Nike Inc.
Social Responsibility
Rich Eggett, Josh Ford,
Andy Taylor, Dennis Wright
Nike Exposed




1995: Critics say that Nike is using sweatshops
to produce shoes
1997: Contract with Ernst & Young to conduct
an independent audit of Labor
Findings leaked by disgruntled Nike Employee
1997: Plant near Ho Chi Minh City, Vietnam
Carcinogens exceeded by 177 times the legal amount
 Workers are paid $10.00 for 65 hours of work
 77% have respiratory problems

Nike’s Response



Press Release
Labor Comments
Fair Labor
Association
Phil Knight’s 1998 Promises



All Nike shoe factories will meet the U.S. Occupational
Safety and Health Administration’s (OSHA) standards
in indoor air quality.
The minimum age for Nike factory workers will be
raised to 18 for footwear factories and 16 for apparel
factories.
Nike will include non-government organizations in its
factory monitoring, with summaries of that monitoring
released to the public.
Promises continued



Nike will expand its worker education program, making
free high school equivalency courses available to all
workers in Nike footwear factories.
Nike will expand its micro-enterprise loan program to
benefit four thousand families in Vietnam, Indonesia,
Pakistan, and Thailand.
Funding university research and open forums on
responsible business practices, including programs at
four universities in the 1998–99 academic year.
Fair Labor Organization

Entity composed of the following:
Corporations: Nike, Reebok, Edie Bauer, etc.
 Human Rights Organizations
 Universities


Conducts Audits at Factories
Each plant every 10 years
 Mediator when needed (Labor dispute)

Nike Response to Wage
“They pay Michael Jordan $40 million to endorse
them. Can't they find more money to pay
the workers?' The short answer is no.
corporations pay the going rate for labor
wherever they are. And Nike maintains that the
rate is good.”
TIME Magazine, March 30, 1998
Our Assessment - Labor


Nike was caught red-handed
Is Nike responsible for suppliers?




Are we?
Nike has good ideas about what to do
The scope of what needs to be done to appease
activist Americans is too large for Nike
Nike is doing a good job given their resources
Supplier Relationships

Governed by Nike Code of Conduct

“Nike is committed to providing safe and healthy
work environments and to being an environmentally
responsible corporate citizen. The Nike standard is
to comply with all environmental, safety and health
laws and regulations.”
Supplier Relationships cont…
“…suppliers are expected to observe the same
standards of conduct as Nike employees when
conducting business with or for Nike.”
 “Nike is committed to socially responsible sourcing
practices. We are driven to do not only what is
required by law, but also what is expected of a
leader. We expect our business partners to do the
same.”

Supplier Relationships cont…

“As a member of the Nike team, when presented the
opportunity, you have a responsibility to promote
compliance with the Nike Code of Conduct and to
report any instances of non-compliance, of which
you become aware, to the Corporate Responsibility
Compliance Group.”
Supplier Relationships -- Assessment


Nike has demonstrated its willingness to drop
suppliers and/or work with suppliers to correct
any violations of the Code.
Nike’s relationships with its suppliers are in
general consistent with the principles established
in the Code of Conduct.
Current Community Programs



3% of pretax profits invested
Support Employees (Habitat for Humanity)
Support activities for young people to keep
them moving


Nike makes a profit while kids exercise
Support girls and women
5000 micro loans per year in 3rd world countries
 Support girl’s athletics in Kenyan refugee camp

Our Assessment - Community



Nike is committed to CSR
Nike’s programs for youth are good
Nike’s Microloans are good


Why women only?
Nike’s commitment to girl’s education is show

How does supporting refugee camp soccer help?
(this is a long stretch)
Nike Inc.
Revenue Trends
14,000
12,253
12,000
10,697
$ Millions
10,000
9,553
9,187
9,489
8,777
9,893
8,995
8,000
6,471
6,000
5,252
4,761
4,383
3,684
4,000
3,591
3,704
3,888
3,488
3,283
713
964
980
1065
1246
790
1998
1999
2000
2001
2002
2003
2,564
1,896
2,000
674
939
1348
1550
0
1995
1996
1997
Revenue
Gross Profit
Operating Income
2004
Nike, Inc. Key Measures and Ratios
in millions
Net Income
Gross Margin
Profit Margin
Earnings Per Share
Revenue Growth
Free Cash Flow
Return on Assets
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
399.7 553.2 795.8 399.6 451.4 579.1 589.7 663.3
474 945.6
39.8% 39.6% 40.1% 36.5% 37.4% 39.9% 39.0% 39.3% 41.0% 42.9%
8.4% 8.5% 8.7% 4.2% 5.1% 6.4% 6.2% 6.7% 4.4%
7.7%
$ 1.36 $ 1.89 $ 2.68 $ 1.35 $ 1.57 $ 2.07 $ 2.16 $ 2.44 $ 1.77 $ 3.51
35.9% 42.0% 4.0% -8.1% 2.5% 5.5% 4.3% 8.1% 14.5%
100.8 113.6 -142.8
11.6 576.9
340 338.9 798.7 731.5 1300.5
12.7% 14.0% 14.8% 7.4% 8.6% 9.9% 10.1% 10.3% 7.1% 12.0%
Growth of Nike Inc. vs. S&P 500
100
10
Value of $1 (S&P 500)
Value of $1 (Nike)
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1
Volume
Closing Price
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
Volume
50
40
30
60
50
20
40
30
10
20
10
0
0
Stock Price
Millions
Historical Stock Price
Nike Inc.
100
90
80
70
Consumers

Though market share
declined in 2000, Nike
has re-bounding nicely,
regaining 42% market
share in 2004
US Market Share: Sporting Footwear
Manufacturer
2000
1999
1. Nike
39.20%
48.90%
2. Adidas
15.10%
16.90%
3. Reebok
10.90%
10.90%
4. New Balance
9.40%
3.70%
5. K-Swiss
3.60%
3.10%
6. Timberland
2.90%
2.10%
7. Asics
2.10%
1.50%
8. Saucony
1.40%
1.40%
9. Skechers
1.40%
0.9%
10. And 1
1.20%
0.90%
- Adapted from WSJ Oct 2000
Nike: Mission Statement


“To bring inspiration and innovation to every
athlete in the world.”
If you have a body, then you are an athlete

Mission statement, Bill Bowerman
Growing Market Share

Keys to Nike Success: Innovation and product
differentiation.

Nike made a conscious decision to not only make the shoe,
but also all items required to play.







The Ball, (Nike One Black Golf Ball)
The Stick, Clubs and Bats
Gloves, baseball, golf, hockey
Bags and Water Bottle
Hats, Helmets, Faceguards
Wristwatches and mile-counters, and heart monitors
Shirts, Shorts, Socks, and Jackets
Environment: Eco-Friendly

Nike aims




Reduce emissions from
manufacturing (GHG)
Reduce emissions as part of
product distribution and
delivery
Displace materials with organic
cotton in Nike shoes and
apparel
Independent Audit of Business
Practices

Partnering Group




World Wildlife Federation
(WWF)
Business for Social
Responsibility (BSR), with
12 additional companies
Organic Trade
Association (OTA) and
Sustainable Cotton
Project (SCP)
Fair Labor Association
(FLA)