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NikeCaseStudentPresentation

NikeCaseStudentPresentation - HittingtheWall:Nike Presented...

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Hitting the Wall: Nike &  International Labor Practices Presented by: Arif Husain Jerry Croke Josh Quinton Ashley White Organizational Strategy: Business 7000 September 20, 2006
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What is Nike? Champion in the sport and apparel industry Well-recognized brand in every corner of the  globe Efficient manufacturing facilities  Able to outsource its products to be  manufactured overseas, and is thus able to  achieve: Economies of scale Economies of scope
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Outsourcing all  manufacturing No dedicated manufacturing  lines Low cost manufacturing Independent (arms length)  contracting factories One of the World’s first  “Virtual Corporations” Business Strategy – Two Pronged Approach Cost Control Marketing Pour all money saved into  marketing Celebrity endorsements  Brand Identity Differentiation strategy Fashion driven The swoosh
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Problem Statement Through  continuous  waves  of  protests  resulting in  negative  publicity  for  Nike  on  its  international labor  standards,  complimented  with  a  lack  of  responsiveness and action on Nike’s part, what is the  best  strategy  Nike  must  implement  to  reposition  itself  as  a  champion  in  the  global  sports and apparel industry 
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An example In 1997, a 23 year-old Vietnamese woman died  while  making  sneakers.  As  she  was  trimming  synthetic soles in a Nike contracting factory, a co-worker’s  machine  broke,  spraying  metal parts  across  the  factory  floor  and  into  her heart. She died instantly.
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Problems Three major problems: Labor Conditions Ages of Workers Wages Nike is criticized on all three issues, and their  response (if any) has been “We’re not responsible,  because we don’t manufacture the shoes”. They believe that since they outsource all of their  shoes, they are not responsible.
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Key issues International outsourcing operations Status Quo of outsourcing without external  pressures Difficulty controlling international suppliers Non Governmental Organizations Increased organization and respect Increased funding and power International presence Power of the Media: Film, Print and Television
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Key issues Powerful Image The strengths and power can also be source of  extreme pressures Image and support are everything for Nike Government Interaction Increasing Pressures from US Senate Increased pressures from Asian (Indonesian)  Governments
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Key issues Labor Unions Increasing influence in operations Increasing expenses Follow Up Continued mistakes and lack of perceived actions to  fix problems Poor Public Relations Research Results Flawed Poor Stakeholder Engagement
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