the highly recognized trademarks

of "Just do it" and the Swoosh logo.

Products

A Nike brand athletic shoe

A pair of Nike Air Jordan I shoes

Nike produces a wide range of sports equipment. Their first products were track running

shoes. They currently also make shoes, jerseys, shorts, baselayers etc. for a wide range of

sports including track & field, baseball, ice hockey, tennis, Association football, lacrosse,

basketball and cricket. Nike Air Max is a line of shoes first released by Nike, Inc. in

1987. The most recent additions to their line are the Nike 6.0, Nike NYX, and Nike SB

~ 61 ~

shoes, designed for skateboarding. Nike has recently introduced cricket shoes, called Air

Zoom Yorker, designed to be 30% lighter than their competitors'. In 2008, Nike

introduced the Air Jordan XX3, a high performance basketball shoe designed with the

environment in mind.

Nike sells an assortment of products, including shoes and apparel for sports activities like

association football basketball , running, combat sports, tennis, American football,

athletics, golf and cross training for men, women, and children. Nike also sells shoes for

outdoor activities such as tennis, golf, skateboarding, association football, baseball,

American football, cycling, volleyball, wrestling, cheerleading, aquatic activities, auto

racing and other athletic and recreational uses. Nike is well known and popular in youth

culture, chav culture and hip hop culture as they supply urban fashion clothing. Nike

recently teamed up with Apple Inc. to produce the Nike+ product which monitors a

runner's performance via a radio device in the shoe which links to the iPod nano. While

the product generates useful statistics, it has been criticized by researchers who were able

to identify users' RFID devices from 60 feet (18 m) away using small, concealable

intelligence motes in a wireless sensor network.

In 2004, they launched the SPARQ Training Program/Division.[citation needed]

Some of Nike's newest shoes contain Flywire and Lunarlite Foam. These are materials

used to reduce the weight of many types of shoes.[

Brand Names

How do you name a product? Simply put it, there is no easy option. Depending on how

established an organisation is, there are a number of ways to brand a product.

Individual name: A product could be branded with an individual name. A firm may

decide it wants a brand, which has no association with any of its other brands.

Volkswagen in the UK, for example own the brand SEAT and Skoda

~ 62 ~

Family brand: Where a product is part of a family, e.g. Kellogg’s, with Corn flakes, Rice

Krispies, and Frosties. The brand is stretched to other products because customers trust it,

and the firm is trying to maximize the equity it holds in the brand.

Combined brand name: A popular strategy involves the organisation combing the already

established family name with a new individual brand name. The idea is to use the

reputation of the established family or company name to launch a new associated

product. For example Nestle may use their name to launch a new cereal or cereal bar.

Product strategies

When an organisation introduces a product into a market they must ask themselves a

number of questions.

~ 63 ~

1. Who is the product aimed at?

2. What benefit will they expect?

3. How do they plan to position the product within the market?

4. What differential advantage will the product offer over their competitors?

We must remember that Marketing is fundamentally about providing the correct bundle

of benefits to the end user, hence the saying ‘Marketing is not about providing products

or services it is essentially about providing changing benefits to the changing needs and

demands of the customer’ (P.Tailor 7/00)

Philip Kotler in Principles of Marketing devised a very interesting concept of benefit

building with a product

For a more detailed analysis please refer to Principles of Marketing by P.Kotler.

 

Kotler suggested that a product should be viewed in three levels.

Level 1: Core Product. What is the core benefit your product offers?. Customers who

purchase a camera are buying more then just a camera they are purchasing memories.

Level 2 Actual Product: All cameras capture memories. The aim is to ensure that your

potential customers purchase your one. The strategy at this level involves organisations

branding, adding features and benefits to ensure that their product offers a differential

advantage from their competitors.

~ 64 ~

Level 3: Augmented product: What additional non-tangible benefits can you offer?

Competition at this level is based around after sales service, warranties, delivery and so

on. John Lewis a retail departmental store offers free five year guarantee on purchases of

their Television sets, this gives their `customers the additional benefit of peace of mind

over the five years should their purchase develop a fault.

Product Decisions

When placing a product within a market many factors and decisions have to be taken into

consideration. These include:

~ 65 ~

Product design – Will the design be the selling point for the organisation as we have seen

with the iMAC,  the new VW Beetle or the Dyson vacuum cleaner.

