Nike Sweatshop Practice Case

Problem Statement (1 point) Their subcontracted workers are working below U.S. working condition standards.

Nike SWOT Analysis (2 points) See Page C4 Strengths (Internal to the Firm) –Access to financial resources. –Market share –Market power and leader –Good ad agency –Brand loyalty –Community service in U.S. and abroad –Innovation –Strong bonds with athletic organizations –Good distribution channels. –Quality products

Weaknesses (Internal to the Firm) –Duck fans –Public relations –Subcontractor management (outsourcing) –Overcharging the product –Being number 1 –Lack of cultural understanding of other nations SWOT Analysis

Opportunities (External to the Firm) –Can improve their world public image with proper response. –Could move manufacturing plants –Help improve world standards for employees. –Make more money through greater innovation –Buy-out subcontractors –Get better endorsements from non-athletes SWOT Analysis

Threats (External to the Firm) –World public image –Impatient capital –Decreased market share –Increased competition –Lack of endorsements –Boycotts –Potential employee strike SWOT Analysis

Your Recommended Solution (2 points) Nike should buyout all subcontractors and create companywide standards for employee quality. (This is a bad solution to the problem which we used as an example in class).

Strategic Implementation (2 points) Possible Implementation to Solution #1 Should be in essay format Start negotiations to buyout subcontractors. Put together universal standards have both internal Nike HR and external NGO representatives. Actually buy the subcontractors. Nike ex-pats will manage our new mfg. plants. Build manufacturing infrastructure and create expertise in running plants, along with the logistics associated with shipping overseas. Increase shoe prices and lower endorsement offers.

Strategic Implications (3 points) Should be in essay format Increased costs No managerial experience so we need to hire new managers with expertise and know the Nike way. Potentially lose market share. Increased accountability for labor practices. Profit margins will shrink. Increase price $10 to $15 per shoe. Competitors eat our lunch through potentially lower prices and get better endorsees. Loss of shareholders due to impatient capital. Stock price will decline Will improve public image with consumer market concerned with human rights. Demographic market could change. Business model will be altered.