The case discusses Nike’s sustainability and labor practices from 1998 to 2013, focusing on the successful steps Nike took up and down the supply chain and in its headquarters to make its products and processes more environmentally friendly, and the challenges and complexities it was still facing in its efforts to improve labor conditions. Nike’s labor practices were the subject of high profile public protests in the 1990s, and CEO Mark Parker said the company still had a lot of work to do in that area. The case also details how making sustainability a key part of the design process led Nike to develop more innovative and high-performing products, such as a breakthrough running shoe called the Flyknit, which was widely worn at the 2012 Olympics.
Following protests in the late 1990s over unsafe working conditions, low wage rates, excessive overtime, restrictions on employee organizing, and negative environmental impacts, Nike began shifting from a reactive to a proactive mode. During the 15 years covered in this case, Nike made significant changes in its sustainability practices, including moving its Corporate Responsibility team much further upstream in the organization, where it could have a greater impact on decisions by providing input early in the process.
The company also developed multiple indexes that measured its sustainability practices and those of its independent contract manufacturers. The indexes had metrics for measuring the relevant impacts of product waste, water, chemistry, labor, and energy. Nike’s critics said many labor issues had not been resolved, but Nike made progress in that area through collaboration with governments, NGOs and labor unions, and through management compliance trainings. If a contract factory did not score high enough on the company’s sustainability and labor ratings scales, Nike would impose sanctions on the factory or even drop it from the supply chain. These actions took Nike off the top of most activists’ target lists.
Case No: IB106
Before opening its first store in India in 1996, McDonald’s spent six years building its supply chain. During that time, the company worked to successfully source as many ingredients as possible from India. However, French fries (“MacFries”) were a particularly tough product to source locally—and importing fries was undesirable for both cost and availability reasons. Growing potatoes suitable for use as fries was challenging in India. By 2007, 11 years after opening its first restaurant, the MacFry was finally being produced in India. McDonald’s main MacFry supplier was the Canadian company McCain, which spent many years working on potato agronomy and with farmers to build up supply in India. From 2007 to 2011, local MacFry production increased from none to 75 percent of sales.
Despite the strides made, in 2011 Abhijit Upadhye, McDonald’s then senior director of Supply Chain India was still a worried man. Double-digit food inflation in India had been putting cost pressure on the company. McDonald’s had aggressive growth plans for the coming years. The company had 240 restaurants, and planned to more than double by 2014. The MacFry was the single largest procurement item, so having a 100 percent local supply was critical to avoiding high import duties. The question that troubled him was: “Will I ever be able to eliminate imported fries from my supply chain?” This case describes McDonald’s India and McCain India’s efforts to optimize the MacFry supply chain by increasing local supply in a fast-growing emerging market using agronomy, farmer relationship development and value chain innovation.
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Case No: GS79
Environmental stewardship was part of REI’s culture since the company was founded, and integral to its corporate purpose. In 2005, REI began carefully measuring its environmental impact, establishing aggressive sustainability goals, and implementing programs to achieve these goals. The corporate social responsibility group, which oversaw the environmental sustainability program, took the approach that social and financial objectives should not be viewed as tradeoffs. For instance, growth objectives (increasing the number of stores and sales per store) should not come at the expense of energy consumption objectives for flat or decreasing corporate energy usage. Insisting that both objectives be met would lead to creating thinking and innovative solutions.
Case No: SM196
In 2010, Recreational Equipment, Inc. (REI) considered adding photovoltaic solar panels to the roofs of some of its facilities. This was driven by both financial and environmental considerations. In 2008, the company had added solar panels to 11 buildings in a project (“Phase 1”) that was justified largely as a learning exercise. The new project (“Phase 2”) would have to meet both financial and environmental objectives. The case describes the company’s experience with solar power generation as well as providing representative assumptions for parameters in the financial analysis.
Case No: BE17
This case details the strategic decisions that went into Nissan’s development of the LEAF, the first mass- produced all-electric car. Carlos Ghosn, president and CEO of the Renault-Nissan Alliance, was making a $5 billion bet that electric cars would be the wave of the future. The Alliance was building capacity for 500,000 zero-emission vehicles in Japan, the United States and Europe.
The case covers the inception and launch of the LEAF; Nissan’s marketing strategy for the car; the building of charging stations; and Nissan’s electric car strategy in the context of the Renault-Nissan Alliance. It also discusses the challenges caused by the high cost of electric vehicle batteries, as well as the advantages of Nissan’s joint venture with Japanese battery maker NEC. To handle battery reuse and recycling, Nissan created a separate company called 4R Energy Corporation.
The case also provides an overview of the electric car industry and the different economic, psychological and political forces that could either advance or impede the success of the electric car. It discusses Nissan’s competitors, including: General Motors, which came out with its plug-in hybrid vehicle the Volt at the same time the LEAF was launched; Tesla; China-based BYD; and the upcoming electric cars promised by Ford, Volkswagen and Toyota.
Case No: SM189