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An Analysis of Nike and the Global Commodity Chain

The unethical business practices of a multi national corporation: Nike

Walter Bernal

on 4 December 2012

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Transcript of An Analysis of Nike and the Global Commodity Chain

Japan Oregon Understanding Nike and its role within the
Global Commodity Chain By; Walter Bernal Korea Seoul Tokyo China Taiwan #1 #3 #4 2 #2 During the late 90's, hidden footage displaying
horrible working conditions, child labor practices,
and underpaid workers tainted Nike's name. Since those dark days however, Nike has made it its mission to recuperate its global reputation by (a) limiting its carbon foot print, and by (b) increasing its business practices. Founder and CEO of Nike: Phil Night Nike's Ethical Policy "Reaching closed-loop business model where the goals to achieve zero waste in the supply chain and have products and materials that can be reused .
-no pre-or post-consumer waste
-not to harm the environment
-product quality sustainability
-Intellectual honesty Nike The company's three main products lines-footwear, apparel and equipment-are made in approximately 600 contract factories that employ more than 800,000 workers in 46 countries around the world. NIke sells tens of million of athletic shoes in the United States every year, yet all of the firm's manufacturing operations are conducted overseas. Nike's origin is in Oregon Before Nike became a multinational corporation the company was formally known as Blue Ribbon Sports. Phil Knight the founder was selling shoes out of his trunk all around the West Coast. Jeff Johnson, a friend of Knight, suggested calling the firm Nike, named after the Greek winged goddess of victory, and the rest was history. After establishing a reputable logo however, the company decided to go global in order to save on on labor costs and to increase profits. Locke, M. (2002) "The Promise and Perils of Globalization: The Case of Nike" According to Locke, Nike's success attracted many other athletic footwear companies to the market. In order to maintain their competitive edge against their counterparts and capture a higher rate of return, Nike outsourced their products to "lower-cost, high quality Japanese producers" (pg.46) However, due to a combination of factors such as rising labor costs in Japan, the Arab-Israeli conflict causing the oil crisis of 1973, and what he calls the "Nikon Shock", Nike decided to relocate productions towards a more "business friendly" Asian market.
Nike was able to escape higher labor costs in Japan by relocating productions first to South Korea and then Taiwan, and finally China in the late 1980's
"Back to the
Future" NIke Shoes! Sounds Good Huh? According to Derrig, Nike is trying to restore its tarnished reputation around the globe is through promoting sustainability, which is the responsible management of resource use. This however is easier said than done. For example, one of Nike's main goals is try to eliminate polyvinyl chloride (PVC) plastics from their footwear. This has been a fairly publicized goal, and it has been around for ten years now, but has yet to be implemented. Whats the main reason for this? Research proves that plastic alternatives are pricier than traditional PVC plastics. This is Nike's main reason for not transitioning. The race to the bottom is far from over. Once labor costs start to increase, Nike will seek to go further into inland China, or else where. If international actors fails to establish some sort of minimum wage law, Nike will continue to look for and relocate to cheaper production regions. conclusion Despite Nike's efforts towards adopting a more sustainable responsible business model to help fix its tarnished reputation, current economic trends such as export-led growth and free trade is making it extremely difficult for MNC's like Nike to find a balance between ethical business practices and growing revenue. The End
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