Product quality: Quality has to consistent with other elements of the marketing mix. A

premium based pricing strategy has to reflect the quality a product offers.

 

               

                                                

Product features: What features will you add that may increase the benefit offered to your

target market? Will the organisation use a discriminatory pricing policy for offering these

additional benefits?

Branding: One of the most important decisions a marketing manager can make is about

branding. The value of brands in today’s environment is phenomenal. Brands have the

power of instant sales, they convey a message of confidence, quality and reliability to

their target market.

Brands have to be managed well, as some brands can be cash cows for organisations. In

many organisations they are represented by brand managers, who have hugh resources to

ensure their success within the market.

~ 66 ~

A brand is a tool which is used by an organisation to differentiate itself from competitors.

Ask yourself what is the value of a pair of Nike trainers without the brand or the logo?

How does your perception change?

Increasingly brand managers are becoming annoyed by ‘copycat’ strategies being

employed by supermarket food retail stores particular within the UK . Coca-Cola

threatened legal action against UK retailer Sainsbury after introducing their Classic Cola,

which displayed similar designs and fonts on their cans. 

Internet branding is now becoming an essential part of the branding strategy game.

Generic names like Bank.com and Business.com have been sold for £m’s. ( Recently

within the UK banking industry we have seen the introduction of Internet banks such as

cahoot.com and marbles.com the task by brand managers is to make sure that consumers

understand that these brands are banks!

Headquarters

Nike's world headquarters are surrounded by the city of Beaverton, but are within

unincorporated Washington County. The city attempted to forcible annex Nike's

headquarters, which led to a lawsuit by Nike, and lobbying by the company that

ultimately ended in Oregon Senate Bill 887 of 2005. Under that bill's terms, Beaverton is

specifically barred from forcibly annexing the land that Nike and Columbia Sportswear

occupy in unincorporated Washington County for 35 years, while Electro Scientific

Industries and Tektronix get that same protection for 30 years.

Manufacturing

Nike has contracted with more than 700 shops around the world and has offices located

in 45 countries outside the United States. Most of the factories are located in Asia,

~ 67 ~

including Indonesia, China, Taiwan, India, Thailand, Vietnam, Pakistan, Philippines, and

Malaysia. Nike is hesitant to disclose information about the contract companies it works

with. However, due to harsh criticism from some organizations like CorpWatch, Nike has

disclosed information about its contract factories in its Corporate Governance Report.

Human rights concerns

Nike has been criticized for contracting with factories in countries such as China,

Vietnam, Indonesia and Mexico. Vietnam Labour Watch, an activist group, has

documented that factories contracted by Nike have violated minimum wage and overtime

laws in Vietnam as late as 1996, although Nike claims that this practice has been halted

The company has been subject to much critical coverage of the often poor working

conditions and exploitation of cheap overseas labor employed in the free trade zones

where their goods are typically manufactured. Sources of this criticism include Naomi

Klein's book No Logo and Michael Moore's documentaries.

Nike has been criticized about ads which referred to empowering women in the U.S.

while engaging in practices in East Asian factories which some felt disempowered

women.

During the 1990s, Nike faced criticism for use of child labor in Cambodia and Pakistan in

factories it contracted to manufacture soccer balls. Although Nike took action to curb or

at least reduce the practice of child labor, they continue to contract their production to

companies that operate in areas where inadequate regulation and monitoring make it hard

to ensure that child labor is not being used.

In 2001 a BBC documentary uncovered occurrences of child labor and poor working

conditions in a Cambodian factory used by Nike. In the documentary, six girls were

focused on, all of whom worked seven days a week, often 16 hours a day.

Campaigns have been taken up by many colleges and universities, especially anti-

globalisation groups as well as several anti-sweatshop groups such as the United Students

Against Sweatshops. Despite these campaigns, however, Nike's annual revenues have

~ 68 ~

increased from $6.4 billion in 1996 to nearly $17 billion in 2007, according to the

company's annual reports.

A July 2008 investigation by Australian Channel 7 News found a large number of cases

involving forced labour in one of the biggest Nike apparel factories. The factory located

in Malaysia was filmed by an undercover crew who found instances of squalid living

conditions and forced labour. Nike have since stated that they will take corrective action

to ensure the continued abuse does not occur.

Following Liu Xiang's withdrawal from the 2008 Olympics, Nike admitted seeking help

from "relevant government departments" in the Chinese government to track down and

identify an anonymous Internet poster.

