Updated: Sep 27, 2020
Was written on July 02 for Business Strategy class at Stony Brook University
**Disclaimer, I have recently boycotted Nike (Nike, not Niky. The only country that says Niky instead of Nike - is the U.S). The reason for that is a recent incident that happened with a track and Field athlete Sara Cain.
Discussion Question #1
How important are Nike’s expensive endorsements to the company’s success? Are the endorsements really worth the money? Explain.
I am a firm believer in the importance of endorsements to a company’s success. Brain from “everyone social” agrees with me in his article: “the more trust and influence you have with someone, the more likely you are to earn their business. This is the value of a brand ambassador,” (2019).
However, when deciding to enforce an ambassador, the company must conduct extensive research to make sure that the person is suitable to be a representative of the company. Because, the representative behavior is directly related to the company’s behavior - in the light of the consumer.
For example, one of Nike's ambassador's program has gone completely wrong, and the company as a whole is the one to blame. Sara Cain is (not was) a talented track and field athlete that was the fastest girl in America at one point in her career when she was 15. Cain was working very hard to achieve her dreams of making it to the Olympics and represent her country internationally. She wanted to be the fastest female runner in the world, she said. She was determined and focused on becoming one, (Cain, 2019).
At 16 she joined a professional track and field training camp endorsed and paid for by Nike. In the camp, she was “emotionally and physically abused by a system designed by Alberto and endorsed by Nike.” (Cain, 2019). At one point in her life, she was merely trying to survive and fight her suicidal thoughts, (Cain, 2019). According to the American Psychological Association, "Sport psychologists help professional and amateur athletes overcome problems, enhance their performance, and achieve their goals" (2012)
Nike's camp did not hold a nutritionist, a doctor, a physicist, or psychology. All are vital parts of running a professional team. Nike hired Alberto as a coach and did not optimize the hierarchy of control to protect the athletes. In fact, all the other coaches in the camp were hired by Alberto as well.
Discussion Question #2
To what extent, if any, is Nike liable for the actions of its manufacturing contractors with regard to employment issues and human rights violations?
Nike is fully responsible for the liability of employment issues and human rights violations. The company’s actions to reduce or endorse social problems shows a lot about who the company is.
In my opinion, Nike has lost control over the organization, the way it is produced, the factories in China, and the unethical behaviors. One of the things that keep an organization successful is the org's culture: how much is the organization caring for the social rights movement? How much does the company care about the consumers' well-being rather than just revenue? What does the company do to improve sports? What does the company do to improve the world?
In 2020 (as opposed to 2000), consumers care for more than just popularity, good advertisement, and catchy slogans. Consumers care also that they are putting their money in a company that is ethical and equal to its employers, that is sourcing the material from ethical sources and that the company is acting to reduce social responsibility problems (such as environmental issues, and gender/racial inequalities). A 2017 report shows that 86% of US consumers expect companies to act on social, environmental issues.
The weird thing about Nike is that the Marketing side of the company is genius: the slogan is catchy and inclusive, the advertisement is inspirational and interesting, and the representation is good (showing both women and men, respect to minorities, LGBTQ, and racially too). It feels like the marketing side, and the production side of Nike is not at all connected, and it is not cohesive. And that's unfortunate.
Discussion Question #3
Do small rivals like China’s Li-Ning pose a serious threat to Nike? Could private-label athletic shoes challenge Nike, especially in poor economic times?
Nike has established itself as an innovative leading company that is always developing its products and bringing the consumers the latest innovation within the sporting goods. Nike is also known to be a company that is leading the market in terms of inclusivity and inspiration - when people think of a high-performance brand that is acting for awareness spread and sports culture establishment - people think of Nike.
Therefore, I do not believe that other smaller companies are a high threat to Nike - that is because even though the products of smaller rivals might be creating the same quality of athletic products - Nike is doing an excellent job with differentiation.
With that being said, if Nike will not catch up with today's expectations of social responsibility and will ensure the well being of its sponsor - they will lose business to smaller rivals.
Brain, C. (2019). The Brand Ambassador: Who Are They And Why Do They Matter?. Retrieved 25 June 2020, from https://everyonesocial.com/blog/brand-ambassador/
Escalent | EVForward™. (2020). Retrieved 28 June 2020, from https://escalent.co/innovations/evforward/?gclid=CjwKCAjw_-D3BRBIEiwAjVMy7GbXOpweLU0KlWPgTfmQIBIdrE_Jv0lZVW1-GiOpFoghgFg6V2kHDxoCcsYQAvD_BwE
MacCarthy, L. (2017). New Report Reveals 86% of US Consumers Expect Companies to Act on Social, Environmental Issues. Retrieved 26 June 2020, from https://sustainablebrands.com/read/marketing-and-comms/new-report-reveals-86-of-us-consumers-expect-companies-to-act-on-social-environmental-issues