NIKE: SUSTAINABILITY – PAST, PRESENT AND FUTURE
NIKE: SUSTAINABILITY – PAST, PRESENT AND FUTURE12 April 2014James LamNick SchulerJarred AdamsMathea Hubert1
AGENDA01Introduction02Country Analysis03NIKE.U04Marketing Strategy05Financials06Action Plan07ConclusionISSUE 1ISSUE 2 ISSUE 3IMPLEMENTATIONBeyond Ability 2
AGENDA01Introduction02Country Analysis03NIKE.U04Marketing Strategy05Financials06Action Plan07ConclusionISSUE 1ISSUE 2 ISSUE 3IMPLEMENTATIONBeyond Ability 3
COUNTRYANALYSISEastern EuropeCollegiate factories: 0South-East AsiaCollegiate factories: 75Total collegiate factories: 89INFRASTRUCTURECentral-South AmericaCollegiate factories: 11POLITICALCLIMATEECONOMICSOCIAL/COMPLIANCEISSUE 1 ISSUE 2 Issue 3 IMPLEMENTATIONBeyond Ability 4
COUNTRYANALYSISPoverty Level(Average GNI per capita)11.3%( 1,550/capita)31.5%( 840/capita)0% tariff on US exports (2015)Regular tariffs apply116/177 (high)156/177 (high)HighHigh8th largest garment exporter4th largest exporter 610/container, 21 days 1,075/container, 27 days 268/month 170/monthWorking Limits48 hours/week60 hours/weekLabor Statistics49.18m, 21% industrial77m, 32% industrialExport LawsCorruption RankingAvailability of ResourcesInfrastructureCost and Time to ExportLiving WageISSUE 1 ISSUE 2 Issue 3 IMPLEMENTATIONBeyond Ability 5
COUNTRYANALYSISVIETNAMConsProsLow wages(Minimum wage 0.5/hour,living wages 268/month) High corruption(116/177)No import tariff to US from2015 Poor export infrastructure( 20 ports) 8th largest exporter ofclothing Unskilled labor with qualityissues Good supply of labor(49.18m labor force) Good labor law Economic uncertainties Enormous potentials make Vietnam a good substitute in South-East AsiaISSUE 1 ISSUE 2 Issue 3 IMPLEMENTATIONBeyond Ability 6
COUNTRYANALYSISPoverty Level(Average GNI per capita)21.4%( 11,630/capita)51.3%( 9,640/capita)54%( 3,120/capita)Bad export lawDifficult governmentFree trade and no taxRegular tariffs apply72/177 (average)106/177 (high)123/177 (high)HighHighMediumLarge apparel industry16th garment exporterDeveloping stage 1,450/container, 11 days 1,435/container, 8 days 435/month 331/month 413/monthWorking Limits48 hours/week48 hours/week48 hours/weekLabor Statistics106.3m, 13.3% industrial50.64m, 23.4% industrial4.35m, 14% industrialExport LawsCorruption RankingAvailability of ResourcesInfrastructureCost and Time to Export 2,215/container, 13 daysLiving WageISSUE 1 ISSUE 2 Issue 3 IMPLEMENTATIONBeyond Ability 7
COUNTRYANALYSISMEXICOProsConsLow wages(Minimum wage 0.6/hour,living wages 331/month) High corruption(106/177)Have laws (discrimination,safety and right to strike) Higher cost than China16th largest exporter ofclothing Good supply of labor(52.8m labor force) No tariffs to U.S. (NAFTA) Have unions, collectivebargaining agreements Unable to lay off employees Limited amount ofraw materials Economic, legal and technological advantages encourage Mexican investmentISSUE 1 ISSUE 2 Issue 3 IMPLEMENTATIONBeyond Ability 8
COUNTRYANALYSISTURkeYProsConsLow wages(Minimum wage 3.05/hour,living wages 370/month) Political unrestLow corruption(53/177) Long distance to U.S. Presence of export taxes 7th largest exporter ofclothing Good supply of labor(52.8mil labor force) Protection fromdiscrimination, child labor Adequate supply of domesticmaterials All-rounded performance guarantees Turkish presence in development plansISSUE 1 ISSUE 2 Issue 3 IMPLEMENTATIONBeyond Ability 9
AGENDA01Introduction02Country Analysis03NIKE.U04Marketing Strategy05Financials06Action Plan07ConclusionISSUE 1ISSUE 2 ISSUE 3IMPLEMENTATIONBeyond Ability 10
NIKE.uThree Phase ApproachGoal: Increase theTriple Bottom LinePhase I:CompanyPhase II:ConsumerISSUE 1 ISSUE 2 ISSUE 3 IMPLEMENTATIONPhase III:Marketingand beyondBeyond Ability 11
