NIKE - Just Do It The renowned worldwide sportswear brand, Nike, was founded in 1964 by Philip Knight

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NIKE – Just Do It

The renowned worldwide sportswear brand, Nike, was founded in 1964 by Philip Knight. The company was established with the idea of importing running shoes from Japan. The sole aim of the business was to compete with German brands such as Adidas and Puma. Japanese shoes were cheaper because labour in those days were cheaper in Japan. Initially, the Nike production began in Japan even though the Head Office is situated in the United States. It is in the Nike World Campus at Beaverton, Oregon where all product design is carried out. By 1977, Nike production had extended to South Korea and Taiwan. Once again it was the cheap labour that attracted Nike. However Nike did not own its own production plants, instead it contracted it out to local companies. The production handover to Taiwanese investors in the 1980s saw Nike move into mainland China. The reason being, once again, the cheap labour. In the late 1980s, Nike moved south to Thailand and Indonesia. In February 2001, the Mexican production plant at the Kukdong factory was attacked by riot police after protests over the sacking of five workers who had campaigned for higher wages. Currently, in Vietnam, Nike training shoes are made by employees who are paid US$10 for working 65 hours a week. The movement of Nike production from Japan, Taiwan and Korea towards other LEDCs (Less Economically Developed Countries) was solely due to the cheaper operation costs. Furthermore, Japan, Korea and Taiwan are far more developed countries and of more power and equality than in the past therefore the opportunities of exploiting for Nike are far less in scale than in the current LEDCs which Nike operates. However, Nike may have also moved as of to keep up with the growing production demand. The LEDCs offer very efficient and economic production and thus may have attracted Nike’s production operations.

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The Nike training shoes ‘Air Pegasus’ costs US$70 to the consumer. It costs $20 for Nike to produce a pair of these trainers. This includes all costs involved, including payment to the trainer producer who makes a profit of $1.75. Nike sells the pair of trainers to the retailer at a cost of $35.50 and makes a profit of $6.25. The retailer sells it to the consumer at a price of $70 and makes a profit of $9. In conclusion, it is the retailer who makes the most profit from a pair of Nike ‘Air Pegasus’ training shoes.


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