Assignment task: Nike is a great example of how imperialism is still evident in our modern society. This very successful company was initially established in September 1969 and is an American-based sports clothing and shoe sellers (Reuters, 2014). They have a net revenue of 27.8 billion, with an average net income worldwide of 2.6 million. They spread around the world over 858 different retail stores, with over 56,000 employees. Nike has had a huge impact on the shoe industry especially in America. When Nike was founded, only 4% of US footwear was imported, while now in the 21st century, it has risen to the massive 98% (Reuters, 2014). This is because a lot of Nike's products are outsourced, which also helped them spread around the world and become as well known as they are today.
By outsourcing, Nike has been able to have a large impact on the culture around the world, a type of Imperialism. By being spread all around the world they have become such a well-known company. Their American slogan and logo are known to such a large amount of people because of how they advertise themselves, which is mainly through famous athletes and teams. Mario Gotze in Germany, Ilie Nastase from Romania, and even sponsoring the Indian Cricket team they spread across almost every country on the globe (Wikipedia, 2014). Although there are many benefits to this "outsourcing" technique, Nike has also become a symbol of abusive labor practices and unsafe working conditions for many foreign factories. Nike began their production of shoes in South Korea and Taiwan back in the 1970s, but once these countries gained new freedom and their wages started to rise, the company began to relocate. They went to Indonesia China and most recently Vietnam, all places where protective labor laws are poorly enforced and cheap labor is a possibility. People there are working for less than minimum wage, with over 10,000 Indonesian workers complaining about wage violations in April 1997, and 3,000 Chinese complaining about the same problem in the same month of 1998 (Saigon, 2014). Indonesian wage only covered 70% of the basic needs of one person, while in Vietnam people earn an average of 20 cents per house (Global Exchange, 2014).
Nike has also been known to abuse the people working in their factories, but they never take the blame for it. This is because Nike does not actually own any of these factories; they outsource and give contract work to various owners. These factory owners then do harmful things to people who work there, and Nike gets no blame for it. In the first two years in Vietnam, one factory official was convicted of physical abuse, another fled the country, and another was investigated for sexual charges (New York Times, 2014). This is a type of imperialism, almost a kind of morphed Mercantilism.
Just like other big organizations such as McDonalds and Starbucks, it is in the company's best interest to spread around the world as much as possible and influence other countries to be like them. Nike has done this by offering outlets across the whole globe, sponsoring people from various nations, and spreading their factories around as well. They are a prime example of imperialism in today's society and reflect the same ideas and values of those in the past.
Requirements:
a. Service - Financial - Strategic are the three main reasons that motivate or favor outsourcing, which one do you think motivated NIKE to move to outsource and why?
b. As a supply chain professional what should be key factors for Nike to develop an evaluation matrix? Demonstrate a demo model for the supplier evaluation matrix. (Only assign a weight, don't do any calculation here, Refer to Fit for Life case)
c. Which KPI do you think Nike should give priority for evaluating the performance of outsourcing? Do you think in the current supply chain sustainable KPI impacts organizational profitability?