Phase I:CompanyVERIFICATION PROCESSNIKE.uRELIANCE ON INDEX GRADINGExecution based on sustainability indexesINCREASE MANAGER TRAININGBetter environment, enhanced efficiencyMaintain Sustainable Labor PracticesTHOUROUGH SOUCRING TRACKApply to all raw materials and productionIntroduce and utilize RFID technologyISSUE 1 ISSUE 2 ISSUE 3 IMPLEMENTATIONBeyond Ability 12
NIKE.uFROM SEED TO SHIRTPhase I:CompanyRaw MaterialWholesalersMaterialSustainabilityIndex VettingTextileFactoriesManufacturingIndex VettingApparelManufacturersConsideredIndex VettingMaterialSustainabilityIndexISSUE 1 ISSUE 2 ISSUE 3 IMPLEMENTATIONBeyond Ability 13
NIKE.uVerify Sustainability ofRaw MaterialsPhase I:CompanyCottonPolyesterCertified Wholesalers markwith RFID ChipTrack materials throughproduction processISSUE 1 ISSUE 2 ISSUE 3 IMPLEMENTATIONBeyond Ability 14
NIKE.uFROM SEED TO SHIRTPhase I:CompanyRaw MaterialWholesalersMaterialSustainabilityIndex VettingTextileFactoriesManufacturingIndex VettingApparelManufacturersConsideredIndex VettingMaterialSustainabilityIndexISSUE 1 ISSUE 2 ISSUE 3 IMPLEMENTATIONBeyond Ability 15
NIKE.uMark apparel with QR Codeat production facilitiesPhase II:ConsumerAllow customer to knowwhere products come from:Which Factory Produced itIndex Scores of FactoryMaterials Sustainability IndexManufacturing IndexApparel Sustainability IndexSourcing and Manufacturing IndexISSUE 1 ISSUE 2 ISSUE 3 IMPLEMENTATIONBeyond Ability 16
NIKE.uCompany and Customer Initiative GoalsPhase II:ConsumerDemonstrate Nike’sdedication tosustainabilityAllow customers totrace productionfrom seed to shirtAllow Nike to keepelectronic verification ofsustainability practicesISSUE 1 ISSUE 2 ISSUE 3 IMPLEMENTATIONBeyond Ability 17
NIKE.uCollegiate LicensedApparel MarketPhase II:Consumer 4.6b marketU.S. is main marketBrand loyalty is lowAll products very similarISSUE 1 ISSUE 2 ISSUE 3 IMPLEMENTATIONBeyond Ability 18
NIKE.uUniversity scholarship programDonate 1% of sales revenue to college scholarship fundPhase II:ConsumerIncreasebrandawarenessDifferentiateour productsGive back tolocalcommunitiesBrand ImageOne morereason forpurchasesConnectionRelated parties(universities,retailers etc.)ExposureIncrease reachby tapping intocampus lifeISSUE 1 ISSUE 2 ISSUE 3 IMPLEMENTATIONBeyond Ability 19
NIKE.uRiskRatingMitigation Biggest competitor is privately held and haslimited resources, cannot match 1%scholarshipConsider dropping if demand does not grow Only use RFID tags on batches of units Extra training for managers at manufacturingfacilitiesIntegrate with existing NikeID platformrequiring personal information CompetitorImitationPhase II:ConsumerXRFID chips cannotbe permanentlydisabledXCompetitorsutilizing QRinformationFeasibility ofgetting 16 millionpounds of cottonper yearX XSource raw materials from wholesalers whohave been certified and guarantee rawmaterials are sustainably farmed andproducedXISSUE 1 ISSUE 2 ISSUE 3 IMPLEMENTATIONBeyond Ability 20
AGENDA01Introduction02Country Analysis03NIKE.U04Marketing Strategy05Financials06Action Plan, Risk & Contingencies07ConclusionISSUE 1ISSUE 2 ISSUE 3IMPLEMENTATIONBeyond Ability 21
MARKETINGSTRATEGYPhase III:Marketingand beyondNew Campaign Theme to Increase Awareness1. Tie individuals with corporate social responsibility2. Visualize Nike CSR effort for awareness3. Establish a new symbol representing improved laborpractices and sustainable materials useISSUE 1 ISSUE 2 ISSUE 3 IMPLEMENTATIONBeyond Ability 22
MARKETINGSTRATEGYKey QuestionHow can Nike be a globally recognized ethical brand?Phase III:Marketingand beyondHypothesisIt’s not Nike hasn’t done enough;It just failed to convey the messageApproachEnhance customerengagement towardsNike as a brandHighlight specific issuestowards labor situation andCSR practice of NikeISSUE 1 ISSUE 2 ISSUE 3 IMPLEMENTATIONBeyond Ability 23
