Nike - International Human Resource Management - Coursework Example

NIKE- HRM d Instrcutor’s NIKE- International HRM NIKE Nike is not a new in the world of brands.it originated from Oregon nearly half a century ago and initially, an American athletic footwear company, the company has come a long way in establishing a strong brand repute and gaining significant market share. From footwear it has evolved into other merchandise like sports gear, accessories and apparel. Now the major portion of its revenues comes from apparel and the brand has a significant global presence. Positioning itself as the leading innovator of athletic footwear, Nike aims at providing athletes the best footwear and equipment solution that compliments their abilities and talent to the maximum. From athletes, it has moved onto the general masses by redefining ‘athlete’. Nike declares that anyone who has a body is an athlete (Nikeinc.com, 2014). This statement has had a major impact on its sales and widened its market by including the general masses. From comfortable performance enhancing shoes for athletes it offers running shoes for all ages. This is a minute example of how the brand has expanded itself, moved towards a global presence and formulated and implemented effective strategies that have contributed towards its success. Needless to say, nearly every organization or brand comes under certain controversies at some point of its life. The strength remains in the firm’s ability to tackle these issues effectively and look towards strategies that can help in refraining such accuses in the future. Nike also has other subsidiaries like Cole Haan, Converse Inc. and Hurley international that specialize in the key product dynamics sales. For example Cole Haan is a luxury brand that offers coats, handbags scarfs etc., Hurley International offer products to attract the action sports players and the youth. Similarly, Converse Inc. designs markets and sells a specific line of sportswear and related accessories (NIKE, Inc., 2010). In this way, Nike has managed to separate the major contributors towards their revenues and implemented a strategy to cater to their market effectively by setting up a separate brand altogether. It has also managed to establish a UK based subsidiary called Umbro Inc. that specializes in soccer footwear and accessories. The Controversy Nike had the misfortune of being surrounded by severe controversy some years back. Since its establishment in US allowed the brand to penetrate that region the most effectively, Nike sought to spread out and look into other markets as well. Globalization has given birth to concept of global presence for sustained advantage. Any form or brand that wishes to keep afloat amidst the array of choices and emerging technologies has to strive to establish itself worldwide and maintain a strong presence in the markets through widespread coverage, global networking and communication, effectively supply chain methods and swift distribution. That being said, it also has to strive to keep its internal operations legal and regulated. When its competitors, adidas and reebok were focusing their efforts on the Europe region, Nike mad e a conscious effort to step into the Asian market and started off with establishing its factories in cheap unskilled labor countries like Indonesia, India and China. This served two purposes. Firstly they had a clear route to enter Asia over time since it had established a presence in China, which is the main business hub of Asia. Secondly, Nike could make use of the ample unskilled labor that was available at cheap rates to manufacture its products. Slowly all the major manufacturing shifted to these countries and Nike was able to pass the cost savings to the end consumers by offering them affordable prices. Apart from cheap labor, raw material like rubber and cotton are also grown in these regions thus the point of raw material is close to that of processing and manufacturing. Apart from that the governments of these countries also support the influx of foreign investment and manufacturing setup as it helps in boosting their economy by providing employment to the people (HubPages, 2013). The situation was smooth until human rights activists and other international labor organizations probed into the operations of Nike in these developing countries to uncover human rights violations in terms of low wages, over worked employees, child labor, inadequate protective measures for the workers etc. the impact of these revelations was huge and soon Nike came into the limelight for its seemingly unjust and inhumane conditions for operations in these countries. The sources of the products were looked into and criticism was directed towards poor working conditions in china and Vietnam, child labor practices in Pakistan and Cambodia and low wage payment to workers in Indonesia (Locke and Kochan et al., 2007, pp. 21--40). Media exposure was harsh and severe tongue lashing on the company’s operations in the third world countries threatened to tarnish the image it had built with such vigor and dedication for many years. Nike was also accused to putting thousands of people out of jobs due to the moving to its manufacturing outlets to other regions. Some even went to the extent of putting the blame of the joblessness trend in US solely on Nike. Under these circumstances, the company faces severe challenges and had to devise strategies that could effectively prevent the accusations of tarnishing its image worldwide. One mistake that Nike’s management made at the start of these controversies was to express its irrelevance to the whole situation. It claimed that the suppliers were the ones who formulated the workforce rules and regulations and Nike just procured the goods from them, making them an indirect party in the whole situation. This was a negative move since it multiplied the intensity at which the labor law advocates and human rights organizations were bad mouthing the company’s practices. The company thus soon realized that the situation cannot be dealt with in such a fashion. And so Nike applied efforts and resources to ensure that their operations all over the world followed standard labor procedures. Nike’s responsive actions Firstly, Nike communicated that the cost of operating in US was very high and stringent labor laws did not allow feasible conditions to the manufacturer, thus, it was imperative for Nike to shift its manufacturing abroad. Otherwise a pair of shoes that was sold at $70 would have to be sold for more than $120 dollars in order to account for the expenses incurred. This would take away the affordability factor that made the company a success. Thus, the focus was moved towards improving the working conditions in the manufacturing areas. Two significant measures from the Human resources perspective are as follows: Establishment of a Code of Conduct: Since labor laws in every country are different and Nike operated its manufacturing from many diverse countries, it formulated a standard code of conduct that outlines the basic guidelines to ensure that every manufacturing facility fulfilled the basic workers’ rights and offered them an optimal environment to perform in. implemented