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The Swoosh Goes Green

Nike, Inc.s Ethical Entrance Strategy to Indonesias Economy by Boston Global Group, Inc.
In a globalized economy it is imperative that companies stay in tune with shifting costs of production,
and resource acquisition to maximize profit margins. Indonesia is currently experiencing tidal shifts in its
economic landscape. The country, a recently established democratic republic, has struggled to find a stable
uplift in its GDP. As of late the country has begun to open its doors to foreign investors. Nike has recognized
these policy changes as an opportunity to expand its production in this fledgling economy, but is limited by its
historically poor practices in environmental impact, and unethical working conditions. For these reasons Nike
has hired, our firm, Boston Global Group, to conduct research on marketing strategies, labor and environmental
standards and new eco-friendly technology to secure a socially responsible entry strategy to move production
to Indonesia, and reposition its brand image. To do this we propose Nike integrates into the local educational
sector, invests in eco-friendly technology, and implements peripheral benefits for it workers.
Strategic integration solutions were built on the framework of research that we as a team conducted. We
began by understanding Nikes history of questionable ethical standards that has lead to its difficulty interfacing
with Indonesia's economy. Specific instances, such as its clash with labor forces for unjust labor conditions, and
chemical waste impact on the global environment in the 1990s (Hsieh 1). This has lead industry leaders to take
action. For example, the Freedom of Association Protocol (FOA) which was signed by Nike, has recently been
implemented in Indonesia which ensures that workers cannot be discriminated against (Gardener, 50-51). Over
the years, Nike has attempted to incorporate social responsibility as a core value in their practices, however they
still suffer major backlash against as their conditions have not improved. According to professor Hsieh from
Harvard Business School sustainability has a role to play in consumers purchasing decision (Hsieh 1) and
that Nike will need the help of others and need to innovate much more to succeed in the long term (Hsieh 1).
We also took to understanding the current economic landscape of Indonesia, and found that the economy
is in desperate need of capital inflow. Over the years Indonesias economy has had a volatile history of rapid
growth, over extension, and recession. This pattern began soon after the country became a democratic entity,
and continued to function in a cyclical manner (Negara 106). Research suggests that the oscillating nature of
Indonesias economy lies in the institutional infrastructure constructed from its democracy. Leaders in the field
suggest that economic policy is not optimized to allow interfacing with foreign investment (ABM 2398). Recent
changes in foreign economic policy made by the democratic leadership have allowed for an influx of foreign
capital (Negara 106). Additionally, experts urge for a change to broaden the bandwidth of the countrys
economy to accelerate growth at a sustainable rate (Negara 106). The countries leaders have done just that and
have opened economic ties with foreign investors, allowing the country to enter into the interdependency of a
globalized world economy (Otto 1). This leaves Nike at a strategically advantageous position to enter the
country, and aid in its rapid growth. Nike, being a multinational corporation that manufactures athletic attire
with annual revenues of +$20 billion and has +700 contract factories around Asia, recognizes the opportunity to
open another new factory in the country.
In order for Nike to open a new factory in Indonesia responsibly it is important they adopt an effective
strategy with a short term and long term solution. Looking at the situation from an ethical and marketing
standpoint, we advise that as an immediate solution, Nike should adopt an education sponsorship for their
workers and their families in the local region. Providing the workforce and their families with essential

