Tugas Principle of Management

NIKE

Nike Inc is a major publicly traded sportswear and equipment supplier based in the United States. The company is headquartered in the Portland metropolitan area of Oregon, near Beaverton. It is the world's leading supplier of athletic shoes, apparel and sports equipment with revenue in excess of $16 billion USD in 2007. As of 2008, it employed over 30,000 people world-wide. Nike and Precision Castparts are the only Fortune 500 companies headquartered in the state of Oregon.

The company was founded in 1964 as Blue Ribbon Sports by Bill Bowerman and Philip Knight, and officially became Nike, Inc. in 1978. The company takes its name from Nike, the Greek goddess of victory. Nike markets its products under its own brand as well as Nike Golf, Nike Pro, Nike+, Air Jordan, Nike Skateboarding, Team Starter, and subsidiaries including Cole Haan, Hurley International, Umbro and Converse. Nike also owned Bauer Hockey (later renamed Nike Bauer) between 1995 and 2008.^[2] In addition to manufacturing sportswear and equipment, the company operates retail stores under the Niketown name.

The company initially operated as a distributor for Japanese shoe maker Onitsuka Tiger, making most sales at track meets out of Knight's car.

The company's profits grew quickly, and in 1966, BRS opened its first retail store, located on Pico Blvd. in Santa Monica, Calif. By 1971, the relationship between BRS and Onitsuka Tiger was nearing an end. BRS prepared to launch its own line of footwear, which would bear the newly designed Swoosh

The first shoe to carry this design that was sold to the public was a soccer cleat named "Nike", which was released in the summer of 1971. In February 1972, BRS introduced its first line of Nike shoes, with the name Nike derived from the Greek goddess of victory. In 1978, BRS, Inc. officially renamed itself to Nike, Inc. Beginning with Ilie Nastase, the first professional athlete to sign with BRS/Nike, the sponsorship of athletes became a key marketing tool for the rapidly growing company.

The company's first self-designed product was based on Bowerman's "waffle" design in which the sole of the shoe was inspired by the pattern of a waffle iron.

By 1980, Nike had reached a 50% market share in the United States athletic shoe market, and the company went public in December of that year. Its growth was due largely to 'word-of-foot' advertising (to quote a Nike print ad from the late 1970s), rather than television ads. Nike's first national television commercials ran in October of 1982 during the broadcast of the New York Marathon. The ads were created by Portland-based advertising agency Wieden+Kennedy, which had formed several months earlier in April 1982.

Together, Nike and Wieden+Kennedy have created many indelible print and television ads and the agency continues to be Nike's primary today. It was agency co-founder Dan Wieden who coined the now-famous slogan "Just Do It" for a 1988 Nike ad campaign, which was chosen by Advertising Age as one of the top five ad slogans of the 20th Century, and the campaign has been enshrined in the Smithsonian Institution.

Throughout the 1980s, Nike expanded its product line to include many other sports and regions throughout the world

 Task Environmental Factor

 

1.    Customer

o        SES : A+, A, B

o   Lifestyle : Energetic, Sporty

o   Occupation : Athlete, Student

 

2.    Competitor

o   Adidas, Reebok

 

3.    Supplier

o   Synthetics

o   Rubber

o   Textiles

 

4.    Government

Nike's world headquarters are surrounded by the city of Beaverton, Oregon but are technically within unincorporated Washington County.

From Nike's perspective, the company, one of only two Fortune 500 employers still headquartered in the state of Oregon (Precision Castparts is the other), has such a large payroll in the area that it should not be forced to be annexed into Beaverton without its consent. Nike prefers to work with county government as it develops and expands its headquarters. Annexation would cost the company $700,000 per year in increased taxes for services it already receives from the county and various special-purpose districts. Intel, another large employer in the state, routinely receives special tax breaks on various capital investments it makes in the county.

From Beaverton's perspective, the company's expectation for special treatment is counter to the city's desire to have zoning and other laws apply equally to all businesses, big and small. A nearby Costco store, one of that company's earliest, was annexed into Beaverton years ago without incident, and Beaverton's focus on additional annexation during the 21st century reflects a desire to streamline both city and county government by having metropolitan-area services handled by cities instead of counties.

