How outsourcing helped companies turn their bad image right?
Outsourcing has rescued many businesses from sinking. Several companies have been on the brink of disaster only to be brought back to life under outsourcing. Here is an example:
The Nike Controversy
It wasn’t that long ago that Nike was being shamed in public for its child labor practices, low wages poor working conditions and sweatshops to the point where it badly tarnished the company’s image and hurt sales.
To overcome this problem they decided to change the way of doing business. It started to adopt outsourcing strategy, using only subcontractors throughout the globe. Nike wanted to increase their revenue by outsourcing the labor of their products. By outsourcing Nike would not have to pay as much to have their products created.
In 1992, Nike created a Code of Conduct, which set forth many rules to cleaning up the way their outsourcing had been done. Nike has been manufacturing throughout the Asian region for over twenty-five years, and there are over 500,000 people working for Nike. Vast majority of production comes from China, Indonesia, Vietnam, Philippines, Taiwan, and South Korea. Factories in these countries are owned by subcontractors, with the majority of their output consisting solely of Nike products.
To avoid pressure from customers and legal cases against the company, Nike employ teams of four expatriates per each of the big three countries (China, Indonesia, Vietnam), that focus on both quality of product and quality of working conditions, visiting the factories weekly. It currently owns a 47% market share of the domestic footwear industry, with sales of $3.77 billion.
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