Non-market issues which include governments and non-government organizations, play an important role in Canadian business.

Therefore, companies should develop strategies to deal with this group of socio-political stakeholders. This report will discuss how Nike deals with non-market issues in Canada. It concludes that lobbying and codes of conduct are the most common means of dealing with their non-market issues.. The inadequate consideration of governments and nongovernments role frequently results in financial loss of or even failure of businesses. As a consequence, public affair becomes a factor in the business. As Asian countries grow to become the largest potential market in the world, along with its cheap labor forces, more companies are attracted to these countries. However, many companies do not consider the impact of non-market issues. For example, Nike suffered frustration owing to its ignorance of the Asian culture.

The non-market environment for Nike

Non-Market Stakeholders
1. Labour Unions
Labour unions have a political stake in Nike Canada has a strict policy about not having their workers unionized. Nike Canada takes the position that they are better able to take care of their employees and provide them with the best benefits and compensation plans. Nike Canada does not want interference from unions.

2. International Factories
One of Nikes Canada key policy issues has been to move into the international retail market and open stores in other countries. Nike Canada has factories in China, Korea, Indonesia and Thailand. Nike Canada must work closely with firms in those countries in order to make sure there is no backlash against them moving into other countries. They must also be careful to follow the laws of each of those countries when they open new stores. Nike Canada has been careful in moving into the international markets. They have acquired companies already well established in those countries and have made sure that their products are locally sourced.

3. Politicians
Politicians have a non-market stake in Nike Canada for several reasons. First of all, politicians may or may not want Nike Canada opening in their district. On one hand, it may be good for the community. However, if it is a district with a large union presence, the politician may not want Nike in that area. Also, politicians may rely on Nike Canada for campaign funding.

Labor practices
Nikes annual report for 1996 showed record revenues of $6.5 billion. Nikes strategy of sourcing shows to third world countries in Asia is one of the companies strategies. Nike bought running shoes from a number of countries such as China, Vietnam, and Indonesia. The successful promotion of the Nikes Swoosh brand resulted in Nike dealing with allegations that subcontractors were running sweatshops associated with poor working conditions, worker abuse and low wages. Running shoes selling for $200 in retail stores were made by workers who earned only $2 a day in countries like Indonesia.

Production of running shoes

Nike looked to Asia to find the cheapest supplier for it line of running shoes. The steps to making running shoes meant that access to an unskilled workforce and low labor costs were necessary to remain competitive. Nike never owned the factory that made the running shoes instead found subcontractor with whom they contracted out the production. The running shoes were made in independently owned and operated factories. By 1980, Nike had contracts with sixty factories. Nike narrowed the production of its running shoes to factories in Korea, Taiwan, China, Indonesia and Thailand. Nike acknowledged that maintaining long term partnerships with suppliers was not a low cost strategy. The agreements between Nike and these suppliers were based mainly on trust. Supply did not guarantee volume purchases, but Nike tried to schedule production to use factories as efficiently as possible. Working Conditions In 1990, reports of poor working conditions in Indonesia factories started appearing in the media in the United States. Several sources reported about long hours in the factories. The media wrote standard shifts at the factory were 12 hours a day, six days a week. Compulsory overtime was illegal in Indonesia but enforcement was lax. Most workers had limited education and it took time for them to get to know their rights. In an audit of Nike, several problems with managers were reported. Some workers considered some managers too strict, some were abusive, shouting, striking out at workers or issuing punishments considered excessive for bad work or tardiness. Wages Low wages led to unrest at Nikes factories. In 1997 workers at the factory in Indonesia staged a strike. They demanded being paid the minimum monthly wage excluding allowances. After workers marched to parliament to demand a increase, the company agreed to pay the minimum wage, not including allowances for attendance, overtime, transport, holiday pay and meals. The

question was debated as whether or not minimum wage was enough to live on. According to one human rights organization, the minimum wage of $2.46 a day covered only ninety percent of basic subsistence needs for one person. However, Nike claimed that their factories paid more than what the laborers would earn in other jobs. Labor disputes between workers in Korea and Taiwanese factories were becoming more common. Workers protested against the treatment from foremen and demanded higher wages. Nike factories were believed to have paid the minimum wage but were accused of paying lower wages in the first three months which was illegal.