Puma and Nike comparison

Nike, Puma

Nike and Puma are two of the major competitors in the international athletic footwear and apparel industry. Nike was founded in 1964 and is based in Beaverton, Oregon, a Portland suburb. Puma was founded in 1924 and is based in Herzogenaurach, a small town near Nuremburg in the Franconia region of Bavaria. Puma was founded by two brothers, but they later split and one would form Adidas. Both companies operate internationally, with roughly the same business model of overseas production and marketing-driven sales. Nike makes more extensive use of celebrity endorsements, but Puma sponsors many sports teams as well. Nike has 34,000 employees while Puma has 9500 employees. Nike is the larger of the two companies. Nike has revenue of $20.8 billion and net income of $2.13 billion. Puma has revenue of €2.7 and net income of €202 million.

Slide Two: Both firms have faced ethical challenges, primarily related to offshore production. Nike has been targeted by activists on numerous occasions, and has responded by taking a leadership role in ethics for its industry. Nike has a code of ethics for its employees, and another code for its suppliers. Included in Nike's code of conduct are the following clauses to which its suppliers must adhere: employment is voluntary; employees are age 16 or older; the contractor does not discriminate; freedom of association and collective bargaining are accepted; compensation is timely paid; harassment and abuse are not tolerated; working hours are not excessive; regular employment is provided; the workplace is healthy and safe; environmental impact is minimized and that the code is fully implemented.

The negative publicity that Nike has received in some high profile incidents has compelled the company to take its ethical duties more seriously, resulting in the code and its active enforcement by Nike. The company's ethical image has improved significantly in recent years as the result of its efforts. The company has been recognized for its work on addressing ethical issues at its suppliers with a listing at Ethisphere as one of the 99 most ethical companies in the world, one of only three apparel companies to receive this designation.

For Nike, their decision-making began as reactionary, but has become proactive. Being based on Oregon, and being the only major American company in the industry, they are attuned to ethical considerations and this has impacted Nike management to demonstrate that they are leaders in the business. In addition, Nike is driven by the fact that it is the industry leader and it wants to outperform its competitors in all areas of the business, including sustainability.

Slide 3: Puma has had less publicity for its supplier issues, but generally faces the same challenges as Nike. There are a number of criticisms of Puma -- such as cutting orders from factories that unionize and the lack of a commitment to paying a living wage -- that the company has failed to address. The company has implemented initiatives for environmental and social sustainability issues. The company has begun to work with activist groups as well, in response to their concerns. For the most part, Puma lags the industry leaders in implementing ethical standards, but is working to catch up.

It seems that Puma management does not have the same sense of urgency to deal with this issue as does Nike management. The fact that the company is based in Germany does not appear to have any influence on its ethical code. It seems that Puma is more driven to compete economically than socially, which reflects its #4 market position worldwide and #2 market position even in its own hometown. Puma therefore appears to feel more oriented towards profit and market share in its decision-making process, with ethical concerns being given lower priority. The relatively lack of spotlight on the firm's ethical practices may also contribute to its attitudes, as it does respond on those few occasions where it receives attention (Greenpeace, 2011).