Summary In 1988, an Indonesian union newspaper published a study of bad working conditions in a plant making Nike footwear. In 1994, an accounting firm, Ernst and Young, were hired to audit code compliance by making spot checks at Nike factories. In that audit was information concerning Nike factory conditions and how the workers were being mistreated. The audit claimed that Nike workers in Southeast Asia were exposed to toxic chemicals, subjected to physical, verbal, and sexual abuse, forced to work an illegal excess overtime at minimum wage, and suffered poor hygiene. Nike, trying to save their company spent many years claiming that these accusations were false. However, when people compared claims from Nike to the audit, they found some of the details to be inaccurate and/or misleading. Marc Kasky, a California resident and activist, sued Nike for unfair and deceptive practices under California's Unfair Competition Law. Kasky alleged that Nike made "false statements and/or material omissions of fact" concerning the working conditions under which its products are manufactured. Nike filed a demurrer, contending that Kasky's suit was absolutely prohibited by the First Amendment. The California Supreme Court dismissed the case as “improvidently granted.” However, late in 2003 Kasky and Nike announced a settlement. In return for Kasky dropping the case, Nike agreed to give $1.5 million to an industry-friendly factory monitoring group.
Analysis
Kasky, in my opinion, was correct and had good intentions when he sued Nike. He wasn’t in it for the money, instead he believed in human rights and he advocated for change within Nike factories (in third world countries) where workers were being mistreated and abused by American corporations. I’m aware that Nike absolutely knew about the harsh conditions of their workers overseas but they neglected to admit that they were conscious and had any remorse for their actions. Society tends to overlook smaller things like, knowing who made the stylish sneakers that we wear and how much effort it actually takes to make one pair of shoes. We spend reasonable amounts of money on shoes that cost nearly 95% less to produce. I feel as if that was something that should’ve indeed been brought to the eyes of America. In Nike’s defense, their overall strategy was brilliant. They pay the workers nearly anything, consumers pay for overpriced products, and in the end they profit gargantuan amounts of revenue. It was marvelous! However, to maintain a successful business one must be loyal and respectful to their workers because overall they are the ones responsible for the end product.
Chapter Concepts CEO of Nike, Bill Bowerman and Phil Knight, established their business model in 1962 when they each put up $550 arranging to import 300 pairs of Japanese shoes. They both were aware that by buying and making products in low-wage Asian factories it would be profitable and lead them on their road to success. Seven years later, Knight and Bowerman decided to create their own brand, Nike. Nike succeeded using two basic strategies. First, its product strategy was to design innovative, fashionable footwear and apparel for affluent markets, and then have connectors in low-wage countries manufacture it. Second, its marketing strategy was to create carefully calculated brand images. Nike created a stylish “swoosh” logo and soon after created its popular mission statement (or slogan) “just do it” –the slogan added connotations of competition, courage, strength, and winning. In 1988, an Indonesian union newspaper published a study of bad working conditions in a plant making Nike footwear. Of course, Nike denied the allegations however, this enhanced transparency throughout America and Nike’s image had altered from positive to negative. Shortly afterwards, an audit was released by Ernst and Young giving America more assurance that many of the things they heard were factually true. Marc Kasky pursued a lawsuit against Nike, however the case was subsequently dismissed due to a split decision amongst the Supreme Court panel. After the case was dropped, Nike and Kasky announced a settlement. In return for Kasky dropping the case, Nike agreed to give $1.5 million to an industry friendly factory monitoring group as an act of philanthropy.