KDAN Consulting Group Nike Corporate Responsibility Presentation

1
KDAN Consulting Group Nike Corporate
Responsibility Presentation

• Presented by
• Neena Gandhi
• Adam Glovsky
• Karthik Palaniappan
• Darlene Woods

2
Goal of Presentation

• The goal of this presentation is to introduce a
  way in which Nike increase social responsibility
  in manufacturing processes without decreasing
  profitability.

3
Current Manufacturing Issues

• No corporate responsibility
• Child/Female Labor
• Wage structure
• Corporate pressure on contractors

4
Nike vs. Reebok

• NIKE
• Do not own responsibility
• Memorandum of Understanding
• Did not enforce human rights

• REEBOK
• Include human rights in corporate culture
• Human Rights Policy
• Enforced human rights standards
• Audited contractors

5
RECOMMENDATIONS

• Reduce raw material cost by (Nike) negotiating
  the cost for all the contracts volume discount
  advantage
• Enhance compliance with standards for human
  rights, regulations for worksite conditions,
  environmental regulations standards and safe
  working conditions

• incorporating these into the corporate credo
• (for both employees and business partners)
• training employees to inculcate new corporate
  values
• providing incentives/awards to on-site
  technicians
• providing incentives/awards to the dealers
• carrying out random inspections by Nike
• requiring routine compliance reports from the
  technicians
• rotating on-site technicians

6
Credo Revision

• Current Mission Statement
• To bring inspiration and innovation to every
  athlete in the world.
• New mission statement
• To bring inspiration and innovation to every
  athlete in the world while being socially
  responsible in our manufacturing processes.

• Why change the corporate mission statement
• Show our commitment to change
• Good corporate PR
• Employee awareness of corporate efforts to change
  existing processes

7
Strength/Weaknesses

• STRENGTHS
• Plantless
• No raw materials or WIP Inventory
• Technicians on-site
• Good relationships with contractors
• Lower effective costs due to competition among
  contractors

• WEAKNESSES
• Contractors pressured to meet targets
• Labor issues
• Environmental noncompliance
• Unsafe working conditions

8
Training employees

• Organize a location-wide meeting conducted by
  senior management
• Publicize the new corporate credo and distribute
  to all the employees
• Publish the new credo in the company newsletter

9
Technicians incentives

• Amend bonus program to reflect the degree of
  compliance with standards
• Incorporate standards as employee goals and
  assess these during performance evaluation
• Institute an annual Gold award of excellence
  for the technician who has demonstrated best
  compliance

10
Contractors incentives

• Incorporate compliance as a criterion for
  appraising bids for contracts
• Institute an annual Nike award of excellence
  for the factory (management) that has
  demonstrated highest compliance standards

11
Nikes Financial Estimate for 1993-1995

• Assumptions
• Expected Sales Growth 15
• Expected increase in Cost of Sales 15
• Expected SGA Cost for 1994 25 and 1995 20

12
Cost Breakdown Analysis
13
Recap

• Reduce raw material cost
• Enhance compliance with standards for human
  rights, regulations for worksite conditions,
  environmental regulations standards and safe
  working conditions

14
Conclusion

• Increase social responsibility throughout the
  company
• Upper management buy-in to enforce social
  responsibility initiatives
• Social responsibility strategy has minimal affect
  on bottom line financials