FINAL TERM PROJECT

Name: Claudia Angelica Chavez RoblesStudent´s number: 2676193

Date: November 27 2015

Case: “Nike Considered: Getting Traction on Sustainability”

INTRODUCTION• Let’s start with a brief introduction about Nike history, in

Greek, Nike means “victory” and since the beginning of the company in 1972, victory has been a term that has represented many things about the Nike brand, but of course as any business story, Nike has faced a lot of challenges to get where they are now, one of the challenges they faced through the years, more exactly in 2008, was to design an strategic scenario planning on corporate responsibility-related global trends such as water, health, and energy, alongside increasing worldwide concern about climate change and try to integrate this factors in their products.

SUSTAINABILITY IN NIKE SHOES

• It’s important to look into the sustainability of Nike shoes because of a few simple reasons. Like innovative changes, if Nike were to change its production standards for higher environmental quality it would force a change in much of the rest of the athletic apparel and sneaker industry. Besides, Nike is a brand that almost all Americans can say they’ve heard of and many Americans can say they’ve bought from but let’s not only focus in America nowadays with globalization almost every develop country has heard of Nike’s brand and in that way their shift as a corporation could have far reaching effects.

IMPORTANT ISSUES• Now let me tell you an important fact about Nike, sustainability design was the key since the 90s, Nike became acutely aware of their dependence on oil for materials and fossil fuel energy. They were very vulnerable, to escalating oil prices and looming carbon restrictions from anti-climate change regulation and the waste production, use of materials and water by contract manufacturers also posed major risks. All of these issues were important and highlighted the areas of the value chain that had the most potential for innovation. It eventually led to a long-term vision to build a sustainable business and create value for Nike and their stakeholders by decoupling profitable growth from constrained resources.

WHAT WAS THE PROBLEM?

• One of the main problems was that Nike didn’t have the skill-set in the environmental team to translate what they knew about environmental issues in a way that designers understood. Part of the problem was they didn’t had tools in place.

WHEN AND HOW THE CHANGE HAPPENED?

• Until 2005, when an important event took place because the Considered Group was formed by Hannah Jones the Corporate Responsibility (CR) Vice-president who recognized that Nike needed to be strategic in its response to its environmental, with the help and surveillance of Mark Parker, who was then co-president of the Nike brand, and who is now the CEO of Nike Inc, in addition with the collaboration of John Hoke, the then Vice-president of Footwear Design, who had an very important role in the group providing the inspiration and tools to drive the Considered design philosophy deep into Nike’s product creation units and processes.

MAIN OBJECTIVES• One of the main group’s objectives included helping Nike

consider the impacts of choices on the entire product lifecycle from design through end of life, and understand and reduce its environmental footprint. Instead of commanding and controlling the ways in which the businesses implemented sustainability, the group placed responsibility for sustainability in the hands of designers who birthed the product.

SPECIAL THOUGHTS• I also found it interesting to look with more depth into a product that is

used by almost all of us. Shoes are a basic necessity in our society and Nike shoes are very commonly found. By exploring the methods used by Nike in particular we were given an idea as to some of the basic methods of all shoe production and what it takes to make a sustainable, economically viable and stylish shoe product.

• So you might be wondering why this situation was and is still being a challenge to Nike, well is because in the past years Nike has made a concerted effort to improve their reputation as an internationally active corporation and improve their production and business practices, because each day more and more consumers are concerned about environmental and sustainability issues, so they want to know that the products they are purchasing are eco-friendly.

BACKGROUND• Back in 2008 they started doing footprint analysis in

toxics, waste, water, etc. and presented it and now designers are helping on solve problems. That’s why one of their sustainability-based endeavors has been to attempt to eliminate polyvinyl chloride or PVC plastics in their footwear. This has been a fairly publicized goal and though it has been part of a plan for about 10 years now, it has not been fully implemented, though the plastics have been removed from almost all products.

INTERNATIONAL ENVIRONMENT

• The international role also plays an important factor to accomplish Nike mission, The company was one of the first in the footwear industry to embrace globalization, contracting manufacturing to other companies located in countries with cheap labor at a time when most shoes were still produced in the United States. Factories that Nike contracted with employed 823,026 people, about half of which worked in footwear.

