How did Nike manage the post crisis communication after the

sweatshops scandal? Analysis of the image restoration strategy and the

actions undertaken.

One of the main reasons why I chose Nike resides in the idea that it
is as one of the most controversial cases on crisis management from
which many companies and interested publics have a lot to learn. That is
why I believe it should be considered an all-time studied topic due to its
past and current problems that deserve ongoing attention.

Vision
Nike’s vision is “To bring inspiration and innovation to every athlete in
the world.”

Mission Statement
While its mission statement is to “do everything possible to expand human
potential. We do that by creating groundbreaking sport innovations, by
making our products more sustainably, by building a creative and diverse
global team and by making a positive impact in communities where we
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live and work.”

Strategic Objectives
To achieve its mission, Nike has employed a number of strategies and
objectives. Due to this fact, Nike, Inc. has maintained its standards of
producing quality footwear and sports equipments to individuals and
institutions of all ages and lifestyles. At the same time, the company has
come up with measures and strategies that ensure that their products are
easily available to their clientele.

To achieve this, Nike, Inc. has a long-term corporate goal that aims at
improving its stockholders return on equity by 20% and increases the
earnings per share by 2.7% (Kim 21). This will ensure that the company
growth in the company is coupled with gains in terms of shares and
revenue. In this respect therefore, Nike Inc has a grand strategy that aims
at increasing the quality of its products to meet the needs of all their
customers all around the world. This will ensure that the company
maintains its position as a leader in the market.

Currently, Nike Inc is at the cash cow stage under the BCG matrix model.
It is experiencing a great return on its capital. To ensure that the company
continues to expand and remain sustainable in the short run and the long
run, the company has put a lot of emphasis on research and development,
incorporation if technology and ICT, improved consumer services and
expansion of its markets (Kim 11). In addition, the company has
formulated a number of marketing and pricing strategies.

 Protect and improve Nike’s position as the number one athletic

brand in America.

 Build a strong momentum in growing fitness market.

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  Intensify the company’s effort to develop products that women need
and want.

 Explore the market for products specifically designed for the

requirements of maturing Americans.

 Direct and manage the company’s international business as it

continues to develop.

 Continue the drive for increased margins through proper inventory

management and fewer, better products.

What is the business of the Nike

Nike, Inc is an American multinational corporation that is engaged in the
design, development, manufacturing, and worldwide marketing and sales
of footwear, apparel, equipment, accessories, and services. The company
is headquartered near Beaverton, Oregon, in the Portland metropolitan
area. It is the world's largest supplier of athletic shoes and apparel and a
major manufacturer of sports equipment, with revenue in excess of
US$37.4 billion in its fiscal year 2020 (ending May 31, 2020). As of 2020,
it employed 76,700 people worldwide. In 2020 the brand alone was valued
in excess of $32 billion, making it the most valuable brand among sports
businesses. Previously in 2017, the Nike brand was valued at $29.6
billion.Nike ranked No. 89 in the 2018 Fortune 500 list of the largest
United States corporations by total revenue.

The company was founded on January 25, 1964, as "Blue Ribbon Sports",
by Bill Bowerman and Phil Knight, and officially became Nike, Inc. on
May 30, 1971. The company takes its name from Nike, the Greek goddess
of victory. Nike markets its products under its own brand, as well as Nike
Golf, Nike Pro, Nike+, Air Jordan, Nike Blazers, Air Force 1, Nike Dunk,
Air Max, Foamposite, Nike Skateboarding, Nike CR7, and subsidiaries
including Jordan Brand and Converse. Nike also owned Bauer Hockey
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(later renamed Nike Bauer) from 1995 to 2008, and previously owned
Cole Haan, Umbro, and Hurley International. 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.

Stakeholders
As a global business, Nike Inc. has a wide variety of stakeholders with
significant influence on the sales of the firm’s sports shoes and other
products. However, the company’s corporate social responsibility
programs target only a number of major stakeholder groups. Nike has the
following stakeholders, arranged according to the firm’s prioritization:

1. Customers (top priority)

2. Communities
3. Employees
4. Governments
5. Interest Groups

Customers. Nike’s corporate social responsibility strategy gives top

priority to customers as a stakeholder group. Customers are
significant because they affect the company’s revenues from the
sports shoes, apparel and equipment market. In the case of Nike Inc.,
these stakeholders’ interests include high quality products and
reasonable prices. The company addresses these interests through
significant R&D investments. For example, Nike continues to
provide products with high quality and advanced technology.
Considering high profitability and growing sales revenues, Nike’s
corporate social responsibility effectively satisfies the interests of
customers as a top-priority stakeholder group.

