Presented by:

Abhishek, Sonal, Divya,

Kamya, Manisha,
Niharika, Sonalika,
Yashika
 How should global corporations behave in the new
international world order? What constitutes good
corporate citizenship in a world where the stakeholders
are diverse and dispersed around the globe and where
no clear or consensual rules and standards exist?
 These questions shape the behaviour of most
multinational corporations (MNCs) today. Although
multinationals are eager to pursue the opportunities of
increased global integration, they are increasingly
aware of the reactions which their strategies induce
both at home and abroad.
 Thus, they tread warily, lacking clear and agreed-upon
definitions of good corporate citizenship. Through a
case study of Nike, Inc. a company that has come to
symbolize both the benefits and the risks inherent in
globalization and examine the various difficulties and
complexities companies face as they seek to balance
both company performance and good corporate
citizenship in today’s global world.
 The top 10 footwear companies control over 70% of the
global athletic footwear market. (See Table 1). Since
displacing Adidas in the early 1980s and Reebok in the
early 1990s, Nike has become the largest and most
important athletic shoe company in the world.
 Since its inception, Nike had looked to Asia to
find the cheapest sources of production for its
shoes.
 Nike’s business model in 1964 is essentially the
same as on today: Nike grew by investing our
money in design, development, marketing and
sales and then contract with other companies to
manufacture their products.
 Phil Knight(Founder) realized that while lower-
cost, high-quality Japanese producers were
beginning to take over the US consumer
appliance and electronic markets, most leading
footwear companies (e.g.,Adidas) were still
manufacturing their own shoes in higher-cost
countries like the United States and Germany. By
outsourcing shoe production to lower-cost
Japanese producers.
 Nike developed a strong working relationship with two Japanese shoe
manufacturers, Nippon Rubber and Nihon-Koyo, but as costs/prices increased
in Japan over the course of the 1970s i.e. since the end of World War II, Nike
began to search for alternative, lower-cost producers.
 During these same years, Nike opened up its own shoe factories in Maine and
New Hampshire to make up15% of their shoe products, hoping to develop a
reliable and high-quality source to supply its growing domestic market.
 At the same time, the company also began to cultivate potential suppliers in
Korea, Thailand, China and Taiwan. By the early 1980s, as costs continued to
increase in both Japan and the United States, and as the Korean government
created a number of incentives to develop Korea’s footwear industry, Nike
closed its US factories and sourced almost all of its production from Asia.
 In 1982, 86% of Nike’s athletic footwear came from Korea and Taiwan. Over
time, as Korea and Taiwan also began to develop, costs began to rise in these
countries as well. As a result, Nike began to urge its suppliers to re-locate
their operations to other, lower-cost countries.
 The company worked with its lead suppliers to open up manufacturing plants
in Indonesia, China and Vietnam. By guaranteeing a significant number of
orders and by placing Nike employees at these new factories to help monitor
product quality and production processes, Nike was able to help its lead
vendors establish an extensive network of footwear factories throughout
Southeast Asia.
 Nike’s strategy of sourcing shoes from low-wage countries in Asia had been
one of the fundamentals of the company’s strategy.
 The Issue: Nike has been accused of using
child labour in the production of its
soccer balls in Pakistan.. While Pakistan has
laws against child labour and slavery, the
government has taken very little action to
combat it.
 Recently if you go to a shop to buy your child a new soccer
ball, there is a good possibility that the ball has been made
by someone your child's age or even younger. About half of
the world's soccer balls are made in Pakistan, and each one of
them passes through a process of production where child
labour is involved.
 This problem not only pertains to Pakistan but is worldwide.
More than 200 children, some as young as 4 and 5 years of
age, are involved in the production line. Majority of these
children work in Asia, e.g in the nations of India, Pakistan,
Bangladesh and Indonesia.
 Nike is characterized of making its equipments in countries
which are in the developing phase, having very cheap labour,
authoritarian government and lack of human rights appeal
and union movement.
 In doing this it has made greater margins on the cost of mere
cents to its workers. So Nike success story is not based on
good name and advertising alone but also attached to it is the
tears of tortured workers and child labour.
 As a good chess player Nike always thinks ahead of its movement. It
does not launch its production directly into the developing country,
such as Pakistan, but instead it subcontracts it to them by selecting
a local firm.
 When doing this, the local firm, in this case SAGA sports, has to
abide by the Nike's international rules and regulations when
producing its goods. And it is the duty of the international firm
(NIKE) to monitor its subcontracted production units and hold it to
tight scrutiny.
