Analysis of Globalization and Challenges
Globalization is an instrument that can assist you with your business around the world (Tapper, 2000). At the point when an organization chooses to go “worldwide,” it will be productivity with a frequently increment. Few out of every odd business, in any case, will profit by globalization. A few associations may have a sound development in the worldwide market; however, a few associations should beat numerous difficulties before they are set up. Nike, the world’s driving shoe company, because of its untrustworthy work practice, has had a ton of awful promoting. Specialists at Nike’s manufacturing plants were constrained in a risky workplace to stay at work longer than required and paid slave compensation. Terrible promoting identified with the act of Nike’s work has demolished its notoriety and brand picture totally. The organization has turned into an objective for developments against globalization and hostile to sweatshop. Hostile to Nike battle has brought issues to light in underdeveloped nations of sweatshop work. Some censured that with the right systems, Nike did not uphold it implicit rules. Phil Knight, Nike’s CEO understood the earnestness of the issue in the wake of getting numerous grumblings about his unscrupulous practice. He visited the agreement processing plants of Nike and gave an assortment of addresses about his forthcoming activities to improve the circumstance of human rights (Hobbs, 1998). Numerous individuals question his truthfulness, in any case, and dread that he couldn’t satisfy his guarantees of a sound laborers. Indeed, even up until this point, Nike still battles to crush the open’s negative inclination (Hobbs, 1998). Would this issue be settled by Nike? Has Nike attempted to improve Asia’s working conditions?
Globalization is commonly understood as the spread of culture, language of religion, communication, technology, commerce, media, and transportation influence. This spread has involved cross-border interconnection of economic and non-economic activity (Smith & Doyle, 2002). Today, many companies are moving their business operations to foreign countries by going global (for example, Apple, Coca-Cola and Dell). They have various reasons to do business internationally. Some companies choose to expand into new markets, some want their business to diversify, and some want to increase market share and brand value. Other reactive or defensive reasons for doing business overseas are: trade barriers, customer demands, competitor globalization, and regulations and restrictions (Okolo, 2008). Production costs in developed countries have risen tremendously today. Many companies, like China, Cambodia, South Africa, India, Vietnam and Indonesia, have outsourced their entire production operation to developing countries or third world countries. They believe that their production, labor and utility costs will eventually be reduced by offshoring production or service.
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The athletic footwear industry has been affected by recent economic crisis. However, in 2009, the market for athletic footwear declined less than in 2008. Sales of athletic footwear were down 1.4 percent and sales were down 3.2 percent in 2008. Footwear is considered less cyclical than clothing when consumer spending is under pressure. The footwear market is expected to continue to grow over the next few years by analysts. (Press release from Prolog, 2009). The US is the world’s largest market for sporting goods. Most businesses in the US face rising prices of raw materials and labor costs. Many companies have focused on moving manufacturing work to Asia increasingly. Countries such as Vietnam, Indonesia, and China have become a major outsourcing destination for American manufacturers of apparel and footwear. The sporting goods retailer market is highly competitive and highly fragmented. In the future, intense competition will drive weak businesses out of the market. Thus, many retailers are reducing their presence in saturated markets in underperforming markets or limiting store growth.
Child labor is spread throughout Pakistan. Sialkot, a city in Pakistan, is a center for export-oriented goods production, especially sports goods such as hand-stitched soccer balls (Locke & Siteman, 2001). Approximately 70 percent of the world’s soccer balls are made in Sialkot and companies such as Nike, Adidas, Reebok and Miter are importing Sialkot soccer balls. Nike contracted with SAGA Sports for its soccer ball production in the 1990s. Both firms benefited from child labor access in Pakistan (Haider, 2007). Life magazine published an article on child labor in Pakistan in 1996, which included a photograph of a young boy sewing a Nike soccer ball.
Over 80% of Nike’s outsourced factories are in Asia such as China, Thailand, Indonesia, and Vietnam. These countries ‘ government forbade workers from forming independent unions and at the rock bottom set the minimum wage. Labor activists criticized the workers being paid below the minimum daily wage in the Nike factories. Nike’s subcontractor paid less than US$ 3 a day for workers in Indonesia (Medea, 1998), and the wage did not meet one individual’s basic needs. In 2006, the Worker Rights Consortium calculated that living wages in Indonesia were approximately US$ 8 per day (Bose, 2008) and the Indonesian government admitted that minimum wages covered only 70 percent of basic wages.