Ethical Issues Of Nike

How could this happen? What were they thinking? How is it possible that Nike, still today ranked the number 1 brand name in sporting goods in the world (Forbes. 2018) could have been inescapably linked with exploitation, low wages, child labour, poor working conditions, and human rights abuses around the globe? The story of Nike and its suppliers’ well publicized ethical violations is one that contains shocking and upsetting images of children stitching soccer balls and underpaid workers being abused, but it is also shockingly understandable how Nike could have found themselves in this situation. Indeed many companies may have made the same mistakes in their attempt to grow and thrive in a competitive market, but in the case of Nike the mistakes

(Porter, M. 1998) They would have considered the existing competition, giants in the industry, companies such as Adidas, and looked at ways in which they could compete with such powerful rivals while starting small themselves. Their plan followed basic business practices and involved reducing costs of production to be able to undercut the competition on price. Noticing that in those days the competition were manufacturing their shoes in markets with high cost of labor, such as Germany and the USA, the Nike founders decided to outsource their labor. In the beginning, inspired by other industry trends like consumer electronics, they outsourced to Japanese producers. This allowed the Nike products to be manufactured more costeffectively, and as a second benefit of outsourcing it allowed the Nike designers to focus on their design tasks, not needing to pay much attention to the practices of 3rd party manufacturers and suppliers. As time went on and political environmental factors changed, the Japanese connection was no longer viably cost-effective, so Nike began looking to other Asian countries for a low cost substitute to Japanese labor. They looked to countries like Korea, Thailand, China, Taiwan, Vietnam,

(Locke, R. 2002)

Nike felt the positive impacts of their business strategy, expanding their footwear product range and market share dramatically through the 1980’s. Adding various other apparel to their product line beyond footwear to sports clothing and equipment, and of course growing financially from a modest company to a $10 Billion annual revenue global powerhouse. Nike also expanded their market beyond

US borders to become a true global player. This exponential growth and massive success could not have been accomplished without the same business strategy that soon would leave the developed world in shock. The negative impacts began. When reports began in the 1980’s and exploded in the 1990’s showing Nike’s suppliers being abusive to workers, forcing people to work in appalling conditions, paying “slave wages” and even employing child labor, the company’s reputation was forever tarnished.

(Locke, R. 2002)

Nike’s first response to the situation was inadvisable. They attempted to deny responsibility for the abuses by claiming that they were not involved in the practices of their suppliers. Nike declined to even investigate alleged human rights problems from their Asian “subcontractors” and