since 2008, this code of conduct takes into account several aspect of the manufacturing team. Firstly, the child labor issue has been dealt with through a minimum age requirement. For footwear setup the minimum age is 18 and for apparel it is 16. Nike has also introduced several departments like Nike environment and action team (NEAT) and labor practices etc. Suppliers are required to comply by these propositions as long as they are supplying to Nike. Apart from that Nike has also set up auditing and inspection teams that evaluate the application of these standards on a daily basis. A rating system has also been established that provides a checklist aimed at giving an in-depth picture of all the aspects of the work conditions. The managers are offered incentives to persuade and effectively ensure that the code of conduct is compiled by. In 2004, Nike also went one step ahead by having its code of conduct audited by the one of the largest accounts auditing firm in the world, Ernst and young. Human Resource Management program Nike formulated an HRM programs that was aimed at training, developing and empowering its 422,222 workers in manufacturing facilities in China Indonesia Sri Lanka, Vietnam, Thailand and India. The workers are trained at the factory level to apply technical skills that hone their workplace attitude and behavior. The managers who are the actual drivers of the success of these programs are facilitated through the provision of adequate resources and data to devise customized strategies (Nikeresponsibility.com, 2012). As an extension to this program, the workers are surveyed upon a standard 70 question survey that allows them to divulge their perception about pay and benefits, working conditions, management culture, hours worked and overall job satisfaction. The result of these surveys is discussed between the managers and the factory administrator to identify gaps and areas of potential improvement. In the wake of the several accusations that it has been guilty of, Nike has made it a strategic priority to address the working conditions and problems of their suppliers effectively. However, there have been several criticisms regarding the reliability of the measures that Nike claims to have implemented. For example, where the code of conduct defines the minimum age limit to be 16 and 18, it says nothing about the countries that have an official permissible age of 14 for work. The minimum wage clause, similarly, does not take into account the purchasing power of the people within that income and whether it is sufficient enough to get by. Thus, even though Nike took drastic steps to ensure that it is not the subject of such controversies in the future, there are several loopholes that can be identified in its current strategy in place. There is no denying the fact that Nike’s management takes conscious steps to ensure that communication channels are kept open in order to dissolve issues at the earliest. These channels could be within the factories or amongst the factories and Nike’s management. Apart from these, Nike took steps to correct its mistakes made in the past in the following manner: -Rehire workers who had been fired upon their protest against the working conditions -Eliminate the practice of mandatory overtime. - No barriers between the workers and factory management - Return of deposits that were collected at the start of the hiring. -Health and safety priority - Providing additional benefits like childcare, medical and security - Establishing a micro financing institution that could finance small scale household businesses of women, empowering them to contribute towards the household as well. - Support for workers in the form of instructions in local language. - Educating workers about their rights - Compensation funds set up for the victims of mishaps that could take place in the factory (Wilsey and Lichtig, 2014). Nike has been accused of leaving more than 400 people out of work in its home country. However, it has made its case by stating that the developed world should have skilled labor and the unskilled ones can be used form the developing world at cheaper rates. Nike deploys many thousands of people in the UD for its research and marketing activities. Procurement plans and manufacturing designs are also decided upon here. But the ideal situation does not exist and many Americans pursue unskilled labor professions due to the lack of their education. The people who lost their jobs were not compensated for leaving a slightly negative note in the minds of the locals regarding this ‘betrayal’. Many protests in Honduras and Oregon highlighted the pleas of the people who had lost their factory jobs due to Nike’s shift in manufacturing facilities. Conclusion Nike continues to be the leading manufacturer and supplier of athletic footwear in the world. Its manufacturing operations have been made to comply with a general code of conduct and continuous inspection ensures that the factories operate within the realms of the approved human rights measures. The Nike case proposes the following learning points: In testing times the focus should not be on doing away with the immediate problem but by devising strategies and programs that could contribute towards the greater change in environment, workplace and laws. Collaborating with governments, NGOs and competitors is the most effectively way of tackling the root cause of the situation. For instance, the child labor practices in several places were not solely due to Nike, however, they were singled out and their collaboration with the human rights activists and the government could have helped doing away with the practice altogether. For long term growth it is essential that the operations all over the world are transparent and in compliance with the basic human rights and workplace laws. Research and innovation are two important aspects that can help organizations deal with unfavorable situations effectively and avoid them altogether. Nike has dedicated departments to oversee its operations worldwide, supplier’s work environment and basic pay structure. These departments are also responsible for communicating the strategies to the media and public to associate itself with transparent sourcing and do away with any leftover negativity that may prevail in regard to the crisis it faced. References: Locke, R., Kochan, T., Romis, M. and Qin, F. 2007. Beyond corporate codes of conduct: Work organization and labour standards at Nikes suppliers. International Labour Review, 146 (1-2), pp. 21--40. NIKE, Inc. 2010. NIKE, Inc. Introduces 2015 Global Growth Strategy. [online] Available at: http://nikeinc.com/news/nike-inc-introduces-2015-global-growth-strategy [Accessed: 14 Mar 2014]. HubPages. 2013. Nike - A global presence. [online] Available at: http://positronwildhawk.hubpages.com/hub/The-Globalisation-of-Nike# [Accessed: 14 Mar 2014]. Nikeinc.com. 2014. NIKE, Inc. - About NIKE, Inc.. [online] Available at: http://nikeinc.com/pages/about-nike-inc# [Accessed: 14 Mar 2014]. Nikeresponsibility.com. 2012. NIKE, Inc. - Sustainable Business Report. [online] Available at: http://www.nikeresponsibility.com/report/content/chapter/labor [Accessed: 14 Mar 2014]. Read More