The Oregonian dates the bad blood between the two back to the Nike purchase of 74 acres (0.3 km²) of nearby Beaverton land which soon fronted the MAX Blue Line. When Nike proposed expanding their headquarters in that direction, Beaverton at first wanted them to build housing near the MAX station and criss-cross the property with two public roads, expectations defined by the zoning already in place when Nike bought the land. Beaverton's request was mostly consistent with Metro's transit-oriented development plans for the region. After a year, which included a threat by Nike to move 5,000 jobs out of the state, Beaverton backed down from the requirement for housing, but the lack of accommodation was something that Nike did not forget.

The annexation standoff soon led Beaverton to attempt a forcible annexation. That led to a lawsuit by Nike, and lobbying by the company that ultimately ended in Oregon Senate Bill 887 of 2005. Under that bill's terms, Beaverton is specifically barred from forcibly annexing the land that Nike and Columbia Sportswear occupy in unincorporated Washington County for 35 years, while Electro Scientific Industries and Tektronix get that same protection for 30 years.

5.    Pressure Group

o   Unicef

o   ILO

Because Nike allowed the children work in the company. The 2 groups are against Nike of this condition. Nike has been criticized for contracting with factories in countries such as China, Vietnam, Indonesia and Mexico. Vietnam Labour Watch, an activist group, has documented that factories contracted by Nike have violated minimum wage and overtime laws in Vietnam as late as 1996, although Nike claims that this practice has been halted.

The company has been subject to much critical coverage of the often poor working conditions and exploitation of cheap overseas labor employed in the free trade zones where their goods are typically manufactured. Sources of this criticism include Naomi Klein's book No Logo and Michael Moore's documentaries.

Nike was criticized about ads which referred to empowering women in the U.S. while engaging in practices in East Asian factories which some felt disempowered women.

6.    Political Conditions

In the 1990s, Nike faced criticism for use of child labour in Cambodia and Pakistan in factories it contracted to manufacture soccer balls. Although Nike took action to curb or at least reduce the practice of child labour, they continue to contract their production to companies that operate in areas where inadequate regulation and monitoring make it hard to ensure that child labour is not being used.

These campaigns have been taken up by many college and universities, especially anti-globalisation groups as well as several anti-sweatshop groups such as the United Students Against Sweatshops. Despite these campaigns, however, Nike's annual revenues have increased from $6.4 billion in 1996 to nearly $17 billion in 2007, according to the company's annual reports.

There have been several concerns raised in the media about the conditions that factory workers have to endure not only Nike's factories but in many of its major rivals manufacturing areas across Asia. Rumors of forced over-time and going for long periods of time without a break have been reported in the press.

7.    Sociocultural

Nike is well known and popular in Youth culture, Chav Culture and Hip hop culture as they supply urban fashion clothing. Nike recently teamed up with Apple Inc. to produce the product which monitors a runner's performance via a radio device in the shoe which links to the iPod nano. While the product generates useful statistics, it has been criticized by researchers who were able to identify users' RFID devices from 60 feet away using small, concealable intelligence motes in a wireless sensor network.

8.    Global

The Nike Foundation in 2005 began investing in adolescent girls as powerful agents of change in the developing world. This focus emerged from the company’s desire to support the world’s developing countries, recognizing the benefits that both Nike’s business and consumers derive from emerging economies. Funded by Nike, Inc. the Foundation leverages the brand’s drive for innovation and positive change, and its ability to inspire both. We believe that when girls receive support and realize opportunity for their futures, they can become an unexpected and powerful force in transforming.

9.    Technological conditions

The consistently growing textile industry often brings negative contributions to the environment. Because Nike is a large participant in this manufacturing, many of their processes negatively contribute to the environment. One way the expanding textile industry affects the environment is by increasing its water deficit, climate change, pollution, and fossil fuel and raw material consumption.

