Manufacturing in Ethiopia: Decathlon’s Partnership Model
The case focuses on Decathlon, Europe’s biggest outdoor and sports retailer. It examines how the company is adjusting its business model to align growth and profits with positive social impact and respect for human rights. It discusses Decathlon’s recent involvement in the nascent Ethiopian garment industry and the company’s efforts to introduce a partnership model, which is based on longer-term business relationships and joint growth strategies with selected suppliers. Beyond Ethiopia, the partnership approach is enabling suppliers in developing countries to organize their work more effectively and helping garment workers acquire new skills and capabilities, thereby improving productivity. At the same time, manufacturers receive support from Decathlon to improve general working conditions and, over time, to increase workers’ wages.
The case introduces the challenges experienced by Anas Tazi, Decathlon’s country manager for Ethiopia. Decathlon’s sourcing strategy, based on a long-term business vision, requires stable demand and investments to unlock the strategy’s true potential. In Ethiopia, recent positive trends, such as greater supply chain transparency and heightened sensitivity to exploitative labor practices in the garment sector are threatened by ethnic and regional conflicts. These conflicts, sometimes violent in nature, could undercut efforts by the Ethiopian government and pioneering brands like Decathlon to develop and diversify the country’s economy. Against this backdrop, the questions are: How can brands source responsibly from developing countries and support their socio-economic development? Can Decathlon’s partnership model overcome a largely transactional business model and create value for foreign corporations and for the communities where the goods are being produced?
The case illustrates what companies can do to promote and uphold human rights through core business processes. But it also shows the complexities of managing global supply chains when crucial factors remain outside the control of individual companies. Establishing longer-term business relationships appears to support improved labor rights at supplier factories over time. Still, a high degree of economic and political stability is needed to support investments in longer-term sourcing relationships. In Ethiopia, the partnership model is put to the test, and students can discuss how brands could best deal with the challenges of the global and local operating context.