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Communities. The stakeholder group of communities has a
significant influence on Nike’s corporate social responsibility
standing. Consumers tend to buy more of a product that has a
positive impact on communities. The interests of these stakeholders
include support for the development of communities. Nike Inc.
addresses these interests through the Nike Foundation, which serves
as the company’s primary means of supporting community
development initiatives. For example, in 2005, the Nike Foundation
started its community development programs in developing
countries, with focus on supporting the empowerment of girls. The
company also has a variety of “Community Impact” corporate social
responsibility programs, such as the Active Schools & Youth Sports
program, which donates funds and sports shoes, apparel and
equipment to promote physical activity among students. These
Community Impact programs align with Nike’s mission and vision
statements in considering everyone an athlete. Nike allocates 1.5%
of its pre-tax income to support these community development
initiatives.

Employees. Nike Inc. recognizes the significance of employees as a

stakeholder group that influences organizational effectiveness. For
instance, employees’ performance directly translates to business
performance. The interests of these stakeholders include fair
compensation, career development opportunities, and a sense of
purpose. Nike addresses these interests through corporate social
responsibility policies and programs that focus on internal leadership
development, talent management through coaching and mentoring,
and team building. These CSR efforts are expected to maximize
Nike’s ability to produce more popular and advanced athletic
footwear, apparel and equipment.

Governments. As part of its corporate social responsibility strategy,

Nike Inc. identifies governments as a stakeholder group. These
stakeholders are important because they affect how Nike operates in
terms of its permits, limits and legal actions in certain markets for its
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 sports shoes, equipment and apparel. Governments are interested in
legal and regulatory compliance, as well as business contributions to
tax revenues and community development. Understandably, the
community development interest is addressed through Nike’s
corporate social responsibility programs for community
development. In addressing the other interests of this stakeholder
group, Nike Inc. maintains a number of policies and standards to
ensure compliance in all of its business areas. Thus, the firm’s
corporate social responsibility strategy satisfies the interests of
governments as stakeholders.

Interest Groups. Nike’s corporate social responsibility policies also

address the interests of some interest groups. These stakeholders
have significant effect on Nike in terms of potential government
intervention and in terms of consumer perception regarding the
company and its sports shoes, apparel and equipment. The interests
of these stakeholders are varied, including fair labor practices,
business sustainability, and environmental conservation. Nike Inc.
addresses these interests through the Nike Foundation’s initiatives,
as well as sponsorships of a variety of related programs. The
company also has corporate social responsibility policies for
improving labor management and environmental impact. These
considerations indicate that Nike Inc. satisfies the concerns of
interest groups as stakeholders.

Competitors
Let us have a look at top Nike Competitors and conduct a competition
analysis of Nike.

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 1) Adidas

 Worldwide revenue – $16 billion.

 Brand valuation – $7 billion.

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Adidas is one of the topmost Nike Competitors. One of the key
advantages of Adidas is that it operates via both – the Adidas brand and
also has a strong subsidiary in Reebok. The combination of both gives a
strong valuation to Adidas as a top competitor of Nike. Not only does
Adidas compete with Nike on the basis of footwear, it also competes on
the basis of clothing and accessories. To know more about Adidas, read
marketing mix of Adidas and SWOT of Adidas.

2) Reebok

 Worldwide Revenue – $3 billion.

 Brand valuation – $1 Billion.

Reebok is a subsidiary company of Adidas which operates independently.

Reebok is known for its excellent design for sports footwear. Some of the
really cool shoes from Reebok were the Reebok Reezig, Reebok Pump
and others. Reebok is known mainly to sponsor kits of various Football,
cricket or other events. Reebok is considered the 2nd biggest Nike
competitor across the world. To know more about reebok, read the
marketing mix of Reebok.

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 3) Puma

 Revenue 3.4 billion dollars

Puma is the third Nike competitor which is known for its running shoes as
well as apparels and Clothing. Interestingly, the founder of Adidas and the
founder of Puma were brothers. However, they had falling out long back
in 1948, which gave rise to two major footwear brands – Adidas and
Puma. It is quite clear that Adidas is far ahead then Puma. But globally,
Puma is still one of the strongest Nike competitors. It lacks for an equal
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level of sports sponsorships which Adidas and Nike have. But it is evident
from the revenue generated by Puma that the brand is loved by many. To
know more about Puma, read the Marketing mix of Puma

4) Fila

Fila is also one of the largest manufacturing companies of Sports footwear

and is one of the top competitors of Nike. However, Fila is not as
premium as Nike and its products are known be cheaper then the top three
brands. It is more into penetrative pricing and promotes products which
are good in quality at lower prices. It is known more for its cost advantage
then its design or differentiation advantage. Fila originated from Italy but

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in 2007, it was taken over by Fila Korea, resulting in the complete Fila
group operating from South Korea.

