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Table of Contents
1 2 Introduction ........................................................................................................................ 1 Company Background ....................................................................................................... 1 2.1 2.2 Human Resource Background ..................................................................................... 3 Human Resources Management .................................................................................. 5 HRM of Nike Inc. & Subsidiaries........................................................................ 5
2.2.1
2.2.1.1 Human resources management and the environment ....................................... 6 2.2.1.2 Acquiring human resources .............................................................................. 7 2.2.1.3 Deloping human resources ............................................................................... 7 2.2.1.4 Labor-management relations and promoting safety and health ....................... 7 2.2.2 HRM of Contracted Factories .............................................................................. 7
1 Introduction
This report is prepared in the intention to comply with the course requirement of Human Resource Management as part of the Master of Business Administration at Prince of Songkhla University. The report outlined the overview and background of a multinational or global company which specifically concentrate on the human resource management aspect of the company. The report will present the various strategies, strength, weakness and recommendation on the human resource management (HRM) in practice by the company at this moment. In the context of this report, the detail of related issues of Nike Inc. is reported. The reason that Nike Inc. was chosen as the subject for this report because of the criticism faced by Nike Inc. in regards to violation of labor laws by its contractor which evince the fiasco in Nike HRM strategies in managing its contractor. In spite of being a global leader in athletic footwear that dominated 31 % of global market sharei with total revenue of US$ 19.17 billionii (2009 Fiscal Year) and net income of US$ 1.49 billioniii. The report is intended to investigate the HRM strategies implemented by the company to manage its contractors in combating child labor, violation of minimum wages and overtime criticism. Furthermore, the information pertains to Nike Inc. internal HRM Strategies will also be included in this report.
2 Company Background
In January 1964, Bill Bowerman and Philip Knight established Blue Ribbon Sports with an initial investment of US$ 500 each which later became Nike Inc. in 1978. Nike Inc. is a major designer, manufacturer and supplier of athletic product which market three main product segments; this includes footwear, apparel and equipment. The products are manufactured in 46 countries around the world with approximately 600 contracted factories. In the whole supply change of Nike Inc. includes its supplier, shipper, retailers, and other business partners in its manufacturing, distribution and retailing of its product around the world, there is a total more than 1 million people involved in this supply changeiv. Nike Inc. markets its products under its own brand coupling with its highly renowned trademarks of the Swoosh logo and the slogan Just Do It. Moreover, the company also market products by its subsidiaries company which includes Cole Hann, Converse Inc., Hurley International LLC. and Umbro Ltd.. In 2009, the sales of Nike Inc. in United States market accommodate to 42% of its total sales figure and the remaining 58% was generated through international market (180 countries around the globe) which has 336 retail stores [John OOI Chuen Seong] | [SID: 5310520015]
EMEA
In 2002, Nike embarked a vision to make the company an Employer of Choice in a five year time frame. The company strongly believe that diversity would nurture positive impact to its business model which Nike Inc. reported in 2005 diversity have articulated a consistent, four pronged business caseviii for diversity includes: A. B. C. D. Diversity drives recruitment of the most dynamic people. Diversity enriches the creativity and innovation that shapes the brand. Diversity grows competitive advantage. Diversity heightens the stature and belief in the brand within the culturally nuanced consumer base [John OOI Chuen Seong] | [SID: 5310520015] 3
