NIKE INC.

Group 3
Aditya Vats, Kartik Misra, Sounak Maity
COMPANY
BACKGROUND
 The company was founded on January 25, 1964, as Blue
Ribbon Sports
 Became Nike, Inc. on May 30, 1971 after the ‘Greek
Goddess of Victory’
 The company is headquartered near Beaverton, Oregon,
in the Portland metropolitan area.
 Revenue in excess of US$24.1 billion in its fiscal year
2012 employing more than 44,000 people worldwide
 Highly recognized trademarks of "Just Do It" and the
Swoosh logo
 Engaged in the design, development, manufacturing, and
worldwide marketing and sales of footwear apparels etc
ISSUES IN
NIKE : HOW IT
STARTED…
 Nike’s Business model was based on
outsourcing its manufacturing to countries
with cheaper labour such as Bangladesh and
Indonesia
 Problems began for Nike in 1991 with
reports about poor working conditions at the
Nike factories in Indonesia.
 At this time, Nike’s response was to
deny responsibility for monitoring
malpractice for suppliers.
 Nike became a target of campaigners, and
because of this a global boycott began.
This campaign quickly caught wind and had
a significant impact on the Nike’s demand.
  In 1998, Their CEO at the time gave a speech

CRITICISM LED announcing big changes in working standards.

 Shortly after this, Nike began the creation of the Fair

TO CHANGES…
Labor Association to help improve their operations. 
 Nike started regular factory audits and publishing detailed
factory info.
THE NIKE SWEATSHOPS
 Nike has been accused since the 1970s of running sweatshops in third world countries such as
Bangladesh, Indonesia, China, Vietnam, Taiwan in order to make products at economic cost.
However Nike Denied it
 Conventional wisdom holds that improving working conditions (which typically costs money)
would undermine the competitive advantage that Nike enjoy
 When workers demanded additional rights and benefits in these countries, the Nike factories
closed and moved to a different location that would enable them to continue operating at a low
cost
 In Mid 2000s Nike embarked on auditing its factories for occupational health and safety
issues. It installed a COC called SHAPE : Safety, Health, Attitude, People, and Environment
 Nike Spent $10million in a year to adhere to the code
Nike embarked on a program to introduce lean
manufacturing to its apparel suppliers in the
developing world

LEAN
It secured support from suppliers, offered
extensive training to factory management, and MANUFACT
inspected production lines for adoption of the
new management practices URING

The initiative sought to improve manufacturing

operations — to deliver high-quality products
in relatively small batches and on shorter
production deadlines
LEAN MANUFACTURING
IMPLEMENTATION IMPACT
 It was found that factories that adopted lean manufacturing
improved compliance with labour standards.
 On average, Serious violations of labour standards fell by fifteen
percentage points, from 40% of factories to 25%.
 These labour compliance ratings primarily reflect factory wages,
benefits, and rest days — important issues that shape workers’ take-
home pay and work-life balance.

 When facing tension between competitive and ethical

sourcing, multinationals should consider a “high road”
approach to the supply chain: investing in new managerial
practices and worker skills.
 WHY CSR IS IMPORTANT FOR
COMPANIES?
 Consumers have begun to care more and more over
the past few years about where their products are
coming from
  Whether it is the chicken nuggets they’re having
for lunch, the latest tech gadget they use to check
the scores , or the shoes they wear for their morning
run
 This trend is only going to grow because millennials
takes CSR into heavy consideration when making
purchase decisions
 A 2013 study shows they’re 89% more likely to buy
a product or service if it came from a CSR company.
 This was proven in the 1990’s when Nike was under
accusations for tolerating sweatshops and child
labour
  Company needs to understand and identify their supply chain at micro
level

KEY
 Companies need to have full visibility into not only their own supply
chain networks, but also their supplier networks beyond the first tier

LEARNINGS
 Better accessibility results in better management of potential risks, and
empowers to better selection of suppliers
 Ethics play an important role in sustainability of a company in long
IN SUPPLY run – hence labour/environmental laws should be abided while
selecting your Supply chain

CHAIN  Putting a plan in place for the future is the final step in bringing CSR
into your supply chain

FROM NIKE  Once you set your supply chain up for success, you need to keep it
going
 Regular audits and re-evaluating performance criteria can help you
to achieve this.
THANK YOU