The Global Sporting Goods Industry Flashcards
What is Nike’s primary business aim?
Nike aims to generate profit for shareholders by seeking out cost-effective labor markets.
How does Nike maximize profits?
By reducing labor costs, utilizing governments that offer tax incentives, and maintaining low operating overheads.
How many subcontract factories does Nike have?
Nike operates approximately 610 subcontract factories worldwide.
What is meant by “offshore flight” in Nike’s operations?
It refers to Nike’s movement of manufacturing plants to countries with cheaper labor, such as Thailand, China, and Indonesia.
What happens if workers push for better conditions at Nike?
Nike may relocate their operations to avoid compliance, as stated by Harmer (1996).
What are some social costs associated with Nike’s production practices?
Low wages
Long working hours (e.g., 54 hours/week in Korea)
Unsafe working conditions
Union suppression and abuse
What is the basic monthly wage for a Nike worker in Indonesia?
Approximately $37.00 per month, with a basic daily wage of $1.20.
hat is the estimated cost breakdown for a $70 pair of Nike shoes?
Labour: $1.66
Materials: $9.18
Admin overhead: $2.82
Subcontractor profit: $1.19
Nike markup: $22.95
Retailer: $32.30
What themes are prevalent in Nike’s advertising?
Freedom
Individualism
Transcendence
Overcoming barriers
No limits to achievement
What forms of resistance have emerged against Nike?
Boycotts
Product returns
Lobbying
Criticism of monopolizing youth sports
How does Nike’s CEO salary compare to workers in Indonesia?
A Nike contract worker in Indonesia earns $2.60 a day, needing 98,644 days to match CEO Phil Knight’s annual salary.
What questions arise regarding Nike’s marketing slogan “Just Do It”?
At what social costs?
In whose interest?
Do what to whom?
For what reason?
What are key features of global commodity chains in the sporting goods industry?
Off-shore flight
Production practices and labor rights
Inequities in the market
Marketing strategies
What should consumers consider before purchasing sporting goods?
Consumers should follow the life of the commodity and keep citizenship and labor issues in mind (Miller et al, 2001).
What was the value of the global sports market in 2018?
The global sports market reached nearly $488.5 billion, growing at a CAGR of 4.3% since 2014.
What are global commodity chains?
They refer to the interconnected processes involved in the production and distribution of goods across different countries, highlighting global interdependence.
What example illustrates the complexity of global production?
Ice hockey equipment is designed in Sweden, financed in Canada, and assembled in multiple locations, showing the global nature of manufacturing.
What are key features of the global sporting goods industry?
Growth in the late 70s and early 80s
Fiercely competitive market
Use of high-profile endorsees
Innovative and controversial advertising
How does late capitalism relate to the sporting goods industry?
It involves globalized markets and labor, emphasizing profit maximization and efficiency in production.
When was Nike founded and incorporated?
Nike was founded in 1971 and incorporated in 1978.
Who are some of Nike’s key endorsees?
Notable endorsees include Michael Jordan, Tiger Woods, Sampras, Agassi, Michael Johnson, Lance Armstrong, Eric Cantona, and Ronaldo.
What was Michael Jordan’s endorsement fee with Nike?
Michael Jordan received a $20 million per year endorsement fee.
What is Nike’s primary business goal?
Nike’s quest is to increase sales (profits) and efficiency through marketing and production strategies.
