CASE STUDY

Detecting Unethical Practices at Supplier Factories: The Monitoring and Compliance Challenges

Prepared By: Irene Yap Lee KuenAlireza Khosroyar   Tan Lee Yin

PRESENTATION OUTLINE

STRATEGIC PROFILESTRATEGIC PROFILE

Critical facts :

Background of Company

• The nation's number-one retailer. • Walmart Supercentre - redefined convenience and one-stop shopping,

Every Day Low Prices went international• In 1992, Walmart employed 371,000 associates in 1,928 stores and clubs.• In 2000, Walmart.com was founded, allowing U.S. customers to shop

online. • In 2012, Walmart celebrated 50 years of helping people save money so

they can live better. • The company employs 2.2 million associates worldwide and serves 200

million customers each week at more than 10,000 stores in 27 countries.

The Wal-Mart Business Strategy

Background of Company : Nike

• Nike is the world’s leading designer, distributor and marketer of athletic footwear, sport apparel, sports equipment and accessories

• Their products were sourced from contract manufacturers

• In 2007, Nike had almost 700 factories in 52 countries – Americas, Europe, Middle East, Africa region and Asia

• Nike’s Code of Conduct:

1991 2002 2007

General environmental analysis

SITUATIONAL ANALYSISSITUATIONAL ANALYSIS

General environmental analysis

SITUATIONAL ANALYSISSITUATIONAL ANALYSIS

Industry analysis , Ethical view

SITUATIONAL ANALYSISSITUATIONAL ANALYSIS

Manufacturers’ strategies to deceive inspectors

Industry analysis, Walmart, 5 forces Model

SITUATIONAL ANALYSISSITUATIONAL ANALYSIS

Industry analysis, Walmart , Economical view

SITUATIONAL ANALYSISSITUATIONAL ANALYSIS

Industry analysis, Walmart, Economical view

SITUATIONAL ANALYSISSITUATIONAL ANALYSIS

SITUATIONAL ANALYSISSITUATIONAL ANALYSIS

http://www.davidbajek.com/2011/10/04/department-stores-market-share/

Competitors analysis, Walmart

Competitors analysisChain stores ranking, based on sweatshop suppliers

http://www.greenamerica.org/programs/sweatshops/scorecard.cfm - 19 May 2004

Industry analysis, Nike, 5 forces Model

SITUATIONAL ANALYSISSITUATIONAL ANALYSIS

Nike Competitors analysis

SITUATIONAL ANALYSISSITUATIONAL ANALYSIS

• adidas AG is a German multinational corporation that designs and manufactures sports clothing and accessories

• Has a set of rules that supplier factories have to follow, to make sure that workers have a fair, safe and healthy workplace – ‘Workplace Standards’.

http://savingourstyle.com/2012/07/07/june-2012-footwear-sales-3/

Internal Analysis

SITUATIONAL ANALYSISSITUATIONAL ANALYSIS

• 2003 – 2006: Nike used 4 approached to plant monitoring:

1) Basic monitoring / SHAPE inspections

2) In-depth M-Audits to focus on factories with highest risk of noncompliance

3) MAV Audits focused on finding the root causes of noncompliance issues

4) Independent external monitoring where Nike is a member of Fair Labor Association

• Corrective Actions to deal with noncomplying suppliers

• Created Global Procurement Services Group (GPSG)

• Supplier Auditing Program1) Opening Meeting2) Factory Tour3) Worker Interviews4) Factory Documentation Review5) Closing Meeting6) Factory Ratings• Use of Outside Auditors• Collaborate with International

Council of Toy Industries (ICTI) CARE Process and the Global Social Compliance Program (GSCP)

SWOTSWOT

Strength

SWOTSWOTWeaknesses

Opportunities

SWOTSWOT

SWOTSWOTThreats

Strategy RecommendationStrategy Recommendation

Strategy RecommendationStrategy Recommendation

ReferencesReferences

• http://www.searsholdings.com/about/kmart/• http://

www.searsholdings.com/govern/docs/Global_Compliance_Requirements_Poster.pdf• http://www.searsholdings.com/govern/compliance.htm• http://

www.motherjones.com/mojo/2012/07/walmart-heirs-waltons-wealth-income-inequality• http://www.greenamerica.org/programs/sweatshops/scorecard.cfm• http://www.davidbajek.com/2011/10/04/department-stores-market-share• http://www.slideshare.net/emmabbbb/nike-competitive-analysis• http://www.eiu.com/index.asp?

layout=ib3Article&article_id=278216812&pubtypeid=1122462497&country_id=1360000136&page_title=

• http://writeacademic.com/company-analysis/porters-five-forces-analysis-of-wal-mart/• http://www.123helpme.com/nike-five-forces-view.asp?id=166611