Nike Case Analysis

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Case Analysis: Nike Jonah Peretti in January 2001 ordered Nike shoes and chooses the word “sweatshop” to be printed on them. Nike gives such option for its customers to customize their Nikes with color and short personal message. Nike rejected order, citing the company’s rules and informed Peretti that “sweatshop” is from inappropriate slang. In retort, Peretti ordered a pair of shoes with a “color snapshot of 10-year-old Vietnamese girl who makes my shoes.” Nike did not respond to this letter. This e-mail conversation between Peretti and Nike had led to a huge Public Relations nightmare for the organization. Since then Nike become a subject to negative press, lawsuits and demonstrations on college campuses asserting that firm’s overseas factories exploit employees in inhumane conditions for low wages. Company was also accused for safety hazards, living standards and working conditions. In 1964, Philip Knight created shoe distribution company and distributed shoes from Onitsuka Company, Japanese manufacturer. Later this manufacturer switched to a larger and more experienced company. Knight, as a businessman, recognized huge potential of the American shoe market and decided to start his own new company which he called “NIKE”. Nike signed contracts with two Japanese manufacturing firms to produce shoes, later the company moved to Korea and Taiwan. In 1977, Nike’s purchase of two shoe manufacturing factories in the United States has ended with a failure. Factories were so unprofitable that the firm decided to close them, and return back to contract manufacturing abroad. Now it doesn’t own a plant. This way of producing is not unique for Nike only, many companies use such way because it is much cheaper to produce in China or in Vietnam, where labor costs are less than in the USA, taking into consideration that athletic shoe production even in

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