Nike has expanded globally to reduce costs and reach new markets. It has partnerships with FC Barcelona through 2026 and the NBA through 2025. While this global growth increased profits, it also led to controversies over poor working conditions in overseas factories. However, Nike has since taken steps to address these issues by raising wages, improving oversight, and increasing transparency. It now focuses its demographic efforts on women's apparel and sponsoring young athletes.
2. Article Overview
● Nike Inc. goes global to save on production costs, labor and to reach new
markets.
● Nike Inc. has renewed their partnership with FC Barcelona for 10 more years
(2016-2026) and began a new partnership with the NBA that will last for 8
years (2017-2025).
● Nike.com relased a publication announcing a new partnership with a global
foundation.
● Nike.com has released publications on their website that explain their global
impact in helping children and young women.
3. Article Overview
● Nike has been accused of treating employees overseas poorly, with low
wages and horrific working conditions (sweatshops).
● Nike loses trust from its consumers and CEO Phil Knight is forced to take
action.
● Nike has challenges with excess inventory, trusting global markets and
competing with global companies.
● Nike expands sponsorships with individual athletes overseas.
4. What Is Globalization?
- The process by which businesses or other organizations develop international
influence or start operating on an international scale.
- This movement has led to practices such as outsourcing in which
businesses move manufacturing and service centers to countries where
labor is cheap.
5. Globalization for Nike
- Nike is the world's leading designer, marketer and distributor of authentic
athletic footwear, apparel, equipment and accessories for a wide variety of
sports and fitness activities.
- The company is diversified geographically, with a presence in over 190
countries.
- Some include the United Kingdom, South Africa, Jamaica, Dominican Republic, and Ireland.
- Nike’s global revenue generated more than 32 billion U.S. dollars.
6. Why Did Nike Choose To Go International?
- The countries that Nike has chosen to operate in are close together,
reducing transport costs.
- Indonesia, China, India, Thailand, Vietnam, the Philippines and Malaysia.
- The countries are also in a “trade bloc”, meaning that products can be transported between
them without incurring import and export costs.
7. Why Did Nike Choose to go International?
- Raw materials (rubber and cotton) are also grown in these countries or
nearby.
- Labor costs are cheaper internationally rather than in the U.S.
8. The Global Impact of Nike
- Nike helps get kids active by supporting sport and physical activity in schools and
giving more kids a chance to play youth sports around the world.
- E.g. In Brazil, Nike partners with local organizations to get 1,400 kids moving during school by
finding new and innovative ways to combine physical activity with regular school subjects.
- Nike has employed over 70,000 people worldwide from 2009 to 2016 (Statistica,
2017).
- The company invests in and supports the “Girl Effect”, which internationally helps
adolescent girls end poverty for themselves.
9. The Disadvantages of Nike’s “Sweatshops”
- Two decades ago, Nike was under fire for abusive labor practices after
outsourcing their labor overseas because it was cheaper.
- Manual workers were employed at factories working long hours for very low wages in poor
conditions (Sweatshops).
10. Nike’s Loses Trust From Consumers
- The public was shocked by reports of Indonesian Nike workers earning as
little as 14 cents an hour.
- As a result, customers began protesting at the Olympics and at nearby
Nike stores (the perception that Nike abused its workers lasted for more
than seven years).
11. Resolving “Sweatshop” Issues
- CEO of Nike, Phil Knight, started to publicly make changes within the
company by starting an honest and transparent initiative with its global labor
issues.
- Nike raised the minimum wage it paid workers, improved oversight of labor
practices and made sure factories had clean air.
- The company also published a 108-page report revealing conditions and pay
in its factories and acknowledging widespread issues, as well as a complete
list of factories it contracted with (The company continues to publish yearly
reports).
12. Nike’s Biggest Challenges Globally
- Competing with other global companies
- Under Armor, New Balance, Adidas, and Skechers.
- Investing in China’s market
- It’s highly unstable and the consumers are unpredictable.
- E.g luxury brands who moved into China several years ago are now struggling.
- Excess Inventory
- Has had difficulty managing the flow of products into the marketplace.
