Adidas Supply ChainThreat of Substitute Products or Services
(low) Supplier Power (low) Rivalry Among Existing Competitors (high) Buyer Power (high) (low) Threat of New Entrants | Since December 2010, Adidas has worked with over 1,230 independent factories from around the world who manufactur their products in 69 countires, these top countries work for Adidas China, India, Indonesia, Thailand and Vietnam. According to the CEO of Adidas they have mentioned that the workers in their suppliers factories play a big role on their company. the company has these set standards for the group's posotion on challenging labour issues that workers face such as their working hours, fair wages, freedom of association, and child labour. Adidas's vision is the self governace in their supply chain where the suppliers take ownership in their compliance programsm which they would need to assess management committment to the program and provide help and support to suppliers to ensure success for them.
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Impossible Is Nothing
Adidas, like many other companies, took advantage of subtractions during 1980's and 1990's. Adidas replies on about 570 factories around the world. In only Asia, its suppliers operate in 18 different countries. By 31 December 2010, adidas has worked with more than 1,230 independent factories from around the world who manufactured our products in 69 countries.
As the company looked to maximize profits, costs could be decreased by closing factories in the United States and outsourcing production to China, India, Indonesia, Thailand and Vietnam.The purpose of maximizing the demand side of the business allowed Nike to ignore its responsibility to the workers that accounted for the supply side of their business. An international blacklash occurred when there were stories about child labor football stiching in Pakistan back in 2002.
Workers pay a huge role for Adidas. Adidas claims to having healthy working conditions, fair wages, freedom of association, child labor however, they do not mention the harsh working condition in subcontracting countries.
Adidas does not control what subcontractors choose to pay their workers. Adidas have the comparative advantage to choose a country that makes their product more efficiently. Subcontractors choose to have the lowest wages, at 2.00 and below. There is not minimum wage. Adidas, like many multinationals, cut cost in order to increase their profit earnings. Adidas does not have the economic freedom over their workers. It is the responsibility of the subcontractors who have the economic freedom over the workers. However, multinationals like Adidas are the reason Subcontractors abuse their workers wages, hours and environment. Subcontractors race to the bottom in order to appeal to multinationals. Adidas get the cheapest production due to Race to the Bottom.
As the company looked to maximize profits, costs could be decreased by closing factories in the United States and outsourcing production to China, India, Indonesia, Thailand and Vietnam.The purpose of maximizing the demand side of the business allowed Nike to ignore its responsibility to the workers that accounted for the supply side of their business. An international blacklash occurred when there were stories about child labor football stiching in Pakistan back in 2002.
Workers pay a huge role for Adidas. Adidas claims to having healthy working conditions, fair wages, freedom of association, child labor however, they do not mention the harsh working condition in subcontracting countries.
Adidas does not control what subcontractors choose to pay their workers. Adidas have the comparative advantage to choose a country that makes their product more efficiently. Subcontractors choose to have the lowest wages, at 2.00 and below. There is not minimum wage. Adidas, like many multinationals, cut cost in order to increase their profit earnings. Adidas does not have the economic freedom over their workers. It is the responsibility of the subcontractors who have the economic freedom over the workers. However, multinationals like Adidas are the reason Subcontractors abuse their workers wages, hours and environment. Subcontractors race to the bottom in order to appeal to multinationals. Adidas get the cheapest production due to Race to the Bottom.
Changes Within Adidas
Employee Code of Conduct was placed to help strengthen general governance. This code was served as a way to ethinical and social behavior in day to day operations, and is aligned with the core values of the company.
"Employees who violate the code of conduct while conducting group business will be subject to disciplinary measures, and may have their employment terminated."Subcontracting Adidas had improved their Key Performance Indicator which according to the rating system it had evaluated the factories level of worker management communication, factory compliance and industrial relations, which was evidence that the company had tougher labor monitoring standards.Adidas had fired several large public universities because labor rights violations in factories subcontracted to Adidas throughout the world.
According to The Michigan Daily "after subcontracting with Adidas. El Savadorian factor violated the university's Code of Conduct with Adidas." El Salvadorian factory failed to compensate workers about $800,000 in back pay and servverance after closing the factory down in 2005.Supply Chain Adidas has less control over how their suppliers operate and their conditions towards their factories than what they do at company owner sites.