foundations like education can immensely improve the quality of the labor in the country and also pose as a
great marketing tool to enhance their brand reputation. By providing the workforce and their families with an
education plan, Nike will be implementing Shared Values Corporate Social Responsibility. Shared Values CSR
makes use of company policies that enhance the company while also benefiting the countries in which it
operates socially and economically. With this type of policy in place, Nike will be sure to create a symbiotic
relationship with its communities in Indonesia in a way that will not be too harmful to the company financially
(Abdulrazak and Fauziah 215).
In the long term, we believe that Nike will not be able to tackle the sweatshop problems on their own;
they will need to partner and work with NGOs and government agencies (Hsieh 1) to improve the overall fair
employment practices and minimum wage policies within the country. Nike should also partner with research
labs to to reduce their dependence on scarce resources while continuing to grow as a business by using
sustainability as a source of innovation (Hsieh 1). Increasing innovation through modern technology and
possibly creating automated factories can eliminate the problem of running sweatshops and can improve their
reputation as a brand introducing technology in a lower economically developed country, making it a great
marketing strategy.
To further advance their efforts in rebuilding a sustainable brand, it is also essential that Nike reduces its
environmental footprint. According to activist Jim Keady who traveled to Indonesia, he discovered that shoe
rubber from their plants was being dumped and burned in villages around the factories (Keady) which, Nike
admitted to being valid (Keady) in 2009. To combat such issues, we believe that Nike should, in the short
term, implement their latest flyknit technology in their upcoming factory which reduces the wastage of apparel
production by 80% on average compared with traditional production methods (Nike Inc. 11). However in the
long term, we would strongly push the company to keep up with the green is mainstream (Henderson 2)
ideology that is essential to win in the future by accessing new sources of knowledge, creativity and capital to
accelerate sustainable innovation and bring it to scale (Nike Inc. 11). For example, we suggest that much like
their competitor, Under Armour, Nike too should look into the research of 3D printing to increase efficiency
while reducing wastage and eliminating sweatshop working conditions.
In conclusion, the iron is hot for Nike to strike Indonesias emerging market as a way to expand global
business, and reposition their brand. From a strategic point of view, shifting production to Indonesia will be an
effective way to wipe the slate clean of previous negative associations. We suggest that Nike create short term
and long term plans in order to move forward in Indonesia. In the short term, Nike should adopt a Shared Values
CSR policy and provide education sponsorships for their workforce and families, and improve technology to
mitigate waste. In the long run, they are going to have to work closely with NGOs to improve fair employment
policies for the country as a whole. It will also be important for Nike to continuously follow the laws for
minimum wage, overtime pay, and protocols like the FOA during this time so they do not come under fire for
treating their overseas workers unjustly. Moving forward, Nike will need to gain further insight into other
challenges they may need to overcome apart from social responsibilities such as possible financial,
infrastructure and economic challenges. As Nike decides to implement these CSR strategies, it would be
advisable for them to explore the extent to which these CSR strategies and long term solutions are going to
impact their financial performance.

Annotated Bibliography
1. Abdulrazak, S.R., and Fauziah Sh. Ahmad. The Basis for Corporate Social Responsibility in Malaysia.
Global Business and Management Research: An International Journal July 2014: 210-219. Academic OneFile.
Web 13 Feb 2016.
This article defines and critiques different theories of Corporate Social Responsibility (or CSR) using
the country of Malaysia as a backdrop. They discuss CSR through Ethical, Social, Economic, and Political
lenses. They also critique the different CSR theories independent of Malaysia. After going through all of the
definitions and critiques of CSR they argue that the Shared Value theory is the most beneficial CSR theory to
all possible parties involved. I believe that this article will be valuable in writing this project because even
though we are working with Indonesia and not Malaysia, the article still discusses companies like Nike and
obstacles theyve faced with CRS and how to make it better in the future.
2. Gardener, Daisy. Workers Rights and Corporate Accountability The Move towards Practical, WorkerDriven Change for Sportswear Workers in Indonesia. Gender and Development 20:1. 23 Mar 2012: 49-65.
Academic OneFile. Web 13 Feb 2016.
This article discusses the plight of workers, mainly of women, in Indonesia working for companies like
Nike and Adidas. It argues that conditions are still not ideal but the world trend is slowly working towards better
working conditions and better CSR policies. This article is very informative because it discusses all of the new
guidelines that have been put in place for sportswear brands by the FOA and the full history of the changes that
are being made in the international industry. Of course there are still a lot of issues detailed in the article, but it
will be good to know them when consulting Nike in this project.
3. Henderson, Rebecca. "Making the Business Case for Environmental Sustainability." An Organizational
Perspective Leading Sustainable Change (2015): Making Business Case for Environmental Sustainability.
Harvard Business School, 2015. Web. Feb. 2016.
This scholarly publication by Henderson is a persuasive paper making a case on the importance of
sustainability in todays date especially by businesses in different areas such as environment , workforce, human
rights, renewable power and technology (2). It explores the negative impact traditional methods and practices
around the world has on the global society and argues the benefit of using advancing innovation and technology
to negate these consequences. The paper significantly supports the possible solutions for the Nike scenario as it
discusses the case on why it is essential for firms and actually beneficial for firms to reduce their environmental
footprint in any way possible (2).