Environmental record

The consistently growing textile industry often negatively impacts the environment.

Because Nike is a large participant in this manufacturing, many of their processes

~ 69 ~

negatively contribute to the environment. One way the expanding textile industry affects

the environment is by increasing its water deficit, climate change, pollution, and fossil

fuel and raw material consumption. In addition to this, today's electronic textile plants

spend significant amounts of energy, while also producing a throw-away mindset due to

trends founded upon fast fashion and cheap clothing.

Although these combined effects can negatively alter the environment, Nike tries to

counteract their influence with different projects. According to a New England-based

environmental organisation Clean Air-Cool Planet, Nike ranks among the top 3

companies (out of 56) on a survey conducted about climate-friendly companies Nike has

also been praised for its Nike Grind program (which closes the product lifecycle) by

groups like Climate Counts In addition to this, one campaign that Nike began for Earth

Day 2008 was a commercial that featured Steve Nash wearing Nike's Trash Talk Shoe, a

shoe that had been constructed in February 2008 from pieces of leather and synthetic

leather waste that derived from the factory floor. The Trash Talk Shoe also featured a

sole composed of ground-up rubber from a shoe recycling program. Nike claims this is

the first performance basketball shoe that has been created from manufacturing waste, but

it only produced 5,000 pairs for sale Another project Nike has begun is called Nike's

Reuse-A-Shoe program. This program, started in 1993, is Nike's longest-running program

that benefits both the environment and the community by collecting old athletic shoes of

any type in order to process and recycle them. The material that is created from the

recycled shoes is then used to help create sports surfaces, such as basketball courts,

running tracks, and playgrounds.

Sponsorship

~ 70 ~

Niketown at Oxford Street, London

Main article: Nike sponsorships

Nike pays top athletes in many different sports to use their products and

promote/advertise their technology and design.

Nike's first professional athlete endorser was Romanian tennis player Ilie Năstase, and

the company's first track endorser was distance running legend Steve Prefontaine.

Prefontaine was the prized pupil of the company's co-founder Bill Bowerman while he

coached at the University of Oregon. Today, the Steve Prefontaine Building is named in

his honor at Nike's corporate headquarters.

Besides Prefontaine, Nike has sponsored many other successful track & field athletes

over the years such as Carl Lewis, Jackie Joyner-Kersee and Sebastian Coe. However, it

was the signing of basketball player Michael Jordan in 1984, with his subsequent

promotion of Nike over the course of his storied career with Spike Lee as Mars

Blackmon, that proved to be one of the biggest boosts to Nike's publicity and sales.

During the past 20 years especially, Nike has been one of the major clothing/footwear

sponsors for leading tennis players. Some of the more successful tennis players currently

or formerly sponsored by Nike include: James Blake, Jim Courier, Roger Federer,

Lleyton Hewitt, Juan Martín del Potro, Andre Agassi, Rafael Nadal, Pete Sampras,

Marion Bartoli, Lindsay Davenport, Daniela Hantuchová, Mary Pierce, Maria Sharapova,

Serena Williams.

Nike is also the official kit sponsor for the Indian cricket team for 5 years, from 2006 till

end of 2010. Nike beat Adidas and Puma by bidding highest (US$43 Million total).

Nike also sponsors some of the leading clubs in world football, such as the US National

Team, Manchester United, Arsenal, FC Barcelona, Inter Milan, Juventus, Shakhtar,

Porto, Steaua, Red Star, Club América, Aston Villa, Celtic and PSV Eindhoven. Nike

will also sponsor Dundee United from summer 2009.

~ 71 ~

Nike sponsors several of the world's top golf players, including Tiger Woods, Trevor

Immelman and Paul Casey.

Nike also sponsors various minor events including Hoop It Up (high school basketball)

and The Golden West Invitational (high school track and field). Nike uses web sites as a

promotional tool to cover these events. Nike also has several websites for individual

sports, including nikebasketball.com, nikefootball.com, and nikerunning.com.

Consumer Buyer Behaviour

CONSUMER DECISION PROCESS MODEL – BUYING A PAIR OF RUNNING

SHOES

The process component of the consumer decision making process deals with how

consumers make decisions. The product I have selected is choosing a pair of running

shoes and in order to understand how a consumer makes these decisions in the process

component we need to look at the psychological field of the process model which are the

~ 72 ~

internal influences of motivation, perception, learning, personality & attitude and how

these influences affect the decision making process. The act of making a consumer

decision consists of three stages which are need recognition, prepurchase search &

evaluation of alternatives.

