Nike Case Study free essay sample

Bowerman was knight’s track coach at the University of Oregon, while he was in college. The company first name was blue ribbon but was later renamed â€Å"Nike†. The idea of opening a company came from a paper written by Knight during his time when he was in his MBA program at Stanford. It was to import athletic shoes from Japan into the U. S. market, and at the time German competitors Puma and Adidas were dominating it. The initial operation for the company was to be a distributor for a Japanese athletic shoe company, Onitsuka Tiger. They also developed their own athletic footwear to promote in the American market. In 1971 Blue Ribbon ended their relationship with Onitsuka Tiger. The brand name Nike was born in 1972. The â€Å"Nike† came from the name of a Greek goddess of victory. The whole company was renamed Nike in 1978, and grow in to the largest worldwide seller of athletic goods. We will write a custom essay sample on Nike Case Study or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page They had in the region of 19,000 retail accounts in the U. S. and about 160 countries around the world. Nike became the most popular by indorsing celebrity athletes. They had to expand more because their product became so widely known and the demands for the product increased dramatically. They went public in the 1980s so they went on an unstoppable rise until the late 1990s. In this period of time, Nike was his with allegations about labor and human rights violations within third world countries in which manufacturing had been subcontracted. The demand for cheap labor in manufacturing plants can lead to the increased prevalence of child labor and abusive practices. For Nike to stay competitive in a world that has converted to globalization as a way to make business more profitable, They turned to third world countries that have low labor cost compared to the U. S. Assembly of shoes began shifting offshore like other consumer goods. Nike first started with Japan as one of the offshore factories as their main manufacturing and production. When Japan became too expansive they shifted to contracts with Indonesia, china and Vietnam. They are now around 700 independent contracts. In these factories the working conditions are unhealthy for workers and been a big contributor to the criticism of Nike. The allegations of poor conditions, child labor, wide spread harassment and abuse have been the issues that have Nike has been confronted with. The Asian factories have further subcontracted there companies so Nike did not have any idea of want was going on with in the factories that manufactured their products. When the media got hold of this information that Nike had these things going on inside of their organization it blow up. Their reputation was damaged by these accusations. Labor activists, the mainstream media barrage Nike with criticism. In 1996, there was an article published in â€Å"Life magazine† that exposed Nike, Adidas AG and other companies. The article had images of children that were stitching soccer balls together instead of being in school and getting an education. These photos had a destructive impact on Nike’s sales. Later that year in 1996 protest and demonstrations started popping up all over the U. S. at Nike mega retail stores â€Å"Nike Towns†. The American costumers that high regard to Nike as a people business now had a low opinion of them. Their problems didn’t stop at just human rights and labor violations. They came to find out that factory conditions in the Vietnam where causing health problems for workers. Nike had to take rapid measures not only to redeem their reputation, but also had to find a way to rectify the internationally oversight of its operations. Nike also got caught up with the environmental problems related to the textile industry. The reason why is because most of Nike’s materials come from these textiles that have a negative impact on the land, air and water where ever the manufacturing is located. With all of the boycotting and Universities cutting their contracts with Nike to produce branded athletic goods they started to lose massive amounts of revenues. Their stocks and revenues dipped so low in 1998 around 50 percent; they had to lay off 1,600 workers. Nike was now on damage control. They lunched a large public relations campaign involving consumer retailers and Universities to combat the damaging allegations. The company spent considerable resources focusing on improving the labor standards in each factory. They started to share their factory locations with independent third parties on a confidential basis enables them to keep a watchful eye on their supply chain. They used other tactics to repair their tainted image. Like other athletic brands, Nike used celebrity endorsement to support its products. Most famous Michael Jordan was Nike spokesperson for years with other famous basketball stars that followed after him. They went to many universities to clear their names with them to resign with Nike because they made a big segment of Nikes market. While Nike is try to clear their name. Mark Kasky, a California activist filed a lawsuit, claim that Nike’s action should be looked and classified as commercial speech that violates California’s unfair competition and advertising laws. After the ruling, Nike settled that lawsuit at 2 million. They continued to improve their reputation and working condition, wages for employees and other problems by increasing its efforts to be more ethical in its manufacturing practice. They used the quote â€Å"Nike’s goals is to encourage the use of sports as a means of empowering individuals and building skills† as a form of how they are doing everything to please the people and do what is right to help improve the way of life of people. 