Understanding The Supply Chain Outsourcing: Opportunities And Challenges Faced By Nike In Bangladesh

Project Objective

Discuss about the Understanding the supply chain outsourcing.

Drauz (2014) stated that the major reason due to which an organization opted for outsourcing their business functions is to improved company focus, controlling and reducing the operating cost, maximizing use of the external resources and mainly to focus on the core business operations. Marketers emphasizes on developing a strategic vision, structured vendor agreement, and relationship management for implementing a successful outsourcing (Fratocchi et al. 2014).  Nike for obtaining high profitability opted for targeting the third world countries including India, China and Bangladesh and Southeast Asian nations. However, a controversial activity that Nike has to face was the allegation of sweatshop in the Bangladesh factories.

Thus in this research the opportunities and challenge that is faced by Nike due to outsourcing their business functions in Bangladesh will be highlighted. The detail about the project objective and scope will also be illustrated followed by literature review, research questions and the methodology that is used for obtaining the main objectives of the research. The limitation of the research along with the timeframe for the research is also presented in the research.

• To identify the benefits of outsourcing business functions
• To evaluate the opportunities of outsourcing business functions
• To find the challenge of outsourcing business functions
• To recommend strategies for improving the effectiveness of the business function outsourcing 

This project will highlight the challenges that Nike has faced during the business function outsourcing in Bangladesh.  Experts say that Nike has to struggle in maintaining a balance between the cost and worker’s safety (Banjo 2014). The media also broadcasted the negative news that in factories, people are provided with lesser salary and in return they have to overwork, poor enforcement of social sustainability practices and the incidence of factory collapse in Bangladesh make Nike a global symbol of abusive labor practices (Pearce 2014).  This research will illustrate Nike’s re-exploring outsourcing in Bangladesh and the opportunity that the concerned organization has focused in opting the decision. Moreover, the challenge Nike faced and has to face in outsourcing their business function in Bangladesh for attaining profitability.

Drauz (2014) stated that established organization intends to targets all the available market in the community and thus ask other organization to manufacture their products. Kang et al. (2012) stated that marketers utilized this concept to emphasize more and allocate resources more on their core competencies.

An established organization have many core functions; whereas, the main aim is to attain more profitability. Yampolskiy et al. (2014) stated that marketers can emphasize more on the core operation like allocation of resources, selecting vendors and process for targeting new customers if they outsource their manufacturing operation to other company.

Project Scope

Kastalli and Van Looy (2013) highlight that not all third party are incompetent. An organization need to research on most competent organization, whose organizational objectives are almost similar and they can obtain the organizational objectives easily. Zhang and Huang (2012) moreover stated that this process thus reduce the risk of working process of manufacturing as the outsourcing organization are efficient in this process.

Outsourcing the business function not only allows organization to accomplish their complete business function properly but also help in enhancing their partnership (McCarthy et al. 2013). This will help them to sustain in any business marketers the third party aware of the political, environmental and technological condition of their nation. 

            Brewer et al. (2013) stated that some businesspeople use some valuable resources and get the supply from their selected vendors. However, business outsourcing for manufacturing process may result in getting all the knowledge to be disclosed to the manufacturer. This furthermore leads to data protection violation to the competitor organization.

According to Solakivi et al. (2013), a successful partnership can only be formulated of the business objectives among organizations is properly alignment. However, alignment disorder can occur due to improper knowledge of other company’s objectives and aim and this may results in poor products manufacturing by not following the quality standard that an organization follows.

This problem is mainly obtained in the cases, where a company desires to outsource their business function in foreign nation. In this case, it is usual that the vendor is not aware of the governing regulations that the company has to follow in their nation. The problem can be increased more due to the improper communication.

• What are the opportunity and challenges faced by Nike by outsourcing business functions in Bangladesh?

• What are the benefits that a Nike can get by outsourcing their business functions?
• What are the opportunities that allow Nike to re-explore their outsourcing approach for business functions?
• What are the challenges that allow Nike to re-explore their outsourcing approach for business functions? 

Approaches to reliability and Validity- The reliability method that will be used in this research is test-retest reliability. Csikszentmihalyi and Larson (2014) portray that in test-retest reliability test, same test is obtained more than one time based on different period and then a particular research outcome will be sated. Moreover, in this research study articles that represent opportunities and challenges in outsourcing the Nike’s business functions in Bangladesh in different time line will be considered.

Moreover, the validity technique that will be used is formative validity technique as after the data collection from articles and research papers, the changes and opportunities found from the research will highlight the main strategies followed by Nike so that their business outsourcing function can be enhanced.

Research Philosophy- Since secondary research will be used, thus the selected research philosophy technique used is interpretivism. Silverman (2016) also stated that in interpretivism research philosophy, the sample size is less and is based on the theoretical findings. Thus, this method will be used in this research.

