International Business Chapter 6 Business Problem Learning From Nikes Failure Issues Involving Cultural Differences Need Resolved

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Chapter 6: TEACHER CASE NOTE

Nike, Inc.: Air Bakin’ Blunder and

The Council on American-Islamic Relations

TEACHING NOTE

Purpose of the Case Study

2. To educate students about the business implications of not taking immediate action

when a mistake is made.

3. To emphasize the importance of effective communication to combat issues, should they

occur.

Identifying the Business Problem—Abstract

In 1997, Nike designed a line of shoes titled Air Bakin’, Air BBQ, Air Grill, and Air Melt, which

had a logo on the back of the shoe that resembled the Arabic word for God, “Allah.” This

Forecasting the Most Desirable Outcome

Nike, Inc. takes immediate public responsibility for the offense, makes reparations to the

affected community, and ensures stakeholders that such a mistake will not be repeated in the

future.

Identifying the Critical Issues

The most important issues associated with this case are:

2. Protecting Nike’s image and its stakeholders.

Stakeholder opinions are as follows:

Nike, Inc. Nike produces athletic footwear, apparel, accessories, and equipment all over the

world, including professional and collegiate apparel. The company’s products fall into one of

the following eight key categories: running, basketball, football (soccer), men’s training,

Listing the Possible Solutions to the Business Problem

Learning from Nike’s failure, issues involving cultural differences need to be resolved on a

timely basis. This controversy lasted about two years and, at the time, gave Nike a reputation

for lacking intercultural knowledge.

As a response to CAIR’s complaints in 1997, Nike chose to implement a series of changes and

improvements, including a recall of 38,000 pairs of shoes. It was the first time the company had

1. High level management immediately apologized to Muslims. This demonstrated respect

2. Nike recalled as many pairs of shoes as possible in order to solve the issue quickly.

Assuming the average price was $100 a pair (usually $70–$130 a pair),3 Nike sold

3. To rebuild a good relationship with the Muslim community, Nike donated playgrounds

to Islamic schools, provided sports facilities to Islamic communities, and collaborated

with CAIR in future events.4

In addition to the items above, Nike could have also designed and implemented an internal

control in the R&D process for all new products, and they should have announced it to the

public as soon as possible. This improvement would have solved the Nike Air Bakin’ issue

successfully, avoided similar issues in the future, and restored the public’s trust in the Nike

brand.

Explaining How to Communicate the Solution

The Nike Air Bakin’, BBQ, Grill, etc. case fully demonstrated the need for Nike to have a

thorough quality assurance process that vets product quality and design implications. Nike’s

product lines appeal to both genders and all ages. Therefore, Nike products should be socially

Potential Difficulties for Students

There are a number of difficulties that may arise during class discussions about this case.

It is also important for the instructor to emphasize the cultural differences highlighted in the

case. These differences cause misunderstandings, sometimes on a broad corporate scale. Nike

was at the forefront of its industry in the late 1990s, and was a very profitable company. They

operated in highly competitive markets and mainly targeted people who participated in sports

and fitness activities.

References

1Business Insights: Essentials, Nike, Inc. (n.d.). Retrieved October 7, 2014.