1.) Need Recognition:

Need recognition occurs when a consumer is faced with a problem. There are many

different reasons why someone would decide that they need to buy a pair of running

shoes. It might be the start of a new year and a person has resolved to start afresh and try

to be as healthy as possible. This person has been faced with a problem that they are

feeling unhealthy and therefore have recognised the need for a pair of running shoes in

order to get themselves fit and healthy. Another reason could be that a person has decided

that they are putting on too much weight. This person has been confronted by a weight

problem and has recognised the need to buy a pair of running shoes in order to take up

running and try to lose some extra weight. Another reason for buying a pair of shoes

could be that someone has decided they are going to run a race like the Comrades

Marathon as a challenge from some friends. Here this person has encountered a serious

problem and will recognise the need to buy a pair of shoes in order to complete the

90km’s. A person could have problems with their feet and after a visit to a podiatrist they

are told that they need to get a specialised pair of shoes for extra comfort and anti

pronation support. Again this person has been confronted with the problem of sore...

Nike Oregon Project

Nike's Oregon Project is a group created by athletic shoe company Nike in 2001 to

promote American long distance running, using air thinning technology. The runners live

and train in Beaverton, Oregon near Nike's headquarters. Some of the runners in this

~ 73 ~

group live in a specially designed house where filters are used to remove oxygen from the

air to simulate that the athlete is living at high elevation. Numerous studies have shown

that living at altitude causes the athlete to develop more red blood cells, increasing

athletic performance. In addition to this, special software is used to monitor electrodes

attached to the athletes, determining what condition they are in and how far or fast they

can train.

The group includes the 2007 World Championship 10,000m Bronze medalist Kara

Goucher, her husband, 2000 Olympian Adam Goucher, rising stars Galen Rupp and Josh

Rohatinsky, Amy Yoder Begley, a 2008 Olympian at 10,000 meters, and Matt

Tegenkamp, who is also a 2008 Olympian running in the 5000m. The group also now

includes 2008 Olympic Marathoner and 5000 meter American Record Holder, Dathan

Ritzenhein. Nike's Marketing Function

This is an excerpt from the paper...

Introduction: The marketing function will face a number of new and dynamic challenges

in the 21st century. One of the defining qualities of a 21st century marketer is that he or

she must be sensitive to cultural differences in new markets in order to be successful. A

marketing manager must be able understand both consumer preferences, and understand

how to develop the appropriate tools and techniques to successfully promote their

company's products and services to customers. Marketers will need to develop better

ways of targeting specific target markets with targeted promotional campaigns that extol

the benefits of the product or service being advertised, and they must do so in a way that

validates the cultural norms, values, and beliefs of their target audience. The most

successful marketing managers handling foreign marketing will be the marketing

professionals that understand customer needs, determine the appropriate media for

reaching them, constantly evaluate the effectiveness of advertising and promotional

campaigns, and regularly gather information to ensure that the message does not cause

any unintentional insult. Marketing managers must:

Develop a respect for cultural diversity

~ 74 ~

Avoid ethnocentrism when planning marketing programs in foreign market

Work diligently to address the unique needs of customers in foreign markets

Reject the idea that a good marketing concept can be transferred from one culture to

another and be equally successful in each

. . .

lympics airing a jarring tv ad entitled "Search and Destroy," which paints Olympic

athletes as full-fledged warriors, kicking, jumping, falling-whatever it takes for victory-

all framed by a crescendo of punk rock music. The spot ends with a runner vomiting

violently, and a bloody mouthpiece sailing across an image of the Nike logo. Very in-

your-face. Twentieth-century Americans, wrote Daniel Boorstin, affiliate themselves less

by their political or religious beliefs than by what they consume. Knight has made it cool

to be a Nike consumer. Highly polished brogues aren't cool-flashy, high-tech sneakers

are. So familiar has the Nike logo become to its target audience that both the sneakers

and the $1.5 billion worth of nonshoe products Nike markets no longer even bother to

carry the name Nike-just the Nike logo, that curvy, speedy-looking blur that has become

as ubiquitous as Mickey Mouse. When some words are called for, Nike uncorks its

indelible and equally ubiquitous slogan: "Just do it." All this savvy begs the question:

How did Phil Knight, a shy 58-year-old track geek who spent the first two decades of his

business career harboring a deep dislike for advertising and spin, evolve into one of the

great marketers of his time

. . .

