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Porter[1] - 1 Hitting the Wall: Nike and International...

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1 Hitting the Wall: Nike and International Labor Practices Hitting the Wall: Nike and International Labor Practices University of Nebraska at Kearney
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2 Hitting the Wall: Nike and International Labor Practices Hitting the Wall: Nike and International Labor Practices Labor Crisis of Nike In 1982, Nike has large base of sneakers manufacturing in South Korea and Taiwan where provide Nike quality and low cost products. 86% of Nike sneakers come from one of these two countries. By 1990, these two countries have been replaced by China and Indonesia because rapid growth in South Korea and Taiwan causes increasing in labor costs. In 1991 the Asian-American Free Labor Association (AAFLI) publishes a highly critical report on foreign companies in Indonesia including Nike factories. Later that year, a group of Indonesian labor economists at the Institut Teknology Bandung (ITB) issues a similar report with respect to abusive practices in Indonesian factories caused by foreign companies. In 1992, Indonesia raises the official minimum daily wage from 2100 rupiah to 2500 rupiah (US$1.24). Nike drafts a series of regulations for its contractors. These regulations are composed into a Code of Conduct and Memorandum of Understanding and attached to the new contracts sent to Nike contractors. The criticism of Nike’s labor practices begins to seep outside of Indonesia. Then the Portland Oregonian, Nike’s hometown newspaper, runs a series of critical articles during 1992 Barcelona Olympics. Also at the Olympics, some protestors hands out leaflets that charges Nike with exploitation of factory workers.
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3 Hitting the Wall: Nike and International Labor Practices In1993, CBS interviews Indonesian workers who reveal that they get paid just 19 cents an hour and other brutal situations such as the fact that women workers can only leave the company barracks on Sunday only if they have a special permission letter from management. Late 1996, Nike decides to hire outside sources, hiring Andrew Young, the respected civil rights leader and former mayor of Atlanta, to conduct an independent evaluation of its Code of Conduct. In 1997, Nguyen Thi Thu Phuong, a 23 year-old Vietnamese woman worker, dies while making sneakers. Her death agitates people to stand up for human rights. This definitely brings bad image to Nike. Nike is severely criticized by media including Doonesbury, the popular comic strip, who devotes an entire week to Nike’s labor issues; protest rally. In the spring of 1997, Nike arranges for students at Dartmouth’s Amos Tuck School of Business to conduct a detailed survey on the suitability of wages . It turns out that 91% of workers are able to support themselves individually; 49% are able to also support their dependents. Regardless of demographic status, 82% of workers surveyed in Indonesia either save wages or contribute each month to their families. In1998 Knight announces that Nike’s fiscal year 1998 produces considerable pain. In
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Porter[1] - 1 Hitting the Wall: Nike and International...

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