The Global Presence and Demographic Focus of Nike

By Victoria Fields

Article Overview● Nike Inc. goes global to save on production costs, labor and to reach new

markets.● Nike Inc. has renewed their partnership with FC Barcelona for 10 more years

(2016-2026) and began a new partnership with the NBA that will last for 8 years (2017-2025).

● Nike.com relased a publication announcing a new partnership with a global foundation.

● Nike.com has released publications on their website that explain their global impact in helping children and young women.

Article Overview● Nike has been accused of treating employees overseas poorly, with low

wages and horrific working conditions (sweatshops).● Nike loses trust from its consumers and CEO Phil Knight is forced to take

action.● Nike has challenges with excess inventory, trusting global markets and

competing with global companies.● Nike expands sponsorships with individual athletes overseas.

What Is Globalization?- The process by which businesses or other organizations develop international

influence or start operating on an international scale.

- This movement has led to practices such as outsourcing in which

businesses move manufacturing and service centers to countries where

labor is cheap.

Globalization for Nike- Nike is the world's leading designer, marketer and distributor of authentic

athletic footwear, apparel, equipment and accessories for a wide variety of

sports and fitness activities.

- The company is diversified geographically, with a presence in over 190

countries. - Some include the United Kingdom, South Africa, Jamaica, Dominican Republic, and Ireland.

- Nike’s global revenue generated more than 32 billion U.S. dollars.

Why Did Nike Choose To Go International?- The countries that Nike has chosen to operate in are close together,

reducing transport costs.- Indonesia, China, India, Thailand, Vietnam, the Philippines and Malaysia.

- The countries are also in a “trade bloc”, meaning that products can be transported between

them without incurring import and export costs.

Why Did Nike Choose to go International?- Raw materials (rubber and cotton) are also grown in these countries or

nearby.

- Labor costs are cheaper internationally rather than in the U.S.

The Global Impact of Nike - Nike helps get kids active by supporting sport and physical activity in schools and

giving more kids a chance to play youth sports around the world.- E.g. In Brazil, Nike partners with local organizations to get 1,400 kids moving during school by

finding new and innovative ways to combine physical activity with regular school subjects.

- Nike has employed over 70,000 people worldwide from 2009 to 2016 (Statistica,

2017).

- The company invests in and supports the “Girl Effect”, which internationally helps

adolescent girls end poverty for themselves.

The Disadvantages of Nike’s “Sweatshops”- Two decades ago, Nike was under fire for abusive labor practices after

outsourcing their labor overseas because it was cheaper.- Manual workers were employed at factories working long hours for very low wages in poor

conditions (Sweatshops).

Nike’s Loses Trust From Consumers- The public was shocked by reports of Indonesian Nike workers earning as

little as 14 cents an hour.

- As a result, customers began protesting at the Olympics and at nearby

Nike stores (the perception that Nike abused its workers lasted for more

than seven years).

Resolving “Sweatshop” Issues- CEO of Nike, Phil Knight, started to publicly make changes within the

company by starting an honest and transparent initiative with its global labor

issues.

- Nike raised the minimum wage it paid workers, improved oversight of labor

practices and made sure factories had clean air.

- The company also published a 108-page report revealing conditions and pay

in its factories and acknowledging widespread issues, as well as a complete

list of factories it contracted with (The company continues to publish yearly

reports).

Nike’s Biggest Challenges Globally- Competing with other global companies

- Under Armor, New Balance, Adidas, and Skechers.

- Investing in China’s market- It’s highly unstable and the consumers are unpredictable.

- E.g luxury brands who moved into China several years ago are now struggling.

- Excess Inventory - Has had difficulty managing the flow of products into the marketplace.

Nike’s Sponsorships Go International

- Nike is well known for sponsoring athletes in the U.S. However, it’s international players are becoming more popular due to their contracts with Nike. A few include:

- Ding Changquin, China (Track and Field)

- Neymar Jr., Brazil (Futbol)

- Andy Murray, Great Britain (Tennis)

- Eluid Kipchoge, Kenya (Track and Field)

- Dirk Nowitzki, Germany (NBA)

- Manu Ginobli, Argentina (NBA)

- Paul Casey, England (PGA)

Nike’s Partnerships Expanding Into Global Markets- Futbol Club Barcelona (Spanish Soccer Club)

- Nike extended its deal with Spanish League Soccer Champions. It’s estimated that the new extension could be worth nearly $175 million annually over the next 10 years.

