Originally founded by Phil Knight and Bill Bowerman, Nike is now the market head in the making of sportswear and gear and enjoys having more than 47% of the market share across the globe. Nike's quest is to bring creativity and innovation to every athlete (Nike Inc. , 2012). Relating to them, you are an athlete if you have got a body.
The company has over 700 shops throughout the world and has offices located in 45 countries beyond your United States. Most of its factories are located in Southeast Asia including China, Indonesia, Taiwan, India, Vietnam, Thailand, Philippines, Pakistan, and Malaysia.
It enjoys possessing the strength of being the marketplace leader and access to cheap material and labor. In addition, it has to pay lower tariffs and tasks; and with its presence in various countries, its suppliers have lower bargaining electricity. However, it is continually under threat from the alternative goods which are swiftly gaining floor (Sookiew, 2012).
Introduction to the Case
This case targets the working conditions faced by the employees who work in the factories under contract with Nike. The situation shows that the subcontractors weren't paying wages to their workers according to international standards. All the factories and making units were split into four main divisions: chemical, production, stitching and assembly section. The production goals were so high that in order to meet the goals, the employees had to work as time passes, and that too without bonuses. The employees were habitually abused verbally and physically by their supervisors. Many people were susceptible to be the patients of kidney disease, liver cancer, heart problems, infertility and many skin area related diseases in future due to pitiable working environment.
The case looks at the measures carried out to resolve the issue. Few colleges and universities joined hands to establish Workers Protection under the law Consortium (WRC); targeted at examining the malpractices of companies with special relation to employee privileges. University or college of Oregon (UO) decided to become a part of the plan - a move which was not reinforced by Phil Knight. He decided to call off all the donations that he had promised UO and announced to depart all future donations too. He didn't consent to the terms and conditions that were organized by WRC and wanted to lessen their affect. This case looks at the influences, results and probable strategies to combat the situation.
Main Members and their Interests
There are numerous members and players in this case and all of these have their certain impact on the truth in different ways. The four main individuals are Nike, potential buyers, suppliers, substitutes and competitors on the market.
Nike:
Perhaps the most crucial player in the event is Nike itself. It is not only the market head, but leads the market with almost half of the market share and leaves the rest to be divided amidst the other rivals on the market.
In this specific case, Nike keeps the power to alter the situation by adopting an alternative solution strategy. Being the market leader, it might also influence others and change the perspective to the whole circumstance. Also, its main ability lies in its decision to whether or not to pay the employees well.
According to the Porter's Five Makes Model, Nike keeps the power to discount with the suppliers and also, enjoy customer devotion. However, credited to bad promotion, the risk of rivals has increased for Nike.
Nike is highly thinking about the financial implications of the circumstance. It would have an impact on the entire cost structure, supply chain break down and the best prices strategy of Nike. This could also have an impact on the online marketing strategy in future; if Nike makes a decision to address the issue through the marketing tools and get in touch with the public straight.
Buyers:
The most important role in any market is performed by the customers. They are the ultimate market and so anything that the manufacturers do, is aimed at convincing the clients to purchase their products. Especially in the present day era, ready and access immediately to information has empowered the buyer even more. The target market of Nike in general, and its purchasers in specific, are no exemption. Rather, they have many selections as there are close and quality rivals competing in the market.
The buying behaviour of consumers change continuously and they do not have a tendency to stay long with a business if they do not get any change or satisfaction. Though they look for invention, but generally purchasers want to buy products at lower costs. There are times and situations where customers do not feel the pressure of brand commitment; masses have a tendency to go for products which offer lower prices. In this particular case, the buyers hold principal importance because using one side they prefer low costs sportswear and items, while on the other in addition they concerned about the working conditions of the employees who manufacture the products they use. There exists a complex balance between your two dilemmas. However, as Nike focuses on the high income group, they are more concerned with the honest and interpersonal issues. However, in either case, the end result would be on the potential buyers if Nike makes a decision to alter its strategy.
This is why Nike has to keep all above issues at heart while framing the insurance policy; for a just a bit more weight era for any one concern could lead to a severe decrease in the demand for Nike's products.
Suppliers/ Companies:
Another major group of participants will be the contractors who supply the products to Nike. Nike has 565 contract factories plus they have a network covering about 45 countries in every continents of world. As the truth indicates, there is absolutely no factory or manufacturing unit that is directly controlled by Nike. Therefore, it is highly reliant on its contractors for the development.
The contractors have access to cheap and quick raw material; they can thus reserve the to exploit Nike at will. Furthermore, they are the basic cause of Nike's access to cheap labor. Therefore, they certainly hold a mainly strategic importance in the case.
Moreover, they have a solid financial desire for the company too. They can be indirectly afflicted by the demand levels, in regards to the production systems and the comparative prices of the models. Any downfall for Nike would mean a doom for the contractors too. Hence, they look for an improvement in Nike's market position to be able to get a chance to negotiate an increased price for every unit given by them.
University of Oregon
One of the major players of this circumstance is the School of Oregon. Though Nike was damaged by the progress of WRC, but it was the inclusion of UO into WRC that finally triggered the situation.
The University of Oregon was found in the centre between Philip H. Knight as the university's most important financial benefactor similarly and its activist scholar and personnel body on the other. Knight experienced previously contributed more than $50 million to the institution and was considering making his biggest donation yet to refurbish the soccer stadium.
It was the joining of UO to the WRC that finally helped bring Nike to the forefront and Knight was required to announce his position on the situation. Financially, the University was both reliant on its sponsors as well as its students; and it is not astounding because of this to see that it tried to arrive at a compromise: it would join WRC for just one calendar year, provisional on the consortium's conformity to give companies a voice in its businesses.
Process of Strategy Making
Henry Mintzberg's Universities of Thought
Henry Mintzberg sorted out strategy approaches into ten classes of thought; each got its own strategy attribute toward company. Two of the academic institutions, 'environmental' and 'cultural' schools, will be taken into consideration.
The Cultural approach proposed that the procedure is collective in nature and everything the employees have to check out it. It can be considered the organizational strategy as it is put in place collectively with various team levels, and it offers the major Head of Departments in decisions predicated on anthropology. The ethnical thoughts derive from norms, values, contribution of open public and society as a whole and they affect your choice making and change the behaviour of business. This university can be resistive in mother nature and can create hurdles in change and mergers or acquaintances for an organization's thinking about process change. This thought addresses the general public's perspective and they may also be the bottom of cultural measurements of individuals.
However, environmental approach it is more of the reactive approach as compared to other university of thoughts. They have effects of exterior factors outside from organization and strategy of open public, it is dependant on external factors plus they give more importance to external side and people have nothing much to do in this type of thought. Outer environment has more impact on strategy formulation and decision making related to policy making in company. Environmental dimensions are more playful and handy in framing policy as compared to ethnical thoughts. Leadership and organizational culture has a higher level of affect; in fact, the greater it is capable of influencing, the more would be the desired results.
In spite of diverse features, some correspondence between your two schools of thought could be considered. Both of the institutions are more concerned with definite features in the strategy management process. It helps bring about more development and experimentation within the business enterprise. In cultural college, business culture is put at the main to support key value, quality, service, or intellectual development. Furthermore, the environmental changes will guide to changes in business strategy and bring new perceptions and more experiment to the company. However, on the drawback, both the institutions have vague sizes and provide fewer realistic signs to how things should be done.
