Founded in 1964 as an importer of Japanese shoes, Nike has symbolized the method of outsourcing and has grown into the worldwide leader of athletic shoes and apparel it is today, employing over 480,000 people outside of the United States. Based on company owner Phil Knights business model, this company focuses on growth through investing money in design, development, marketing and sales while contracting with foreign companies to manufacture their products. In turn, the Nike trademark, or swoosh, created in 1971 is now an unmistakable trademark throughout the world. The investments in marketing and design have created a public strive to own Nike apparel to satisfy a certain status level. According to the corporate website (www.nike.com) Nike Inc., based in Beaverton, Oregon, sells products to 18,000 retail accounts in the United States alone through a variety of independent distributors in 140 countries worldwide. Independent contractors located in third world countries such as Indonesia, China, Thailand, and Pakistan manufacture almost all of their products. The Nike Company is believed to be among the first companies to outsource all of its production to third world countries, and sell the goods to the worlds largest market, the USA. In the context of economic globalization, Nike is important because it was one of the first companies to outsource for cheaper labor, making it extremely successful through investing in marketing and brand recognition without sacrificing quality.
In doing my research I studied scholarly journals, and Nike based websites that describes their history, sales and income trends, and company analysis. Nike describes its mission to “Be the world’s leading sports and fitness company.” Like all other transnational corporations that have outsourced, Nike used this business tactic in hopes to grow as an entity. Nike began as an idea from an intelligent businessman in the 1960’s, now its sports apparel is being produced and sold in masses around the world.
When and Where Nike Went Global
Nike founder Phil Knight while attending Stanford business school in the early 1960’s developed the business model of the Corporation. He observed how the Japanese were beginning to take over the United States consumer appliance and electronic markets through high quality, low cost labor. Knight found a so-called “nitch” when he realized that most leading shoe companies, such as Adidas, were still manufacturing their shoes in the United States at a relatively high cost. By outsourcing shoe production to Japanese manufacturers, Knight believed that his company could undersell its competitors so break into the shoe market. Soon there after, Knights Company, then known as Blue Ribbon Sports, started to import shoes from a company called Onitsuka Tiger of Japan. By the early 1970’s, Blue Ribbon Sports had sales upwards of $2 million dollars and used these funds to design and subcontract its own line of shoes, and parted ways with Onitsuka. This represents a significant turning point for the Nike Corp., as they became a marketized company as they sought out more regions to manufacture their goods. With this transition to more of a horizontal integrated company, the Nike brand was launched in 1972, and the company officially changed its name to Nike Inc., in 1978. Initially, Nike stayed in Japan to subcontract its shoe manufacturing with two companies, Nippon Rubber and Nihon-Koyo. But, soon prices of labor soon began to rise in the late 1970’s do to a combination of a tighter labor market, and shift in the dollar/yen exchange rate. In order to keep competing with other shoe companies, Nike left Japan to search for lower-cost producers. While searching for new manufacturing regions where workers would accept low wages, Nike opened shoe factories in New Hampshire and Maine, to supply its growing local market. This was in an effort to develop a reliable and...