Globalization is defined by Eriksen, (2007)as in integration and interaction system for individuals, organizations and addition to countries of the globe with an aim of growing the global economy. This is a process that impacts on the well-being of the people, environment, society, culture, in addition to economic development and success of countries around the globe. Nike Inc. is an incorporated company whose main area of business is athletic footwear and accessories. This work looks at globalization and its impact on Nike Inc.(Eriksen, 2007).
This is an American Company, started in January 1965 by Bill Bowerman and Phil Knight. It took on the Name Nike Inc. in May 1978. The company is famous in the sports industry with product lines in shoes, shirts, equipment and accessories amongst others. Some of its globally known slogan include just do it. Nike Inc. has in place traditional and modern distribution channels for reaching to approximately two hundred countries where their main market segments are in the United States, Americas and Europe. Globally, Nike has approximately twenty thousand retailers which incorporates Nike Stores, Nike Towns amongst others that are responsible for sale and distribution of Nike Inc. products. The company has 33% market share in footwear for athletics industry(Datamonitor, 2011).
Globalization and its impact
Nike Inc. outcome on globalization has had tremendous benefits for the company. Due to access to a wider pool of talent and labor, the company has been able to produce low priced shoes. In addition, the company has supplied countries with a cheaper option on athletic footwear and equipment. This fuelled the company’s growth. The cheaper production costs gave the company the power to have surplus funds for innovative designs in addition to more money for marketing efforts. Nike gave developed countries the capacity to purchase the best in the market when it came to sports gear and day-day wear. The company gave developed countries an array of options on stylish shoes, fitting shirts and awesome fittings amongst others. Countries like China, Japan and Netherlands amongst many more, have Nike Inc. products at their disposal, meaning they can purchase them at any time. This is important as the company’s is minting huge profits, particularly in China. It is anticipated to see a compounded annual growth rate of seventeen percent in the next two years. This will make Nike reach the thirty two billion mark. Globalization brings with it bigger market shares, translating into bigger profits(Murphy & Matthew, 2001).
In the 1980’s, Nike Inc. started receiving criticism for getting its products from locations and factories that were champions for low wages, human rights violators in addition to deplorable working conditions. In the 1990s, there were numerous public relations problems that entailed poorly paid workers in Indonesia, Child labor, and deplorable working conditions which joined forces to smear Nikes image. Nike products in the late 1980’s were compared to workers abuse, forced overtime and poor wages. A company once linked to health and fitness, creative marketing and innovative design had a negative image of child abusers showing how globalization can bring about negative risks to the company(Murphy & Matthew, 2001).
Nike inc. is an icon of globalization for sports and commodity culture. The executive management at the company normally reiterate their will to be a global company. The objective is to sell a global brand which can be achieved through marketing that is attractive to diverse and unique local tastes. Hofstede, argued out that there are four sides of national culture. Hofstede’s theory analyzes culture in relation to countries as opposed to individual characters. Elements such as collectivism can work towards Nike Inc. The fact that its main line of products are sports gear, sports have been known to bring people together in countries. Deeply divided countries will come out as one in support of their sports personalities. Having sports gear under Nike is a unique selling point. On the Uncertainty avoidance index, people embrace champions. For instance, in 2014, Nike was testing a running shoe with a Kenyan athlete, not yet launched in the market. In the London Marathon, the innersole of the shoe came out. Despite this, he still won the race. The company went ahead and apologized in the media for the malfunction. This won the hearts of not only Kenyans, but Africans at large(Datamonitor, 2011).
Globalization has both negative and positive effects. This has worked for and against Nike Inc. some of the advantages the company reaped of from globalization are huge profit margins and a bigger market share. However, globalization at once ruined the company’s image in the 1980’s. Cultures are unique in a globalized market and marketing should be localized to each geographic and cultural region.
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Datamonitor. (2011). DATAMONITOR: NIKE, Inc. NIKE, Inc. SWOT Analysis. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=61332460&site=ehost-live
Eriksen, T. H. (2007). Globalization: The Key Concepts. Humanities. http://doi.org/10.4324/9780203098837
Murphy, D., & Matthew, D. Nike and Global Labour Practices, Case study prepared for the New Academy of Business … 32 (2001). Retrieved from http://www.bollettinoadapt.it/old/files/document/5282NGLP_2009.pdf