Description
For this module, we will be engaging in a ?traditional? case analysis Involving sportswear company hummel International. To complete this case, you will need to read the case study and the article by Porter & Kramer cited below, as well as draw on the background readings for this module. You will also need to conduct additional outside research on the company in order to have the information you need to address the assignment – the case study will not give you all the information you need.
Case Assignment
Begin by reading the case study by clicking on the title:
Karma United: How the Danish Sports Brand hummel Wants to “Change the World Through Sportâ€
Drawing on the information in the case study, the background readings, and outside sources, prepare a paper that answers the following question:
Drawing on the 7 s framework, discuss how hummel?s strategy, structure, systems, style, and superordinate goals work together to contribute to the company?s success? (Extra points if you can find information about skills and staff, and include them in the analysis as well.)
Prepare for the case by researching the following:
Case Readiness Questions
1.What type of company is hummel?
2.What is hummel?s ownership structure? Is it a private or public company?
3.Who are their customers?
4.Who are their competitors?
5.How does hummel compare to its competitors in size?
6.How does hummel differentiate itself from its competitors?
7.What is hummel?s generic strategy?
8.What does hummel?s value chain look like?
9.How does the Karma United campaign serve hummel from a marketing perspective?
10.How does the Karma United campaign affect hummel?s relationships with its suppliers?
The following article is fairly old, but it is a classic and will help you develop your ideas about the company and the effectiveness of its strategy.
Porter, M. E., & Kramer, M. R. (2002). The Competitive Advantage of Corporate Philanthropy. Harvard Business Review, 80(12), 56-69.
Keys to the assignment:
1.Find answers to the case readiness questions, but do not include these questions in your paper. The answers to these questions will help guide your research to address the 7 s analysis.
2.It may be difficult to get definitive criteria for some of the 7 s elements. It is OK to make educated inferences as long as you can back up your assumptions logically with the information you are able to find.
3.Use at least 3 library resources in your research.
4.Stress the interaction of the 7 s elements. Where do they support each other and where are they out of sync? Critical thinking is essential.
5.Cite all sources and provide a reference list using APA format.
6.Proofread and edit the paper. The goal is zero errors.
KARMA UNITED:
HOW THE DANISH SPORTS BRAND HUMMEL WANTS TO
?CHANGE THE WORLD THROUGH SPORT?
This case was written by Professor Kai Hockerts, Department of Intercultural Communication and Management at Copenhagen Business
School and Kamoliddin Saliev. We thank hummel for their support. The case is targeted first semester student and intended to be used as
the basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation.
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WHAT? YOU HAVE NEVER HEARD OF THAT JOB TITLE?
Whatever career path Dan Bjerg had in mind while studying at the university, he definitely
did not imagine becoming a ?Karma Developer?.
Don?t worry; you are not going to find it in any textbooks on human resource management.
The position was dreamed up by the Danish business celebrity Christian Stadil, the highly
charismatic and innovative owner of hummel International (hummel), who hired Dan in 2010.
Working as a Karma Developer at hummel had been an exhilarating experience for the young
and energetic Dan. During his two and a half years at the Danish sports brand, he had worked
closely with Christian and hummel?s Chief Marketing Officer, Henning Nielsen, and Dan had
come to cherish what he thought might well be one of the most unusual work places in
Denmark.
As Karma Developer, Dan was responsible for developing hummel?s ground-breaking
philanthropic activities supporting sports in developing countries and also for strengthening
hummel?s supply chain management. As he was preparing for his next meeting with Christian
and hummel CEO, S?ren Schriver, Dan was considering how he should prioritise and
reconcile these two activities in the following years and which specific actions he should
suggest.
Dan Bjerg and UN Secretary General Ban Ki-Moon at Diplo-Match ? a football match for diplomats arranged by
hummel and Play31 to generate support and awareness for Sierra Leone ? in New York, April 2012.
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HUMMEL INTERNATIONAL
Since its foundation in 1923, hummel had grown into a multinational company with activities
in more than 40 countries. During the 70s and 80s, hummel achieved iconic status in
Denmark peaking when the national football team won the European Championship in 1992,
wearing a hummel football outfit. However, hummel grew too big, too fast, resulting in zero
profits. Just as it was on the verge of bankruptcy, Thor Stadil, a Danish investor, took over
hummel.
The present CEO, S?ren Schriver, was hired in 1993 and immediately initiated a plan to pull
the company back from the brink bankruptcy. S?ren scaled hummel?s wide range of
sponsorships and apparel back, which had spread the company too thin, and diluted its brand
image. Over the next few years, S?ren worked diligently to return hummel to being profitable.
He revitalised hummel?s range, and narrowed its focus to just a handful of sports with football
remaining the company?s most active sports line.
