Globalization in the Modern Society - Case Study Example

Introduction Globalization can be described as the spread and the connectedness of means of production, communication and technologies across the global market. This was spreading involved both the interlacing of economic and cultural activities (Scholte, 2000). With the fast growing technological know-how, the fast speed of communication and exchange together with the growing complexity of the networks involved, globalization has gained another momentum and the results are evident in the market share of various companies. Differently put as Veseth (2005) would have it, globalization involves the mass diffusion of various ideas, practices, and technologies in a universal manner. This paper aims at using Nike case analysis to explore the promises and perils of globalization in the modern society. The paper is responding to the questions related to the subject of discussion, and a conclusion is given as a summation of the promise and perils of globalization. Response to Question 1a: How globalization contributed to Nikes economy of scale together with product and geographical diversification Founded in 1964, Nike (initially Blue Ribbon Sports) has grown to be a global renowned manufacturer of sports’ gears and its vested interest in sports fashion has earned a global market as the world leader in design, distribution and marketing of athletic footwear (Frisch, 2009). Nike company outsourced its shoe production in lower- cost regions as a strategy of underselling its competitors and break into the competitive market. It developed strong working relationships with other shoe manufacturers in the region, and this made it have a competitive market share (Mahon, 2009; Kobayashi, 2012). For instance in Japan, it had a working relationship with Nippon Rubber and Nihon-Koyo but due to the tight labor market and a shift in the dollar/yen exchange rate, Nike broke off and outsourced other alternatives targeting lower-cost producers. This networking with other lead producers and suppliers enabled Nike to open up manufacturing plants in various parts of the world as well as have a market share of its products (Frisch, 2009). The production cost of a hosting country determined Nike’s future. When the cost of production increased, Nike Company moved into lower-cost countries where it will break into the footwear market with high tech models of athletic shoe. As such globalization has enabled Nike to expand the market for its products throughout the world (Frankiewicz & Churchill, 2011). Through linking with other lead suppliers, Nike broaden its market share by establishing manufacturing plants across the world and placing its employees in these newly established factories to check and monitor the product quality and production processes (Frisch, 2009). Globalization has resulted in an intensification of worldwide social relation that link distant geographical localities, and so the market outreach of Nike products has expanded considerably (Tulder & Zwart, 2006; Scholte, 2000). This, therefore, enhances a wide and deep participation in the global market by Nike’s footwear products. With increased technological innovation power, globalization have made easy the communication and general management of the company across the globe resulting into good sell globally. Response to Question 1 b. Factors that created the bad image of Nike in the marketplace. With its self-motivating global outreaching strategy, Nike was criticized for sourcing its sportswear products in factories and countries where problems of low wages, poor working conditions and violation of human rights were common phenomena (Frisch, 2009). Sullivan (2000) observed that intermingling its economic growth with underpaid laborers in Indonesia, child labor in Cambodia and poor working conditions in China and Vietnam did nothing but tarnished the public image that Nike had. In Indonesia, Nike factories had been reported to pay their workers low wages, not even enough to cater for an individual’s needs. Low wages coupled together with poor working condition for its workers contributed greatly to creating a bad image for Nike (Sullivan, 2000). In the Pakistan-the city of Sialkot- Nike brand products were also clouded with clouds of child labor that were depicted to participate in the stitching of the soccer balls. The involvement of children in its mainstream labor force also devastated Nike global brand image (Frisch, 2009). In addition, Nike manufacturing plants exposed its workers to poor working environments since it was reported that the plants produced chemicals that had numerous cases of skin and heart diseases, as well as respiratory diseases (Tulder & Zwart, 2006). In spite of the danger to which the plant’s workers were exposed to, Nike never provided personal protective equipment (Tulder & Zwart, 2006). These incidences created a devastating image for Nike as such putting its public relations in shambles. Needless to say, the labor and environmental factors at Nike manufacturing factories/plants also became major signs of weaknesses and major problems for Nike Company itself (Frisch, 2009). Nike’s human and environmental abuse resulted not only in the tarnishing its global image but also resulted in formation of anti-globalization and anti-sweatshop movements which mainly coordinated protests to embarrass the company as well as boycotts of Nike’s products (Sullivan, 2000). Response to Question 1 c. Policies that Nike adopted to counter their image problems and develop their brand values In response to the growing criticism, Nike developed a hands-off approach to counter its image problems. Nike managers disowned any responsibility for the alleged labor and environmental problems that were associated with their suppliers’ plants/factories (Frisch, 2009). They argued that workers in these factories were not Nike employees, under such Nike could not be held responsible for their working condition. Or simply put, the managers argued that Nike had no responsibility towards these workers given that they were not directly