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Global strategy presentation: Nike

Case study for Global Strategy
by

Anni M

on 7 February 2013

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Transcript of Global strategy presentation: Nike

Case Summary History Handshake between
Bill Bowerman and Phil Knight Nike had regained its position as industry leader Nike became a publicly traded company 1964 Jeff Johnson
became the
first full-time
employee New name
and the
"swoosh" mark 1965 1970s 1980 Please describe how Nike changed from
a defensive to a more proactive strategy Discussion How much more would you be willing to pay for a pair of Nike shoes if the aditional charge will prove that the shoes are produced
in a fair trade company with
well paid workers? Lessons learned Case summary 1989 1988 "Just Do It"
Slogan To which extent can the clash between responsible
management and a cost leadership strategy be resolved? How did Nike's CSR issues affect
the company's economic bottom line? Denegation Discovery of: Code of conduct in 1992 Nike as the symbol for worker explotation Nike achieved the accomodative strategy Transparancy of bad conditions Criticism got U.S. Attention Nike denied to be responsible Campaigns were launched Even President Clinton urged to change circumstances Fight against bad reputation Labour Practices Departement in 1996 CSR Departement in 1998 UN ambassador reviews factories Internal report of Ernst & Young in 1997 Human right activists explore factories Change of business model Several new improvements concerning the regulations of the factories Reports about monitoring process Integrated supply chain Open doors for research teams Campaign of mandatory global standards Accession to mulitstakeholder organizations Reaction Sweatshops Outsourcing Business Model Proactive reaction 80's and 90´s Outsource all manufacturing to low-cost areas in the world Invest in research and development of innovative new products Marketing strategies beyond conventional Nike was the leading athletic shoe company in the US in the 80s In the 90s it was accused of operating sweatshops that involved labour exploitation and violation of human rights They started in Japan and then moved to: South Korea, Taiwan, Indonesia, Vietnam and China Nike's manufacturers were employing around 24.000 $ 1 a day Hiring children Producing 8% of Nike's global output These labour conditions were the contractor's responsibility Nike did not own any manufacturing facilities itself Nike's image became a symbol of worker exploitation, resulting in a significant fall of their sales and the stock prices As a result, Nike turned to be more proactive realizing a report of Corporate Responsibility and tried to adjust their business model Consumers expect more eco-friendly and socially responsible products, but very often, they are not willing to pay more for them Social Responsibility products Companies implement CSR measures while hoping to gain a better competitive position in return. It promises: CSR and Competitiveness High cost structure: Corporate social responsibility Greater economic performance is not driven by multinational enterprises alone. Economic performance Competitiveness: its ability to produce high quality goods and services in an efficient and innovative way and by that to outpace its competitors. Competitive advantage DEBATE:
Competitiveness vs. Responsible management NIKE manage corporate responsability as a core part of the business. NIKE Significant growth in the number of enterprises that have a policy on CSR. Corporate Social Responsability Company´s competitiveness CSR has envolved considerably CSR and Sustainability are deeply integrated within both: operations and strategies Every person working for the company is aware of the code of conduct. Their rights and performance standards. Cost Savings: center of debate on the business case for CSR. The encouragers argue that responsible business behaviour can lead to cost savings. Critics argue that CSR is expensive and the benefits are often seen in long terms, if they even occur at all. Competition: is defined in term of price and quality. Products and services at lower prices than competitors Offering products and services at comparable cost but in a unique quality giving a greater buyer value. Product innovation is a key source Competitiveness should be placed in the area of SOCIAL AND ENVIRONMENTAL aspects, so it can have a better impact Much depends on the nature of the - Nature of the CSR measure taken - The cost of investment - The considered time period Only some strategies of CSR might reduce the costs - Higher wages - Better legal standards in regard to: Health Safety and environment The higher costs, usually cannot be adequately rewarded by consumers.
CSR is more than a cost, it can also be a source of opportunity, innovation and competitive advantage - Coherent environmental, social and economic policies. Ex: eco-friendly products and labels (market strategies) Gain competitive advantage through offering: Nike had slipped from its position as the industry leader 1985 Major product and marketing campaign to regain the industry lead 1987 The triple bottom line Nike declared that its financial performance has deteriorated Main reason: resistance of consumers The economic bottom line gets negatively affected Nike had to change their business model Deliver new products and experiences in a more sustainable way How do we produce the best products under the best factory condititions and remaine profitable? How do we balance investments of time and money in corporate responsibility initiatives with bottom-line demands? CSR is the ultimate goal Branding is the Achilles heel Minimize costs by outsourcing, invest in research in development and marketing Nike is one of the leading corporations committing human right violations They are trying to follow the triple bottom line CSR is viewed as a necessary factor in the success of their organization Nike risks losing market share Nike is working hard to provide with equitable and empowering opportunities Sustainability is a route for future profitability Do you think Third World countries benefit from outsourcing of companies like Nike or would you say Nike should produce in the U.S. ?
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