Nike Case Analysis Study Example | Topics and Well Written Essays - 1250 words

Nike Analysis - Case Study Example For fiscal year May 31, 2009, the company has reported revenues of more than $19 billion. These figures include sales for affiliate businesses such as Converse, Umbro, Cole Haan and Hurley International. While the company has recorded a 6% drop in its return on investment (ROI), Nike’s performance between 2005 and 2009 is so much better compared to the top 500 S&P companies. Nike’s success may be traced back to capacity to tap into the international market, which accounts for more than half of the company’s sales. Aside from this, Nike has chosen various Asian countries for their contract manufacturing base, allowing them to take advantage of low operational costs and even lower wages. Known best for its â€Å"Just Do It† Campaign which started in 1988, Nike has struggled with issues involving violations of human and labor rights, and deficiencies in health and safety conditions (Ferrell et al., 2011, p. 387). Like most companies that had to face human rig hts allegations, Nike’s response was slow and ineffective. According to an Amnesty International (AI) report, the company’s response may be summarized in four stages: denial, blame others, damage control, reassert control over damaged corporate image, and give appearance of compliance (Avery, 1999). At the beginning, Nike reiterated the efforts the company is making to improve working conditions and raising wages in countries where their factory is located. In a statement, Philip Knight said, â€Å"every Nike subcontractor is subject to systematic, unannounced evaluation carried out by Ernst & Young and that our own reviews†¦have shown that the Code [of conduct] is complied with in all material means† (as cited in Avery, 1999). Unfortunately, the review evaluation carried out by Ernst & Young did not reveal how may factories were actually audited and what tools were used to carry out its evaluation. Moreover, hiring its own evaluators to assess the companyà ¢â‚¬â„¢s operational practices was counterproductive, according to the company’s detractors. For one, how can a company release a negative report against the same people who are providing them with business? Moreover, as a growing company, Nike was too busy fulfilling client orders, its hiring and standard operating procedures were not yet a subject of scrutiny – until the Asian employees started their strike, that is. With thousands of people in their employ and hundreds of factory locations around the world, Nike failed to institute an internal auditing system (and an internal auditor) which could have helped them ensure the highly viable working conditions they wanted to provide. Another issue that led to Nike’s failure to address corporate responsibility earlier is the presence of a contract manufacture base denuded the company’s ability to monitor the activities in all its subcontracting plants. In addition, because many of the contracting plants wer e located in Asian countries, Nike should have installed an in-house representative who is tasked of ensuring that the new manufacturing plant has adopted the Code of Conduct. Transitions should have been made, and regular audit should have been scheduled to monitor the plant’s performance and adherence to the Code. Aside from its labor issues in the Asian territories, Nike has also earned the disagreement of several thousand people who were formerly employees