13. Nike’s Sponsorships Go International
- Nike is well known for sponsoring athletes in the U.S. However, it’s
international players are becoming more popular due to their contracts with
Nike. A few include:
- Ding Changquin, China (Track and Field)
- Neymar Jr., Brazil (Futbol)
- Andy Murray, Great Britain (Tennis)
- Eluid Kipchoge, Kenya (Track and Field)
- Dirk Nowitzki, Germany (NBA)
- Manu Ginobli, Argentina (NBA)
- Paul Casey, England (PGA)
14. Nike’s Partnerships Expanding Into Global Markets
- Futbol Club Barcelona (Spanish Soccer Club)
- Nike extended its deal with Spanish League Soccer Champions. It’s estimated that the new
extension could be worth nearly $175 million annually over the next 10 years.
- National Basketball Association (NBA)
- The NBA and Nike Inc. announced an eight-year global merchandising and marketing
partnership that will make Nike the official on-court apparel provider beginning with the
2017-18 NBA season.
- Ellen MacArthur Foundation
- The leading organization working with businesses, governments and academia to build a
framework for a circular economy.
- With this partnership, Nike will increase its global innovation efforts by joining other influential
companies and emerging innovators working on the shift to an economy that is restorative and
regenerative by design.
15. What are Demographics?
- Statistical descriptions of characteristics of a population.
- Which include age, race, gender, income, and so on.
- When it comes to Nike Inc., they attempt to provide the most affordable, yet
durable clothing, shoes and equipment for all consumers regardless of race
and ethnicity.
- However, when it comes to age and gender, their demographics have
changed; which has resulted in shifting their focus to the groups that provide
the most profit.
16. Nike’s Demographic Focus: Women
- Nike is expanding women's apparel, especially
sports bras and tights.
- The sales of Nike's training and running apparel for women
grew by double digits within the past year, outpacing the
men's business.
- “Women in their 20’s and 30’s are largely driving
the "athleisure trend", in which customers buy
leggings with the intent of wearing them to the gym,
errands, and brunch” (Business Insider, 2016).
- The women's line could add $2 billion in additional sales by
the end of 2017.
17. Nike’s Demographic Focus: Young Athletes
- Every young athlete’s dream is to become just like
their idol; whether it’s Kevin Durant (NBA), Russell
Wilson (NFL), Lionel Messi (FC Barcelona) or
Maya Moore (WNBA).
- Therefore, Nike provides the necessary equipment apparel
and shoes, so that young athletes are able to reach new
limits.
- Nike gets young athletes to wear its products
through sponsorships with local leagues, clubs,
and federations.
- This advertising strategy draws kids in at a young age and
potentially keeps them, as they grow older.
18. Questions
1. Will Nike ever sponsor athletes who are apart of the LGBTQ Community or
those who identify as Intersex?
2. Should the NBA and FC Barcelona keep their deals with Nike, if controversy
over the sweatshops arise again?
3. Did Nike actually resolve their “Sweatshop” issues or did they just put out
information that consumers wanted to hear?
4. Does the global impact of Nike Incorporated outweigh the harmful conditions
their employees endure in factories overseas?
19. Suggestions for Nike Inc.
1. Nike should incorporate all genders and sexualtites that athletes identify with,
to display that they are a global brand who represents everyone. More
importantly, Nike will set the standard, that will separate them from their
competitors. Thus, generating more profit to their business.
2. The Nike “Sweatshop” controversy goes against the code of ethics for the
NBA and FC Barcelona. Therefore, if the accusations are proven to be true
again, each organization should withdraw their partnership. Hopefully, this will
teach Nike a hard-learned lesson to treat their employees as persons and not
a means to an end.
20. Works Cited
- Lutz, Ashley. "Nike Is Going after 3 Kinds of Customers." Business Insider. Business Insider, 07 Apr.
2016. Web. 17 Jan. 2017.
- "Number of Employees of Nike Worldwide 2009-2016 | Statistic." Statista. Web. 17 Jan. 2017.
- "Nike Joins the Ellen MacArthur Foundation As Global Partner." Nike News. N.p., 11 May 2016.
Web. 17 Jan. 2017.
- Ogus, Simon. "FC Barcelona And Nike Announce Landmark Partnership." Forbes. Forbes
Magazine, 25 May 2016. Web. 17 Jan. 2017.
21. Works Cited
- Release, Official. "Nike to Become Uniform, Apparel Provider for NBA." NBA.com. Web. 17 Jan.
2017.
- Schlossberg, Mallory. "Nike Is Facing Unprecedented Headwinds." Business Insider. Business
Insider, 04 July 2016. Web. 17 Jan. 2017.
