The Nike Company was founded in 1964 by Philip H. Knight under the name “Blue Ribbon Sports”. This idea was born from a paper written by Knight himself during his MBA program. He started by selling shoes out of his car trunk. The company was re-branded to Nike in 1972 and waited until 1980 to go public. Currently Nike is one of the world’s largest manufacturers of athletic goods in the world.
The company depends on manufacturers mainly from Asia. It originally had Japanese producers but it later replaced then with Taiwan and Korea producers. This newer producers were in cheaper labor markets and were able to provide products at lower costs that enabled Nike to make profits even with its increasing size of operation and scope that meant increasing operation costs. Nike had a pool of supplies from over fifty countries with a staggering seven hundred factories contracted.
In 1990’s Nike problems started. These hugely dented the company’s image and lead to business loss. The company had to embark on ways to improve its public image and to improve its business.
What Nike did wrong
Nike did not ensure that its producer factories had enough health and safety conditions as required by laws. The factories were health risk to workers since most of them used toxic chemicals on their manufacturing processes. Workers were exposed to these chemical and Nike did not do anything to revert the situation by just claimed it was a designing and marketing company with no knowledge in manufacturing. In its Vietnam producers there were reports of employees’ health problems caused by these toxic chemicals that were way above the recommended levels.
Nike’s producer factories offered extremely low wages. These factories also hired and fired their employees without following any established guidelines. These violated workers rights and were inhuman to the workers.
Mistakes Nike made
Nike ignored the claims using main reason that they did not own the factories and therefore it was responsible for human rights and labor via lotions. Knight later in his acceptance speech for responsibility, claimed that the problem was to do with public relation rather than the actual working conditions in the factories.
Nike used parts of Young’s report that found out that Nike typically provided meals and medical treatment to the factory workers at subsidized prices to ran full page advertisements that mentioned that Nike was doing very good but could do better. The report also claimed that the workers were paid very well.
Was Nike aware of the negative publicity?
With they claims being on radios, TV and newspapers it is obvious that the company was aware of the negative publicity but choose to ignore them. To show that the company was aware of the negative publicity, it released information to press claiming it was not the one responsible for the problems but it was the producer factories. Nike believed that this negative publicity will fade and people would be able to see its point of argument. This did not go their way. It did a great damage to the companies business starting with the Universities that rejected Nike labels from their sport out fits. Its market diminished and lead to large layouts of workers on its producer factories.
What would Nike have done deficiently?
If Nike had continued its denials and pointing of fingers, it would have not helped them. This running away from responsibility would have only lead to more problems and maybe the eventual collapse of the company. It understood very well that it could determine how the workers were paid and also would have forced the companies to improve their working conditions and adopt newer manufacturing processes that did not use toxic chemicals. When they accepted the responsibility and started working on them they saved their business and also earned themselves recognition by being listed on various top 100 companies lists.
Nike has since made great improvements on labor and environmental areas and regarded by other companies as a role model. It has employed auditors to continually monitor the working conditions in the factories and payments the workers receive. These have really helped. Its business has improved and it owner has been ranked seventh richest person in the world by the Forbes Magazine in the year 2006.