According to Adidas response to managing an external supply chain they said "within the supply chain we act as both inspectors and advisors."If you are so to act both as inspectors and advisors then why aren't you encouraging foreign business partners to establish systems to help with human resource and health, safety and the environment.
On December 31, 2010, Adidas had worked with over 1,000 independent factories from around the world to help improve working conditions that led to the writing of "Workplace Standards", which had helped with labour issues such as working hours, fair wages, freedom of association and child labor.
"Employees who violate the code of conduct while conducting group business will be subject to disciplinary measures, and may have their employment terminated."Subcontracting Adidas had improved their Key Performance Indicator which according to the rating system it had evaluated the factories level of worker management communication, factory compliance and industrial relations, which was evidence that the company had tougher labor monitoring standards.Adidas had fired several large public universities because labor rights violations in factories subcontracted to Adidas throughout the world.
According to The Michigan Daily "after subcontracting with Adidas. El Savadorian factor violated the university's Code of Conduct with Adidas." El Salvadorian factory failed to compensate workers about $800,000 in back pay and servverance after closing the factory down in 2005.Supply Chain Adidas has less control over how their suppliers operate and their conditions towards their factories than what they do at company owner sites.
According to Adidas response to managing an external supply chain they said "within the supply chain we act as both inspectors and advisors."If you are so to act both as inspectors and advisors then why aren't you encouraging foreign business partners to establish systems to help with human resource and health, safety and the environment.
On December 31, 2010, Adidas had worked with over 1,000 independent factories from around the world to help improve working conditions that led to the writing of "Workplace Standards", which had helped with labour issues such as working hours, fair wages, freedom of association and child labor.
Adidas Race to the Bottom
The Adidas group, an Olympic sponsor is benefiting from their workers in their companies making their products in Bangladesh. Adidas is helping their economy hurting their workers by wanting to track multi-companies to invest in their factories, to decrease tax companies, increase child labor and decrease environmental standards.
Some parts of the business Adidas company holds contracts with the Bangladesh suppliers but only for those who make t-shirts, and ready made clothing. Subcontractors like Adidas, that have workers working to make their supplies in Bangladesh have taken advantage of the workers wage hours, and wage pay.
A Race to the Bottom report release states, some very serious accusations about working conditions on factories.The use and abuse of workers in Bangladesh are sourcing out production to even poorer countries. In result this makes Adidas to be able to pass on more risks to their suppliers making them not responsible to what happens to their workers. One worker who makes goods for Adidas works exhausting hours, giving them less than minimum wage and is positioned as the lowest paid Adidas staff.
"The report also surveyed workers making goods for Nike and Puma, who have both invested heavily in high profile sponsorship deals with athletes competing in the London 2012 Games. Two thirds of the workers interviewed worked over 60 hours a week, in breach of Bangladeshi law, to earn enough money to cover the cost of basic essentials. Most of the workers lived in a single room with their families, sharing a kitchen and toilet with their neighbors." (1.). In result this does not give employees much economic security because due to these problems factories tend to close down. In the end it is really sad to see workers make such a small amount of money for the hard work that they supply for these multinational companies.
Some parts of the business Adidas company holds contracts with the Bangladesh suppliers but only for those who make t-shirts, and ready made clothing. Subcontractors like Adidas, that have workers working to make their supplies in Bangladesh have taken advantage of the workers wage hours, and wage pay.
A Race to the Bottom report release states, some very serious accusations about working conditions on factories.The use and abuse of workers in Bangladesh are sourcing out production to even poorer countries. In result this makes Adidas to be able to pass on more risks to their suppliers making them not responsible to what happens to their workers. One worker who makes goods for Adidas works exhausting hours, giving them less than minimum wage and is positioned as the lowest paid Adidas staff.
"The report also surveyed workers making goods for Nike and Puma, who have both invested heavily in high profile sponsorship deals with athletes competing in the London 2012 Games. Two thirds of the workers interviewed worked over 60 hours a week, in breach of Bangladeshi law, to earn enough money to cover the cost of basic essentials. Most of the workers lived in a single room with their families, sharing a kitchen and toilet with their neighbors." (1.). In result this does not give employees much economic security because due to these problems factories tend to close down. In the end it is really sad to see workers make such a small amount of money for the hard work that they supply for these multinational companies.