Nike outsourcing pros and cons 8 For more on the evolution of Nike’s strategy, see Nike (A), HBS Case # 9-385-025; International Sourcing in Athletic Footwear: Nike and Reebok, HBS Case # 9-394-189; and J. Delivery precision in a multi-product and multi In today's global economy, outsourcing has become a common practice for companies looking to cut costs and increase efficiency. , competitive wage and benefits systems that progressively meet their workforces’ basic needs, including some discretionary income), because every worker has the right to Apr 28, 2025 · But each approach comes with its own set of pros and cons, Pros Cons; 1: Outsourcing: Cost-saving, speed, flexibility What Countries Does Nike Not Operate In Global outsourcing has become a transformative force in today’s interconnected world, shaping economies and businesses alike. Apr 11, 2025 · However, outsourcing is not without its drawbacks. Do the pros help with your goals? Are the cons too much to handle or are they something you can work with? Advantages of Outsourcing. Despite the overwhelming amount of interest, there exists no theory for studying this topic. You can pay as a contractor when you outsource. As you consider each benefit and drawback, reflect on how this affects your business. Thus; multinationals and integration of world economies requires that any successful firm on international scene such as Nike, must be honest in disclosing corporate responsibility, enforce code of conduct, comply by the manufacturing standards of a product, follow the laws of the Mar 7, 2019 · This case explores the evolution of Nike's global product sourcing strategy, in particular ongoing efforts to improve working conditions at its suppliers' factories. Jan 23, 2020 · Outsourcing agencies typically ask freelancers and small business owners to sign lengthy agreements with a significant amount of fine print. What are the benefits and challenges associated with More about . The current paper fills this gap. In this section, we will explore the advantages and disadvantages of outsourcing, and help you determine if it is the right move for your business. Understanding the pros and cons of outsourcing is essential for businesses considering this strategy. Access to technology. “Made in Vietnam” is everywhere in the American footwear market. May 1, 2024 · Pros & Cons of Outsourcing: Explained. View Case study Nike Global Operation and Production Strategy. Nike is committed to working with our suppliers around the world as they seek to develop strategic compensation capabilities (i. There are pros and cons to outsourcing that must be carefully weighed against each other before making a decision. The outsourcing of trainer companies within developing countries with particular emphasis on Nike outsourcing history. Aug 31, 2022 · The current study analyses Nike's journey to responsible sourcing in the global market. Oct 14, 2021 · There are six major footwear manufacturers across the world, namely Nike, Adidas, Reebok, Fila, New Balance and Converse. GrandFerretPerson1170. Better service delivery. References 9 Method: Investigation on outsourcing within business. Strasser and Laurie Becklund, Swoosh: The Unauthorized Story of Nike and the Men Who Played There, (Harper Business 1991). The decision to outsource has positively impacted Nike’s sustainable income by lowering production costs and maintaining the quality of its earnings through a consistent and efficient supply chain. Benefits and Challenges of Nike’s Outsourcing Strategy. Given all of these logistical challenges, it is impressive that Nike was able to generate $37 billion in sales and a $2. S. Shoes that were exported to the United States were estimated at $1. This way, they can enhance their performance overall. This article will delve into the various aspects of outsourcing, discuss its advantages and disadvantages, and highlight the factors that organizations should consider before making the decision to outsource. Let’s start with the benefits. Nike Conclusion Opposition : The good, the bad and the ugly. By focusing on the perspectives and arguments presented in each document, students will create a list of evidence about topics in which there are clear differences between published corporate policy (Nike’s code of conduct) and public opinion (media releases). Nov 4, 2018 · The Cons: Limitations and Disadvantages of Outsourcing 1. 3. 