Nike Case Study: J453. Nike, a US-based international business powerhouse, has successfully lead the

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1 Kayla Glanville Alexis Hosfield Katie Bartholomew Overview: Nike Case Study: J453 Nike, a US-based international business powerhouse, has successfully lead the sportswear industry in innovation and performance for decades. Since its inception at the University of Oregon in 1964 by Phil Knight and Bill Bowerman, Nike has sought to be a precedent-setting company in all aspects of business (Nike CRR, 2009). The company designs, creates and markets high-quality footwear, apparel, equipment and accessory products for distribution all over the globe (Nike Inc., 2013). As such, Nike has grown from a grassroots track shoe maker in Eugene, Oregon to a dominant $16 billion dollar global corporation with especially deep roots in Asian markets (CNBC). In the late 1980s and early 1990s Nike was enjoying stellar success. With high revenue, innovative products and successful marketing, Nike was well positioned to remain among the global sportswear industry s elite (Clancy). However, things began to change in the mid- to late 1990s. With rumors of Nike-tied Asian sweatshops and harsh international labor practices, activist groups began taking to the media, and that decade s newest technology: the Internet (Nike CRR, 2009). Although Nike claimed to be an innovator of business, with industry-standard labor practices and sustainable wages, their good reputation was quickly called into question. Problem: Nike s key problem when it came to reacting to the sweatshop accusations and communicating with the people making said accusations was that Nike, in fact, did not react or communicate at all for the first three years that the accusations spread. The 1

2 company deflected all accusations by claiming that ensuring fair labor was the responsibility of the Asian factories themselves, and that Nike was merely a factory customer. By not immediately addressing the accusations, Nike left plenty of room for Internet users, media outlets and activist groups to spread uncontested and detrimental information (true or untrue) across multiple platforms. Alternative Solutions: To address this problem, we suggest these potential solutions: (1) Create a communication initiative that includes multiple stakeholders, such as, but not limited to, the supply industry, civil society, and government organizations. (2) Utilize the Corporate Responsibility Division to create an annual Sustainable Products and Business report (Nike s version of a CSR plan). Implementing one, or both of these suggestions could help Nike continue to set standards in the shoe and apparel industry. Establishing communication lines between multiple stakeholders will help resolve the issue of not taking responsibility of the incident. Also, with open lines of communication employees are encouraged to voice questions and/or concerns. When it comes to the implementation of the annual Sustainable Products and Business Report, Nike will have to keep track of decisions made, and opportunities taken. In addition, Nike will have to make this report open to the public, ensuring nothing is being hidden or skewed. However, each potential solution has its own pros and cons, making them difficult to execute. Evaluation of Alternatives: By generating a communication initiative it will help create a unified implementation and adoption of the Nike-made international labor Code of Conduct. This 2

3 will be executed through monthly meetings and online at Nike.com. Allowing all stakeholders to voice their concerns will give Nike an outside perspective allowing them to develop as a company. Also, a communication initiative will push Nike to pay attention to pressing matters and take responsibility when fault is at hand. However, by creating a communication initiative Nike now has to monitor all traffic, and respond accordingly to each complaint or suggestion. The amount of time and manpower needed to execute such an operation could be expensive. As for the annual Sustainable Products and Business report Nike would be allowing stakeholders and employees to see first hand, everything that is occurring. By utilizing the Corporate Responsibility Division, Nike will show the public there is nothing to hide. However, on the off case something went wrong, Nike will be unable to hide it. Also, by creating an annual Sustainable Products and Business report it will give Nike the chance to take responsibility in departments where it is needed. Recommendations: We recommend that Nike implement our first suggestion and work to improve communication lines between their multiple stakeholders and make these implementations visible to the public. Improving communication and establishing partnerships with stakeholders is always valuable for an organization. It is one of the most effective ways Nike can create an atmosphere of trust and build positive relationships with all types of groups, including those who might initially be opposed to Nike. Implementing these communication efforts between stakeholders is also a new and more creative perspective on solving the issue. Revising and improving the 3

4 Corporate Social Responsibility Report might be valuable, but it has already been a source of negative press for Nike, unlike the suggested resolution where we will establish new methods of communication and improvement for multiple parties involved. Additionally, making all of the communication efforts visible to the public will allow for a transparency that will appease critics. Possible Results & Obstacles to Implementation: Although we recommend improving the communication between multiple stakeholders as an effective solution, we recognize that there may be some challenges in implementation. First, there is the potential for stakeholders to resist partnering with Nike. Second, the solution may be logistically difficult to implement. There are many cultural factors to take into account and can be sensitive issues. In addition, the different economic, political, and legal environments could prove to be an obstacle. Nike must consider the socio-economic balance of the countries they are working in and will also need to make a conscience effort to understand how the changes they are looking to implement will be perceived internationally. Transparency is the final obstacle we foresee as it can create opportunities for lawsuits. However, considering the challenges the solution may face, ultimately the advantages of establishing the new and transparent communication plan greatly outweigh the cons. 4

5 References Clancy, M. Sweating The Swoosh: Nike, The Globalization of Sneakers and The Question of Sweatshop Labor. InUniversity of Hartford. Retrieved February 9, 2013, from NIKE, Inc. (2009). Corporate Responsibility Report. Beaverton, OR. Retrieved February 9, 2013, from Nike Inc. (NKE). (2013). In CNN Money. Retrieved February 9, 2013, from NIKE, Inc.- Workers and Factories. Retrieved February 9, 2013, from overview.php?cat=overview (2010). Swoosh: Inside Nike [Online video]. United States of America: CNBC. Retrieved February 9, 2013, from 5