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The Reebok Challenge ~ A Corporate Charter for Social Responsibility Julian Jacobson Adam Rees Hans Singh Iris Liang Impact of Globalization on Long Run Average Cost Pareto Optimality

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the reebok challenge a corporate charter for social responsibility

The Reebok Challenge~A Corporate Charter for Social Responsibility

Julian Jacobson

Adam Rees

Hans Singh

Iris Liang

pareto optimality
Pareto Optimality

A movement from one alternative allocation to another that can make at least one individual better off, without making any other individual worse off is called a Pareto improvement or Pareto optimization.

Shareholders

Society

pareto optimality4

Pareto Optimality

Short-Term Profits

1.Cost Structure

Social Responsibility

Consumer Awareness

2. A company’s commitment to it’s employees and host country does not end when it’s cost structure erodes.

3. Do consumer’s care about anything other than price?

Long-Term

Brand Equity

pareto optimality5
Pareto Optimality
  • What percentage of profits provides maximum benefit to shareholder’s and society?

Societal development

Shareholder’s Equity

incentive to relocate
Incentive to Relocate

South Korea China (PRC)

Persons Employed 500,000 500,000

Wages per hour $2.71 $0.25

No. of Hours per day 9 9

No. of days per year 312 306

Total labor cost $3,8 billion $344 million

relocate profits
Relocate Profits

Investment in Welfare

Total Labor Cost in South Korea $3.8 billion

corporate level strategies
Corporate Level Strategies
  • Relocate manufacturing operations to achieve lower costs
  • Createan industry-wide auditing systems by developing a common industry charter and enforcing all companies in the industry to comply
  • Invest in educational & training programs for employees in developing countries
  • Increase consumer awareness of social responsibilities through marketing efforts
  • Increase international sales by expanding geographical market and extending product line

Profit

Social responsibilities

Social responsibilities/ Brand Equity

Social responsibilities/ Consumer awareness

Profit

reebok s challenge
Reebok’s Challenge…
  • To Industry (Nike et al)
  • To Consumers
  • To Shareholders
  • To Developing Nations
marketing strategy educate the consumer
Marketing Strategy:Educate the Consumer
  • Launch the challenge via television advertising during 1996 - Spain Olympics
  • Budget = 50% (63 mm) of Reebok’s estimated (126 mil) current marketing budget
  • Sponsorship strategy:
    • International stars from the Seoul Olympics unfold story about how production in their countries has been positive, and negative, and the importance of social consciousness. American Olympiads drive home importance they have realized in Olympic experience.
the athletic shoe industry
The Athletic Shoe Industry
  • Reebok
    • Apartheid, Native Americans, Pro-Democracy
    • Responsible Business Citizens
  • Nike
    • Focus on manufacturing partners
    • Lack of Long-Term perspective
the athletic shoe industry12
The Athletic Shoe Industry

Phil KnightPaul Fireman

  • Broad Perspective
  • Consumer Awareness is increasing
  • Employee’s are vital in forming corporate identity
  • Denial of exploitation
  • Emphasis on Contribution
  • Memorandum demands partners comply with national standards

Everyone is missing the POINT!

  • Become Pro-active
  • Start with the Man in the Mirror
  • Think Long Term!
long term profitability
Long-Term Profitability
  • Brand Equity World-wide
  • Development of Accountability Standards
  • Challenging Consumers and Shareholders

Minimizing cost Structure

INDUSTRY DOMINANCE

Building Brand Equity

conclusion
Conclusion

Reebok must establish a global standard of:

  • Optimal Profits
  • Social Accountability