employed under Nike’s workforce umbrella. Further, to tone the image that is portrayed by these factories, Nike Company formulated a Code of Conduct that required all its suppliers to observe basic labor and environmental or health standards (Frisch, 2009). The Code of Conduct stipulated an end of child labor and improvement of the working conditions. If a contractor or suppliers were caught employing children they would face the penalty of paying for the child’ education together with his/her monthly wage until they reached a legal working age (Hutton & Giddens, 2001; Sullivan, 2000). In relation to this, the conduct increased the minimum employment age for footwear workers to 18 and for all other workers such as those in equipment and apparel to 16. Additionally, the Cond of Conduct also insisted that all the Nike suppliers adopted the US Occupational Safety and Health Administration (OSHA) standards for indoor air quality (Mahon, 2009). As a way of ensuring compliance from its suppliers, Nike production staffs conducted an inspection which acted as a preliminary, pre-production inspection of all the suppliers to ensure that they adhered to the set regulations (Sullivan, 2000). The inspection involved ensuring that the suppliers meet Nike’s set standards of clean and health working environment, good labor – management relations, fair (if not adequate) labor wages and the minimum working age. After the inspection, Nike Company also employed auditing into the company’s wages, age of its employees, overtime usage and the availability of benefits for its workers. These inspections and audits enabled the company to ensure that quality of products and the labor and environmental standards are met by all its suppliers across the globe (Tulder & Zwart, 2006). Through these Nike sorts to regain its public confidence and public image. Response to Question 1d. Other strategies that Nike could adopt to improve their brand image Since brand image devastation and distortion was predominant in Nike’s various supplier plants, improvement of the image once again would involve creating a more closely monitored and cordial relationship between Nike management and the suppliers’ managements (Tulder & Zwart, 2006). Creation of incentive schemes would help improve the relationship. Through these schemes, the Company could reward good corporate relationships among its suppliers and its managers. Apart from the involvement of expertise in the specific areas of labor and environmental standards, Nike Company would get more public accolades from its corporate and social responsibilities (Kobayashi, 2012). Nike should be actively involved in supporting other organization outside its structured operational standards to ensure that not only the workers’ workplace is improved, but the external environment at large is preserved. It should also through these organizations aim at improving the livelihood of the local people in the various countries where they have suppliers. In other words, it terms of its corporate citizenship, Nike should not only be driven by its economic gain and considerations alone, but it should also have social responsibilities within the areas of its locality (Tulder & Zwart, 2006). Conclusion Globalization has contributed majorly to Nikes global exposure into the competitive market. It has gained these extreme external exposures by diversifying its production and supplying joints across the world. Nike did establish good working relationships with other lead suppliers and so founded suppliers within these collaborative factories. Through this Nike has ensured global outreach for its low cost but high tech model footwear. Banking on the lower cost production ends, Nike established its suppliers and plants in lower cost regions as a way of establishing market share and breaking down a competition in these regions. Though this approach gained Nike a global economy of scale, it also acted as its image downfall. Since it established its greatest market share in regions that faced problems of low wages to workers, poor working condition, and child labor, consequently, Nike was criticized to have a hand on these social problems. It acted fast in response to this allegation by using hand-off approach, in which the Nike management denied any responsibility for the facts of accusations. Further, it developed Code of Conduct to govern the employment policies of the suppliers as well as see to it that the working and environmental standards are kept to the stipulated Nike’s targets. Clearly, using Nike case analysis, globalization has a major economic growth in manufacturing industries. These can be attributed to the fast innovation trend and communication networking that enhances companies to outreach and expand their market share on the global scale. However, globalization has also contributed almost an equal share of downfalls to particular company’s economic growth. References Frankiewicz, C., & Churchill, C. (2011). Making Microfinance Work Managing Product Diversification. Geneva: International Labor Office. Frisch, A. (2009). The story of Nike. Mankato, Minn: Creative Education. Hutton, W. & Giddens, A. (eds.) (2001) On the Edge. Living With Global Capitalism, London: Vintage. Kobayashi, K. (2012). “Globalization, Corporate Nationalism and Japanese Cultural Intermediaries: Representation of Bukatsu through Nike Advertising At the Global-Local Nexus.” International Review for the Sociology of Sport, 724-742. Mahon, R. (2009). Leviathan Undone? Towards A Political Economy of Scale. Vancouver: UBC Press. Malaspina, A. (2006). Critical Perspectives on Globalization. New York: Rosen Pub. Group. Scholte, J. A. (2000) Globalization. A Critical Introduction. London: Palgrave. Sullivan, T. (November 30, 2000). “Nike Learns The Flipside Of Associating With Success.” Marketing Week. Tulder, R., & Zwart, A. (2006). International Business-Society Management: Linking Corporate Responsibility and Globalization. London: Routledge. Veseth, M. (2005). Globaloney: Unraveling the myths of globalization. Lanham, MD: Rowman & Littlefield. Read More