Describe about the Case study: Nike spending out to stay together?
Nike has facing several issues such as controversies based on advertising campaigns as well as outsourcing of their products. They have relied on outsourcing to reduce overhead. Nike has taken outsourcing to a new level; they decided to produce their products in their own factories (Arnold & Bishop, 2013). Subcontractors made their shoes that cannot hurt the quality of their shoes but challenged the reputation of Nike. Nike lost their trusted customers. Therefore, it has collapsed their reputation in the market as well as created a bad image of the company. After the primary accusation of the sweatshop labour in the factories, they tried to make out with reasonable critics. Nike should focus on the issue of sweatshops that challenged their success in the market.
Nike enjoys a market share of 46% with a sale of $3.77 billion. It utilizes a strategy of outsourcing using sub-contractors. These factories are 100% owned by the subcontractors, with the majority of their output consists of products of Nike (Brauner, Zwinzscher & Sterzing, 2012). Due to its manufacturing network, Nike faces violations involving the conditions of the factory as well issues of human rights. Nike is being shamed among the public for its problem of the sweatshop. The business world of Nike is based on outsourcing its manufacturing by using the money it saved for its marketing campaigns. Nike handles the working conditions of their employees (Casey & Byington, 2013). They not only take the aspects of cheap labour but also take some responsibilities of the employees working in the factories. Even Nike is away from their responsibilities; it takes control of its sub-contractors those exploits the workers. Nike is then concentrating on improving the shareholder’s value. The workers are eager to work as well as accept the conditions that are provided by the sub-contractors of Nike (Clair, 2012). The company is trying to manage their image in the market place. Nike is forced to follow those standards that prevail in The US; it is not benefited from the lower cost as well as advantages from the environment of manufacturing shoes. If Nike accepts to combine those standards, then it ensures that the employees get the minimum wages. . After the most important accusation of the sweatshop labour in the factories, they tried to make out with practical critics (Coleman, 2013).
After facing the challenges of the sweatshop, Nike has taken some steps to alter its image in the market (‘Ned’ Frederick, 2013). Many campaigns as well as protects are done against the problem of sweatshop, especially in the U.S. One of the steps that are taken by the company to change its business model starts from the speech by CEO, Phil Knight. Knight proclaimed that the products of Nike became identical with its slave wages, arbitrary abuse as well as forced overtime. It is also stated that the consumer of America is not interested to buy those products that are made under abusive conditions (Federolf & Nigg, 2012). Then, Nike has taken necessary steps such as the creation of Fair Labour Association to maintain a fair work place for the workers (Large, Fay, Friedland & Link, 2015). It increases the company’s monitoring as well weekly working hour as 60hour. The suppliers should get incentives in the form of higher price, bonuses as well as benefits to maintaining comfortable working conditions (Powell & Zwolinski, 2011). All these steps are achieved and allowed to integrate corporate social responsibility with the requirements of other businesses such as price, delivery, etc. To be accountable in the market, the company should communicate with the public. After come to the fact that, Nike cannot sustain their growth by only selling shoes. Nike learns more about the interest of the customers. Therefore, to become successful in their business Nike had an alliance with Apple. It helps to become a world’s largest running club. In the year 1992, Nike created a code of conduct that produces their product. They needed some hired employees to monitor the factories as well as ensure that the code of conduct is enforced.
The solution that is taken to alter the brand image of Nike works. In the year 2005, Nike became the most specific industry of sportswear for athletics (MPA, 2013). It solves the issues of sweatshop to maintain an assurance to corporate social responsibility that summarizes both the environmental as well as labour situations of its contracts factories. Nike started working on its culture to change their business model, but the damage was so severe that it needs to work on buying ideas of social responsibility practice using both internal as well as the external audit (Onwuegbuzie, Adomdza & Ogola, 2012). To be accountable in the market, the company should communicate with the public. After come to the fact that, Nike cannot sustain their growth by only selling shoes. Nike learns more about the interest of the customers (Nweze & Onyishi, 2011).
Over the course of the last century, manufacturing in the footwear industry grows. Due to increase in economy and skills, production of the footwear spread to less developed areas around the world. While Nike has its manufacturing factory, the reason behind their growth within the marketplace is their ability to focus on their skills. But outsourcing trend controls the industry to increase its future growth. After facing the challenges of the sweatshop, Nike has taken some steps to alter its image in the market. Nike has taken necessary steps such as the creation of Fair Labour Association to maintain a fair work place for the workers. The suppliers should get incentives in the form of higher price, bonuses as well as benefits to maintaining comfortable working conditions. All these steps are achieved and allowed to integrate corporate social responsibility with the requirements of other businesses such as price, delivery.