2 billion in Jan 19, 2012 · Just ask Nike. g. If one were to look at their market share, one company stands out – Nike. Pros. In recent years, Apple has also felt the sting. Example of Outsourcing: Nike, a global leader in A Nike is a shoe that simultaneously kicks people out of jobs in the West, and tramples on the poor in the Third World. Nov 30, 2023 · Nike’s success can be attributed to several advantages, such as its strong brand image, innovative product range, and effective marketing strategies. docx from FINANCE PRINCIPLES at Gift University. Experts believe Nike has more to lose in the long term after cutting ties with Woods. Over the past two decades, Nike has been one of the pioneers in outsourcing production to the developing world. Nov 15, 2017 · Nike is synonymous with globalization. The Pros And Cons Of OutsourcingSummary Of The Noble Feat Of Nike By Johan Norberg 955 Words | 4 Pages; Summary Of Upton Sinclair's The Jungle 754 Words | 4 Pages; Outsource Locally By Jesse Walker Analysis 1230 Words | 5 Pages; Nike's Insane And Poor Women In El Salvador 64 Words | 1 Pages; Johan Norberg's The Noble Feat Of Nike Dec 1, 2024 · View Case Study. We will now go deeper. Take a Risk Stay True Success Mylee Brown Chris Heywood Alex Miller Tarl Langham Jordon Westbroek Never Stop Running Success Remained true to their mission. Learn how to make outsourcing work for your business effectively. Now one of the There are many pros and cons of outsourcing, all of which you should carefully consider before deciding for or against this strategy. There have been negative offshoots associated with outsourcing. Sep 14, 2021 · So, let’s explore some of the pros and cons of outsourcing and how to make it work for your business: Benefits Of Outsourcing. Mar 3, 2022 · MOS is a well-established outsourcing company in the US providing quality services to diverse business organizations. Summary: We would like to show you a description here but the site won’t allow us. . The Biggest Winner in Nike's Outsourcing The analysis reveals that Nike is the primary beneficiary of its outsourcing strategy, enjoying cost savings and increased profits. Mar 19, 2015 · The company utilizes a strategy of outsourcing and visits its 800 factories on a weekly basis. The International Organization for Standardization (ISO) states that outsourcing can help businesses cut expenses by 15% on average (Butler, 2023). Nov 27, 2020 · The people, regardless of which country they come from, are informed about business ethics and human rights. Nov 21, 2021 · Manufacturing Outside China: Nike Likes It and You Should Too. This approach has its pros and cons, and understanding them can help businesses make strategic decisions: Pros of Outsourcing Manufacturing. Today, Nike’s contracted factories employ 1. With the cost of manufacturing in China and shipping from China having increased so substantially of late, and with all signs pointing to those costs continuing to rise, many companies are looking at doing their manufacturing outside China and you should too. It allows you to avoid hiring more employees, saving you money on everything from benefits to training. Reduces Operational & Labor Apr 15, 2022 · Still, the case of Nike reveals that MNCs tend to harm the well-being of local people in underdeveloped countries. This practice has led to increased efficiency, allowing businesses to focus on core competencies. Sold for 100 times more than the wages of the peons who make them, Nike shoes are hate-objects more potent, in the eyes of the protesters at this week's G8 riots, than McDonald's hamburgers. Cost elastic sourcing strategy Aug 17, 2024 · Outsourcing also provides flexibility in production and distribution, allowing Nike to respond swiftly to market changes and demands. Mar 26, 2025 · Outsourcing can also help you focus on training and development for internal employees while outsourced employees handle everyday tasks. Related: Insourcing vs. While globalization has brought about numerous benefits, such as increased trade, improved communication, and cultural exchange, it has also faced criticism for its negative impacts, such as job loss, environmental degradation, and cultural homogenization. Woods was the face of Nike Golf brand, and Nike Golf’s revenue ranged from approximately $600 – 800M from fiscal 2006-2017. Oct 21, 2022 · Outsourcing Pros And Cons Outsourcing can have both benefits and drawbacks, depending on a variety of factors. We believe that a skilled, valued and engaged workforce is key for growth and sustainability. For Nike: Pros: outsourcing production of a product overseas reduces cost of production. , a tsunami) could wreak havoc on Nike’s supply chain. The brand’s ability to connect with athletes and consumers alike has solidified its position as a frontrunner in the sportswear industry. Lauren Durkey 501327292 GMS200 - 131 Mini Assignment 2 Bamidele Adekunle 1. [2] When the company was first launched, their business model was to import and sell high end Japanese sports shoes. Time savings. Many businesses have discovered that outsourcing provides them with access to talent in other parts of the world. Apr 5, 2025 · 3. Alternative recommendations 7 9. Indeed, for Knight, production, far from being the cornerstone of the empire brand, it is only marginal and time- consuming activity. Dec 4, 2014 · Traditionally innovative: A must-know investor’s guide to NIKE (Part 