MARKETINGSTRATEGYIntegrated marketing communicationINTERACTIVE MARKETINGPhase III:Marketingand beyondNike.U QR CodeApp with information on Nike’s productionADVERTISINGBillboards, magazines and commercialsAds featuring individual empowermentEVENT MARKETINGCo-organize events with minority groups (women, child)Sponsorship for charity and college event beside scholarshipISSUE 1 ISSUE 2 ISSUE 3 IMPLEMENTATIONBeyond Ability 24
MARKETINGSTRATEGYOverall Effect on Collegiate-Licensed ProductsAssociation withRelevant IssuesCustomer EngagementQR Code and App connectcustomers and productsPhase III:Marketingand beyondCollege and charity eventsact as efficient channelScholarship incentivizesschool to allow promotionMinority groups are goodaudience and powerfulopinion leadersMore aware ofNike as a wholeActive lobbying toincrease media exposureQR Code provides fullaccount of productionNike more connectedEmotional advertisementwith socialto highlight differencesresponsibilityIncreasedAwarenessNIKE.U logo directly andnaturally linked to laborand sustainability issuesCollege is a good cut-in point with effective marketingISSUE 1 ISSUE 2 ISSUE 3 IMPLEMENTATIONBeyond Ability 25
AGENDA01Introduction02Country Analysis03NIKE.U04Marketing Strategy05Financials06Action Plan07ConclusionISSUE 1ISSUE 2 ISSUE 3IMPLEMENTATIONBeyond Ability 26
FINANCIALSCollegiate Apparel Sales GrowthIn Million2,600.02,400.02,200.02,000.01,800.0Current Market Share: 32%Market Growth Rate: 6%1,600.01,400.020132014201520162017ISSUE 1 ISSUE 2 ISSUE 3 Implementation20182019Beyond Ability 27
FINANCIALSAnnual cost breakdownMonitoring/Due Diligence2 Million7%17%First Year26.45 MillionScholarship15 MillionTraining Costs50,000/factory,increase at 5%/annum19%Marketing Expenses5 Million forfirst 2 years57%ISSUE 1 ISSUE 2 ISSUE 3 ImplementationBeyond Ability 28
FINANCIALSCollegiate Apparel Sales GrowthIn Million30Net Present Value:9.34 Million2010020142015201620172018-10-20-30Pre Tax Cash OutflowAfter Tax Cash InflowISSUE 1 ISSUE 2 ISSUE 3 ImplementationNet Cash FlowBeyond Ability 29
AGENDA01Introduction02Country Analysis03NIKE.U04Marketing Strategy05Financials06Action Plan07ConclusionISSUE 1ISSUE 2 ISSUE 3IMPLEMENTATIONBeyond Ability 30
ACTION PLANIMPLEMENTATION SCHEDULE2014 2014 2015 2015 2015 2015 2016 2016 2017 20173Q 4Q 1Q 2Q 3Q 4Q 1H 2H 1H 2HNew Facility SearchTransit Into New FacilitiesManagement TrainingCustomer Relations Marketing PushCollegiate RFID and QR CodesNike Brand Wide RFID and QR CodesReview KPI MetricsEvaluation of New Tracking SystemISSUE 1 ISSUE 2 ISSUE 3 ImplementationBeyond Ability 31
AGENDA01Introduction02Country Analysis03NIKE.U04Marketing Strategy05Financials06Action Plan07ConclusionISSUE 1ISSUE 2 ISSUE 3IMPLEMENTATIONBeyond Ability 32
Just do it.Thank you.33
APPENDIXFinancial ProjectionsCountry ComparisonGrowth Rate ProjectionFinancial Projection With Nike.ULabor Market Risk Score by CountryCost to ExportFinancial Projection Without Nike.UCollegiate Production StatisticsClothing Exports by CountryCorruption Perception IndexNike Revenue BreakdownProduction MaterialGlobal Competitiveness Index Infrastructure ScoreLabor Standards and LawsNike Collegiate Apparel Figures (America)Nike Collegiate Apparel Figures (Asia)Fair Labor AssociationLabor StandardsSustainable MaterialsPolyester vs CottonTurkish Labor LawVietnamese Labor LawProgress of Nike ApparelU.S. College Store Sales and Enrollment TrendMexican Labor LawFair Compensation and Worker Safety in MexicoMSI Scoring FrameworkProblems with ChinaProtection of Foreign Workers in VietnamCSR IssuesAutomation Cannot Cut Cost in ChinaChina’s Decreasing Productivity Gain6 Key Reasons for Embracing CSR10 Companies with Best CSR PracticesPossible Reinvestment in U.S.Increase of Chinese WageBeyond Ability 34
APPENDIXGROWTH rate projection16.00%Current Market Share: 32%Market Growth Rate: 015201620172018Long TermBeyond Ability 35