Nike, Inc. is a multinational American company engages in the development as well as marketing and selling of footwear, accessories as well as services. It is the top supplier of athletic shoes and a manufacturer of equipment of sports. In addition to manufacturing sportswear and equipment of sports, they also operate retail stores. The company give high-quality shoes to their customers with a trademark s “Just Do It”.
Discussion: Informal structures are the shadow of an organization that represents the required working as well as the relationship with the communication that cannot be similar to the formal structure of the organization (O’Toole & Prince, 2014). At the time, Nike CEO Phil Knight was on the board, the communications relationship is old to take his departure from the position of CEO and unkind to Perez from the required information. The accessing of Knight to the network of informal communication has worked to spread report to Knight and then back down the chain of communication. These reports contain improper information that distracts the members from their job. This used to reinforce the position of Perez as an outsider.
Discussion: Designs of mechanistic are highly bureaucratic with an importance on command as well as the control. It is suggested that mechanistic designing are most suitable for manufacturing in the foreign countries. While the organic designs are decentralized as well as change the environment faster than mechanistic design. It is suitable for those organizations that are operating in different countries with various cultures that try to change the technology rapidly. Not only technology, but they also try to respond to the demands of the customer as well as economic conditions. Nike is depended on the mechanistic design to prevent their reputation as well as their brand image. The design is unique and not be traditional. It is necessary that the products should be manufactured as per the original ideas of the maker. One of the examples of this idea is using differentiation strategy of a company to gain their competitive advantage (Lund-Thomsen & Coe, 2013).
Problem Solving: Network structure uses the information technology to connect their networks between the outside suppliers as well as service contractors. This helps to outline the efforts of Nike to outsource non-executive responsibilities to reduce the overhead. Both the business centres of the research as well as the marketing are the part of network structure. The other functions are designing, advertising, marketing on entertainment as well as compliance sports.
Further Research: Nike spends about 5-7% of its revenue in its advertising sectors. As Nike business is huge in size, therefore it is critical for their rivals to allocate a large amount for their marketing expenses. Nike also has a high-quality brand to compete in the marketplace. It has a variety of products from athletics to life style with different ranges of price. The advertising strategy and branding strategy of Nike are shown as compared to its rival:
Approving Athletes shoes
Sponsoring events of sports
Themes to bring inspiration among the people to every athlete in the world
Banners as well as billboards
Advertisement based on city
Athletic, outsourcing, hi tech, retro cool, way of living as American
Approving Athletes shoes
Sponsoring events of sports
Themes to bring inspiration among the people to every athlete in the world
Mixing the influences of sports with fashions as well as lifestyles
Based on European style of living, orderly, sophisticated
The shoes of Nike are of high quality as well as stylish, whereas the shoes of Reebok are comfortable as well as casual. The brand of Adidas gives superior performance and is considered as technically oriented brand.
Nike is using high quality technology to develop their new products. As for example, Nike has manufactured microprocessor shoes to give comfort to their customers. In the other hand, Adidas is using high tech innovations to provide high quality shoes. Nike had an alliance with Apple to sell their shoes while Adidas had an alliance with Microsoft to sell their goods. Therefore, Nike is following an outsourcing strategy of 100%. In general, Nike might be an industry leader if it focuses more on their innovation strategy as well as development, strategy of pricing and investing on research.
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Brauner, T., Zwinzscher, M., & Sterzing, T. (2012). Basketball footwear requirements are dependent on playing position. Footwear Science, 4(3), 191-198.
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Clair, R. (2012). Engaged Ethnography and the Story(ies) of the Anti-Sweatshop Movement. Cultural Studies <=> Critical Methodologies, 12(2), 132-145.
Coleman, C. (2013). Classic Campaigns – “It’s Gotta Be the Shoes”: Nike, Mike and Mars and the “Sneaker Killings”. Advertising & Society Review, 14(2).
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Large, S., Fay, G., Friedland, K., & Link, J. (2015). Quantifying Patterns of Change in Marine Ecosystem Response to Multiple Pressures. PLOS ONE, 10(3), e0119922.
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O’Toole, P., & Prince, N. (2014). The psychological contract of science students: social exchange with universities and university staff from the students’ perspective. Higher Education Research & Development, 34(1), 160-172.
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