Nike Ethical Issue

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Nike Inc. started off as a small company from Beaverton in the state of Oregon in 1971. A unique attitude, astonishing growth, and a distinctive and innovative fashion sense marketed to the world's best athletes paved the way for Nike Inc. to become an extremely powerful and profitable corporate powerhouse in their sector for approximately three decades. By 1998, Nike Inc. controlled over 40% of the athletic shoe market in the United States and was a growing force in the global $64 billion athletic clothing market (Yoffie, 1991). Two main ideas were put forth by Nike Inc's CEO Phil Knight and contributed to the corporation's meteoric rise from the early 70s to the late 90s; outsource all production to low cost parts of the world and invest…show more content…
Selected by AAFLI (Asian American Free Labor Institute), activist Jeff Ballinger was selected to investigate and review the labor conditions of plants in Indonesia and report wage compliance by American companies. Initial findings proved useful, but it was not until the release of his report coincided with a series of strikes that swept Indonesia and newborn interest by media groups that his report really became known. Ballinger discovered over 17,000 accounts of violation and vast amounts of corruption and bribery involving the Nike Inc.'s subcontracting companies and the Indonesian government. Early action taken by the Indonesian government includes a minimum wage raise from 2100 rupiah to 2500 rupiah but according to observations this wage proved to still be unsatisfactory with many factories ignoring the change in the law. Nike Inc. faced intense scrutiny and criticism but despite that, Nike Inc. kept on insisting that labor conditions in subcontracting factories are not and are neither Nike Inc's concern nor their responsibility. After acknowledging the gravity of the situation and due to mounting pressure, a Code of Conduct and Memorandum of Understanding was published by the company in 1992 and subsequently sent to the company's contractors worldwide. The Code contained rules, regulations, and a set of principles advocating respect, honesty and non-discrimination (Walz, 2011). By 1992, criticism of Nike Inc.’s labor practices began to take shape outside of Indonesia. The publishing of paychecks courtesy of Ballinger further exposed wages paid to workers. Wages amounted up to almost 14 cents an hour, significantly lower than the minimum wage in the country at the time, which ranged from half a dollar to $1.5 daily (Schwarz, 1999). Pushed into the spotlight for its unethical and illegal labor practices, Nike Inc. became the subject of much criticism. Protests were staged at the 1992 Summer Olympics in
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