AMDP Rough Draft

Still figuring out the formatting

From: Brett Emershad

To: Professor Hansen

CC: Writ 340

Subject: AMDP Investment Pitch

Date: February 28, 2018

“At Nike we believe it is not enough to adapt to what the future may bring – we’re creating the future we want to see through Sustainable Innovation”

            - Mark Parker, President and CEO, Nike, Inc.

Nike has been a titan of industry for decades. Consumers around the globe recognize Nike as an iconic athletic wear company. Nike is also the brand behind many of the world’s most popular athletes from Neymar to Tiger Woods. Unfortunately, the positive economic and societal footprints have been counteracted by their environmental impact. Other forces such as pressure to close down sweatshops have forced Nike to formulate a new business strategy. This new venture will revolutionize how businesses interact with the environment and I believe Nike needs AMDP’s investment more than ever. Sustainable Innovation is the new trend at Nike and it looks to completely reimagine how Nike manufactures, distributes, and sells their goods.

History

Nike began at a fellow PAC-12 school, the University of Oregon. Phil Knight and his track coach Bill Bowerman sought to reimagine the running shoe in the late 1950s. They originally founded Blue Ribbon Sports but after Bowerman made friends with a waffle iron, everything changed. Bowerman was searching for new was to create soles for shoes using urethane. He poured his urethane mixture into a waffle iron and began experimenting. Knight and Bowerman took their innovation and founded Blue Ribbon Sports. After creating the product they thought would revolutionize the market, they changed their company name to Nike which derives from the Latin word for victory. The release of the Nike Waffle Trainer in 1974 marked Nike’s entrance to the sporting goods scene. Since that point Nike has experienced continuous growth throughout its existence.

Sustainable Innovation

Nike can act as an enormous influencer in society and

as a result, their beliefs can shape the ideas of millions. Executives at Nike, much like the leaders of AMDP, have placed tremendous importance on sustainability and environmental responsibility. Nike has allocated tremendous resources to lowering their carbon footprint. Nike performed a simulation on possible sustainability

strategies and produced the graph above. Efficiency targets are only a short term solution for a long term

problem our society is facing. Lowering carbon emissions is essential to preventing climate change from having a disastrous effect on our society. It is clear that disruptive innovation is the key to a cleaner future and Nike is prepared to endorse that strategy.

The Sustainable Innovation initiative focuses on revolutionizing Nike’s business process to support the economy and environment. To measure their initiative’s effectiveness, Nike has created three distinct strategic goals – minimize environmental footprint, transform manufacturing, and unleash human potential. I believe these three key points are what makes Nike worthy of an AMDP investment. Nike is not stopping at lowering their carbon footprint, they are completely remodeling their business strategy in order to bring awareness to the importance of sustainability.

Minimizing Environmental Footprint

Nike’s environmental efforts are focused on four main areas:

-       Waste

-       Water

-       Energy

-       Chemistry

Waste is defined as “damaged, defective, or superfluous material produced by a manufacturing process” in the Merriam-Webster dictionary. Nike has produced tremendous amounts of waste since its creation. Manufacturing companies often generate waste as a byproduct of creating their product. Aside from producing lower levels of carbon, the Sustainable Innovation strategy aims to reduce waste primarily through recycling. Nike recycled 54 million pounds of footwear factory scrap in 2015 and aims to generate “zero waste from contracted footwear manufacturing by fiscal year 2020” (Kell). Nike will continue to find ways to reduce its impact on the environment.  

Water is essential to life and as a result Nike has dedicated resources to create manufacturing processes that conserve water. Water is becoming increasingly scarce and no one is more familiar with this grim reality that the residents of Cape Town, South Africa. The major city has experienced drought for the past three years and is close to running out of water. “Thousands of residents will be forced to collect water rations from central collection points” if the infrequent rain cannot produce enough water. It is clear that conserving water is essential and Nike is taking the necessary steps to improve the efficiency of water use.

Energy is the driving force behind everything in society. Finding new ways to generate renewable energy has been a popular subject for scientists in recent years. Experiments in this field have brought us “renewable energy from sustainable sources like wind, solar, and geothermal power with little or no pollution or global warming emissions” (Union of Concerned Scientists). Nike has adopted renewable energy sources and since launching the “Energy and Carbon program in 2008…it takes about half the energy and emissions to make a pair of shoes compared to eight years ago” (Sustainability Report).

Chemistry…

Transform Manufacturing

-       Innovation in the supply chain

-       “code of conduct” for suppliers

-       importance of management’s understanding of sustainability

-       workers that the center

Unleash Human Potential

-       “bring inspiration and innovation to every athlete in the world”

-       Diversity unleashes innovation

-       Investing in talent

-       Get kids active – good for the future

Investment Criteria

-       Triple Bottom Line

-       Social Responsibility

-       Legitimacy of this investment