Some common words found in the essay are:

Phil Knight, CONSUMER INSIGHT, , Census Bureau, Forbes Nike, Ms Dolan,

According Maslow, Kraft Dinner, Knight Nike's, Search Destroy, phil knight, ms dolan,

nike shoes, photo color, wieden kennedy, users print, target market, posted listserv

copyright, sites posted, multiple sites, sites posted listserv, e-mailed multiple, listserv

copyright holder`s, holder`s express written, copyright holder`s express,

~ 75 ~

Nike`s

Creation

Nike's Oregon Project was created by Nike Vice President Tom Clarke after reportedly

being disgusted at the lacklustre performance of American athletes in long distance

events since the early 1980s. Since Oregon Project coach Alberto Salazar won the New

York City Marathon three consecutive times from 1980-1982, only one American, Khalid

Khannouchi (naturalized in 2000) has a marathon finishing time among the 50 best in the

world.

Leadership

The health of coach and project director Alberto Salazar has been in question since he

suffered a heart attack at Nike's Beaverton campus on June 30, 2007. From that time,

Salazar has been implanted with a defibrillator, and he has planned to take a more limited

role with Nike Oregon Project. In June 2008, Salazar chose his tentative successor as

head of the Oregon Project, hiring cross country coach Jerry Schumacher away from the

University of Wisconsin–Madison. In turn, Schumacher has brought his top distance

protégé, Matt Tegenkamp, with him to join the program along with Chris Solinsky and

UW–Madison Freshman turned pro Evan Jager.

Criticisms

In 2002, the Oregon Project came under scrutiny from the United States Anti-Doping

Agency, which formed a think tank to discuss the ethics of the high altitude house. The

Agency's Senior Managing Director, Larry Bowers said, "The argument for altitude

rooms is that they make up for those athletes that can't live high. What they don't take

~ 76 ~

into account is that people living high don't get the benefits of training low." Alberto

Salazar was confident the Anti-Doping Agency would ultimately approve the altitude

house, saying that it's no different from other legal scientific advances like heart rate

monitors and sports drinks.

In 2006, the subject was revisited more thoroughly by the World Anti-Doping Agency

(WADA) which claimed that it could be equivalent to blood doping and therefore they

should be banned; however, on September 16, 2006, Dick Pound of the WADA

announced that "...the overwhelming consensus of our health, medicine and research

committees – was that, at this time, it is not appropriate to do so." No explanation was

given as to how WADA would have enforced a ban.

The Oregon Project has also been criticized by college track coaches for recruiting Galen

Rupp directly out of high school to go live at the Oregon house and forgo attending

University of Oregon for his first year.

CHAPTER 4

Nike swot analysis

~ 77 ~

Strengths.

Nike is a very competitive organization. Phil Knight (Founder and CEO) is often

quoted as saying that 'Business is war without bullets.' Nike has a healthy dislike

of is competitors. At the Atlanta Olympics, Reebok went to the expense of

sponsoring the games. Nike did not. However Nike sponsored the top athletes and

gained valuable coverage.

Nike has no factories. It does not tie up cash in buildings and manufacturing

workers. This makes a very lean organization. Nike is strong at research and

development, as is evidenced by its evolving and innovative product range. They

then manufacture wherever they can produce high quality product at the lowest

possible price. If prices rise, and products can be made more cheaply elsewhere

(to the same or better specification), Nike will move production.

Nike is a global brand. It is the number one sports brand in the World. Its famous

'Swoosh' is instantly recognisable, and Phil Knight even has it tattooed on his

ankle.

Weaknesses.

The organization does have a diversified range of sports products. However, the

income of the business is still heavily dependent upon its share of the footwear

market. This may leave it vulnerable if for any reason its market share erodes.

The retail sector is very price sensitive. Nike does have its own retailer in Nike

Town. However, most of its income is derived from selling into retailers.

Retailers tend to offer a very similar experience to the consumer. Can you tell one

~ 78 ~

sports retailer from another? So margins tend to get squeezed as retailers try to

pass some of the low price competition pressure onto Nike.

Opportunities.

Product development offers Nike many opportunities. The brand is fiercely

defended by its owners whom truly believe that Nike is not a fashion brand.

