United States Business Scandal: Nike

Timeline created by sjmonday
  • Nike Moves Factories Overseas

    Nike Moves Factories Overseas
    o Nike moves factories overseas to China, Vietnam, Korea, and Taiwan
    o Cheap labor produces shoes and clothing for a fraction of what it would cost in the United States
    o Moving factories creates a stepping stone into Asian markets that Nike has not yet reached
  • News of Nike Sweatshops Appear in the News

    News of Nike Sweatshops Appear in the News
    o Articles appear in Indonesian and Taiwanese newspapers regarding investigative reports and wage protests
    o Most shoe factories illegally paid workers "training wage," which was less than the standard eighty-six cents a day
  • Nike's Scandal Reaches Worldwide News

    Nike's Scandal Reaches Worldwide News
    o UK’s Thames TV, The Economist, and Knight Ridder all report poor working conditions of Nike factories in Indonesia
    o Exhaustive quota system, low wages, dangerous working environment, abusive supervision, child labor, and unclean air
  • Nike Fights Back with New Regulations

    Nike Fights Back with New Regulations
    o Nike formulates an official code of conduct for its contractors that is supposed to apply in all factories producing Nike products
    o The code, first formulated in 1992 and amended in 1997 and 1998 is still in use today
    o The code is called SHAPE: Safety, Health, Attitude, People, and Environment, and results in spending $10 million a year to follow the code, adhering to regulations for fire safety, air quality, minimum wage, and overtime limit
  • Nike Responds to Continuous Bad Publicity

    Nike Responds to Continuous Bad Publicity
    o Further bad press in 1994 included investigative reports in The Rolling Stone, The Boston Globe, The Los Angeles Times, The Chicago Tribune and a book by Donald Katz called Just Do It
    o Nike hires accounting firm, Ernst and Young to do "social audits" at Indonesia-based contract factories to earn back consumer trust
  • Nike Works to Build Public Trust

    Nike Works to Build Public Trust
    o Nike hires former UN ambassador Andrew Young to visit its contractors' factories in Asia and report on working conditions hoping that he would provide an independent endorsement.
    o Human rights groups criticise tour as a public relations stunt
    o Strikes outside of Nike stores and student protests begin in the United States
    o Anti-Nike rallies are held in 50 US cities and 11 other countries
  • Stakeholder Reactions

    Stakeholder Reactions
    o Share prices have dropped significantly and profits are weak
    o CEO Phil Knight admits “The Nike product has become synonymous with slave wages, forced overtime and arbitrary abuse
    o Nike pours its marketing expertise into its own corporate reputation and seeks to portray a caring company that is concerned about working conditions in its contractors' factories
    o Nike becomes a member of the Fair Labor Association (FLA) that states that member companies will pay the minimum wage of the country
  • Nike Partnerships Under Stress

    Nike Partnerships Under Stress
    o Nike has 'partnerships' with over 200 US colleges and universities,42 of which involve cause-related marketing deals providing them with a financial reason for supporting the company
    o Under pressure from student activists, universities have been joining up with the Worker's Right Consortium (WRC) rather than the FLA
    o 50 universities have joined up so far further undermining the credibility of the FLA
  • Nike Makes Strides to Change Public Opinion

    Nike Makes Strides to Change Public Opinion
    o Nike is using the internet to provide information that defines themselves as a trustworthy compnay and to profess a social conscience
    o Nike has a whole section of its website devoted to responsibility, with sub-sections on labour, global community, environment and diversity
    o In April 2000, Nike CEO Phil Knight announced the company would be publishing the results of monitoring of its contract factories by PricewaterhouseCoopers (PwC) on its website
  • A Not So Happy Ending for Nike

    A Not So Happy Ending for Nike
    o Nike has employed reputation management rather than instigated real reforms that addressed the underlying issues of their overseas factories
    o Nike seems to be moving slow with regards to its major issues: paying a minimum wage, allowing workers to afford basic human necessitites, and granting workers the right to form independent labor unions
    o Many people believe that once the public relations nightmare is over for Nike the company will revert back to its exploitative ways
  • Period: to

    Leading Up to the Scandal

    Many companies, including Nike, move their production factories overseas to cut costs.
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    Unfolding of the Nike Sweatshop Scandal

    Inhumane labor environents and low wages come to light in Nike factories overseas.
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    Corporate and Consumer Reactions

    Consumers and the corporate world react to constant criticism of Nike's sweatshops.