1. They failed to address the problems earlier because they where not focused on the issues off shore but more worries about how to get labor cost lobar. Their approach toward corporate social responsibility can be labeled as sluggish. Due to the fact they only started to become more active in trying to fix the problems when more problems were uncovered. I feel at first they really did not know what was going on but still you should have a handle on the organization no matter where it is. 2. In evaluating Nike’s response to societal and consumer concerns about its contract manufacturing at first was â€Å" its not our faults†. Then as time went on they started to open up their company to the public and asked them what needs to be done and did what needed to be done. Nike went to great extents to turn their company around to compile with the concerns of the people. They brought in students from universities to see the changes in the factories compared to what they were. . The challenges that are facing Nike in the future are problems in Malaysia and China. In Malaysia it’s be reported that workers were living in substandard housing conditions and their passports and some employee wages have be with held. In china one of the factories was found to have underage workers, unpaid wages for employees, and to falsified documents for workers permits. Nike has come a long way from 1990s but they still have a lot of room to improve more because they still have some ethical and corporate social responsibility they need to address. Nike Case Study free essay sample Having the agency in the building is having them at their disposal at anytime they need them and also the agency will have to consider them first incase of any new ad or good idea discovered by the agency or when Nike needs to salvage a problem with the help of the agency. Thus, the agency at their finger-tips serves great advantages for not only trouble shooting. 2. I believe the organic design of Nike helped in posing the sweatshop labor problem Nike faced. Using a flat structure helps get a lot of work in a short time but none-the-less can cause a lot of trouble as seen in Nike. With a more highly bureaucratic structure, also known as Mechanistic design, practices will be closely monitored to prevent such problems from arising. In a centralized design with many rules and procedures which have to be followed, a clear-cut division of labor and narrow spans of control and formal coordination, the higher management/ board of directors will be very well informed on what is happening in the organization at each and every level. We will write a custom essay sample on Nike Case Study or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Though organic design has more personal coordination a more strict coordination will help in preventing such issues. For example, if Nike had a tight structure, they would have a predictable goal, centralized authority on whom to report directly to, many rules and procedures they must abide by, a narrow span of control so as to control their workers/management’s practices, everyone has his/her specialized task, and formal and impersonal coordinator. Having this sort of clear division of labor and coordination helps keep the management well informed and they would have known and remedied the sweatshop labor before the allegations surfaced. Nike would have known the right factories to outsource to instead of using factories that fail to meet their standards. 3. Fig. 1 shows what Nike network structure looks like, Mark Parker (CEO) reports to the Board of Directors and in return almost every manager/worker reports directly to him when the need arises. Nike is a divisional company but retains some functional departments as well. The brands Nike sells comprise many of the divisions of the company. Apparel for Nike brand, Converse, and Jordan brands are examples of some divisions created around specific products. Functional departments such as Nike design and investor relations are also part of Nike’s organizational structure. Nike‘s vertical structure includes CEO Mark Parker and a board of directors chaired by co-founder Phil Knight. Although Nike has functional divisions and divisions based on specific products it is not a matrix organization. In a matrix organization, employees report to a functional and divisional manage. At Nike, employees report to the divisional manager and the president of each division reports directly to the CEO. Nike’s continued product innovation and successful marketing are due to the combination of functional and divisional organization using an operations department to insure communication between divisions. There is division of labor but it is not clearly identified. With a more pronounced division of labor and levels of direct supervision Nike can improve its business thereby staying ahead of competition like Adidas. The bulk of divisions reporting to Mark Parker can be cut down introducing more managers to report to in other to lessen the workload on him. Having more layers can help ease the workload and also the more levels reported to will enable more ideas to be shared. A lower manager can have important ideas that will be welcomed by Mark Parker and Board of Directors but cutting such a manager from the line of report will render him unaware of the situation and not able to share his ideas, which may potentially be just the perfect solution to the situation. No doubt he flat structure makes work faster and workers feel more involved in a project, but it’s not always the best because once a project goes wrong, salvaging it is not impossible but it is hard and more time consuming to investigate than in a mechanistic bureaucratic structure. REFERENCE Schermerhorn, John R.. Management. 11th ed. Hoboken, N. J. :Wiley; 2010