In 1999 Thor became sole owner and he brought in his son Christian (then 28 years old). The
young Stadil quickly noticed an interesting trend; people were scouring the local thrift shops
for old hummel fashions from the 1970s and 1980s. He recognised similar trends in other
markets, with retro fashions making a comeback in Paris and London. hummel then used a
selection of the company?s older designs as the basis for the launch of the company?s first
fashion-oriented clothing collection. From the get go, hummel sought to maintain the
collection?s exclusive aura, shunning advertising and restricting sales to a selected range of
boutiques. Word-of-mouth provided the fashion line with sufficient momentum. By the early
2000s, hummel was growing by around 20% per year and by the end of 2012, hummel?s sales
soared to over US$ 170 million.
Father and son. Thor and Christian Stadil in THORNICO?s headquater in Copenhagen
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KARMA UNITED ? CHANGE THE WORLD THROUGH SPORT
Buoyed by his success, Christian turned his attention to a management issue that was
particularly close to his heart: a new leadership style which he termed Company Karma,
inspired by a Buddhist belief that all acts of individuals would eventually fall back on them.
Selfless behaviour would eventually benefit the giver, selfish behaviour would hurt those
responsible for it. With Company Karma, hummel challenged managers to adopt this
philosophy in businesses, convinced that responsible management would eventually benefit
the firms that engaged in it.
?If you light a lamp for somebody,
it will also brighten your path?
Buddhist proverb
Christian was convinced that doing good and doing well were two sides of the same coin. He
openly stated that companies needed profits the same way a body needed blood, but he added:
?Where it really gets interesting is when the company first makes profits ? what does it
choose to do with itself??
The idea was not new; for the past two decades, Corporate Social Responsibility (CSR) had
emerged as a new management philosophy requiring firms to accept greater responsibility for
their actions and to ensure a positive impact on society at large. In effect, it was voluntary
self-regulation asking businesses to do more than just comply with laws and regulations.
hummel kicked off the Karma
campaign with a decision to
sponsor the first Tibetan national
football team in 2001, after it had
been previously turned down by
Nike, Adidas, and Reebok. The
move embroiled hummel in a
controversial political debate
about the rights of the Tibetan
people.
However,
it
also
benefited the brand as a number
of celebrities, including Richard
Gere and U2?s Bono, began
wearing the Tibetan team?s t-shirt
in a gesture of solidarity.
Ever since this first PR
endeavour, hummel supported what Christian called political ?projects with an edge?.
hummel?s conviction was that sports sponsorship did not just have to be about advertising, but
could also have a deeper meaning. With this approach, hummel?s marketing team developed
the brand promise: ?Change the World through Sport?.
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A COMPLEX GAME
Having taken a very public stance in favour of CSR, Christian was for a long time showered
with praise by Danish and international media. Nevertheless, he came in the crosshairs of
Danish tabloid wrath, when hummel decided somewhat abruptly to end sponsorship of the
Tibetan team in 2008, after seven years of cooperation.
Referring to the Tibetan sponsorship case, Christian asserted that the decision was in part due
to the fact that sports sponsorships change: ?Seven years is a long time in sports sponsorship.
We were looking for new social causes to support such as, for example, women?s football in
Afghanistan and children?s football camps in Sierra Leone?. Christian however also openly
admitted that there had been tension stemming from support of the Tibetan team and
hummel?s production in China: ?It is clear that it is tough to do business in China, when you
support Tibet.?
Consequently, hummel became the sponsor of the first female Afghan football team, making
a powerful statement for gender equality in a country where female sports are highly frowned
upon. The move earned hummel the ?Best Athletic Women Award? from Sportswear
International, underlining hummel?s belief in the power of sport to help developing countries
change. In 2010, a friendly match was held between international troops in Kabul and the
Afghan women?s national football team. The match was deemed a resounding victory for
football, Afghanistan, and oppressed women. It was also a terrific success for hummel: news
of the match garnered 250 million contacts worldwide, from many of whom had never heard
of hummel before.
In 2008, hummel also began sponsoring Sierra Leone?s national team and initiated a project to
build children?s football schools there. In cooperation with the Danish organisation Play31,
community tournaments were organised in five provinces in Sierra Leone. During
tournaments, staff of Play31 talked with victims and former rebel soldiers, in an attempt to try
and heal wounds brought on by the civil war ? memories of which are still vivid in the minds
of many ? and taught them about human rights and other issues. The tournaments reached
about 80,000 people each year.
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In February 2012 hummel launched the Karma Dashboard; a new website
(http://www.hummel.net/en-DK/karma), to allow its business partners to join the Karma
campaign and where hummel?s business partners in various countries could sponsor their own
sports causes and share their experiences online. There was also a global map to better track
and make visible the changes made by all participants in the Karma movement. Plans for the
future included social media campaigns, which would allow customers to comment on their
favourite campaigns and thus spread the word about Karma United.
THE CHALLENGE OF SUPPLY CHAIN MANAGEMENT
hummel knew that by taking a high profile position on sports and human rights, they would
also need to make sure their production would live up to certain ethical considerations when it
came to the factory workers actually producing the hummel products. Driven by an
increasingly globalised market place, the challenge of supply chain management had grown
considerably over the past two decades. Businesses worldwide relied on a large number of
suppliers and in their ability to produce and distribute their own products and services.
