This Presentation is made by the students of CALCUTTA BUSINESS SCHOOL (KOLKATA). This is related to the labour exploitation.

2. PRESENTED BY : GROUP 3
CHETAN SINGH (16003)
HONEY SINGH (16007)
SUBHANGI SHARMA (16027)

4. • The case study tells us about the malpractices and policies
which was followed by NIKE in its various factories of
the countries such as South Korea, Taiwan, China , Japan,
Indonesia, Vietnam.
• NIKE does its business from outsourcing all of its
manufacturing
• Investing heavily on celebrity endorsement
• Formulating and implementing the strategies to get an
identity of its logo in the minds of the consumer and
lastly violating the rules and exploiting their workers.
• They hired Ernst & Young (accounting Firm) to
conduct formal audit of its overseas factories.

6. • Nike sees corporate responsibility as a catalyst for growth and
innovation.
• By 1990, China and Indonesia were the main outsourcing
countries for Nike as they were the low cost regions.
• Currently, the products of Nike are made by approx. 600
contract factories that employ more than 8 lakh workers in 46
countries.
• Nike’s policy of competing on the basis of cost fostered and
even encouraged the contractors to mistreat their workers in
pursuit of unrealistic quotas.
• Ballinger’s findings gained the interest of media groups and
stories became big news and that is when the Indonesian and
US government had to pay attention.

7. Contd..
• Most of the workers were not the primary wage earners.
1.67$ were paid to Vietnamese workers, so criticism
continued to mount.
• 82% of the workers surveyed, either saved wages or
contributed each month to their families after incurring
essential expenditures.
• Indonesians put typically their excess wages in banks while
Vietnamese likely hold their savings in form of rice or cows.
• There was a series of sweeping reforms such as raising the
minimum age limit of sneaker workers to 18, expand
monitoring and educational programs, availability of micro
loans to workers and significant restructuring charges and lay
off to 1600 workers.

9. • Nike was one armed with an inimitable attitude, phenomenal
growth and the apparent ability to dictate fashion trends to
some of world’s most influential customers.
• Nike’s CEO came up with two logical business strategies,
which were reducing costs by outsourcing the whole
manufacturing and channelling savings from outsourcing into
marketing.
• Nike aimed to have their products manufactured where the
labour costs were low such as China, Indonesia, South Korea
and Taiwan.
• By adopting this strategy i.e. by outsourcing Nike achieved the
operating target with no physical assets.
• Because of globalization, Nike was fully utilizing outsourcing
in developing countries and increased its profitability.

10. CONTD..
• Along with outsourcing savings, Nike used celebrities to
promote their products.
• Diversity came from models designed from different foot
types, body, weight, gender, speed, running, training schedules
and skills level.
• By 1981, Nike led all the athletic shoemakers with
approximately 50% of the total market share.
• The corporate governance model of Nike talks about
eliminating excessive overtime, tailored human resources
management systems, encourage other brands to join as
partners, 90% of footwear lines to lean manufacturing
processes.

13. • International outsourcing operations
– Status Quo of outsourcing without external
pressures
– Difficulty controlling international suppliers
• Non Governmental Organizations
– Increased organization and respect
– Increased funding and power
– International presence
– Power of the Media: Film, Print and Television

14. Contd..
• Powerful Image
– The strengths and power can also be source of
extreme pressures
– Image and support are everything for Nike
• Government Interaction
– Increasing Pressures from US Senate
– Increased pressures from Asian (Indonesian)
Governments

15. Contd..
• Labor Unions
– Increasing influence in operations
– Increasing expenses
• Follow Up
– Continued mistakes and lack of perceived actions
to fix problems
– Poor Public Relations
– Research Results Flawed
– Poor Stakeholder Engagement

17. Contd..
• Lack of understanding, regarding stakeholder
management
• Disconnection between company, brand
awareness, and manufacturing plants
• Public relations failure
• Poor labor standards

19. • Phil Knight announced a series of sweeping reforms including raising the
minimum age of all sneaker workers to 18 and apparel workers to 16; adopting
U.S. OSHA clean air standards in all its factories; expanding its monitoring
program; expanding educational programs for workers; and making micro loans
available to workers.
• Nike’s second step was to get more involved with Washington-based reform efforts.
The Apparel Industry Partnership (AIP) lay deadlocked over the ever-delicate
issues of factory monitoring and wages.
• To allow independent monitoring done by an organization that was not on a
corporate payroll, such as an NGO or a religious group
• To get associated with Fair Labor Association (FLA) a private entity controlled
evenly by corporate members and human rights or labor representatives. It would
support a code of conduct that required its members to pay workers the legal
minimum wage or the prevailing local standard, whichever was higher.

20. • Nike was running extensive training programs for its
contractors’ factory managers. All managers and supervisors
were required to learn the native language of their workers,
and received training in cultural differences and acceptable
management styles
• The company partnered with the National University of
Vietnam in a program designed to identify and meet worker
needs. It also helped found the Global Alliance, a
partnership between the International Youth Foundation, the
MacArthur Foundation, the World Bank, and Mattel, that
was dedicated to improving the lives of workers in the
developing world.

24. Thank You