4. Kennedy, Elizabeth J and Giampetro-Meyer, Andrea . "Gearing Up for the Next Industrial Revolution: 3D
Printing, Home-Based Factories, and Modes of Social Control." Loyola University Maryland (2015): Print.
This thesis by Kennedy and Giampetro gets to the heart of the advancing new technology innovation in
the manufacturing and production business world proposing the use of 3D printing as way to utilize green
technology and reduce the negative impact of globalization in outsourcing factories. This scholarly paper by
Loyola University highlights the impact of green innovation on the global environment and also discusses the
possible elimination of sweatshop factories that large multinationals run due to outsourcing. This research is
worth noting as it makes the case that for long-term success businesses must invest in advancing eco friendly
technology to decrease cost and increase sustainability going into the future.
5. Negara, Siwage Dharma. "Reflections on the Dynamics of the Indonesian Economy." Journal of Southeast
Asian Economies (JSEAE). Vol. 30. N.p.: n.p., 2013. 106-12. Print.
Siwage Dharma Negara, a researcher at the Indonesian Institute of Science, has written "Reflections on
the Dynamics of the Indonesian Economy as a review piece of three very interesting books about the
Indonesian economy published last year, which provide important contributions to the growing literature on
the subject (106). Negaras review highlights similarities and differences between three pieces of literature.
The first, An economic history of Indonesia 1800-2012, by Jan Luiten van Zanden, and Daan Marks presents a
historical perspectives on the Indonesian economy since the nineteenth century (106). The second,
Macroeconomics and Monetary Policy Issues in Indonesia, by Akhand Aktar Hossain examines a relatively
newer period with a special emphasis on the design and conduct of monetary policy (106). The third,
Diagnosing the Indonesian Economy: Toward Inclusive and Green Growth, edited by Hal Hill, Muhammad
Ehsan Kahn, and Juzhong Zhuang discusses broad issues toward a more inclusive and green development
policy in Indonesia (106). Nayaras ability to triangulate similarities in both policy gaps, and solutions makes
this piece an incredibly valuable source of quantitative data to be used within this study. Our efforts to
contextualize Nike within the socioeconomic scaffolding of Indonesia will benefit from Negaras analysis of all
three sources by providing specific ways the company can interface with the local economy.
6. Nien-he Hsieh. "Sustainable Strides at NIKE, INC." Harvard Business School (2015): Web. Feb. 2016.
This journal article by Hsieh from Harvard business school specifically discusses the strides that Nike
has made in sustainability and the strategy that enables innovation in the areas of sustainable materials and
manufacturing methods (1). Furthermore, the authors also discuss the reason behind why sustainability of the
environment and workforce is the key driver of innovation and technology in todays date for long-term
business success in any business practices. The paper makes the case that for any business that exists in todays
globalized world has only two options: embrace sustainability as a core part of your growth strategy or
eventually stop growing (1) and argues the different forms of technology and innovation strategies the
company is implementing to rebuild its ethical brand reputation after its criticism crisis on the consequences of
their sweatshop and wasteful factory conditions.
Rationale: The value of this information is that it will essentially explores new solutions that can be
implemented in production factories to reduce environmental wastage and negate other consequences of
outsourcing to carry out a their proposed investment responsibly.