This reliance, however, came at a price; the company ended up participating in processes
beyond its immediate control. This could create significant risks as Nike, Inc. discovered in
the 1990s, when anti-sweatshop activist groups attacked the sports apparel and shoe-maker
for contracting suppliers who used child labour in their manufacturing. The ensuing critical
coverage by the media, vilified Nike and the whole sports apparel industry in the eyes of the
general public.
Over the past three decades, hummel had built a complex supply chain of 40 suppliers in a
large number of countries including China, Vietnam, India, Turkey, and Portugal. 10-12 of
these suppliers handled approximately 80% of the orders, with quite a few specialising in
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certain areas. Nevertheless, when building a supply chain and sourcing new partners, hummel
paid great attention to social certifications such as BSCI, WRAP, SA8000,
furthermore, considering whether their factories supplied to other brands, with strict codes of
conduct (COC); indicating that their supplier?s factories had to take COC and relevant
regulations seriously.
Over the years, hummel had also developed its own team of inspectors. It employed about 20
dedicated staff to conduct audits of its suppliers, some of which lived and worked locally,
close to factory sites. However, these inspectors could only audit direct suppliers, not
suppliers of suppliers. Furthermore, hummel did not allow factories to use subcontractors
without first notifying hummel. Suppliers were trained and educated in to understanding that
rule breaking was not a solution, and that it would affect their business relationship with
hummel in the long-term if they did not abide by the rules. But while control was important,
it was also important to build a personal and trusting relationship with production partners,
and establishing a dialogue was essential in securing the best conditions for all people
involved. As a consequence, S?ren personally visited many production facilities in China and
India. Per Kragh, hummel?s Chief Purchasing Officer, also stressed that dialogue with the
factories was essential: ?We have to train and educate our suppliers that rule breaking is not a
solution, and that it will affect their business relationship with hummel in the long-term if
they don?t stick to the rules?.
In the recent years several organisations offering to help companies manage their supply
chain issues had surfaced. One of these was the Fair Factories Clearinghouse (FFC), a nonprofit organisation offering a database (www.fairfactories.org), where companies monitoring
the same factories could share information about workplace conditions on labour, health and
safety, ethical, environmental and security standards, industry trends, and best practices. The
FFC was founded by a group of former Reebok employees that wanted to enable
collaboration among its clients and to enhance compliance with local labour laws, industry
standards, and their respective codes of conduct.
FCC hoped that its solution would help companies lower their auditing costs as well as
improve leverage with suppliers. Eventually the tool would make it easier to select factories
with good human rights records. However, some firms hesitated in joining the FFC since it
would require sharing data about who their suppliers were and possibly even about specific
orders. Many firms had qualms about making such sensitive information available to their
competitors.
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ASSIGNMENT
As Karma Developer, Dan was in charge of hummel?s development and proactivity.
Considering the recent media criticism, it was however clear that in order to stay on track and
continue hummel?s work of doing good while doing well, Dan needed to reconsider the
company?s strategy for philanthropic activities while at the same time ensuring responsible
supply chain management. At tomorrow?s meeting with Christian and the S?ren, Dan was
expected to present and clearly argue for his suggestions. He had to look at all aspects of the
situation ? how would the strategy affect external stakeholders such as customers and
suppliers, and how should potential changes be managed internally in order to obtain support
and engagement from hummel?s employees?
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EXHIBITS
EXHIBIT 1: THE 5 VALUES OF HUMMEL INTERNATIONAL
HERITAGE
As one of the oldest team sport brands in the world originating from 1923, our unique heritage is
deeply rooted in every single fabric of our soul. It is a cornerstone in our design philosophy and is
evident in both our team sport and fashion collections.
CHARACTER
Character saturates the way all our products are made. Each product expresses its own story and
character and the same goes for every team and individual player we sponsor. To paraphrase the
Danish philosopher Soeren Kierkegaard, it?s our ambition to give people a platform where they can
step into character.
DANISH
Being one of the only Danish owned sports brands in the world we honour and believe in values such
as freedom of speech, human respect and equality for all. With roots in the famous Danish design
tradition, we are proud to associate ourselves and our products with these strong values.
SPORTS
hummel begins and ends with sport. From concept development and product design to company
culture, sports are the most essential part of our DNA. The energy, dedication and team spirit that
defines sport, is the strong fundament hummel?s history and growth are based on.
COMPANY KARMA
Every action has a consequence. With our core philosophy of Company Karma we strive to combine
our actions as a business with doing good. Armed with our long heritage in sport, we believe we can
step into character and do good by using sport as a tool for positive change.
EXHIBIT 2: WEBSITE LINKS
http://www.cnbcmagazine.com/story/everyoneas-a-winner/1330/1/
http://qn.som.yale.edu//content/can-international-attention-improve-factory-conditions