Hitting the Wall with Nike

PROBLEM STATEMENT

What should Nike do to counter the various advocacy groups protesting Nike and yet still be profitable?

SWOT ANALYSIS

Strengths

* Nike has strong brand name and its logo (“swoosh) is a distinctive and instantly recognizable logo.

Through the years, Nike was able to establish its brand which is often associated to products of superior quality and high standard. Likewise, its logo is easily identified by consumers of athletic and sportswear. Its logo is best known as a global symbol of athleticism and cool.

* Endorsers are well-known personalities and athletes.

Michael Jordan and Tiger Woods are among the known personalities and athletes that endorse Nike products. Nike rules because of all the good things people associate with the company endorsers and advertisements.

* Outsourcing all its manufacturing to low cost parts of the world.

Nike is characterized of making its equipment in countries which are in the developing phase, having very cheap labor. In doing this, it has made greater margins on the cost of mere cents to its workers.

Weaknesses

* Initially ignored the protests and criticisms by various groups regarding the unfair labor practices of its contractors until it has negatively affected the income of the company.

Although there have been reports of unfair labor practices conducted by their contractors, Nike didn’t admit these malpractices neither they enforced their contractors to improve the working conditions of their workers. Nike managers argued that the Indonesian factories were owned and operated by independent contractors, not by Nike and further claimed that Nike is just marketers and designers.

* Nike has not done an especially good job of scrutinizing the subcontractors with which it’s working.

Nike’s subcontractors are found to have been violating basic labor practices. If Nike cannot control its subcontracted plants, it means they have not implemented their rules and regulations effectively. Furthermore, it shows that it is not abiding by the international standards which they have set for themselves.

Opportunities

* May attract more workers and help employ people from less developed countries.

Nike has never made shoes in the United States. Its first factories were in Japan, when the country was still a part of the Third World. And since then, Nike have been migrating from nation to nation, arriving as countries install the necessary mechanisms for orderly business operations. With such mechanism, Nike helped in increasing the employment rate of a developing nation.

Threats

* Various groups are protesting and banning the use of all Nike products.

The anti-Nike headlines had flooded campuses, where group of activist movements consider Nike as a symbol of corporate greed and exploitation. This is now making a big threat to the image that Nike is projecting.

* Reebok, a chief competitor of Nike, had moved aggressively into the human rights arena.

When activist accused the company of violating workers’ rights in Indonesia, Reebok responded with a far-reaching set of guidelines, one that spoke the explicit language of human rights; set forth specific standards for the company’s contractors and promised to audit these contractors to ensure their compliance. By doing so, Reebok was able to convince the public that they are sincere in promoting a better standard of living for their workers and in promulgating human rights.

OPTIONS