In addition to this, today’s electronic textile plants spend significant amounts of energy, while also producing a throw-away mindset due to trends founded upon fast fashion and cheap clothing. Although these combined effects can negatively alter the environment, Nike tries to counteract their influence with different projects. According to a New England-based environmental organisation Clean Air-Cool Planet, Nike ranks among the top 3 companies (out of 56) on a survey conducted about climate-friendly companies. Nike has also been praised for its Nike Grind programme (which closes the product lifecycle) by groups like Climate Counts. In addition to this, one campaign that Nike began for Earth Day 2008 was a commercial that featured Steve Nash wearing Nike’s Trash Talk Shoe, a shoe that had been constructed in February of 2008 from pieces of leather and synthetic leather waste that derived from the factory floor. The Trash Talk Shoe also featured a sole composed of ground-up rubber from a shoe recycling program.

Nike claims this is the first performance basketball shoe that has been created from manufacturing waste, but it only produced 5,000 pairs for sale. Another project Nike has begun is called Nike’s Reuse-A-Shoe program. This program is Nike’s longest-running program that benefits both the environment and the community by collecting old athletic shoes of any type in order to process and recycle them. The material that is created from the recycled shoes is then used to help create sports surfaces, such as basketball courts, running tracks, and playgrounds.

10. Legal and Politics

The above statements were made by Thuy and Lap, woman workers at Nike plant in Vietnam, and reported by CBS in October 1996. However disturbing those comments might have been, they turned out to be but a scratch on the surface of a far more horrendous reality -- confirmed, quantified, and fully documented in a March '97 report by Vietnam Labour Watch during its visit to Vietnam.

Despite its progressive image in the United States, Nike is a very different company in Vietnam and in other Asian manufacturing operations. Reports of physical abuse, sexual abuse, salary below minimum wage and a debilitating quota systems are confirmed by CBS News, the New York Times, USA Today, Wall Street Journal, AP, Reuters as well as other non-profit and non-governmental organizations.

We started this web site in 1996. Since then, the stories of Nike labor abuses have made the front-page of many newspapers. The courage of Thuy & Lap to stand up to Nike sweatshops has helped spark a worldwide movement. In 1998, Phil Knight promised to change Nike's labor practices in Asia. We observed a few improvements, but much of Phil Knight's plan of actions were nothing but empty promises. In 1999, Thuy & Lap were fired for talking to reporter. Thuy is now working in another factory in Dong Nai. Lap is still unemployed. You can read her letter to Nike .

We are now in the year 2001. Still there's much left to be done. Nike continues to treat its labor problem as a matter public relations. Nike's factory wages are still the lowest among foreign-owned factories in Vietnam. Many studies have confirmed that Nike do not pay its Asian workers enough to live on. Nike factories continue to abuse its workers and violate their labor rights.

Nike did made changes. Nike has staffed up its PR department to go on a charm-offensive to seduce the public, to create confusion among concerned people about the reality of Nike sweatshops and to sow doubts about anti-sweatshop activists. Nike public stance has become much more sophisticated than five years ago. It's no longer simply refusing to acknowledge the labor question. It now tries hard to look like a responsible citizen; it has put out more Nike-funded "studies" & propped up Nike-funded organizations to be apologists for the Nike globalization agenda.

 Nike funded the Global Alliance for $10 Million USD and got numerous feel-good articles from Global Alliance studies of Asian workers. Nike also continues to use the Fair Labor Association (FLA) as a quasi-stamp of approval for its labor policy even though in reality the FLA is still a non-functioning organization. The FLA has not even monitor a single factory yet, despite numerous press releases promising actions.

Behind closed-doors, however, Nike continues its goal to sabotage any labor organization that stands in its way. To derail cooperation between US labor groups & Vietnam labor organizations, Nike sent a "private" letter to a high-level Vietnam government official accusing US labor activists of harboring a secret agenda to change the government in Vietnam. To stop the momentum of the Workers Right Consortium (WRC), Phil Knight's retracted his donation to the University of Oregon because the school has joined the WRC, a labor group whose agenda competes with Nike-sponsored monitoring body, the FLA.

Nike also threatened to stop funding for universities that joined the WRC. The Nike protest has many organizations: Press for Change , the National Labor Committee , Global Exchange , Campaign for Labor Rights, National Organization of Women , Clean Clothes Campaign , Community Aid Abroad , The Living Wage Project, Justice Do It Nike and several other NGOs. These organizations work together to persuade Nike Corp. to treat their overseas workers fairly. (Not all members of the Working Group on Nike advocate a boycott of Nike products.