7. NIKE, Inc. "4.1 Overview - NIKE, Inc." 4.1 Overview - NIKE, Inc. NIKE, Inc., n.d. Web. 18 Feb. 2016.

NIKE, Inc.s site overview suggests a new redesigning approach of the worlds environmental issues and
the environmentally friendly implications on their products through a project they call North Star. NIKE, Inc.
states that North Star uses innovation as a driver to conserve, water, increase our energy efficiency, reuse and
recycle our products. They address sustainability through product design in multiple steps that NIKE, Inc.
categorizes such as healthy chemistry in which they will minimize the impact of product ingredients
throughout the life cycle. The genre and purpose of this is an overview summary of North Star in order to
promote sustainability in the environment. The summary is intended for the general audience and used as a
public forum. NIKE, Inc. is a high-profile credible multinational corporation that publishes official information
through their licensed sites. The site is very useful for gaining an understanding of NIKE, Inc.s vision for a
sustainable environment and the actions needed to achieve those goals.
8. NIKE, Inc. "Nike CR Report." Nike CR Report. NIKE, Inc., n.d. Web. 18 Feb. 2016.
NIKE, Inc. addresses the issue of waste reduction and states that their target builds have been reduced by
35% from FY01 to FY11. NIKE, Inc. has tackled waste reduction through innovatively redesigning their
products such as introducing NIKE Flyknit technology in 2012. This technology has allowed the company to
reduce footwear waste by up to 80%. The company also addresses other ways to reduce waste such as
packaging and shoeboxes by making them lightweight and waste-efficient, but must still retain their integrity
and structure from the factory to the consumer. Other ways NIKE, Inc. plans to reduce waste is by measuring
waste reductions through their NIKE Materials Sustainability Index and their footwear and apparel indices. The
genre is a review, editorial summary and a report of the current and proposed waste reduction for NIKE, Inc.
The report is intended as a publication outlet for environmental enthusiasts and research purposes. Information
is report on NIKE, Inc.s official page for their CR Report. The report is very useful as it displays valuable and
relevant information that correlates waste reduction and sustainability in recent and upcoming years.
9. NIKE, Inc. Sustainable Business Performance Summary. Rep. Oregon: Nike, 2013. FY12/13. Nike
Responsibility. Nike, INC., 2013. Web. Feb. 2016.
This is a corporate social responsibility report by the company to evaluate and share its performance and
future strategies on sustainability with its shareholders, its competitors, its consumers and potential
stakeholders. As sustainability has become one of the core values of any business activity today, this report
clearly analyzes the details of their upcoming green innovation and also the audit assessments of their factory
working conditions, labor force and the impact on environment. This information is essential to understand
Nikes current environmental and labor conditions in their existing factories to ensure they do not repeat any
mistakes and build on the innovation and technology to create a socially responsible factor.
Although this corporate report and not a scholarly peer reviewed paper, it provides us with a foundation
and guidelines on how to tackle our scenario. It gives essential insight into the brand marketing, environment
and labor conditions and the technology innovation strategies the company has tried in the past and is currently
working on which will allow us to create an effective, realistic and integrated solution.
10. Otto, Ben. "Indonesia Opens More Big Businesses to Foreign Investment." Wall Street Journal, 11 Feb.
2016. Web. 17 Feb. 2016.
Ben Otto, a writer for the Wall Street Journal, maps out the changing topography of the Indonesian
Economy and the dramatic policy changes its leaders are pushing through to stimulate a new surge the next
wave of domestic growth. Otto opens the piece by summarizing the actions of Joko Widodo, current president
of Democratic Indonesia, and explaining the Presidents intentions to liberalize and draw more investment to
Southeast Asias largest market (1). As such, Otto builds upon Widows central intention by commentating on

the push and pull of power by foreign investors, and the Indonesian Government, who wish to hold both power,
and economic prosperity. To capture this Otto looks to Parulian Simanjuntek, executive director of International
Pharmaceutical Manufacturers Group, who finds the new Indonesian economic reform [is] not up to
expectation (3). This negative reaction is balanced by film industry leader, and president of the Association of
Indonesian Film Producers, Sheila Timothy, who finds the new reforms as a milestone for the Indonesian film
industry (3). Ottos piece is exceptionally insightful in understanding the current, and rapidly changing affairs
of economic policy in Indonesia. Furthermore, it is a valuable resource to contrast previous attempts by
Indonesian leadership to stimulate economic growth, which will be a valuable asset to find ways Nike can
position themselves to aid the community while maintaining internal growth.

