Nike

Third World Quagmires No Stock Market Likes!

The stock market response to Nike is most unsporting! Sales have crossed $15 billion. Earnings per share are up 18%. What else is the poor management supposed to do to get stock market support for the Nike share price? The stock market lesson in the Nike story is important for every executive whose career depends on investor sentiment and support. No third world issues in our portfolios please!

Stock market values are affected by perceptions of people about exploitation of the poor-especially among the young and sportive customer groups. Do not expect outdoor types to want burdens of unfair dealings on their collective conscience. Perhaps this is a new stock market valuation parameter, which traditional management science has ignored. Nevertheless, it is here to stay.

Outsourcing is so integral to the Nike story that it has begun to hurt stock market sentiments. How can you merely design and distribute luxury goods, without fair dealings for countless people in sweat shops having to risk their well being for assembly-line production. It would appear that some socialist thinking has made insidious inroads in to stock market capitalism!

The truth is that no brand owner really has full control over everything that happens at an outsourced site. You can provide training, pay the owner of an organization from which you outsource well, but it makes no economic sense to camp at the outsourcer’s premises 24/7! You might as well have your own manufacturing units! Nike is not alone in this respect. Many stock market giants may discover, on doing a thorough life cycle analysis that they are all in the same boat!

The word Nike stands for the Greek Goddess of victory, and she cannot be happy with the allegations against the company named after her! It is not in terms of outsourcing alone; Nike has been repeatedly attacked over its advertising. The stock market may not have the patience to get to the roots of all these matters, and just punishes the share price! No other U.S. company has drawn the kind of global ire that Nike has in recent times, so it must be time for company management to look beyond the numbers to fix their stock market image.

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