The Bad Boys of Business: Nike

Steve Reiter  Sep 03, 2009 9:40 am

The Bad Boys of Business: Nike
 
A "just do it" approach on the field and in the boardroom.
 

Just do it.

With one of the most recognizable slogans in the history of retail, marketing, and, indeed, the world, Nike (NKE) is instantly familiar worldwide. Couple that with the sleek and simple "swoosh," and you have something very close to brand immortality.

Nike's footwear lines the racks of shoe stores, department stores, and even high-fashion retailers. Its headbands are worn by the greatest athletes in the world; its jerseys by professional and college sports teams alike.

But an empire isn’t built without a little bloodshed.

Along the way, Nike has found itself on the wrong side of a number of lawsuits, and has learned the hard way that a “just do it” attitude in business can land you in scalding hot water. Among its high-profile issues: extensive labor violations, copyright infringement, licensing violations, racial discrimination… The list goes on.

 
 
 
 
 
 
 
 
 
 
 
Nike didn't respond to requests for comment on the incidents.

In 1998, San Francisco activist Marc Kasky filed a complaint against Nike alleging that the company made false claims about the treatment of workers at some of its overseas factories (the company had stated in a public relations campaign that conditions were compliant with US working standards). Independent studies revealed major flaws in employee safety and health, along with violations of minimum wage and overtime compensation policies.

The case got the attention of the California Supreme Court, which decided the statements made by Nike were “commercial speech” and could fall into the category of false advertising. The suit became a First Amendment issue when Nike appealed to the US Supreme Court, saying its statements were protected under free speech. But when the high court dismissed the case, saying it should never have reached that level, the California ruling stood. In 2003, Nike settled for a paltry $1.5 million. Human rights activists are undoubtedly still reeling.

Just do it.

Nike
Back in 2003, the company's Niketown store in Chicago came under scrutiny of the law when African American workers filed complaints of racial slurs used by managers. The black workers claimed the managers would have security unfairly monitor people because they felt a person's race made them more likely candidates for theft. The workers had also been segregated into cashier and stockroom positions after being looked over for promotions. Shockingly enough, African American Nike customers in this location were also subject to intense scrutiny. In 2007, the two sides agreed to a $7.6 million settlement.

As Nike says “just do it” to unsavory and sometimes hostile working conditions, it seems to have the same philosophy regarding patents and copyrights.

Back in 2007, Nike collaborated with Apple (AAPL) to create the Nike+iPod Sports Kit, which synced sneakers to iPods and recorded user's speed and distance while running. Sounds good, except for the alleged violations of four US patents held by Utah-based Leaper Footwear. The company claimed Nike began working on this technology in 2006, disregarding the patent which was acquired in 1998.

Just do it.
56 of 74 (76%) found this helpful
Rate this article:  (74 Votes)
Comments (5) See All Comments »
09-04-2009, 12:13 pm
You know we could make the shoes here? But wait that mean paying an American good wages,Medical,Dental,401k,Vac and company car. Well the the Nike Air Force One would no longer cost $80 a pair. But now it will cost $280 a pair....no thanks stay mean
Read More
09-04-2009, 12:48 pm
There is a difference between outsourcing and injustice. They dont have to go hand in hand. Nike could very well continue to outsource without the extremely poor wages, long work hours and poor working conditions. Nike does not have to take advantage
Read More
09-04-2009, 2:08 pm
Jesse Miguel, why would you think that doing the work here would equate to having to pay good wages and benefits. Helloooooo, have you been living under a rock?? MOST americans work here in the good old USofA and don't get all the benefits tha
Read More
09-04-2009, 2:50 pm
You guys should be embarassed by the lack of thorough reporting you provided for this article. The reality is that all manufacturers deal with issues abroad because THEY DON'T OWN THE FACTORIES. Which means that consultative influence and coach
Read More
10-14-2009, 7:46 pm
totally agree ..nike lives by "there is no finishline" and some other brands out there cant compete...its always easier to point fingers and find bad things in a company instead of talkin about the good things nike does as of reuse a shoe
Read More
discuss this article and more on the mv exchange
No positions in stocks mentioned.

Get real-time options trading ideas from Steve Smith, veteran options trader and newsletter author, plus let him show you the way to cut risk and boost your returns through the strategic use of options.  Click here for a free 14 day trial to OptionSmith by Steve Smith.



The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Ticker Talk
Popular Tickers:
F »AMZN »HIG »
Select
  •  
Talk Now
Share this Talk on your site:
Send us your feedback

Our Professors

rss article alert