1. What were Nikes mistakes in handling the negative publicity?

Nike had been criticized for sourcing its products in factories/countries where low wages, poor working conditions, and human rights problems were rampant. Initially, Nike was making mistakes in adopting a denial approach; Nikes initial reaction to this negative publicity was to ignore them. They reasoned that that they did not own the factories and were therefore not responsible for labor and human rights violations. They claimed to be marketers and designers lacking knowledge about manufacturing. Nike, being a multinational company, should have acknowledged the fact that it would not have successfully operated without regard to local social, labor, and environmental standards. 2. Discuss the intent of their public relations tactics. The intent of the public relations campaign is to counter the allegations about labor and human rights violations in its contract factories. Nike denied the criticisms and claimed that the problems had to do with public relations rather than actual factory conditions. Hence they employed the public relations tactics of codes and pledges with third-party endorsements. 3. Do you think Nike is doing enough to improve conditions in its contract factories? What might they do differently or better? Following years of criticism over its poor labor and environmental standards, Nike has taken measures to improve conditions in its contract factories, which can be wellappreciated. After failed litigation case in 2002, Nike has realized the importance of corporate responsibility for the growth of business. It has learnt to deliver equal value to its five different stakeholder groups: consumers, shareholders, business partners, employees and the community. It has followed an open-minded approach to the issues facing its industry. It has moved away from focusing on its own code of conduct and toward creating a standard code of conduct throughout the industry. Nike has not just stopped with the creation of a standard code of conduct; it employed three different types of monitoring systems to determine the compliance to regulations regarding environment and labor practices. And one of them is the Fair Labor Association, a worker rights monitoring group, (to which it has to settle for payment of penalty earlier over a failed litigation case). Hence, in our opinion, the monitoring systems employed are transparent and impartial. Nike has implemented a balanced scorecard system to reward high-performance, compliant factories.

The above measures go to prove that Nike is doing enough to improve conditions in its contract factories. However, Nike spends more money on advertising and promoting the reputation of its products than most other companies in the world. In Contrast, the money that Nike spends for improvement programmes in the countries where its products are made are meager (not even 1 % of the money spent on advertising and promoting). Nike's response to all the criticisms directed at it appears largely superficial. It employed an extensive public relations campaign to manage its reputation rather than instigating real reforms that addressed the underlying issues. It is the appearance of social and environmental responsibility that Nike has aimed for, in 1990s. 4. How would you rank Nikes improvements? It is mentioned that as a result of the changes, Nike appeared in Business Ethics magazines 100 best corporate citizens list for 2005 and 2006. It was ranked 31st and 13th in the above lists (in 2005 and 2006 respectively) and Nike itself admitted that it has a long way to go; However, in our opinion, Nike has shown lot of improvements from the days when it was criticized. Nike, being a company, utilizing natural resources and toxic substances in its production processes, and yet it has shown tremendous improvements to be ranked as number one in the Business ethics magazines environmental category. Its importance to recycling programmes can be well appreciated. However, despite these environmental improvements, Nike's reputation in the areas of social responsibility and human rights has to be improved.