11. Parjiono, A.B.M. Rabiul Alam Beg, and Richard Monypenny. "The Driving Forces Of The Level And The
Growth Rate Of Real Per Capita Income In Indonesia." Applied Economics 45.17 (2013): 2389-2400. Business
Source Complete. Web. 17 Feb. 2016.
A.B.M Parjiono, Rabiul Alam Beg, and Richard Monypenny are Economics researchers at the School of
Business within James Cook University, Australia. Parjiono, Beg, and Monypenny, in association with the
Center for Regional and Bilateral Cooperation Policy, Fiscal Policy Office Ministry of Finance in Indonesia,
seek to understand the driving forces behind the level and the growth rate in real per capita Gross Domestic
Product (GDP) in Indonesia (2389). The researchers, using statistical inference coded for policy variables that
are assumed to be linked to economic growth (2390). Parjiono, Beg, and Monypenny are able to pull out 14
variables that can then be identified as positive, and negative influences to per capita income. The researchers
then compared these specific variables to historical trends of GDP growth in Indonesia. doing so Parjiono, Beg,
and Monypenny found that Economic growth in Indonesia is largely driven by government policy (2398).
This finding is then broken down into subsections of findings that offers nuances to this claim. The piece itself
is highly research driven, and applies statistics to a sociopolitical phenomena, which offers great insight into
potential solutions, but could overlook qualitative data. The numerical data of this piece leads to strong research
driven solutions, which overlap the current economic policy shifts covered in the Ben Ottos piece in the Wall
Street Journal. The specific solutions offered in this piece, paired with current economic topography lends great
insight into the specific ways Nike can integrate into the Indonesian community, while maintaining profit and
positive brand equity.
12. Vestel, Leora Broydo. "Nike Makes Environmental Strides and Abandons Carbon Offsets." Green Blog.
New York Times, 02 Feb. 2010. Web. 18 Feb. 2016.
Leoro Broydo Vestel is a writer for the New York Times. Leoras article reviews and voices NIKE, Inc.s
environmental strides in the companys corporate responsibility report. She explains that through NIKE, Inc.s
responsibility report the company is actively trying to reduce and abandon its carbon footprints produced in the
environment by their products. The article explains the companys plan to use their design and innovation to
bring about environmental, labor and social changes by abandoning carbon offsets and renewable energy
certificates. The genre is a review meant to exemplify the proposed actions NIKE, Inc. plan to take in order to
reduce environmental effects. The general public is the intended audience so that they may be informed by the
companys progress. Leora Broydo Vestel uses multiple quotes from the official report to back up her statements
and claims about NIKE, Inc. The article is useful in understanding the significant steps and progress NIKE, Inc.
has taken to reduce carbon offsets.
13. Vial, Virginie, and Julien Hanoteau. "Returns to Micro-Entrepreneurship in an Emerging

Economy: A Quantile Study of Entrepreneurial Indonesian Households Welfare." World Development 74


(2015): 142-57. Web. 16 Feb. 2016.
Virginia Vial and Juien Hanoteau, researchers at Frances Institut dAsie Orientale, seek to uncover the
impact of micro-entrepreneurship on the Indonesian economy using quantitative research. The two researchers
take an oppositional stance on previous research of this nature because most studies fail to account for both
micro-entrepreneurs context and heterogeneity (142). The piece continues by defining microentrepreneurship as firms with fewer than five employees and self-employed individuals, and contextualizes
the market-based environments self-employed individuals are positioned in. The piece concludes with very few
substantive findings on the direct linkage between entrepreneurship, and GDP growth. Vial and Hanoteau
loosely claim that participation in micro-entrepreneurship is rewarding on average (153). Other than this
finding the researchers were able to provide very little cause-and-effect relationships. Ultimately the researchers
claim that so few results are able to be found due to underrepresentation of financials, which points back to
institutional weakness in broad Indonesian economic policy. In the broad context of research for Nike this piece
fits well to support previous findings that institutional weakness plays a large role in slow GDP development.
Vial and Hanoteau offer a distinct lens to view socio-economic enmeshment, but fail to deliver substantive
claims to point Nike in the direction of fostering local entrepreneurship

14. Wilsey, Matt, and Scott Lichtig. The Nike Controversy Stanford University n.d. Web
13 Feb 2016.
This article will be very important in the writing of Project 2 because it details Nikes entire human rights
crisis in third world countries from beginning to end. It goes into great detail on some of the motives Nike had
for treating their workers so badly, to the backlash they received, to the suggestions for better CSR policies they
were advised on, to the final outcome. In order to attempt to consult Nike in this project it is important to
understand the full history of the crisis so mistakes that were made in the past will not be repeated again.