Literature Review

Research purpose- Among deductive and inductive research purpose, inductive research purpose will be used. From the primary research is that the study of opportunities and challenges faced by Nike in outsourcing their manufacturing operation, some strategies for enhancing the business outsourcing function will ne suggested and based on which the research outcome will also be found.

Sampling- There are two type of sampling methods that can be followed in research- probability and non-probability sampling method. Fowler Jr (2013) stated that all the respondents get equal chances to participate in the research, it is known as probability sampling method. Moreover, when all the respondents are not getting the same chance to participate in the research, it is known as non-probability sampling method (Sekaran and Bougie 2016). In this research, non-probability sampling method is used as not all the newspaper articles and research paper are not selected for this research only those papers that is based on business function outsourcing of Nike in Bangladesh will be considered.

Data Collection Method- There are two methods for data collection primary and secondary data collection process. Bernard (2017) stated that data when collected directly from the research respondents, the method of collection is known as primary data collection. Data is collected through websites, newspaper articles, research papers and peer journal articles are known as secondary collection process. In this research, secondary data collection will be utilized and data will be gathered from newspaper articles and research papers. 

The limitation of the research is that only secondary data collected is being collected and thus the data collected are outdated and the current situation of the business function outsourcing cannot be identified. Moreover, the research is also based on one organization, which illustrate that the opportunities and challenges for business function outsourcing can only be defined for one organization or limited to the shoe manufacturing industry. This identified challenges and opportunity do not define the scenario of all industry.

Table 1: Research plan

(Source: Created by Author)

Conclusion

The selected research objectives for the research are to identify the benefits of outsourcing business functions, evaluate the opportunities and challenges of outsourcing business functions and to recommend strategies for improving the effectiveness of the business function outsourcing. A secondary research will be conducted and the source selected are from newspaper articles based on the business outsourcing of Nike in Bangladesh and research based on outsourcing will also be selected. Non-probability sampling technique will be followed in selecting these resources. The entire project is planned to be completed in six months. 

Reference List

Banjo, S., 2014. Inside Nike’s struggle to balance cost and worker safety in Bangladesh. The Wall Street Journal, 21.

Bernard, H.R., 2017. Research methods in anthropology: Qualitative and quantitative approaches. Rowman & Littlefield.

Brewer, B.L., Ashenbaum, B. and Carter, J.R., 2013. Understanding the supply chain outsourcing cascade: When does procurement follow manufacturing out the door?. Journal of Supply Chain Management, 49(3), pp.90-110.

Csikszentmihalyi, M. and Larson, R., 2014. Validity and reliability of the experience-sampling method. In Flow and the foundations of positive psychology (pp. 35-54). Springer Netherlands.

Drauz, R., 2014. Re-insourcing as a manufacturing-strategic option during a crisis—Cases from the automobile industry. Journal of Business Research, 67(3), pp.346-353.

Fowler Jr, F.J., 2013. Survey research methods. Sage publications.

Fratocchi, L., Di Mauro, C., Barbieri, P., Nassimbeni, G. and Zanoni, A., 2014. When manufacturing moves back: concepts and questions. Journal of Purchasing and Supply Management, 20(1), pp.54-59.

Kang, M., Wu, X., Hong, P. and Park, Y., 2012. Aligning organizational control practices with competitive outsourcing performance. Journal of Business Research, 65(8), pp.1195-1201.

Kastalli, I.V. and Van Looy, B., 2013. Servitization: Disentangling the impact of service business model innovation on manufacturing firm performance. Journal of Operations Management, 31(4), pp.169-180.

McCarthy, I.P., Silvestre, B.S. and Kietzmann, J.H., 2013. Understanding outsourcing contexts through information asymmetry and capability fit. Production planning & control, 24(4-5), pp.277-283.

Pearce, J.A., 2014. Why domestic outsourcing is leading America’s reemergence in global manufacturing. Business Horizons, 57(1), pp.27-36.

Sekaran, U. and Bougie, R., 2016. Research methods for business: A skill building approach. John Wiley & Sons.

Silverman, D. ed., 2016. Qualitative research. Sage.

Solakivi, T., Töyli, J. and Ojala, L., 2013. Logistics outsourcing, its motives and the level of logistics costs in manufacturing and trading companies operating in Finland. Production Planning & Control, 24(4-5), pp.388-398.

Yampolskiy, M., Andel, T.R., McDonald, J.T., Glisson, W.B. and Yasinsac, A., 2014, December. Intellectual property protection in additive layer manufacturing: Requirements for secure outsourcing. In Proceedings of the 4th Program Protection and Reverse Engineering Workshop (p. 7). ACM.

Zhang, A. and Huang, G.Q., 2012. Impacts of business environment changes on global manufacturing outsourcing in China. Supply Chain Management: An International Journal, 17(2), pp.138-151.

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