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Nike and What It Does to Third World Countrys

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Nike and What It Does to Third World Countrys
The Manufacturing Practices of the Footwear Industry: Nike vs. the Competition

The current manufacturing practices of the sneaker industry, in particular companies such as Nike, Reebok, Adidas, Converse, and New Balance, takes place throughout the globe. With the industry experiencing severe competition, and the product requiring intensive labour, firms are facing extreme pressure to increase their profit margins through their sourcing practices. The following paper will analyse the sneaker industry, while examining the multitude of viable manufacturing options, and critiquing their current manufacturing structure.

Footwear Industry – Players, Revenues, Market Share

To properly review the manufacturing in the footwear industry, it is necessary to first gain

an understanding of the dominant leaders in the marketplace. The industry is currently

experiencing hyper competition, led by six main firms – Nike, Reebok, Adidas, Fila,

Converse, and New Balance (see exhibit 1), with nearly $7 billion in revenues

domestically. Nike is the industry leader, with a 47% market share, followed by Reebok,

a distant second at 16%, and Adidas at 6% (see exhibit 2). This category is facing

decreasing demand and the rising popularity of alternative footwear, resulting in more

pressure than ever before to achieve high gross margins through effective global

sourcing practices.

Manufacturing options

Footwear companies have two basic options in the manufacturing of their products, they

can both own and operate the factories that produce their products, or subcontract their products out to secondary manufacturers. These facilities can be located either domestically or internationally, and both present a myriad of positives and negatives. Firms that produce domestically benefit from ease of monitoring, skilled workforce, government stability, job

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