Managment Case Assignment
- 1. ATTN Boss: I have been summoned to by the Vice President of International operations to inquire about the future of Nike Inc. Since Fiscal Year 1998 (last year) Nike has been experiencing slight backlash, and public outcry as our stock continues to fall and from the customer’s point of view our public opinion is tumbling quite quickly. Major universities, human abuse, and various other labor right activist groups have cultivated a public outcry to Nike and are halting our earnings and destroying our public image as a whole. The international labor practices from manufacturing, shipping and importing finished goods for Nike Inc. is the main issue before us. As the executive who is apart and oversees much of these types of operations, and I being a management and public relations consultant for Nike Inc. These issues have urgently come to my attention for Nike Inc. Though endeavors were sought to enhance Nike’s public image, such as getting more involved with Washington-based reform efforts. Nike Inc. still has a plethora of adversaries such as Mr. Jeff Ballinger, university organizations, and various politicians in Washington. With I holding the position of public relations and management consultancy; I am going to propose various measures and protocol to - enhance Nike Inc. public image, - to reduce public outcry - Help Nike Inc. run on both feet again as a legendary sporting apparel corporation using my knowledge in management and public relations Nike Inc. operates under a “Matrix structure” form of corporate organization. Where both divisional and functional managers have apparent and equal authority within Nike Inc. This is the most complicated form of corporate organization. Organizational Design Solutions - Re-structure the manufacturing division globally with more emphasis on factory worker’s rights. - Move Indonesian factories to other Asian or South American nations, doing this will broaden public image and wont condemn Nike to be a company that abuses workers based on wage gaps. - Invest more in Research and Development to integrate product divisions more efficiently with manufacturing objectives in given regions of the world. Next I will be conduct a Strength, Weakness,Opportunity and Threats (SWOT) analysis to better relay future strategies yet acknowledging current strategies for Nike as-well. Nike has achieved price and cost leadership in the areas of sports apparel, and has also achieved Economies of scale where the price it takes to produce a product is low and the sheer volume created due to this causes a firm to reduce per unit costs, therefore reducing cost to the consumers. Below are a quick snapchat of a SWOT analysis for Nike Inc. Strengths:product differentiation, competitive advantage in sporting apparel, Cost and price leadership, celebrity endorsements, large cash reserves,gradually increasing stock prices (until 1998), and up until 1990’s Nike posed great public relations. Weaknesses: Corporate socialresponsibility in the eyes of the public, relatively low wages/education for contracted factory workers, after 1990’s disappointing public relations, Labor abuse allegations, Bad public opinion for university students, and consumers aged 18-35. Opportunities: Chance to improve public relations internationally (start somewhat fresh), Research/development can further associate with external manufacturing resources to create a better solution to overworked, abused workers in Indonesia. Threats: Labor unions, public image, stock prices, future earnings, brand image, brand name, brand awareness,customer regression, and public outcry.
- 2. A “fair wage” in Indonesia is much higher than what the current wage is for the factory workers. The typical market basket of basic food expenditures for an Indonesian worker is more than a “fair wage”, and that doesn’t even account rent and living, and health expenses incurred by individual workers. A couple of facts below: - In 1993 the minimum monthly wage was 196 rupiahs, maximum being 2,920 rupiahs. - In 1997 the minimum slightly rose to 438 rupiahs, with maximum still at a large gap of 6,050 rupiahs’. *This large cap is the main issue and as the Vice President for outsourcing and international affairs it falls upon your division to better allocate resources for current factory managers and workers while still upholding Nike’s brand name and public relations. As you may already be solidly familiar with the labor activist known as Jeff Ballinger he has aroused many corrosive issues in terms of public relations and the Nike brand outlook. Mr. Ballinger accused Nike Inc. of: - in-humane - corrosive policies - worker abuse - corruption - widespread dissatisfaction with labor conditions. *Jeff Ballinger has made Nike Inc. a key target in his reporting’s with the AAFLIA,he does bring upon clear argumentative points concerning labor abuse, corrupt Indonesian government policies, and low wages that coincides with Nike Inc. competitive strength, therefore turning it into a mass corporate strategic vulnerability. Nike’s response to Mr. Ballinger’s claims have not been as well engineered as should have been and has caused public dissatisfaction on a mass scale. In terms of Nike Inc. corporate governance, Nike is tended more towards the shareholder’s point of view, and the Corporate Social Responsibility (CSR) also relates to this shareholder’s type of view. For Nike globalization has proved for to be an extremely prevalent, and beneficial path. Resulting in a competitive advantage in manufacturing, finished goods, and overhead costs. Nikes holds its fiduciary responsibility to its shareholders at the utmost importance. This being held so high that the sociocultural and public relations clusters were not as keenly or heavily invested in, for the most part, resulting in the ethical responsibilities to overlap economic and financial responsibilities causing Nike to become a victim of its own corporate global endeavors. The corporate social responsiveness for Nike has also been at an all time low. I certainly hope that my ideas, analysis, and expertise in the topic of outsourcing solutions, management, and public relations has helped greatly. I would like to incorporate decisive solutions to Nike’s pubic relations and managerial dilemma: - Develop a Three Prong action plan to improve public opinion and relations. The three pillars consist of 1. Advertise Nike internationally on television and magazines in local Indonesian/Asian communities helping and donating material and funds for use 2. Open up a “complaint office” away from any Nike affiliated factory for workers to voice grievances and opinions, and 3. Organize a coalition of celebrity endorsers and key important personal to act on Nike advertisements and boost public opinion over the Nikes manufacturing woes. - Using an Internal Integration strategy to accomplish work abroad more efficiently by drastically improving wages and quality of life for our employees. This in turn will effect our External adaption strategy. Using External adaption to make new factories to other continents and regions, boosting public relations by making it seem like we aren’t abusing a single country to condemnation. Thank you very much for your time. I hope that this e-mail helps when you decide to make future decisions for Nike Inc.