Nike Case Study Analysis
By Ellie Boggs, Alexis Chan, Lauren McLean and Lauren Van Neste
Overview
As the industry leader, Nike was targeted by fair labor activists and watchdog groups for
low standards in its factories overseas; despite other competing companies having similar
issues, Nike took the brunt of the criticism. While at first only mild media attention was paid
to the issue, that attention steadily increased into the 1990s and became a full­blown crisis
when the general public began to take voice outrage over Nike’s labor practices. An
example of this public outcry can be seen in the creation of “International Nike Day of
Protest” (October 1997), which involved demonstrators from 28 states and 12 countries.
Nike then re­evaluated its business and communication strategy, and created a Corporate
Responsibility Division – seen as a simplistic public relations ploy – and focused on
employee morale improvement. None of Nike’s attempts to regain public trust succeeded
because most of the changes were seen as public relations moves, not real and significant
change.
Problem
The problem is that Nike broke various labor laws while doing business in Southeast Asian
countries. In 1989, Nike’s fair labor practices came under fire by labor activists and
watchdog groups, which continued into the 1990s. The most significant error that Nike
made during this reputation crisis was never attempting to make its efforts transparent.
Thus, all subsequent efforts to remedy the situation fell flat.
Alternative solutions
1. Radical transparency after making brand re­positioning statement.
2. Demonstrate goodwill towards community through CSR campaigns.
Evaluation of alternatives
1. Radical transparency after making brand re­positioning statement
Nike could begin by issuing a statement to the media, via press conference, about
changing its labor practices and its new policy of radical transparency. Nike will not take
responsibility for the accusations of poor labor practices to avoid possible lawsuits, but it
will apologize for not previously being transparent in its labor practices. Nike will promise to
uphold its role as the industry leader by setting the standard of labor practices moving
forward. The statement will include descriptions of the new labor practice standards for all
factories, as well as how those standards will be upheld. The statement will also include
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information about the radical transparency Nike will provide on its website.
Next, Nike would hold a press conference to address the public and the media. During the
press conference, Nike would reiterate its radical transparency statement and elaborate on
the new tactics and strategies it will implement in order to ensure lawful labor practices.
Nike would be able to answer any questions regarding the new training tactics and
implementation methods in its factories. This would also be a way to inform the public of
the new outlets Nike will provide in order for its stakeholders to see the changes that it has
made.
After this conference, Nike would subsequently hold seminars to inform and teach
employees and other stakeholders the new management strategies. The goal of the
seminars is to ensure that every representative of the company is aware of exactly what
Nike’s strategies are in order to support the fair labor laws. Stakeholders would have full
confidence in explaining to any critic what Nike has done and what the company plans to
do in the future in order to prevent any other issues with labor.
The first method of radical transparency that Nike could provide is live feeds for each of its
factories on its website. The live feeds would show the conditions inside the factories at all
times from all angles, so the whole of each factory is seen. The live feed would be
accessible 24/7 by all publics. The live feeds would also show the ISP location of the feed
to prove that the cameras are inside all Nike’s factories. By supplying live feed of factories
24/7 to its publics, it will prove that Nike is serious about the statement it made to change
labor practices. Implementing radical transparency in this fashion will allow no room for
critics and activists to accuse Nike of poor labor practices.
In conjunction with live feeds of factories, the second method of radical transparency that
Nike could provide is streaming portions of the extensive training sessions with all Nike
employees and managers. The stream will demonstrate exactly what fair labor is to look
like inside its factories. Streaming the sessions on the Nike website will allow interested
parties to understand the new standards of labor practices and show that Nike wants to be
held accountable for the promises it has made. Providing a play­by­play of employee and
management training gives labor activists the ability to take the information and then
compare it with what they see on the live feeds from the factories. This may reduce the
amount of criticism Nike receives from these groups, because any confusion would be
eliminated. If anyone witnessed an action that violated the training taught in the sessions
during a live feed, Nike would welcome that information through any and all available
outlets. Nike would acknowledge the wrongdoing and take action to solve and eliminate
that problem immediately.
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2. Demonstrate goodwill towards community through CSR
By implementing an extensive corporate social responsibility (CSR) campaign, Nike could
demonstrate to stakeholders, as well as critics, its dedication to improving the working
conditions. First, Nike would implement training seminars for its employees focusing on
how they can contribute to CSR efforts abroad. Then, Nike could install a philanthropic
campaign in which domestic Nike employees would assist Nike employees abroad by
raising money for community improvement projects, creating awareness of an issue or
even a small group of employees traveling to a Nike factory overseas to assist with various
projects. By sharing stories of employees helping employees, it would give the public a
new perspective of Nike ­ one that is not just about the labor practice issues.
Additionally, Nike could create a CSR campaign that focuses on general community
improvement in factory locations abroad. The CSR campaign abroad would include
environmental sustainability efforts in communities surrounding Nike factories. By
researching the current environmental surroundings of each factory location Nike can better
understand how to have the least amount of impact on the environment and local
communities. This shows Nike’s dedication to the living standards of its employees abroad
for reasons beyond simply improving its image.
Recommendation
We recommend that Nike implement alternative No. 1 because we think that Nike needs to
make a loud statement that it’s embracing its role as the industry leader and setting an
example of how labor should be managed. A lack of transparency was a significant
problem in Nike’s initial effort to combat activist criticism. From now on Nike should employ
the strategy of radical transparency throughout its businesses and factories.
Radical transparency will prove to watchdog groups and labor activists that the tactics are
not simply part of a public relations strategy because Nike will be open about the
processes that they implement. Anyone who doubts Nike’s intentions has the opportunity to
watch the steps taken to improve labor practices. The steps can be seen through the live
feeds of factories and streaming of management and employee training posted on the
Nike website. From this, critics have the ability to see real­time results and improvements
from Nike’s efforts.
Possible results and obstacles from implementation
After implementing alternative No. 1, Nike may be able to reduce the negative attention that
has been plaguing its business for the past decade, as well as turn harsh critics into neutral
observers or perhaps supporters. Setting these examples of radical transparency and
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improvement of industry standards will affirm Nike’s position as the industry leader.
A possible obstacle post implementation of alternative No. 1 is that critics will choose to
focus on other perceived flaws. For example the “low” wages for employees working in
developing countries. Those wages, although “low” by U.S. standards, are actually
considered on par with living standards in those countries.
Another obstacle that Nike may face is the possibility that another incident could occur
while the live feeds are running in the factories abroad. This would certainly be caught by
watchdog groups due to the new strategy of radical transparency. Nike can seek to prevent
incidents from occurring as much as possible through training sessions and new
management tactics; however, if an incident were to occur it would be crucial for Nike to
immediately respond and take action.
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