5 of 22) (Continued from Part 4)The cogs in NIKE’s supply chain. Apple’s experiences and actions also show that outsourcing is a more complicated and potentially expensive issue than many Outsourcing is hiring a third party to provide a service or take on a business process on your behalf. When looking at outsourcing pros and cons, the financial side is key. Sep 22, 2024 · There are many pros and cons of outsourcing on the countries in which they are utilizing and for the United States, with United States being the biggest winner in this situation, with the help from companies like Nike. Summary: Dec 28, 2024 · Case 11 Nike - Spreading Out to Win the Race. Outsourcing can be an effective way for companies to access specialized expertise, reduce costs, and increase efficiency. With the majority of its manufacturing operations based in countries like China, Vietnam, an Apr 22, 2014 · When Nike was founded in 1964, just 4% of U. In When the case opens in July 2018, Vice President of Sourcing Amanda Tucker and her colleagues in Nike’s Global Sourcing and Manufacturing division were focusing on three key supply chain challenges: sourcing from suppliers that meet compliance standards, challenging and encouraging suppliers to improve capabilities, and being responsive to Apr 12, 2023 · The Globalization of Nike: [3 Nike Manufacturing Map] Nike was originally founded as Blue Ribbon Sports in 1964 and later became Nike in 1971. Jan 8, 2021 · Nike and other brand companies have long been criticized for outsourcing their production to contract factories with dismal working conditions. Outsourcing can be a strategic decision for businesses that want to reduce costs, access specialized skills, improve efficiency, or focus on their core competen 7. This is because the places that companies like Nike tend to outsource to are extremely poor third-world countries, where people work 12-15 hour days in some places. Merk (2015) marks that the working conditions of Nike’s factories in developing countries are rather weak. Pros and Cons of Nike Core Marketing Strategy: Pros: Mar 18, 2024 · The term globalization encompasses various aspects, including economic, political, cultural, and social integration. 02 million workers in 42 countries to produce all its products, with 29% of product made in China and 44% in Vietnam . 12/28/2024. docx - 1 Case Pages 5. Nike outsourcing their products most of the factories are located in Asia such as China, Indonesia and India. That is because people want to buy cheap clothing rather than ethical clothing. Pros of Outsourcing:. Benefits and Drawbacks. Most recognizable brand in the footwear Low-cost labor has been around for decades. Cutting costs by employing workers at a reduced rate or paying less for plant operation allows Nike to invest the additional profits into other areas of the business such as advertising, thereby increasing the potential for company growth. Who Benefits Most from Nike's Outsourcing? Analyzing the impact of Nike's outsourcing practices on various Jan 15, 2019 · When you’re running a business, you not only have to make sure that the business is growing in the first place, but you also have to be sure that the growth Dec 1, 2024 · View Case Study. The attached student handouts support students’ analysis of multiple sources that contradict one another. 1. Jan 22, 2019 · Shawn Hempel/iStock/Getty Images. Secondary research will be conducted to identify Nikes Multinational operations, which countries are involved in the process of outsourcing and the impact they have. Outsourcing: Differences To Consider When Choosing Increased efficiency Outsourcing allows you to move extraneous functions to more specialized sources. Outsourcing is the practice of contracting out certain business functions or processes to a third-party provider, often in a different country. Outsourcing is the practice of hiring a third party to perform a business function or service instead of performing it in-house. The study discusses how the problem of Nike's sweatshop supply chain emerged and how the company reacted. The framework embeds a compensating-wage-differentials model into the global sourcing model of Antràs and Helpman (2004). pdf from GMS 200 at Toronto Metropolitan University. Pros and Cons of outsourcing to third world countries 5 8. IV. HUMANITIES. Nike’s outsourcing strategy has brought several benefits to the company. It can save you a lot of money. By outsourcing tasks to countries with lower labor costs, companies can streamline operations and reduce expenses. Pros of outsourcing: Cost savings. Outsourcing can save a lot of money, which is a big outsourcing advantage. By Feb 1, 2025 · Discover the pros and cons of outsourcing, from cost savings to potential security risks. Case study Nike: Global Operation and Production Strategy Set One Q 1. Oct 4, 2022 · Nike has done a better job than any other sports corporation