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the rest of the market was dropping them. Their competitors were offering heavy promotional discounts to try to stay afloat and keep consumers buying. Nike has taken a new approach to their pricing model, using a consumer value model based on analysis of how much a consumer would be willing to pay for each product. “The strength of our brand and the innovation that’s in our products means that there is a great consumer valueproposition at higher price points.” (MacLeod, 2015)Global Operations & Supply Chain According to Nike’s website, they have a complex global supply that connects them to consumers, buyers, suppliers, workers and communities. Each of them is quite essential in Nike’s success. They have formed relationships with many different suppliers. They focus on backward integration, which involves the company to integrate more developments toward the original source of materials: component manufacturers. Nike’s global manufacturing is in 42 countries, which consists of 692 factories and over 1million workers. Like footwear, independent contract manufacturers manufacture all of Nike’s apparel outside the US. In fiscal year 2014, 430 apparel factories operating in 41 countries supplied Nike. The top five apparel contract manufacturers together accounted for ~34% of Nike’s apparel production. One apparel contract manufacturer accounted for over 10% of production. (Nike 10K, 2014)Compensation & Appraisal SystemThrough Nyjobsource, you can see Nike’s compensation programs. They have a performance-sharing plan. This means that Nike has an annual bonus plan that rewards the employees based on Nike’s performance, which rewards a team’s success, and also individual performance as well. Nike has an employee stock purchase plan. This 10
contributes to about 1%-10% of the employees pay through payroll deduction to buy Nike’s stock at 15% off of the FMV. Also according to their 10K, Nike allows certain highly compensated employees and nonemployee directors of the Company to defer compensation under a nonqualified deferred compensation plan. (NYJobSource, 2014)Employee Culture, Employee Relations, & PracticesAccording to Nike’s website, “Nike, Inc.'s culture is deeply rooted in innovation and we believe diversity and inclusion are key levers in continuing to drive creativity andinnovation. It takes every one of our more than 30,000 employees working at the top of their game for Nike, Inc. to reach its highest potential. And we know that outstanding teams are composed of people with diverse backgrounds, perspectives and skill sets.” (Nike, 2014)Nike, Inc. directly employs more than 30,000 people across the globe, from designers and marketers to compliance monitors and accountants, to retail employees. In addition, Nike contracts with manufacturers that employ more than 800,000 workers. Every two years they conduct an employee survey to measure what motivates and engages the employees. In 2013, 94% of Nike’s factories went through a full assessment of labor, health, safety and environmental compliance. They wanted to make sure that everything is up to par. They were able to drop to 16% violations from their previous 29% the year before. Nike’s practices tried to make sure that they were not violating any of the codes such as paperwork and documentation to overtime hours. The reports continued to improved from no incidents from 87% to 93%. (Nike, 2014)SECTION 4: Global FinancesExchange Rates11