Nike
Executive Summary
The company strategy that Nike uses is an ingenious one. A strategy that founder Phil Knight thought of while still in school at Stanford. Instead of paying Americans to put together Nike’s shoes, Knight thought that it would be a better idea to take manufacturing plants overseas to places where labor is much cheaper than in the U.S., places like Taiwan and South Korea. With 86% of its products being produced in one of those two countries and Nike employing a large number of people who lived there, the countries were becoming more wealthy until Knight decided prices were too high to manufacture there anymore (Hitting the Wall, 3). With this in mind he decided to move the factories to places in China like Indonesia where countries were not yet fully developed. This seemed to work and production was going well until the early 1990s when labor strikes rose to 112 in 1991 and news began to leak out about the terrible conditions Nike’s labor force was working in. The subcontractor companies that Nike hired overseas were using underage workers and brutally underpaying them. The pay was so low that a family couldn’t even survive off of the wages made at a Nike factory even while working six days a week. Nike’s sales than began to decline and the company was once again dealing with the negative brand issues that came about numerous times in the 90s for their bad labor practices.
Porter’s Five Forces Direct Rivalry
The key aspect of the company that kept Nike ahead of its competitors was its strategy, which it still employs today. This strategy was different from others because they didn’t manufacture the shoes in the U.S.; instead Nike moved all of its factories overseas where cheaper labor could be used to make the shoes. With the money Nike had saved by doing this, Nike did something very smart Nike decided to put it toward marketing to have huge names in sports Like Michael Jordan to promote its products. In 2003 alone Nike spent $153 million
The company strategy that Nike uses is an ingenious one. A strategy that founder Phil Knight thought of while still in school at Stanford. Instead of paying Americans to put together Nike’s shoes, Knight thought that it would be a better idea to take manufacturing plants overseas to places where labor is much cheaper than in the U.S., places like Taiwan and South Korea. With 86% of its products being produced in one of those two countries and Nike employing a large number of people who lived there, the countries were becoming more wealthy until Knight decided prices were too high to manufacture there anymore (Hitting the Wall, 3). With this in mind he decided to move the factories to places in China like Indonesia where countries were not yet fully developed. This seemed to work and production was going well until the early 1990s when labor strikes rose to 112 in 1991 and news began to leak out about the terrible conditions Nike’s labor force was working in. The subcontractor companies that Nike hired overseas were using underage workers and brutally underpaying them. The pay was so low that a family couldn’t even survive off of the wages made at a Nike factory even while working six days a week. Nike’s sales than began to decline and the company was once again dealing with the negative brand issues that came about numerous times in the 90s for their bad labor practices.
Porter’s Five Forces Direct Rivalry
The key aspect of the company that kept Nike ahead of its competitors was its strategy, which it still employs today. This strategy was different from others because they didn’t manufacture the shoes in the U.S.; instead Nike moved all of its factories overseas where cheaper labor could be used to make the shoes. With the money Nike had saved by doing this, Nike did something very smart Nike decided to put it toward marketing to have huge names in sports Like Michael Jordan to promote its products. In 2003 alone Nike spent $153 million