Globalization typically leads to an increase in the integration and interaction between people of different nations and governments and companies as well. Consequently, the main drivers of globalization are international trade and technological advancements, which make information and communication possible. Nike is among the earlier pioneers of globalization and has benefitted by becoming one of the leading multinational corporations (MNC).
Nike was established in 1964 and has experienced expansive growth across the globe in the athletic footwear industry and, in particular, specializing in mass production of athletic shoes.
Unfortunately Nike’s strategies to win global market share were heavily scrutinized through criticism of labor and marketing
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Initially, each country was provided with subcontracts for production while Nike retained all control of the products. Through this move, Nike was able to reach global market supply goals, but was also able to gain a competitive advantage, which competitors have found hard to beat over the years.
By taking advantage of outsourcing opportunities, Nike is also able to produce at very low both through the raw materials and the cheap labor availability. As a result, Nike is able to largely invest in marketing and designing innovative designs, another strong tactic to survive competition in the industry.
In addition, Nike products can also be sold cheaply and with its mass production benefits, Nike positioned
The Promise and Perils of Globalization: the case of Nike 3 itself strategically enough to meet global demand. As stated by Hill, (2007) “Nike enhanced the productive capacity to meet the rising demand, hence; satisfying the customers’ needs.”
The positive and negative impacts of this
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There were several consumer and labor groups that boycotted and protested against Nike products some leading to cancellation of Nike orders. In the end, the reports seriously and negatively impacted both Nike’s profitability and corporate image.
Nike 's response Strategy
As a result of this criticism in relation to the bad working conditions and low labor compensation,
Nike established labor policies and rules that created work standards similar to American condition and agreed to equally compensate their workers. These new regulations and standards were later adopted by other manufacturing companies within the same nations or regions like Asia and Indonesia. In addition, to address the child labor complaints, Nike implemented new human rights standards especially focusing on child labor laws, including age requirements, and minimum wage levels. These standards were applied to the subcontractors’ agreements and Nike refused to work with those unwilling to meet the conditions. The child labor laws eliminated child employment, requiring only children of age 16 years and above to be eligible for employment. Further, Nike, in conjunction with the Sialkot Chamber