Nike's Globalization Strategy

Question In the last 30 years, Nike has only intensified its practices in growing across all continents. Over the years, Nike has had had success but has occasionally come under scrutiny, for various unethical practices or scandals. After reviewing the case study. •Explain how Nike has come came to that their current globalization situation through its expansion strategy •Explain what the positive and negative impacts of this strategy were. •Explain how Nike responded to this situation. •In your opinion, how could the company have responded differently? Suggest at least two alternative responses. What would the consequences have been then? Answer 1)Explain how Nike has come came to that their current globalization situation through its expansion strategy The full examination of the expansion strategy that was implored by Nike into penetration into new global markets has a deep connection with the definition of the term globalization. Globalization refers to the spread of products, technology, information, and jobs across national borders and cultures. In economic terms, it describes an interdependence of nations around the globe fostered through free trade. (Jason Fernando, 2022 Investopedia) with the definition of globalization will examine the in-depth strategy utilized by Nike to enter into new markets and become a global giant the global strategy had its fair share of criticism as will be highlighted in the essay. To begin with, robust marketing with the use of the internet and social media has assisted in the quest of expanding its business globally and acquire a substantial market share globally, it employs global marketing methods. Nike was able to garner global consumers and market share by leveraging its social media presence. Nike was on the forefront of firms that took advantage of the internet's and social media's technological advances. It pioneered email marketing, online marketing, and broadcasting. It also recognizes the importance of social media in communicating with customers and building a brand image with a Facebook of almost 33 million Facebook fans and 141 million Instagram followers ( Maarten et al, 2021, Global Marketing) this huge following enable Nike to leverage its social media presence to inform customers about new items and campaigns around the world which has enabled its superiority and leadership in the globalization project thus it is valid arguing that the robust marketing strategy as an expansion strategy that Nike has utilized to lead the globalized project. In addition to the above, the utilization of partnerships and endorsement deals has also been at the center of Nike worldwide marketing and global expansion. Nike has always endorsed prominent figures who are global as well as national icons Michael Jordan, Neymar, Cristiano Ronaldo, and Tiger Woods are just a handful of Nike's high-profile athletes. These athletes have a large following around the world, especially in their own country. Neymar, for example, has a sizable following in Brazil, and is highly revered globally and in his homeland and Cristiano Ronaldo has a sizable following in Portugal, these figures enable Nike to easily penetrate in their home countries for instance Nike can easily engage with audiences from many nations by working with these athletes. Many customers regard these players as role models and heroes, and the clothes they wear can have a significant impact on their fans' purchasing decisions. Nike also sponsors a number of sports teams with this strategy Nike has precipitated the spread of the globalization project thus it is valid arguing that partnerships and endorsements necessitated the Nike Globalization project. 2)Explain what the positive and negative impacts of this strategy were. The expansion of Nike into new markets had its fair share of positives in that Nike's expansion plan paid off for the company, they were very successful in entering the market which they previously faced difficulties as well as occupied by other increasing sales and turning a profit. The mass production that came with global expansion drastically increased the economies of scale and drastically minimized production cost which led to devoting more resources to design and marketing, allowing them to increase their global footprint. The expansion of Nike also increased the Gross Domestic Output of hosting countries such as Vietnam which hosted the companies as well as that of the United States. The other positive to the Nike global strategy was that skills to shoe manufacturing were also spread across new territories which in itself was skills transfer onto the local communities. With positives attached to the Nike global strategy there was a fair share of negatives which also characterized the Nike strategy. Nike was accused of unethical tactics, particularly in the 1990s, as a result of their development into several low-cost countries in Southeast Asia. The Child labor accusations came to light in which the company was accused of having 12 year old working in a soccer ball factory ( Mallen Baker ,2016 ) this was bad publicity on the company’s image. The child labor accusations seemed as the scratch on the surface there seemed to be more accusations to follow with the company also being accused of slave inadequate wages were among the unethical acts, The accusation on the Nike company was centered on the book the Nike Culture; The sign of the Swoosh which highlighted the company as paying slave wages, an average $2.60 per $80 pair of sneakers (Goldman and Papson, 1998) which was very low. The other negative that Nike faced was also that the working conditions that the workers were exposed to as very bad with the workers exposed to Toluene which was a chemical that caused skin diseases as according to the Ernest and Young report of 1997 which highlights a fair share of Nike negatives that can be associated with the Nike strategy. 3)Explain how Nike responded to this situation. In the wake of the crisis of revelation that befell Nike, the initial response that the company instituted was to deny any responsibility for any violations of labor rules or poor working conditions in the facilities from where they sourced their supplies (Mallen Baker, 2016) they claimed that they lacked the authority to control factory activities and that the workers engaged were not directly employed by Nike, that the companies they sourced the products where part of the value chain and not directly affiliated to Nike although this position changed in 1992. They devised a code of conduct that all current and potential suppliers were required to sign and post in their offices. This code of conduct outlined the rules that had to be followed when it came to labor regulations and working conditions. In 1998, they made progress by raising the minimum working age for factory workers. The Nike also trained officer which were to be designated in each of the offices that the company operated in to oversee the labor compliance regulation adherence. Nike also responded to the accusation by sending a United Nations representative to formulate and independent report on the allegations into poor working conditions in Vietnam and the report found Nike in the Clear though it was accused of bias by Human Rights organizations and ignored the fundamentals. 4)In your opinion, how could the company have responded differently? Suggest at least two alternative responses. In my own opinion, Nike should have firstly acknowledged the accusations especially those that of child labor and looked for ways to rectify them for instance perhaps provided the affected kids a bursary so they can attain a proper education and properly employ them when they are of age in a more strategic part of the organization this would have the companies badly tattered image. The other one was reduced the compensation of the highly inflated partnerships and endorsements in that it is the high-net-worth individuals who continued amass the bulk of Nike wage bill when in actual fact even the poor individual’s contribution in the creation of the product cannot be understated or be undermined and perhaps hike the wages of the lowly placed workers 5)What would the consequences have been then? The consequences would have been less severe in that the brand of Nike wouldn’t have been tarnished in being associated with Child labor slavery working allegations. The alienation of the Nike brand would have been minimized as well as the reduction of revenue which were associated with Nike product boycott. The Nike company would have easier penetration into new markets for with the scandals the Nike company was met with suspicion and less support.