APPENDIXFinancial projection with .41,775.82,042.22,287.32,516.0Cost of Sales859.0928.31,021.11,174.31,315.21,446.7Gross Profit663.0686.1754.7867.972.11,069.3Gross Margin %43.6%42.5%42.5%42.5%42.5%42.5%SG&A Expense468.1496.2545.8627.7703.0773.3Income Before Tax194.9189.9208.9240.3269.1296.0After Tax Cash Flow126.70123.45135.80156.17174.91192.40Beyond Ability 36
APPENDIXFinancial projection without .41,711.21,813.91,922.82,038.1Cost of Sales859.0910.5965.11,023.01,084.41,149.5Gross Profit663.0703.9746.1790.9838.3888.6Gross Margin %43.6%43.6%43.6%43.6%43.6%43.6%SG&A Expense468.1496.2526.0557.5591.0626.4Income Before Tax194.9207.7220.1233.4247.4262.2After Tax Cash Flow126.70135.00143.10151.68160.78170.43Beyond Ability 37
APPENDIXProduction materialBeyond Ability 38
APPENDIXClothing exporters by countryBeyond Ability 39
APPENDIXNike revenue breakdownBeyond Ability 40
APPENDIXBeyond Ability 41
APPENDIXNike collegiate apparel figures (America)Beyond Ability 42
APPENDIXNike collegiate apparel figures (Asia)Beyond Ability 43
APPENDIXSustainable materials MaterialsSustainability IndexBeyond Ability 44
APPENDIXPolyester vs cottonBeyond Ability 45
APPENDIXMsi scoring frameworkBeyond Ability 46
APPENDIXProgress of nike apparelBeyond Ability 47
APPENDIXFair Labor Association (FLA) Increasing labor standardsaround the world Code of Conduct: 9 aspects Today several big companiesare on boardBeyond Ability 48
APPENDIXLabor standards, fla Employment Relationship Nondiscrimination Harassment and Abuse Forced Labor Child Labor Freedom of Association and Collective Bargaining Health, Safety and Environment Hours of Work CompensationBeyond Ability 49
APPENDIXTurkish labor law Protection from discrimination and Harassment Minimum wage/compensation Working hours regulation Health and Safety Obligation Age restrictionsBeyond Ability 50
APPENDIXVietnamese labor law Minimum wage/compensation Collective bargaining Minimum wages/compensation Working hours/break hours Occupational safety and health Labor inspectionsBeyond Ability 51
APPENDIXMexican labor law Laws against discrimination and harassment Protecting women Labor Unions and right to strike Occupational health and safety regulations Collective bargaining agreementsBeyond Ability 52
APPENDIXBeyond Ability 53
APPENDIXBeyond Ability 54
APPENDIXBeyond Ability 55
APPENDIXBeyond Ability 56
APPENDIXBeyond Ability 57
APPENDIXCost to exportBeyond Ability 58
APPENDIXBeyond Ability 59
APPENDIXSource: National Association of College StoresBeyond Ability 60
APPENDIXMexico – FAIR COMPENSATION AND WORKER SAFETY The Issues: In 2009 some of the more than 400 workers at a factory for Electronic Arts, Inc.were not using earplugs and eye protection in work areas where they were mandatory. Inaddition, deductions from pay for workers’ savings plans exceeded the legal 30 percent limit. Solutions: They modified their payroll software to detect and prevent deductions greaterthan 30 percent. This was confirmed by th FLA through Worker interviews and a review ofdocumentation. Additional verification confirmed that a training course for workers onproper protective equipment was implemented by the medical department.Beyond Ability 61
APPENDIXvietnam – protection of foreign workers Issues: During a 2009 factory visit, FLA assessors found that foreign staff at a factoryproducing apparel for adidas Group and Nike, Inc. lacked required legal work permits. Inaddition, some printing department workers, who neither asked to leave nor signed awithdrawal notice, were compelled to leave the union without their consent. dues. Further,proper personal protective equipment was not provided for workers in certain departments,and the noise meter for measuring noise levels was not set correctly (instruction manualwas in English only). Solutions: Following the assessment, four foreign