However, like it or not, consumers that wear Nike product do not always buy it to

participate in sport. Some would argue that in youth culture especially, Nike is a

fashion brand. This creates its own opportunities, since product could become

unfashionable before it wears out i.e. consumers need to replace shoes.

There is also the opportunity to develop products such as sport wear, sunglasses

and jewellery. Such high value items do tend to have associated with them, high

profits.

The business could also be developed internationally, building upon its strong

global brand recognition. There are many markets that have the disposable

income to spend on high value sports goods. For example, emerging markets such

as China and India have a new richer generation of consumers. There are also

global marketing events that can be utilised to support the brand such as the

World Cup (soccer) and The Olympics.

Threats.

Nike is exposed to the international nature of trade. It buys and sells in different

currencies and so costs and margins are not stable over long periods of time. Such

an exposure could mean that Nike may be manufacturing and/or selling at a loss.

This is an issue that faces all global brands.

~ 79 ~

The market for sports shoes and garments is very competitive. The model

developed by Phil Knight in his Stamford Business School days (high value

branded product manufactured at a low cost) is now commonly used and to an

extent is no longer a basis for sustainable competitive advantage. Competitors are

developing alternative brands to take away Nike's market share.

As discussed above in weaknesses, the retail sector is becoming price

competitive. This ultimately means that consumers are shopping around for a

better deal. So if one store charges a price for a pair of sports shoes, the consumer

could go to the store along the street to compare prices for the exactly the same

item, and buy the cheaper of the two. Such consumer price sensitivity is a

potential external threat to Nike.

CHAPTER 5

Nike documentation

~ 80 ~

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CHAPTER 6

Recommendations

~ 85 ~

     Arising from our work and the "Findings" and "Observations" previously stated, we

submit here for NIKE's consideration a number of recommendations. In some instances,

these suggestions are "directional" and indicate general areas or topics for additional

work or focus. In others - where we are comfortable doing so - we offer specific ways in

which these recommendations might be effectively implemented.

     1.NIKE should continue its efforts to support and implement the provisions of the

Apparel Industry Partnership which resulted in the first major agreement - across industry

lines - to set voluntary, global standards and goals for international labor practices.

     While it was probably considered an imperfect result, particularly by the parties who

participated in it, the Apparel Industry Partnership represents a significant collaboration

among the apparel industry and the NGOs on a critical global issue. It is our strong

recommendation that NIKE continue to play a leadership role in this important effort.

     2. NIKE should take more aggressive steps to explain and enforce the Code Of

Conduct.

     I am aware of some of the efforts already underway to increase both awareness and

enforcement of the Code Of Conduct, but NIKE can do more.

     During my trip to Asia, I had the opportunity to meet and talk with the NIKE Labor

Practices staff who worked in the countries visited.10  I found that Director of Labor

Practices Dusty Kidd already had some ambitious plans to enhance training and

education and was very open to our specific suggestions as to what might be done to

improve the overall relationship between the management and workers. I made a number

of suggestions to him related to the Code Of Conduct and repeat them here:

     A. NIKE should do a better job of explaining to new and current employees the

importance of the NIKE "Code" which is a covenant between NIKE, the factory

operators and employees.

~ 86 ~

     B. The NIKE "Code Of Conduct" should be displayed more prominently in the

factories where NIKE goods are produced.

     C. Each worker should be given a card suitable for a billfold or pocketbook which

contains the "Code Of Conduct" written in the local language and signed by the plant

manager.

     D. Hold regular sessions with expatriate managers, new and current employees,

explaining the Code Of Conduct and the workers' rights under that Code.

     3. NIKE should take pro-active steps to promote the development of "worker

representatives" in the factories who can effectively represent the workers' individual and

cumulative interests.

     A common problem in some factories is that the "worker representatives" are full-time

employees and do not have time to understand problems and communicate grievances to

the factory management. NIKE should take specific steps to insure that in each factory

which produces its goods there are qualified people who have the time and ability to

forge relationships with the workers and can be the workers' voice and advocate with

factory management.

     It makes little sense to have an elaborate procedure for a worker to air a grievance if

the worker is not aware of the procedure and/or does not know how to utilize it. Effective

worker representation is needed.

     4. NIKE should insist that the factories which manufacture its products create and

enforce a better grievance system within the factory that allows a worker to report a

complaint or abuse without the fear of retribution or reprisal.

