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Vans Case Study

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Vans is considered as the largest and most profitable show manufacturer in the world. Vans’s success relies on the network structure that Vans founder and CEO Philip Knight created, allowing the company to produce and market shoes. Basically, the virtual organizational architecture that would allow Vans to focus on some functions such as design and leave others like manufacturing to keep costs low and to give the company greater flexibility. By far, the largest function of Vans Oregon is the design function responsible for pioneering innovations in shoe design while the rest of the major functions are scattered in Southeast Asian suppliers like China and Malaysia. Strategic alliances are important aspects of Vans production particularly since 99 million pairs of shoes manufactured annually are made through such. Moreover, the network structure provides Vans two important advantages: quick responding to changes in sports shoe fashion and low cost. Vans makes use of a global IT system that can literally change the instruction it gives each of the suppliers in real time (Jones and George, 2003, p. 232). As such, within a matter of short period its foreign manufacturers are producing new kinds of shoes.

Vans’s cost are also low because of Southeast Asian labor are a fraction of that of its US counterparts. With Vans’s ability to outsource and use foreign manufacturers keep the headquarter’s structure flat and flexible. This relatively inexpensive functional structure to organise its activities enabled Vans to obtain talent and resources worldwide. Although the virtual structure provides high flexibility for Vans to be responsive to market trends and changes, Vans is hindered by the loss of hands-on control of several functions and employees. Considerably a hollow organization, Vans has a weakened organizational culture and employee loyalty. Inherent risks are also evident including relationship management and contract partner failure and/or business exit. True enough, Vans is faced with minimal tasks environment but with international environment that is otherwise conflict-laden and competition-pressured. While in the internal environment Vans is considered as a technological innovator; technological capabilities also make a standout within the athletic shoes industry.

Globalization, as such, not only requires Vans to globalise its communication technology but also contributes to ever-fiercing competition thus the continued product innovations (Frenkel, 2001). Stonehouse et al (2004) notes that continuous product development is considered necessary because Knight believes that there is a seven-year brand cycle within the athletic footwear industry. Vans combated the perils of globalization through embracing a continuous business model without sacrificing the core design of its products. Pal (2008, p. 265) describes Vans’s business model that transformed into a network-centric organization using information technology to better equip coordination among its more than 800 partners in over 52 countries. Technology has created a fierce competition within the industry and it is the only way to innovation. Luo (2001, p. 227) maintains that Vans monitors the industry for changing trends and often leads it in product innovation. Public is increasingly becoming aware of new technological improvements in footwear as well hence increasing stability, support, comfort and performance are at the core of Vans’s research and design.

Vans adapts to rapidly changing environment through the use of technology. Likewise, Vans also capitalizes on healthier lifestyles of the people although the industry in general is in its mature stage of the industry life cycle. Further, major threats for Vans are government regulation especially those that attacks the corporate social responsibilities (CSR) and ethicality of Vans, and also economic downturns and changes in shoe fashion. All these makes high end shoes like Vans an unaffordable luxury good. Moreover, Vans faces tough competition with Reebok and Adidas with the former focusing on quality and not quantity and strategizing for increased international sales. Possibility of new entrants, nonetheless, is not significantly high and established companies could easily venture into an athletic footwear line. These companies, however, might be trendy but must be guarded with the demands of the athlete. Vans is an organisation that had long-term contracts with professional and collegiate athletes then running expensive television and magazine advertisements.

Aside from contracting agreement with individual teams, Vans settles agreements with the entire sports league which enables the company to enter and market itself in growing industries using existing industrial leaders and popular sports. Going back to CSR, Vans had faced dilemmas of unethical treatment of its labor force hence in the manufacturing aspect whereby sweatshops make most of the production units. Virtual organizations adhere into environment uncertainties that require buffering, boundary spanning, strategic alliances and co-opting, and Vans understands this very well. However, various unethical criticisms necessitated Knight to rethink its organization. Heal (2008, p. 168) points out the responsibilities of a Western company outsourcing to a poor country. Frenkel (2001) termed the process as the international contracting wherein a buyer-driven commodity chain is apparent. In such an arrangement, the lead firm, in our case Vans, is a brand name merchandiser in a developed country. Vans orchestrates the procurement, manufacture and marketing of athletic shoe products manufactured in developing countries.

Because Vans is propositioned at moderate to high uncertainty and is an unstructured organization, it is easy for Vans to fall prey of the changes in the environment. What made Vans to proactively respond to its global environment was the pressure anti-Vans activists are imposing the organization (Wokuch, 2001). The problem of poverty wages and working under extreme pressure for long hours prevail. Vans institutionalized itself by becoming more responsive when cases of labor rights violations in specific suppliers are brought to its attention to improve the conditions of the worker in supplier factories. This is normative considering that Vans is being pressured by cultural expectations (DiMaggio and Powell, 1983). Using Myron Chartier’s change management model known as change by rational problem solving, Vans felt the need and decided to do something about it. Vans tried at defining the problem and discovered that wages are not only the central of these criticisms but also health and safety laws, and laws guaranteeing human rights.

This prompted Vans to take unprecedented step of listing all of its subcontractors and admitting that it was unable to ensure that they all comply with its labor standards. Disclosure was attempted through cooperative monitoring. Vans then searched for promising solutions and applied one or more promising solutions to the need. What Vans did was to bring together the industry through setting up standards and communicating such through a code. Vans sought at disclosing its supply chain while also investing in and improving communities where productions are in existence. Those suppliers that are not in favor of the new agreement are quickly replaced, as a way of symbolizing that Vans is serious with its endeavors. Since this will be fairly ineffective if Vans will do it alone, the role of Fair Labor Association (FLA) to conduct unannounced audits for five percent of the supply chain annually, amounting to at least 40 independent audits of Vans factories. Non-compliance with the requirements of FLA means dropping out of such factory. On a broader scale, Vans encouraged the industry to embrace and agree on common standards because of the fact that Western sports organizations can have different and potentially conflicting standards.

Coercibly, Vans is pressured to conform to various rules and laws imposed by different states worldwide. This was mirrored in Vans’s Code of Conduct, setting standards for partnerships by seeking contractors who are committed to best practices and continuous improvement in areas of employing management practices that respects the rights of all employees, minimising impact on the environment, providing a safe and healthy workplace, promoting the health and well-being of all employees. Core standards hence are forced labor, child labor, compensation, benefits, hours of work/overtime, environment, health and safety and documentation and inspection (Hartman, Arnold and Wokutch, pp. 145-146). This is a process wherein Vans determines, and continued doing so, whether the problem is solved satisfactorily. In particular, SHAPE that stands for Safety, Health, Attitude of Management, People Investment & Environment was conducted. SHAPE is performed also for a new production factory that desires to establish a relationship with Vans. To say, there is no need for Vans to repeat the problem solving cycle since the problem had been solved from a supplier-centric point of view.

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