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Nike Case Study : Governance And Sustainability

Introduction and Background of the company

GOVERNANCE AND SUSTAINABILITY AT NIKE, Inc.  Nike was the world’s best footwear and the apparel company with its best-known brand and over $20 billion in revenue. A number f people had won the number of competitions by using Nike’s brands like shoes, uniform, etc. The company even offers the infant version of iconic shoes and much more. With the athlete footwear and the apparel products, Nike, had gotten the rank first or second, globally among its competitors and had the market shares 25% in Asia and 44% in the US. The Company has a number of competitors, among them the largest competitor; close to them are Adidas Groups.

Nike was started his business in 1964 with Oregon track Coach, Bill Bowerman, and the runner Phil Knight establish the company Blue Ribbon Shop for the export of the tiger running shoes manufactured at Japan, after some time, they started to make their own shoes and they used the name Nike in 1972, in the Olympic trials. Knight stepped down in 2004 but remained in the strong presence of the member of the board with a 15% share of the company.

In the early years of its business, Nike started from the low wages company by producing the innovative shoe design in the low cost, by the independent contractors. Nike made a lot of research on innovative designs of its product up to 1980, and then it’s other competitors. It does a lot of business in Japan, Korea, China, and many other countries with 500,000 products in 900 independent companies.

Nike adopted the strategy of work globally can get close to the customer, made them able to reach the revenue target of 28-30 billion till 2015 and they were very close to it at the start of 2012. However, their basic strategy was the innovation, as they introduce a lot of brands in China and the other countries and invested a lot in their market. They also built a link with the Apple so that the athletes used the iPad and iPhone to share their tracks and activities.

Parker has joined the company as the footwear designer and the product manager. He made some influential innovations in the company, so by watching his struggle, he became a co-president from 2001-2006.

Parker and all of his team were very concerned about the new innovations in the company. Parker introduced the new methods t make the shoes using the best yarns. Parker not only saw the incremental improvement but the game-changing strategies for sustainable growth. The journey of the company was gone to the sustainability growth when in 1990, the company has to face the issue of inhuman behavior with the employees and grossly underpaid.

In 1998, the company changes its culture by hiring Maria Eitel, from Microsoft as the president of corporate responsibility, who looked all the matter about employees and their wages and made the environment better.  She hired Jones, as her former colleague, and for the new Brussels-based role of director of community and the government affairs for Europe, Middle East, and Africa.

In the year 1990, the company, environmental concerned were moved to the mainstream. So the company thought to make programs for recycling waste products. For this reason, they made the broad level corporate committee. In this way, several issues were raised in the company to them they met well. The CEO of the company applied sustainable changes in the company and make its progress better by resolving all issues.

Main Challenges

The company had done an excellent work since is starting but they only focused on brand loyalty and try to give the best A-class products in many countries. The company main policy was innovation, globally and they achieved as much revenue as it became the rank first or the second company globally, among its compotators. But there occurred several issues after times which were needed to resolve the issues and challenges are:

The first challenge that the company has to face the bullish behavior of Parker and the executors’ team f the company toward the potential of innovation borne the environmental and the social concern to make the future growth but their attitude toward employees was not better. In 1990, the company was criticized for its labor practice and threatened for his brand product with its core consumer, from the college students.

The issue was created by the inhuman behavior of the company by his workers and sort gross incomes. They also found the issue of Europe Chemical factory employees, who burned the shoes in front of their houses due to the destroying workers’ jobs.

Another issue was the environmental concern that was rose up in late 1990; there were a lot of issues in the environmental concern like the issues of product recycling, water use in the supply chain, and the releasing of the toxic substances. These issues were necessary to deal well. Another issue that the company was facing is the fallen reputation of the company, for bring close the community, management, and the labor.

One issue was the water supply issue for the supply chain of the Nike because, with the world’s increasing population, the demand for water is also increasing but for the manufacturing and the supply chain, water was also needed to the company because in several years the demand for the company product was increased so the demand for the water was also increased.

Another issue was the code of conduct of violation, excessive labor issues with overtime and contract with the factories in the year 2008. These have become the major issues for the company that was needed to sort out immediately. In the same year, the world was facing the financial crises and the company as well.

Recommendations

From the issue analysis, several recommendations can be made to sort out these issues as the company done in the case of labor wages issue. They appointed Maria Eitel, as the vice president of the corporate responsibility, who set about the consolidation the community affair department and the labor practice team to create a more responsible corporate department. She started work strategically on the issues; the company was facing at that time. She thought the name of Company has become famous for the incorporate culture and the poor wages, irresponsible behavior so this culture is needed to be changed.

The second issue was the environmental concern and for this issue, the CEO of the company decided to make a commitment by the name of Board-level Corporate Responsible Committee to see the issues of product recycling, water use in the supply chain, and the releasing of the toxic substances. They decided to end these issues up to 2020 by making several strategies in water supply, emission of CO2 and wastage problem.

The company needs to make its operations sustainable in order to face the challenges for the company because the operations that are environmentally harmful are harmful to the company as well. The resources of the company are wasted as a result of the consumption of extra materials. The company needs to be socially responsible. Here arises the concept of corporate social responsibility. The practices of the employees should support the environmental initiative and they restrict the carbon footprint in order to make operations more sustainable.

To meet the water issue, the company was launched its water program in 2001, provided suppliers tools for water usage. The issue of the contract to the factories, they resolved by making long-time contracts. By giving the incentive and the extrinsic motivations, much of the employers and the supplier’s issues can be resolved.

By making the Global labor policies, the company tries to catch the root of the problem and make several strategies to resolve the issues. She focused on all the contract o 34 factories in Malaysia including her own internal business practice. They found that the root of the issue lies in the poor law enforcement and the low-quality education, so this department is needed to address well.

To meet the financial crises of 2008 and early 2009, the company decided to make the full review of the business. As a result of the review, they decided to spend $195 million, in restructuring the projects, get closer to customers and make new innovations. They knew that this restricting will bring the sustainability in the business.

One of their challenges was to bring the new emerging sustainability, beyond the issues of the environment or the labor issues. So the new targets were set by the company to make progress in those areas.

To address much of the issues, the company brings the sustainability plans in the company and made new innovations in order to rebuild the image and make innovation plans. They set the new round of targets and goals, in working in the environmental and the labor issues, in managing brand and the cost, particularly in the areas of innovation and related terms.

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Other recommendations

  • The Company should be having the meeting of all the executive with the head of Global Exchange to address the issue, the company was facing at that time.
  • The Company should be developed the feedback annual report by the employees to take responses and to work according to the expectations.
  • The Company should be made better policies to address the issues of the environment.
  • It was necessary for the company to bring the community, labor, and the management closes to meet the challenges facing the company.
  • To make the reputation better it was necessary for the company to concern about other departments, other than innovation.
  • It was needed for the company to seek the new resources for making the product.
  • Labor issues can be reduced by making pay plan compensation. And giving other motivations to the employees. One other thing that can be reduced the labor issues is that they could be involved in the decision making and this thing can be happened by changing the culture of the organization.
  • The company should focus on Byron’s ten principles as they are the basis of the fulfillment of the ethical responsibilities of the company. They include integrity, veracity, fairness, human dignity, participation, human commitment, social responsibility, the common good, subsidiarity, and love.

 

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