Nike, the huge sportswear company, is set to reduce its workforce by about 1,600 employees, which is about 2% of its global staff, as part of a much bigger plan to reduce cost of production by $2 billion.
The decision was done in the midst of some bad bad performance which makes it seem as though the company is planning to change their strategy.
CEO John Donahoe,who spoke about the situation, actually admitted to the fall in the performance of the company and took full responsibility for it, stating, “This is a painful reality and not one that I take lightly.
We are not currently performing at our best, and I ultimately hold myself and my leadership team accountable,” he continued. Since December, there have been rumors that some workers may lose their jobs during the period when Nike unveiled its cost-cutting and restructuring strategy.
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Donahoe, however, said that he was confident in the abilities of the company to balance itself in these economic times. “Nike has a proud history where the most challenging moments bring out the best in us, individually and as a team. I know we will come together to respond once again, and I am confident in our future.”
Since late May, the layoffs had already begun. At first, it affected the company’s Oregon headquarters. In response to this, former Nike employees have come together to create alumni groups aimed at supporting those affected.
These groups would help as a network to move individuals into society, many of whom would try on new businesses post-Nike employment.
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Jana Panafilio, a Nike veteran, highlighted the prevalence of former employees founding their own businesses, stating, “There is a disproportionate number of former Nike people that start their own companies.
They are looking for talent, and they are looking for clients.” Panafilio emphasized the availability of resources within these alumni networks to assist individuals in their post-Nike endeavors.
The decision to downsize comes amid a turbulent period for Nike, with its stock experiencing a double-digit drop in December coinciding with the announcement of budget cuts.
Additionally, high-profile departures, such as Tiger Woods ending his long-standing partnership with Nike to launch his own brand, have further underscored the company’s challenges.
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While Nike has stated that store and distribution center staff will not be affected by the layoffs, the way they are restructuring is showing that the company is putting some effort into managing the challenges of a company to maximize profits while minimizing costs as well as the political policies that can affect the company.
However, they believe that by reducing operations and focusing its efforts, they will adapt to the recent business environment as well as remain at the top of the sportswear business.
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