How Nike Changed Its Expansion Strategy

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• Explain how Nike came to that situation through its expansion strategy ‘Although multinationals are eager to pursue the opportunities of increased global integration, they are increasingly aware of the reactions which their strategies induce – both at home and abroad. Thus, they tread warily, lacking clear and agreed-upon definitions of good corporate citizenship. The athletic footwear industry experienced an explosive growth in the last two decades. In 1985, consumers in the United States alone spent $5 billion and purchased 250 million pair of shoes. In 2001, they spent over $13 billion and bought over 335 million pair of shoes. Since displacing Adidas in the early 1980s and Reebok in the early 1990s, Nike has become the largest and…show more content…
However, over the course of the 1990s, a series of public relations nightmares – involving underpaid workers in Indonesia, child labor in Cambodia and Pakistan, and poor working conditions in China and Vietnam – combined to tarnish Nike’s image. How Nike, a company associated with athleticism, health and fitness, and innovative marketing and design, came to become the poster child for the anti-globalization movement provides an interesting window into the potential risks and problems which globalization creates for all multinational corporations.’ • Explain the positive and negative impacts of this strategy ‘In the early 1990s, Nike products were being manufactured in six Indonesian factories, employing more than 25,000 workers. Four of these factories were owned by Nike’s Korean suppliers. As Nike’s presence in Indonesia increased, the factories supplying its products (about six million pairs of shoes per year) came under greater scrutiny. Reports by a variety of NGOs and labor activists claimed that these plants were rife with exploitation, poor working conditions, and a range of human rights and labor abuses. Many Indonesian shoe factories did not even pay the minimum daily wage (at the time, 2,100 rupiah or about US$1). They petitioned the Indonesian government for exemptions to the legal minimum wage, claiming it would cause them “hardship” to pay.
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