5) Converse

 Worldwide Revenue – 2 billion Dollars

Converse shoes are known more for their unique style and looks rather
than their sporting abilities. Do a google query on “how to wear converse
sneakers” and you will find many article. That’s how much people love
wearing their converse shoes.

Everyone loves how a converse shoe looks on their jeans or in casual

clothing. This is a company which has made footwear beautiful. Besides
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casual shoes, Converse is also known for its sports shoes line up,
especially for tennis shoes and sneakers. It has launched its clothing line
up as well  It has a whopping revenue of $2 billion from across the world.
But majority of it is made up from its casual shoes line up. To know more
about Converse, read the Marketing mix of Converse.

6) New balance

 Revenue 3.7 billion dollars

New Balance is a premium sports shoe manufacture which is much

costlier then Adidas, Reebok or Nike. It is a strong Nike competitor in the
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US and the UK, from where it derives its major revenues. New balance
shoes are costlier because it carries out all its manufacturing within the US
or UK, and does not export the manufacturing like Nike or Adidas group.

New Balance is also involved in the sale of Apparels but the sale of
footwear is far more then apparels. New Balance is known to take part in
sponsorships of Olympic sports, cricket, basketball, cycling and many
others. It is also known for innovative design as its shoes are far advanced
in design then any of its competitors – another reason that New balance
demands a premium and is one of the toughest Nike competitors in US or
UK.

7) Under armour

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  Brand value – 4 billion dollars

Under armour has a fantastic brand valuation because of its fantastic sales
in the US market. Under armour is the official uniforms provider for
American football, Basketball as well as American Soccer. Besides this, it
has a wide product portfolio comprising or Athletic shoes, Apparels like
T-shirts, hoodies, pants and even protective gear for sports. It has presence
in more then 50 countries across the globe and is known to have a
premium brand image. Under armour is also known for its product
placements across many television serials and movies.

8) K-swiss

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K-swiss is again an American footwear brand but one which is
concentrated towards tennis shoes and Sneakers. It specialises in these two
types of sporting shoes. Besides the shoes, K-swiss has its own clothing
line up and apparels. K-swiss carried out a rebranding exercise in 2014 to
target itself as America’s heritage tennis brand. The company wants itself
to be recognized as the go to brand for Tennis players and Tennis lovers.

9) Asics

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ASICS is a brand originating out of Japan and is known for its varied
design of sports shoes. It has major concentration on the Asian markets
and on Australis. Besides these 2, ASICS also sells its product to the UK,
the USA and several other countries. Asics has a plethora of sponsorships
up its sleeve majority of it being in the US, UK or Australia where it is
concentrated. It has sponsored cricket and football teams, hockey, tennis,
Rugby, Netball, swimming and many others.

10) Li Ning

 Revenue – 1.1 billion dollars

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Li Ning is known to be amongst the top Nike competitors because not
only does it manufacture sports shoes, it also manufactures sporting goods
– majorly Badminton racquets, ping pong equipment as well as scarves
and gloves for various sporting events. It is known to be very good in its
apparel line up. Li Ning originates from China has a major focus on its
home ground. Because the Asian market is large, Chine being the largest
amongst them, Li Ning has a great chance to become a top Nike
Competitor in the next few years.

Communication Policy of Nike

The communication strategy of any organization needs to be in line to the
product and services it produces. The strategy should communicate to the
customers and the internal employees the mission of the organization and
the values it stands for. Multinationals like Nike, have incorporated the
values of sports like teamwork and perseverance and adopted them into
the company culture. Thus each employee can identify himself as a part of
the team that is called Nike Inc... Nike is endorsed by athletes who have a
reputation for winning and a passion for the sport they play. It is in unison
with the internal branding initiatives of Nike without the company
reshaping its value delivery mechanism. This understanding is utilized to
design products which form an integral part of Mike`s value proposition.
At Nike emotion is used in everyday work to remain competitive in the
workplace. Nike employees use sporting metaphors for carrying out their
everyday business. Thus, through such branding initiatives, Nike ensures

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that all its employees have the ultimate goal of creating a world-class
sporting product at the back of their minds all the time. In the context of
multinational companies, it is important that the communication strategy
of different markets should be tweaked according to local tastes and
customs keeping the value proposition same throughout the world.

