The Global Sporting Goods Industry Flashcards

1
Q

What is Nike’s primary business aim?

A

Nike aims to generate profit for shareholders by seeking out cost-effective labor markets.

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2
Q

How does Nike maximize profits?

A

By reducing labor costs, utilizing governments that offer tax incentives, and maintaining low operating overheads.

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3
Q

How many subcontract factories does Nike have?

A

Nike operates approximately 610 subcontract factories worldwide.

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4
Q

What is meant by “offshore flight” in Nike’s operations?

A

It refers to Nike’s movement of manufacturing plants to countries with cheaper labor, such as Thailand, China, and Indonesia.

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5
Q

What happens if workers push for better conditions at Nike?

A

Nike may relocate their operations to avoid compliance, as stated by Harmer (1996).

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6
Q

What are some social costs associated with Nike’s production practices?

A

Low wages
Long working hours (e.g., 54 hours/week in Korea)
Unsafe working conditions
Union suppression and abuse

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7
Q

What is the basic monthly wage for a Nike worker in Indonesia?

A

Approximately $37.00 per month, with a basic daily wage of $1.20.

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8
Q

hat is the estimated cost breakdown for a $70 pair of Nike shoes?

A

Labour: $1.66
Materials: $9.18
Admin overhead: $2.82
Subcontractor profit: $1.19
Nike markup: $22.95
Retailer: $32.30

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9
Q

What themes are prevalent in Nike’s advertising?

A

Freedom
Individualism
Transcendence
Overcoming barriers
No limits to achievement

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10
Q

What forms of resistance have emerged against Nike?

A

Boycotts
Product returns
Lobbying
Criticism of monopolizing youth sports

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11
Q

How does Nike’s CEO salary compare to workers in Indonesia?

A

A Nike contract worker in Indonesia earns $2.60 a day, needing 98,644 days to match CEO Phil Knight’s annual salary.

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12
Q

What questions arise regarding Nike’s marketing slogan “Just Do It”?

A

At what social costs?
In whose interest?
Do what to whom?
For what reason?

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13
Q

What are key features of global commodity chains in the sporting goods industry?

A

Off-shore flight
Production practices and labor rights
Inequities in the market
Marketing strategies

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14
Q

What should consumers consider before purchasing sporting goods?

A

Consumers should follow the life of the commodity and keep citizenship and labor issues in mind (Miller et al, 2001).

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15
Q

What was the value of the global sports market in 2018?

A

The global sports market reached nearly $488.5 billion, growing at a CAGR of 4.3% since 2014.

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16
Q

What are global commodity chains?

A

They refer to the interconnected processes involved in the production and distribution of goods across different countries, highlighting global interdependence.

17
Q

What example illustrates the complexity of global production?

A

Ice hockey equipment is designed in Sweden, financed in Canada, and assembled in multiple locations, showing the global nature of manufacturing.

18
Q

What are key features of the global sporting goods industry?

A

Growth in the late 70s and early 80s
Fiercely competitive market
Use of high-profile endorsees
Innovative and controversial advertising

19
Q

How does late capitalism relate to the sporting goods industry?

A

It involves globalized markets and labor, emphasizing profit maximization and efficiency in production.

20
Q

When was Nike founded and incorporated?

A

Nike was founded in 1971 and incorporated in 1978.

21
Q

Who are some of Nike’s key endorsees?

A

Notable endorsees include Michael Jordan, Tiger Woods, Sampras, Agassi, Michael Johnson, Lance Armstrong, Eric Cantona, and Ronaldo.

22
Q

What was Michael Jordan’s endorsement fee with Nike?

A

Michael Jordan received a $20 million per year endorsement fee.

23
Q

What is Nike’s primary business goal?

A

Nike’s quest is to increase sales (profits) and efficiency through marketing and production strategies.