- National Basketball Association (NBA)- The NBA and Nike Inc. announced an eight-year global merchandising and marketing

partnership that will make Nike the official on-court apparel provider beginning with the 2017-18 NBA season.

- Ellen MacArthur Foundation- The leading organization working with businesses, governments and academia to build a

framework for a circular economy.- With this partnership, Nike will increase its global innovation efforts by joining other influential

companies and emerging innovators working on the shift to an economy that is restorative and regenerative by design.

What are Demographics?- Statistical descriptions of characteristics of a population.

- Which include age, race, gender, income, and so on.

- When it comes to Nike Inc., they attempt to provide the most affordable, yet

durable clothing, shoes and equipment for all consumers regardless of race

and ethnicity.

- However, when it comes to age and gender, their demographics have

changed; which has resulted in shifting their focus to the groups that provide

the most profit.

Nike’s Demographic Focus: Women- Nike is expanding women's apparel, especially

sports bras and tights.- The sales of Nike's training and running apparel for women

grew by double digits within the past year, outpacing the

men's business.

- “Women in their 20’s and 30’s are largely driving

the "athleisure trend", in which customers buy

leggings with the intent of wearing them to the gym,

errands, and brunch” (Business Insider, 2016).- The women's line could add $2 billion in additional sales by

the end of 2017.

Nike’s Demographic Focus: Young Athletes- Every young athlete’s dream is to become just like

their idol; whether it’s Kevin Durant (NBA), Russell Wilson (NFL), Lionel Messi (FC Barcelona) or Maya Moore (WNBA).

- Therefore, Nike provides the necessary equipment apparel and shoes, so that young athletes are able to reach new limits.

- Nike gets young athletes to wear its products through sponsorships with local leagues, clubs, and federations.

- This advertising strategy draws kids in at a young age and potentially keeps them, as they grow older.

Questions1. Will Nike ever sponsor athletes who are apart of the LGBTQ Community or

those who identify as Intersex?

2. Should the NBA and FC Barcelona keep their deals with Nike, if controversy

over the sweatshops arise again?

3. Did Nike actually resolve their “Sweatshop” issues or did they just put out

information that consumers wanted to hear?

4. Does the global impact of Nike Incorporated outweigh the harmful conditions

their employees endure in factories overseas?

Suggestions for Nike Inc.1. Nike should incorporate all genders and sexualtites that athletes identify with,

to display that they are a global brand who represents everyone. More importantly, Nike will set the standard, that will separate them from their competitors. Thus, generating more profit to their business.

2. The Nike “Sweatshop” controversy goes against the code of ethics for the NBA and FC Barcelona. Therefore, if the accusations are proven to be true again, each organization should withdraw their partnership. Hopefully, this will teach Nike a hard-learned lesson to treat their employees as persons and not a means to an end.

Works Cited - Lutz, Ashley. "Nike Is Going after 3 Kinds of Customers." Business Insider. Business Insider, 07 Apr.

2016. Web. 17 Jan. 2017.

- "Number of Employees of Nike Worldwide 2009-2016 | Statistic." Statista. Web. 17 Jan. 2017.

- "Nike Joins the Ellen MacArthur Foundation As Global Partner." Nike News. N.p., 11 May 2016.

Web. 17 Jan. 2017.

- Ogus, Simon. "FC Barcelona And Nike Announce Landmark Partnership." Forbes. Forbes

Magazine, 25 May 2016. Web. 17 Jan. 2017.

Works Cited - Release, Official. "Nike to Become Uniform, Apparel Provider for NBA." NBA.com. Web. 17 Jan.

2017.

- Schlossberg, Mallory. "Nike Is Facing Unprecedented Headwinds." Business Insider. Business

Insider, 04 July 2016. Web. 17 Jan. 2017.