     A worker in any factory should have a way to register a complaint that can be

seriously considered by factory management. That same worker - if he or she fails to get

satisfaction from factory management and/or fears personal reprisal - should have some

~ 87 ~

practical and confidential way to communicate with NIKE. (A specific suggestion is

offered in #6 which follows.)

     5. NIKE should expand its dialogue and relationship with the human rights

community and the labor groups within the countries where they produce goods and with

their international counterparts.

     I come from the larger NGO and human rights community and understand their

purpose. These groups - created on high principles and universal values - demand

perfection of all us and are not easily satisfied. They play a special and important role in

our world today.

     I believe that NIKE will accomplish more for themselves and for those in the factories

by working directly with the NGOs and the human rights community on these problems,

whenever possible. The direct dialogue with the human rights and NGO community

which grew out of the Apparel Industry Partnership should be continued and is in the best

interests of the workers.

     I have seen harsh criticisms of NIKE by some of these groups that have no basis in

fact. This type of exaggerated rhetoric only makes NIKE less inclined to work with these

very groups who have the ability to help them to understand and deal with many of these

problems. It is asking a lot of NIKE to trust groups who have made irresponsible

statements about them.

     6. NIKE should consider some type of "external monitoring" on an ongoing basis as a

way to demonstrate its commitment to the Code Of Conduct and to insure its effective

application.

     First, it is very important that the ongoing "spot audits"- conducted by Ernst and

Young and by Price Waterhouse - be continued. While these audits may not have much

credibility with the NGOs, I know from having examined them they are professionally

done, rigorous in their examination of these issues and very useful for NIKE's in-country

management.

~ 88 ~

     But NIKE should do more, and I have several suggestions.

     Many have called for NIKE to submit to "independent monitoring" which has

different meanings to different people.

     To some, this means turning over monitoring factory compliance with NIKE's Code

Of Conduct to NIKE's critics, and giving these organizations free access to the plants

which produce NIKE goods so that they can monitor and publicize worker conditions and

problems.

     This is - in my opinion - neither a practical nor fair solution. I am not aware of a single

Western institution, public or private, profit or non-profit - whether it be a business, a law

or accounting firm, a newspaper, a hospital, a church or a labor union - which permits its

critics to be the final arbiter in evaluating its performance.

     The Southern Christian Leadership Conference was a major force in the passage of the

Voting Rights Bill, but we were never asked to be official "election monitors" in areas of

the South where this new and controversial law was enforced. The AFL-CIO would never

invite the Chamber of Commerce to "audit" their work. The American Bar Association

would never allow the American Medical Association to "monitor" its professional

standards.

     As a practical matter people, and groups on the opposite sides of a hotly debated issue

are not considered objective, independent monitors of that same issue.

     However, I do have two suggestions for accomplishing the same objectives.

     First, I believe a more relevant and useful model is the "ombudsman" model used by

some large news organizations. I would recommend that NIKE consider establishing an

"ombudsman" inside each major country that manufactures its products and have a

practical way - by mail, by phone or by after hours office - for workers to report abuses,

violations of the Code Of Conduct or national law after the worker has exhausted his or

her remedies within the plant. It would undermine the responsibility that the individual

~ 89 ~

factory has, to comply with the Code of Conduct and national laws, if a mechanism is

established that encourages all complaints and grievances to be presented externally.

     Secondly, I believe that a small panel of distinguished international citizens could be

assembled to monitor these factories on a regular basis. As I have personally discovered,

the "learning curve" on these issues is steep. If the same group of people developed a

familiarity with these issues and monitored these factories over a two or three year

period, it would provide the public and NIKE a broader perspective and continuity not

possible in my six-month assignment.

Implementation Of Recommendations

     NIKE's commitment was to seriously consider the suggestions that we put forward in

this report. To the extent NIKE accepts any, most or even all of our recommendations, I

would urge them to put forward a public timetable for implementing those suggestions.

Closing

     The goal of NIKE and the various NGO's who are concerned about these issues should

not be to find a middle ground that merely "splits" their economic and moral differences.

The goal should be to find a common ground, through dialogue, that respects the right of

the worker to fair pay and humane treatment in a decent work environment, while not

imposing conditions on the manufacturer that have economic consequences that make the

production of its goods economically infeasible.

     With this in mind, let me make these final comments:

     It is my sincere belief that NIKE is doing a good job in the application of its Code Of

Conduct.

