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Nike Case

In: Business and Management

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Hitting the Wall: Nike and International Labor Practices CEO Phil Knight took a different approach than competitors when it came to his original strategy for Nike. One of the noticeable differences was the outsourcing of all manufacturing; no in-house production or dedicated manufacturing lines. None of the products or manufacturing would be done within the United States, meaning there were no physical assets. The plan to outsource specifically targeted low cost parts of the world. With the amount of money saved by outsourcing they could pour it all into marketing the brand. Celebrity endorsements were used, but in a different fashion because they only used high profile athletes as a representation for Nike. While this strategy was unique and worked well for a while, in the 1990’s problems began to surface. Jeff Ballinger’s main concern was the large gap in wage rates between developed and developing countries. As part of his research he interviewed workers and noted their dissatisfaction with the conditions they worked under. Ballinger believed Nike was more focused on competitive pricing that it led to mistreating workers and expecting unrealistic production. He was concerned Nike employees were not being paid enough in order to fulfill everyday necessities. Ballinger’s work went fairly unnoticed until Indonesia had a sweep of strikes that matched up with his arguments of the company. Nike’s response to the criticism and negative publicity was the contract factories were not their concern or responsibility. Nike believed they had hired independent contractors and how they ran their factory was none of their business. Nike’s argument is weak and invalid. Although it is not Nike’s factory, their products and manufacturing are done there, causing them to be responsible for regulations, upkeep, and fair wages. As the uproar continued, Nike hired Dusty Kidd to...

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