Nike Inc. put into practice a constant monitoring program to assess employee satisfaction to the organization by conducting survey. The surveyed data was analyze and reported through its Corporate Reponsibilities Report, in taking employee voice a step further, Nike Inc. shaped their priorities based on the feedback on the work environment, career advancement and various aspect of the organization for workplace improvement. As a result of this effort, Nike Inc. was awarded and recognized as Employer of choice by various organization which includes: Business Week - Rank # 55 on 2007s Top 100 Places to Lunch a Career. Fortune Magazine 2006, 2007 & 2008 on 100 Best Companies to Work For Best Workplaces for Commuters 2004, 2005 & 2006 Oregon Business Magazine Rank # 21 on 2005s 100 Best Companies to Work For in Oregon E. Human Rights Campaign Score 100 on Best American companies for gay, lesbian, bisexual and transgender workers A. B. C. D. In spite of being recognized as employer of choice with multiple award today, Nike Inc. has come through obtacles of being criticized for contracting factories that have violated human rights law includes minimum wages, working overtime, poor working condition and child labor in the 20th century. During 1990, Nike faced criticism for use of child labor in Cambodia and Pakistan in its contracting factories to manufacture soccer balls. In 1997, the workers in Indonesia (PT Hardaya Aneka Shoes Industry), Vietnam (Tae Kwang Vina)ix and China (Wellco) factory go on strike over wagesx. Following this series of critique, an investigation by Australian Channel 7 into Nike Contractors in Malaysia (Hytex Apparel Ltd.)xi discovered major worker rights violation including squalid living conditions, garnished wages and withheld passports of foreign workers. According to Nike Code of Conduct, the act of diminishing workers rights, workers welfare and social responsibilities of its contractors or business partners are prohibited. Nike Inc. stated in its Code of Conduct that the company is committed to collaborate with its contracted factories in building a leaner, greener, more empowered and equitable supply chainxii.
In managing more than 32,000 employees of Nike Inc. and its subsidiaries, the element and component of HRM activities includes: A. B. C. D. E. Human resources management and the environment Acquiring human resources Rewarding human resources Developing human resources Labor-management relations and promoting safety and health
The next section will further evaluate and describe the above element and component pratice by Nike Inc.
Weakness Expatriate training Too much emphasis on leadership and diversity, Nike should also provide technical skill related training. 100% health care coverage http://www.usatoday.com/money/industries/retail/2008-08-01-nike-malaysia-laborviolations_N.htm
Wikimedia
Foundation
Inc.,
30th
November
2010
Nike, Inc. (NKE) Company Financials, The NASDAQ Stock Market, 6th December 2010 <http://www.nasdaq.com/asp/ExtendFund.asp?symbol=NKE&selected=NKE>
iii
ibid
iv
Nike Inc. (2010, January 22) Nike, Inc. Corporate Responsibility Report FY07-09. Retrieved November 26, 2010 from http://www.nikebiz.com/crreport/content/pdf/documents/full-report.pdf
v
ibid
vi
The NASDAQ Stock Market. (2010). Stock Report - Nike, Inc. (NKE) Retrieved December 6, 2010 <http://www.nasdaq.com/asp/quotes_reports.asp?symbol=NKE&selected=NKE>
vii
ibid
viii
Nike Inc. (2007, June 26). Nike FY05-06 Corporate Responsibility Report. Retrieved November 19, 2010 <http://www.nikebiz.com/responsibility/documents/Nike_FY05_06_CR_Report_C.pdf>
ix
The World Bank. (September 16, 2003). Nike in Vietnam: The Tae Kwang Vina Factory <http://siteresources.worldbank.org/INTEMPOWERMENT/Resources/14826_Nike-web.pdf>
x
Campaign for Labor Rights. (1997). Strikes at Nike factories in Indonesia and Vietnam. <http://www.clrlabor.org/alerts/1997/three_strikes_nike.html#3>
xi
You Tube. (July 22, 2008). Nike Contractor in Malaysia using forced labour. Retrieved November 17,
2010 <http://www.youtube.com/watch?v=9Qzm7MCusGM&fmt=18>
xii
Nike Inc. (August 17, 2010). Nike Inc. Code of Conduct. Retrieved November 15, 2010 <http://www.nikebiz.com/responsibility/documents/Nike_Code_of_Conduct.pdf>
xiii
Fortune Magazine. (2008). 100 Best Companies to Work For 2008: Full list | FORTUNE <http://money.cnn.com/magazines/fortune/bestcompanies/2008/full_list/index.html>