Team Ideation Hr Mgmt I Mba544 Offshoring With Audio

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  • John Good evening. My name is John Reynolds, together with Joshua Fritchman, Eric Goodrich, Angela Peters, and Chris Shamp, we would like to thank you for joining Team Ideation for this presentation on the strategic human resources management issue – offshoring. During this presentation, we will discuss offshoring, and relate our discussion back to a firm long steeped in the practice – Nike.
  • Team Ideation Hr Mgmt I Mba544 Offshoring With Audio

    1. 1. Offshoring Nike and the Footwear and Apparel Labor Market iMBA 544 – HR Management Team Ideation
    2. 2. Offshoring <ul><li>Production relocation across national boundaries to take advantage of cost savings and other benefits in countries where products or services can be produced more efficiently. (Cheung, Rossiter, Zheng, 2008) </li></ul>
    3. 3. Pros & Cons <ul><li>Pros </li></ul><ul><li>Reduced Labor Costs </li></ul><ul><li>Improved Proximity to Materials </li></ul><ul><li>Superior Cultural Work Ethic </li></ul><ul><li>Cons </li></ul><ul><li>Cultural Differences </li></ul><ul><li>Cost of Monitoring a Global Supply Chain </li></ul>
    4. 4. Key Outcome Variables <ul><li>Labor Cost </li></ul><ul><li>Relative Labor Sources </li></ul><ul><li>Logistics Cost </li></ul><ul><li>Relative Socio-Political Risk Profiles </li></ul>
    5. 5. Potential Cost Savings <ul><li>Companies that globalize their cost structures to include low-cost countries can realize savings of 20-40% in the landed costs of their products. (Boston Consulting Group, 2004) </li></ul>60
    6. 6. Relative Labor Costs
    7. 7. Nike <ul><li>Market Cap of $21.6 BB </li></ul><ul><li>2008 Revenue $18.6 BB </li></ul><ul><li>2008 EBIT $2.5 BB </li></ul>
    8. 8. Nike Labor Breakdown
    9. 9. Labor Availability
    10. 10. Right HR Costs <ul><li>Huselid’s HR Scorecard </li></ul><ul><ul><li>Benchmark industry labor force split </li></ul></ul><ul><ul><ul><li>Nike is a leader in apparel and footwear manufacturing </li></ul></ul></ul><ul><ul><ul><li>To remain competitive, Nike must not trail the industry norms for labor cost </li></ul></ul></ul>
    11. 11. Potential Savings Erosion
    12. 12. Recommendations <ul><li>No Cost advantage to move manufacturing to U.S </li></ul><ul><li>Nike can not afford to bring jobs home </li></ul><ul><ul><li>Nike 2008 EBIT was $2.5 BB </li></ul></ul><ul><ul><li>US labor force = $6BB-$12BB increase </li></ul></ul><ul><ul><li>Huselid’s scorecard signals imbalance </li></ul></ul>
    13. 13. Recommendations <ul><li>Strong alignment with Huselid’s HR Scorecard </li></ul><ul><li>- Policies in line with business strategies </li></ul><ul><li>- Assessment tools </li></ul><ul><li>- Tailored HR management programs </li></ul>
    14. 14. Recommendations <ul><li>Stick to offshore labor for production activities </li></ul><ul><li>Nike can still employ in the US </li></ul><ul><ul><li>New technology can reduce overtime in offshore factories </li></ul></ul><ul><ul><li>Engineers, product development, technological advances </li></ul></ul>
    15. 15. Questions & Answers <ul><li>Thank you for your time this evening. </li></ul><ul><li>You are invited to present any questions at this time </li></ul><ul><li>References </li></ul>

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