 But this is not what really happens. Both Nike and the local
production company aims to minimize cost and earn the highest
amounts of profit thus involving themselves in illegal practices, such
as child labour, a practice which is not so highlighted by the
government of the host developing country. So what happens when
you question Nike about its labour practices?
 An answer comes that it is not they who are involved in this illegal
labour practices but it is the local sub-contractor who is doing so.
This is wrong to say as Nike and SAGA sports both benefits with
access to cheap child labour in Pakistan. And if Nike cannot control
its subcontracted plants, it means they have not implemented their
rules and regulations effectively and is not abiding by the
international standards which they have set for themselves.
 Nike's entrance in to the Pakistani markets was the part of its
long term strategic planning. It is false to explain that Nike
didn't knew that child labour is an ages-old practice in
Pakistan. Nike went into Pakistan, having full knowledge of the
favourable conditions prevailing in terms of child labour and
has taken no precautions whatsoever to prevent the use of
child labour in the production of its soccer balls. Instead Nike
has made a profit from its Pakistani contractors who in turn
has used bonded child labour in the production process.
 According to a Foulball campaign report, Nike has refused twic
e to have a check in their Saga-managed centre in Pakistan
while on the other hand Nike's rival Reebok readily granted
access to its Moltex-managed centre in Pakistan.
 Nike has the habit of hiding behind its good public image and
its effective means of promotions and advertising. Nike
attempts to create a good public image by offering charity,
donating equipments and never passing an opportunity to
remind the public that it has set up stitching centers in places
such as Sialkot, Pakistan.
 How it all started - Consumer awareness 1996
 When the June, 1996 issue of Life magazine carried an article about child
labour in Pakistan, Nike knew that it was in trouble. The article's lead
photograph showed 12-year-old Tariq surrounded by the pieces of a Nike
soccer ball which he would spend most of a day stitching together for the
grand sum of 60 cents. In a matter of weeks, activists all across Canada
and the United States were standing in front of Nike outlets, holding up a
photo.

 And yet, Nike has not done an especially good job of scrutinizing the subc
ontractors with which it's working. Nor has it been open about its labour
practices in the way public companies should be expected to be.
 Cameramen have been pushed out of factory floors. And, most troubling,
nearly all the soccer balls made in Pakistan have been revealed to be
made by young children getting paid just cents a day. This is the first
time that Nike has had to face real questions about its labour practices
abroad, the first time that it has felt a public-relations impact. At this
point, that impact does not seem at all devastating. While in the
 Nike should take immediate actions in order to provide remedy
to all the activism it faces, otherwise it can prove devastating
for the company's image in the long run. The basic truth about
Nike is that its only real strength is its good name. Nike rules
because of all the good things people associate with the
company: sharp ads, Michael Jordan, Tiger Woods, little Penny,
and Michael Jordan again. If "beaten workers" and "child labour"
get added to that list, then Nike's greatest asset will be lost.
 When a person states that he/she is working for Nike, it gives a
very good status symbol. But what if the person is a 9 - year old
child? What image will it give you as a consumer when you buy
those products or brands that employ child labour? Consumers
should take an immediate action in order to eradicate child
labour practices discharged by these multinational U.S
corporations. This can only be done by not buying their
products which are produced in the third world and which have
suspicion of a child being involved in the process. Child labour
is a human rights issue. What is more of a human right than
growing up as a free person, attending school without being
held in bondage?

 Nike started its venture in Vietnam in 1995 and its share in the country’s Gross Domestic
Product reached 5percent by 1999. Despite Nike’s contribution to the Vietnamese
economy, the corporate giant failed to prevent the violation of the labour code in the
Vietnamese sweatshops during the mid- and late-1990s.
 The five Nike factories in Vietnam, owned by Korean and Taiwanese subcontractors,
employed over 35,000 people, predominantly young women, who left village farms to
earn better wages. The Tae Kwang Vina Factory (VT), a Nike sweatshop in an industrial
estate in Dong Nai province, employed around 10,000 people(over 85 percent of whom
were women).
 Most workers were immigrants from northern and central Vietnam who left their homes,
families and work in rice fields for a better city life. VT became operational in 1995 and
soon achieved the reputation of a bad place to work. The workers were forced to work
over the legal overtime limits almost every day. Their monthly salaries (around $40) were
insufficient for survival. Besides unhygienic work conditions, the workers were subject to
verbal and physical abuse by managers. The local people usually avoided working at VT,
and thus the large number of migrants served as VT’s labour pool.
