The Promise And Perils Of Globalization : The Case Of Nike

Decent Essays
To maintain positive balance sheet managers ought to constantly be in search of new strategies to do so. This may include upgrading of production equipment’s every five years, staff training, and business expansion just to mention a few. An expansionary policy is necessary to promote brand recognition, increased revenue, prolong the life cycle of products, increase customer base and loyalty. When a business is growing the opportunities presented by Economies of Scale become an added advantage to the firm. According to Locke and Siteman (2002), the story of Nike started in 1964 with the creation of Blue Ribbon Sport by Phil Knight and Bill Bowerman (p.3). They understood the benefits of comparative advantage in the production process and immediately began outsourcing the production of goods. The comparative advantage Nike had over its revivals was so overwhelming that Nike decided to become more involved in the production. What next for Nike? In the following paragraphs, we shall be answering questions related to the complexities of expansion amid a globalized world, drawing inspiration from “The Promise and Perils of Globalization: The Case of Nike”, a working paper presented by Richard M. Locke and Alvin J. Siteman.

When Nike was founded technological advancement in communication was still very primitive. Nike will outsource shoe production with Japanese companies until the oil crisis of 1970 and the new labor which consequences lead to an increase in production cost. As a
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