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What communication failure it experienced and how it
overcame that

One of the topics that caused many debates around the world is the Nike
Sweatshop case study which raised one of the most controversial
questions: can Nike be held accountable for the working conditions in
foreign factories they subcontracted in Southeast Asia? It is claimed that
among the main problems that led to Nike’s crisis was the business
communication failure at the top. Among the pro reasons stands the
argument that as long as Nike doesn´t own these factories, they are not
responsible for all the wrong going on, despite having their
subcontractors making products for Nike. On the other side, there are
many voices claiming that Nike should have taken actions to improve the
working conditions, impose a minimum age limit and assure the
minimum wage for all the employees around the world but . That is why,
back in the 90´s when the scandal took place, the U.S. Supreme Court
decided that Nike has broken the law by having its public relation personnel
denying the fact about its employees in developing countries like Vietnam or
China. This seems to be the start for building a new model for business
communication crisis management, called the hegemonic model which
attempts to reflect on the use of corporate power through public relations
in this case, to shape the reality and reinforce a company’s position on
the market.
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. The labor conditions in Vietnam and Southeast Asia were soon spread
by the media and everyone got to be familiar about Nike’s workers.
However, Nike’s immediate response was one of denial, blaming it on
their vendors. In reverse, the employees’ reaction was one of
embarrassment as they had no idea about these happenings.
Eventually, the CEO, Philip Knight, went to the National Press
Club in Washington to hold a discourse in order to assume responsibility
and promise to act in that sense. He admitted that Nike’s corporate
identity became “synonymous with slave wages, forced overtime and
arbitrary abuse” (Dionne, 1998, p. A7 cited in Knight & Greenberg,
2002).
One of the first actions undertaken by Nike was to bring the
famous politician of that time, Andrew Young, to see their plants and
their struggle to get things better (Peter Schwartz, 1999).
Furthermore, Philip Knight made six promises to improve the
working conditions. These promises were announced on May 12 1998,
during CEO’s speech at the National Press Club, in Washington DC:
“1st Promise: All Nike shoe factories will meet the U.S.
Occupational Safety and Health Administration’s (OSHA)
standards in indoor air quality.”
2nd Promise: The minimum age for Nike factory workers will be
raised to 18 for footwear factories and 16 for apparel factories.
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 3rd Promise: Nike will include non-government organizations in
its factory monitoring, with summaries of that monitoring released
to the public.
4th Promise: Nike will expand its worker education program,
making free high school equivalency courses available to all
workers in Nike footwear factories.
5th Promise: Nike will expand its micro-enterprise loan program
to benefit four thousand families in Vietnam, Indonesia, Pakistan,
and Thailand.
6th Promise: Funding university research and open forums on
responsible business practices, including programs at four
universities in the 1998–99 academic year.

In 2018, female employees spoke out about the male-dominated culture

that fostered harassment and discrimination in the workplace. It started as
an anonymous survey by a group of women at the company’s Beaverton,
Oregon headquarters about their experiences. The disturbing results were
delivered to CEO Mark Parker.

Some examples of internal communication problems that went wrong here

include:

 It took a renegade survey by a group of employees to reveal this

toxic culture 
 Lack of trust in HR
 A leader who says he was unaware of the problems
 Inefficient methods of bottom-up communication

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 Nike took dramatic steps to fix these issues by firing C-Suite
executives, including the head of diversity and inclusion,
implementing mandatory management training, a commitment to a
more inclusive culture, and an overhaul of their HR procedures and
internal reporting processes.
On a positive side, Nike has been struggling to regain its credibility and
correct its misbehavior by adopting a socially responsible attitude
concerning its global practices. Therefore, one of its most important
actions was the incorporation of the CERES principles1 in November
2000. This implied a launch of a program called “Transparency 101”
which aimed to monitor the factories in every country where Nike
operates, with an increased attention on its practices to be in accordance
with the code of conduct. This program also involved investigation of
the work conditions worldwide. Regarding the safety of its products,
Nike has been trying to eliminate PVC or any other harmful chemicals.
All these actions were recognized this time by other groups that ranked
Nike as number one in the apparel industry on its annual list of “America's
Most Admired Companies”. Nike was also ranked among its top- ten best
multinational corporations in Asia for corporate leadership and issue-
specific leadership, by another group called Far Eastern Economic
Review (FEER), noting that Nike had improved in almost every
category in the previous year. Apart from this, Nike was also on the list

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of the 226 companies recognized for sustainability efforts on the Dow
Jones Sustainability Index. A final point on the list of restorative actions
to which Nike has been widely devoted ever since the crisis, is their
online strategy, http://www.nikebetterworld.com/ that speaks for itself.
Besides being an online tool that encompasses smart audio-visuals, it
presents a sum of CSR actions that are well explained and designed in
such way as to highlight their strivings to make this world a better world.

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