 A 1997 audit carried out by Ernst & Young showed that 104 workers at VT were below 18
years of age, which clearly violates the national labour code. The factory also avoided
complying with the country’s environmental regulations.
 Since the factory was located in the middle of an industrial zone, no one officially lived
near it and there was no local community that could complain about the problems. The
Tae Kwang Vina company controlled the workers’ union through representatives chosen by
the management. The residents of the surrounding area had little connection with VT
workers, as the workers, mostly immigrants, usually stayed less
 Labour law violations: Nike subcontractors
violated many critical Vietnamese labour
regulations, covering overtime wages, night
shift wages, and Sunday wages. Evidences
were found that pay stubs with such
irregularities in compensation that they
suggest a systematic form of wage cheating.
Many workers who received below minimum
wage during the first three months of
employment, which is another violation
of Vietnamese law.
 Wage: Over 90 percent of the Nike workers in Vietnam
are women, and most of them are between the ages of
15 and 28. A uniform complaint among the women that
they were not being paid a liveable wage. The daily wage
is approximately $1.60 and the cost of three simple
meals is $2.10 per day. The women literally have to make
a daily choice between eating a balanced meal or paying
rent for the single rooms that most of them rent out.
 Health and safety practices: Many health and safety
standards in Vietnam are ignored by Nike factories. In
March 1997, it was found that a Nike factory had not
even implemented a single health and safety
recommendation from a list of many made in September
1996 by the Ho Chi Minh City Health Department. It is a
common occurrence to have several workers faint from
exhaustion, heat and poor nutrition during their shifts.
We were told that several workers even coughed up
blood before fainting. The medical facilities at the
factories were inadequate.
 Working conditions: Several factory rules in place violate
sensibilities and indeed, human dignity. Workers cannot go to the
bathroom more than once per 8-hour shift and they cannot drink
water more than twice per shift. If they violate this rule, they
are given a warning and after 3 warnings, they can be dismissed.
Drinking water and using the toilet facility is controlled by a card
or hat system. In order to use the facility, the supervisor must
first assign a card or a hat to a worker. Wearing the hat or
carrying the card, the worker is allowed to go. However, the
number of cards or hats are limited per assembly line to 3 cards
for 78-person line, 4 cards for a 300-person line. The treatment
of workers by the factory managers is a constant source of
humiliation. Verbal abuse and sexual harassment are frequent,
and corporal punishment is often used.
 During a two week survey conducted, 56 women workers at a
Nike factory were forced to run around the factories premise
because they were not wearing regulation shoes. Twelve of them
suffered shock symptoms, fainted during the run and were taken
to the hospital. This deplorable event occurred on International
Women’s Day, an important holiday when Vietnam honours its
women
 This abuse of workers reflects Nikes inability to enforce its Code
of Conduct.
 Activistcampaigns demanding improved labour
conditions in Nike plants gained worldwide
media attention and considerably affected the
company sales during late 1990s.
 In May 1998, Nike announced a major initiative
to eliminate the use of toxic solvent based
cleaners and glues, pledging to comply with US
workplace laws in all its factories. By 2001,
water based adhesives were used in
manufacturing 95 percent of Nike shoes. To
enhance its sustainability, Nike has set a goal
of creating “zero waste” in the production of
Nike footwear by the year 2020.
 By December 1998, workplace health and safety
conditions were much improved at VT. According
to the Dong Nai Health Department, the nose
and throat diseases among VT workers decreased
from 86 percent in1997 to 18 percent of workers
in 1998, suggesting a significant reduction in air
pollution and workplace hazards.
 During the same period, VT’s yearly clinic data
report showed a 7 percent increase in clinic
visits, indicating improved health awareness
among the workers. A survey of Nike factories in
Vietnam done by Global Alliance in 1999
indicated that 85 percent of workers considered
the work conditions as safe.
 We rate Nike ‘Not Good Enough’ based on
information from the 2017 Ethical Fashion
Report and research. Though Nike has a few
promising environmental measures in place,
it’s clear that the company does not do as
well as it should.
 It needs to make serious changes in most
areas. With an annual revenue of over $30
billion, they can certainly afford it! We
notice that arch-rival Adidas (rated ‘Good’ )
has stepped up its game, improving its
transparency and environmental practices.