• Shoe factories from roughly 50 factories are located almost exclusively in China, Thailand, Indonesia and Vietnam. With an outsourced manufacturing network widely distributed across the world, from nearly 700 factories, totaling 800,000 workers, located in 52 countries, so it’s important to know how to apply these ideas in all of the factories around the world, issues like culture and diversity, politics and policies has to be consider.

POLITICAL CLIMATE NEWS• President Obama dressed his campaign for free trade in the clothing

of "middle class economics, appealing to his liberal base to support a Pacific trade deal he said would help American workers.• Nike announced it would hire 10,000 workers in the United States over

the next decade if a Pacific trade agreement passes Congress. Introducing Obama, Nike President Mark Parker said Nike's fast-growth success story "was made possible because of the power of trade."• Labor groups said that if Nike wants to hire American workers, it

shouldn't be contingent on a trade deal. "We have heard similar promises from companies before, and very few have panned out. We hope this time is different," said Eric Hauser of the AFL-CIO. "Decades of experience have taught us that corporate-driven trade policy too often accelerates a global race to the bottom.

NIKE IN THE DIFFERENT SECTORS OF THE

ECONOMY• The impact of the primary sector in the Nike industry would be the

different suppliers who provide Nike with their raw materials for the manufacturing of their shoes and the tertiary sector would be the shops that sell their products around the world which are bringing a service.

• The secondary sector, also known as the manufacturing of goods would be like mention before in the international environment slide the different factories where all the Nike shoes are manufacture the following picture is the representation of where are located the many global manufacturing factories of Nike in the whole world. Which represents about 43 countries, 679 factories and 1,023,714 workers.

•This sector is very important in Nike because they have a great commitment as a global company to play a role in bringing positive and systemic change for workers within the supply chain and in the industry. The needs of nearly 1 million workers in Nike’s contract supply chain overshadows any other group and they also know that the size and scale of the combined manufacturing operations has a considerable environmental impact. 

CLUSTERS• The athletic and outdoor cluster firms that design, develop,

manufacture, market, distribute and sell apparel, footwear and gear for active outdoor recreation is a signature cluster for Portland and Oregon which are one of the most important cluster in the Nike industry. This cluster consists of more than 300 firms with a payroll, and employs more than 14,000 Oregonians, In addition the cluster includes about 3,200 self-employed individuals with sales of $100 million annually.

• Oregon has the nation’s foremost concentration of athletic and outdoor companies. The Portland metropolitan area has the highest location quotients for footwear distribution and footwear manufacturing of any large U.S. metropolitan area. Oregon receives more patents for footwear than any other state. The region’s key domestic rivals include Los Angeles and New York for apparel and Boston for footwear. Nike, Columbia and Adidas are the pillars and foundation firms of this cluster.

• Nike played a decisive role in defining the athletic and outdoor cluster and anchoring it in Portland. Nike s defined a business model, brought thousands of talented workers to Oregon, and connected Portland to the globe. And while Nike is still vitally important, the cluster is now much bigger than one firm.

POLICIES ON SUSTAINABILITY• It’s difficult for U.S. policy makers to have a major impact on the

sustainability of Nike’s footwear. Regardless of this hurdle, policy makers can require transparency about corporate impacts on sustainability, as well as the potential impacts of a changing climate on their business. This is especially true for publicly traded companies like Nike, because the Securities and Exchange Commission (SEC) can require them to release information to benefit shareholders. The SEC recently issued an interpretive guidance that clarifies what companies need to disclose to investors in terms of climate-related, material effects on business operations, whether from new emissions management policies, the physical impacts of changing weather or business opportunities associated with the growing clean energy economy.

CONCLUSIONAfter decades of phenomenal growth and becoming one of the world’s top brands, Nike intentionally shifted its strategy to integrate sustainability as a vehicle for growth. They have being through a long way to get where they are now, from the association with the discontent of globalization in the late 90s and subsequently establishing one of the first corporate responsibility (CR) departments, to setting the bar in embedding sustainability into business practice. Nike no longer view sustainability as option. Rather it is a business imperative, an innovation opportunity and a potential competitive advantage.