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nike.com
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Threat posed by substitute products which
might capture market share
• The worldwide demand for athletic footwear, apparel and equipment
is expected to grow in the future as customers cannot substitute
these products
nike.com
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counterfeit (fake) Nike products
Bargaining power of customers
• Nike caters to its customers through both the wholesale and direct-
to-consumer channels
• Direct-to-consumer sales rose by 23%, as compared to 6% growth in
the wholesale channel
• Certain big wholesale customers hold bargaining power
• Bargaining power of end-customers is low
• Customers could also choose other brands
nike.com
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Bargaining power of suppliers
• Nike’s footwear and apparel products are manufactured by third-
party contract manufacturers outside the U.S.
• Nike’s footwear production is largely conducted in Vietnam, China
and Indonesia as contract factories
• No single footwear factory or apparel factory accounted for more
than 6% of total Nike brand footwear production
• The switching costs in changing suppliers is significant
• Suppliers generally share the inflationary pressure with Nike through
manufacturing service pricing
nike.com
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Recommendations
• Nike should re-evaluate the monitoring services performed by Ernst and Young, and demand
more comprehensive reviews of Code of Conduct compliance, performed by trained industrial
hygienists, in future audits
• Nike should hold regular meetings with workers and/or elected worker representatives to explain
the findings and detail the steps being taken to remedy problems found by Ernst and Young auditors
• Nike should initiate the pooling of resources by the Apparel Industry Partnership to establish a
fund for independent monitoring
• When enforcing its Code of Conduct, Nike should strive to minimize any detrimental effects to
workers resulting from noncompliance
• Nike should seek to do business with suppliers who not only meet, but also exceed the
stipulations of the Code of Conduct
thank you.