~ 90 ~

ACTIONS LIST

We call on Nike and Reebok to take immediate action on the following issues:

-Ensure that the factories start to pay workers the legal minimum wage and

provide compensation to workers who have been cheated out of their rightful

wages

-Totally eliminate any forced overtime, eliminate all excessive overtime (i.e.

overtime that violates the Codes and the law) and pay the legal overtime rate

-Stipulate that all workers must be given pay stubs upon receiving their wages

so that they can see what they were paid for, at what rate, and what deductions

were taken out;

-Immediately return all deposits illegally taken from workers upon their hire

-Eliminate regulations that prohibit workers from talking to their coworkers

-Stop making morning calisthenics mandatory

-Stop the illegal procedure of deducting disciplinary fines out of workers'

paychecks

-Investigate any allegations of beatings by security guards and other abusive

treatment

~ 91 ~

-Cease firing workers who are pregnant and provide them with their legally

mandated maternity benefits

-Provide childcare, social security benefits, medical insurance and bereavement

leave, as stipulated under Chinese Labor Law

-Eliminate the quota system or reduce it to an amount that can be easily

accomplished in an 8-hour day

-Undertake a health and safety review of factories with regard to dust and noise

pollution, heat, fumes and congestion and provide companies with a 6-month

plan to improve conditions

-Make public a list of accidents and work-related illnesses that have affected

workers in the past three years, what measures have been taken to prevent them,

and how workers were compensated

-Rehire workers who have been unjustly fired for participating in strikes or for

efforts to improve factory conditions, and compensate them for lost back wages

-Eliminate child labour by seeing that any workers under the age of 16 are

provided with a stipend to go back to school and are guaranteed their jobs back

when they are of legal working age

-Provide materials and workshops to educate workers about the companies'

Codes of Conduct

-Allow outside groups to provide education and awareness-training to workers

about local labour regulations and workers rights, and ensure that workers who

choose to attend such programs are not punished

~ 92 ~

-Set up a compensation fund for workers who are injured or killed on the job

-Ensure that all chemicals used in the factories are clearly labeled in the local

language

-Pressure the subcontractors and government officials to allow workers the right

to freely organize.

CHAPTER 7~ 93 ~

Working Conditions in Sports Shoe Factories in China

Conclusion

Making Shoes for Nike and Reebok

Asia Monitor Resource Centre and Hong Kong Christian Industrial Committee

September 1st, 1997

Both Nike and Reebok insist that the workers who make their products should

be treated with "respect and dignity." Clearly, this is not true in the case of

Chinese workers. As leading international corporations, U.S. sports shoe

companies should play a positive role in improving human rights in China. They

should become an example for others to follow.

This is what President Bill Clinton promised when he de-linked the granting of

the Most Favored Nation status from human rights in China. Mr. Clinton

insisted that US capital would have a positive effect on the development of

human rights in China, but we have yet to see these positive results. We call on

the shoe companies to accept their corporate responsibility by taking immediate

measures to dramatically change the situation of the workers in Chinese shoe

factories. We hope that both Nike and Reebok will seriously consider the

recommendations we have outlined below. We look forward to working with

both companies to institute changes that will allow the hard-working women

and men who make their shoes to live with the "respect and dignity" they so

deserve.

The factories should be asked to make these changes to comply with the law

and the companies' Codes within a period of six months. An external

~ 94 ~

monitoring group made up of Hong Kong labour groups and independent

experts should be set up immediately to work with management on these

changes. If insufficient progress has been made at the end of the six-month

period, then Nike and Reebok should cut orders to those factories that have

failed to comply.

Nike's Code of Conduct allows for a 48-hour work week with only 12 hours of

overtime. This would be six working days of eight hours each, excluding

overtime.

1 G. Greenfield and A. Leong, "China's Communist Capitalism: The Real

World of Market Socialism", in Leo Panitch (ed.), Ruthless Criticism of All

That Exists: Socialist Register 1997 (Suffolk: The Merlin Press, 1997), pp.106-

115.

Document 118 (1994) of the Labour Ministry (March 4, 1994) states that no

enterprises are allowed to require a deposit from workers upon the

commencement of work.

See Article 41 of the Chinese Labour Law.

Article 41 of the Labour Law also states that overtime should be limited to one

hour per day. Under no circumstances can overtime exceed three hours per day

and 36 hours a month. Article 38 states that workers should receive at least one

day off per week.

BIBLOGRAPHY

~ 95 ~