Nike Outsourcing

2367 WordsFeb 6, 201310 Pages
Matthew Christensen History C Thorton 15 February 2013 Cuts Costs * Decreasing overhead through outsourcing is a valuable resource for Nike. 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. In addition, decreased operational costs are more likely to attract and retain company investors because more money can go into increasing business profitability.

 Increases Competitiveness * Because Nike is able to more efficiently produce its product and reduce costs due to outsourcing, it can more competitively price its products. This enables Nike…show more content…
Nike grew at a compounded 20 percent growth rate and earned a 31 percent ROE for its shareholders through most of the past decade. • Knowing it could not be the best at making chips, boxes, monitors, cables, keyboards, and the like for its explosively successful Apple II, Apple Computer outsourced 70 percent of its manufacturing costs and components. Instead of building internal bureaucracies where it had no unique skills, Apple outsourced critical items like design (to Frogdesign), printers (to Tokyo Electric), and even key elements of marketing (to Regis McKenna, which achieved a “$100 million image” for Apple when it had only a few employees and about $1 million to spend). Many of us know Nike for the clever maketing campaigns, celebrity athelets, "swoosh" logo, and "Just Do It!" slogan. In 1963 the world's largest athletic shoe company was founded by Philip Kight and Bill Bowerman for $500 apiece and a handshake, and today has over $9 billion in revenues. After several years of record breaking performance Nike's global labor practices were brought to the attention of the public as early as the 1990s. Which included publishings in Harper's magazine that a Nike subcontractor paid woirker's just under 14 cents an hour. Other reports include
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