Company with Unfair Working Conditions and Low Wages
The term “Nike” derives from a Greek Goddess of victory who was called ???? in Greek mythology. In 1964 a company called Blue Ribbon Sports was created from a deal between Phil Knight, Bill Bowerman, and a Japanese shoe company named Onitsuka. Knight and Bowerman later split from Onitsuka because Knight thought that “the financial arrangement with the Japanese firm was strangling his chances for financial expansion” (Theodoros II, 2014). Blue Ribbon sports later launched its own shoe line and named it Nike. Nike planned to create high quality shoes for a cheap price in order to compete with the German shoe companies Adidas and Puma. Their iconic “Swoosh” logo was designed by Carolyn Davidson for only thirty-five dollars. The logo was first used on June 18, 1971 and the Nike shoe line made its debut in 1972 at the U.S. Track & Field Trials in Eugene, Oregon. Being started with only $1,000 dollars, Nike now makes up for 38% of the global sports footwear market share and currently has a net worth of US $34.7 billion.
Being a global retailer, Nike specializes in “sportswear, including shoes, clothing and accessories” (Business Teacher, 2017). Specializing in so many categories can create a lot of strengths, but also weaknesses, opportunities, and threats. Some of the strengths that Nike has are may include but is not limited to brand equity. Nike has developed a mainstream name for itself and is trusted by consumers, including people who are public figures. The company is known for its innovative style, high quality, durability, and performance. Another strength that Nike has is its slogan “Just Do It”, which is easily recognizable to anyone, anywhere. On the production end, Nike has strength because they outsource all their materials oversees, keeping production costs low so they can focus more on design, quality, and marketing without creating a price tag that is too expensive for the average consumer. Lastly, Nike has a powerful effect on society, as they speak on social issues and they create products for all cultures. With strengths there are always weaknesses, and one of Nikes weaknesses is the poor working conditions for the company’s oversees employees. It was said that “Nike has been cited numerous times for poor working conditions in what have been described as sweatshops, low wages, and child workers in its manufacturing facilities” (Business Teacher, 2017).
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This has become detrimental to their brand as these conditions are inhumane and should never be allowed. Another weakness Nike has is that they partner with outlets that sell other brands. This can hurt their sales because of the lack of exclusiveness which can lead to consumers buying other products because of cheaper prices, style, or even design. As far as opportunities, I believe that Nike should sponsor more athletes in other countries like India or China, this could bring in a larger market and help their global presence. Another opportunity that Nike should keep implementing is their clothing market for other countries, for example, the hijab they created for Muslim athletes gained them a new target market to appeal to. Nike has many threats that have the ability to affect their business, such as international labor strikes and currency fluctuations. Another threat would be their unethical working conditions in developing countries. If they continue to utilize sweatshops, more of their consumers will migrate to different brands which will hurt their business in the long run.
Currently, I believe that Nike is using an International business strategy, which can be defined as “companies adopting the broad, international strategy approach focus on creating and exploiting innovations on a worldwide basis, using all different means to achieve this end” (Bartlett & Beamish, 2014, p. 215). Nike took an international push 1981 when it developed Nike International, Ltd. This push was caused by the slow growth in the U.S. market, Nike had bigger dreams. Moving into the European, Nike faced a lot of competition from Adidas and Puma as they were the sole providers for soccer which was the main sport in Europe. To compete, Nike “opened a factory in Ireland to enable it to distribute its shoes without paying high import tariffs, and in 1981 bought out its distributors in England and Austria, to strengthen its control over marketing and distribution of its products” (Funding Universe 2018). Nike’s main reason for expanding international was to be able to become the worlds largest shoe company, which was a success. Diversifying their business is another reason for Nike’s International push, being able to compensate for slow demand in one country with the high demands of another country is ideal for a successful business. It was said that “if one market never gains or loses interest in your offerings, you can pick up the slack with success in other countries” (Kokemuller 2018). Being able to take advantage of the raw materials and resources that would be expensive in their home country was an added bonus for Nike as well.
In my opinion, if I were Nike, the only thing I would change is the labor conditions in our factories. I would offer fair wages and prove to society that our company cares about our workers and that we do have a social conscious. We would lose more profits by paying higher wages, but they would only be a diminutive amount, and they would make up for the loss by adding more socially conscious customers. Other than that, I believe that Ike is doing a great job, according to “Forbes” Nike is the number one shoe brand in the world with a brand value of US $15,000,000,000 and industry leading 38% share of the branded. Nike is an international conglomerate and all I see is more success in their future, as long as they continue to make great products and maintain a social conscious.