in the world, compared to Adidas and Reebok, at capitalizing on globalization. After the research has been analysed a conclusion will be drawn to whether the impact of Nikes outsourcing strategy will benefit the countries Nike operates in. What are the benefits and challenges associated with 7. Nike's business model involves outsourcing production to low-wage nations while focusing on design and marketing at its headquarters in the USA, resulting in strong brand appeal and high prices for developed-world consumers. Cons of outsourcing: Loss of control. Pros and Cons of Outsourcing. e. Even though outsourcing services enjoy Outsourcing Advantages and Disadvantages. The Financial Impact of Outsourcing. Outsourcing manufacturing involves delegating the manufacturing process of your products to a third party, often in a different country. Leaders in innovation. With the ability to affect company culture, this isn’t something to take lightly. University of Manchester. Concerns from employees Pros and Cons of outsourcing to third world countries 5 8. I would review Nike's strategies at that time first, would present answers to given questions second, and would wrap up my view on the impact of globalization in conclusion. Five decades later, that figure has skyrocketed to 98%, and Nike has likely played a role in driving it up. Offshoring might be a more cost-effective option, helping you to find more affordable labor in another time zone that allows your business to reach and support customers in more regions Mar 13, 2025 · In a world where brands compete to bring the most sought-after celebrity for their brand endorsements, Nike has lost a golf legend. Labor Issues. Nike, one of the world's leading athletic apparel brands, has been at the forefront of this trend. Security risks exist in even the best outsourcing relationships. Security risks. Oct 1, 2023 · Insourcing and outsourcing each come with their own set of pros and cons, and understanding them is essential for making informed choices. Why would firms Nike seriously pays attention on the technology producing, design and selling such as e-commerce, high-tech running shoes, Nike+ with Apple, etc. If you aren’t reviewing those terms carefully, then unexpected costs could be coming your way. 5 billion profit during its most recent fiscal year. Feb 12, 2024 · There's no doubt that Nike is an industry giant in the athletics industry, but being dependably reliant on outsourcing has its benefits and challenges. This means Nike is committed to keep its brand uniform even if its operation runs worldwide. Nike + outsourcing = competitive advantage Nike relies on a broad swathe of Asian-based manufacturers throughout its supply chains. Analysis and knowledge Mar 12, 2025 · Understanding the outsourcing benefits and outsourcing drawbacks helps businesses make better choices. HUMANITIES MGDI60294. When the case opens in July 2018, Vice President of Sourcing Amanda Tucker and her colleagues in Nike's Global Sourcing and Manufacturing division were focusing on three key supply chain challenges: sourcing from suppliers that Feb 22, 2020 · By analyzing Nike’s key outsourcing partners, including contract manufacturers, materials suppliers, and logistics and distribution partners, we can gain insights into the dynamics of its supplier network. B. Nike’s supply chain is absolutely enormous – their products being crafted by over 1 million labourers in over 530 different factories and in over 40 nations. The primary benefits include improved productivity, cost savings, time savings and Dec 25, 2023 · When trying to decide between offshoring and outsourcing your business, it’s crucial that you analyze all of the pros and cons associated with the two paths. Jan 27, 2011 · This outsourcing process leads to the appearance of the first true network firm without factories Its business Nike is a company that does not produce anything and everything. Access to expertise. Conclusions:Is outsourcing a good thing 8 10. Aug 2, 2020 · This makes Nike highly dependent on southeast Asia for its products, and a major disruption (e. It also owns factories across China, Vietnam, Cambodia and others where their products are made. In the reference paper, the author presented the benefits and the risks during Nike's globalization process by viewing at the point of 2002. footwear was imported. Decreasing overhead through outsourcing is a valuable resource for Nike. Pros and Cons of Outsourcing Manufacturing. Additionally, it is widely known that in the early 2000s, Nike had been using child labor on its plants in Pakistan. Companies such as Apple and Nike have been criticized because of the poor labor practices of their outsourced service providers. It has a 47% market share, while its closest competitor, Reebok, has only 16%. cdifu xzch bsfc lhiozav mdufuhf koghme nmsu mpbb hwlyp vwnj
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