KDAN Consulting Group – Nike Corporate Responsibility Presentation

1. KDAN Consulting Group – Nike Corporate Responsibility Presentation Presented by: Neena Gandhi Adam Glovsky Karthik Palaniappan Darlene Woods

2. Goal of Presentation The goal of this presentation is to introduce a way in which Nike increase social responsibility in manufacturing processes without decreasing profitability.

3. Current Manufacturing Issues • No corporate responsibility • Child/Female Labor • Wage structure • Corporate pressure on contractors

4. NIKE Do not own responsibility Memorandum of Understanding Did not enforce human rights REEBOK Include human rights in corporate culture Human Rights Policy Enforced human rights standards Audited contractors Nike vs. Reebok

5. RECOMMENDATIONS • Reduce raw material cost by (Nike) negotiating the cost for all the contracts – volume discount advantage • Enhance compliance with standards for human rights, regulations for worksite conditions, environmental regulations standards and safe working conditions: • incorporating these into the corporate credo (for both employees and business partners) • training employees to inculcate new corporate values • providing incentives/awards to on-site technicians • providing incentives/awards to the dealers • carrying out random inspections by Nike • requiring routine compliance reports from the technicians • rotating on-site technicians

6. Current Mission Statement: To bring inspiration and innovation to every athlete in the world. New mission statement: To bring inspiration and innovation to every athlete in the world while being socially responsible in our manufacturing processes. Why change the corporate mission statement: Show our commitment to change Good corporate PR Employee awareness of corporate efforts to change existing processes Credo Revision

7. STRENGTHS Plantless No raw materials or WIP Inventory Technicians on-site Good relationships with contractors Lower effective costs due to competition among contractors WEAKNESSES Contractors pressured to meet targets Labor issues Environmental noncompliance Unsafe working conditions Strength/Weaknesses

8. Training employees • Organize a location-wide meeting conducted by senior management • Publicize the new corporate credo and distribute to all the employees • Publish the new credo in the company newsletter

9. Technicians’ incentives • Amend bonus program to reflect the degree of compliance with standards • Incorporate standards as employee goals and assess these during performance evaluation • Institute an annual “Gold award of excellence” for the technician who has demonstrated best compliance

10. Contractors’ incentives • Incorporate compliance as a criterion for appraising bids for contracts • Institute an annual “Nike award of excellence” for the factory (management) that has demonstrated highest compliance standards

11. Nike’s Financial Estimate for 1993-1995 • Assumptions: • Expected Sales Growth 15% • Expected increase in Cost of Sales 15% • Expected SG&A Cost for 1994 25% and 1995 20%

12. Cost Breakdown Analysis

13. Recap • Reduce raw material cost • Enhance compliance with standards for human rights, regulations for worksite conditions, environmental regulations standards and safe working conditions

14. Conclusion • Increase social responsibility throughout the company • Upper management buy-in to enforce social responsibility initiatives • Social responsibility strategy has minimal affect on bottom line financials