employees received work permits fromthe Department of Labor - Invalids and Social Affairs, from the local province. The factoryestablished policies and procedures to guide foreign workers in obtaining work permits. Inaddition, the factory created a transparent procedure for employees to join or withdrawfrom the trade union. Further, the factory conducted training for workers, including aspecific training for printing workers, on freedom of association. Finally, a new policy wascreated regarding personal protective equipment. The noise meter has been set correctlyand its instructions have been translated into Vietnamese.Beyond Ability 62
APPENDIX6 key reasons for embracing csr1.Innovation2.Cost savings3.Brand differentiation4.Long-term thinking5.Customer engagement6.Employee engagementBeyond Ability 63
APPENDIX10 companies with best csr practices Microsoft Disney Google BMW Daimler Sony Intel Volkswagen Apple NestléBeyond Ability 64
Nike as a brand . Phase III: Marketing and beyond . ISSUE 1 ISSUE 2 ISSUE 3 IMPLEMENTATION . Beyond Ability 23. How can Nike be a globally recognized ethical brand? Highlight specific issues towards labor situation and CSR practice of Nike . It’s not Nike hasn’t done enough; It
Nike missile technical and maintenance manuals from Nike Site 88L, Fort Barry. Includes both Nike-Hercules and Nike-Ajax missiles, as well as manuals for associated equipment and systems. See associated database and print-out for full title listing. Preferred Citation "Nike Missile Manual Collection, GOGA 35286, Golden Gate National Recreation
The NIKE Code of Ethics - Defining the NIKE Playing Field and the Rules of the Game. Do the Right Thing. A Message from Phil At NIKE,we are on the offense,always. We play hard,we play to win,but we play by the rules of the game. This Code of Ethics is vitally important. It contains the rules of the game for NIKE,the rules
Nike, Inc. (NYSE: NKE) November 17, 2015. Current Price 122.58 . Target Price 127.7 . Nike Comes Back We recommend investors to buy Nike. We also believe that Nike will rise to our target price and refresh its 52 week high record. Nike’s CEO Mark Parke
Consumers' Brand Loyalty: Nike Lauren Putbrese Introduction This study examines Nike. What attitudes do consumers have towards Nike that leads to . Nike as the leading brand in sport apparel Nike has reported in recent years that their marketing efforts are targeted on generation Y (Cendrowski, 2012). The research will use data collected
3 Nike's bullet ad with Pistorius backfires - CNN (2013) 3 Nike suspends its contract with murder accused athlete Oscar Pistorius - couriermail.com.au, (2013) 3 Nike pulls 'Bullet in the chamber' Pistorius ad - B&T Magazine, (2013) This is a significant issue for Nike's reputation globally as sponsorship issues continue to occur.
Nike sells their product to retail accounts through Nike-owned retail including stores and internet sales, and through a mix of independent distributors and licensees, in over 170 countries around the world. Nike products are manufactured by independent contract manufacturers and most of Nike products are manufactured outside of the United States.
Zalando.com. Whereas Nike.com only sells Nike products, Zalando.com has a more varied inventory. This means that the products of Nike are responsible for 100% of the sales, and therefore 100% of the brand equity of Nike.com, whereas the Nike products have a significant lower impact on the brand equity of Zalando at Zalando.com.
82nd ABN Div Pam 600-2 5 1. PURPOSE: The purpose of this publication is to inform 82nd Airborne Division Paratroopers of basic standards of appearance, conduct, military courtesy, and need to know information. 2. RESPONSIBILITIES: Commanders are responsible to ensure Troopers under their command present a neat and soldierly appearance.
