The Global Sporting Goods Industry

Question 1

What is Nike’s primary business aim?

Answer 1

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

Question 2

How does Nike maximize profits?

Answer 2

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

Question 3

How many subcontract factories does Nike have?

Answer 3

Nike operates approximately 610 subcontract factories worldwide.

Question 4

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

Answer 4

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

Question 5

What happens if workers push for better conditions at Nike?

Answer 5

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

Question 6

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

Answer 6

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

Question 7

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

Answer 7

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

Question 8

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

Answer 8

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

Question 9

What themes are prevalent in Nike’s advertising?

Answer 9

Freedom
Individualism
Transcendence
Overcoming barriers
No limits to achievement

Question 10

What forms of resistance have emerged against Nike?

Answer 10

Boycotts
Product returns
Lobbying
Criticism of monopolizing youth sports

Question 11

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

Answer 11

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

Question 12

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

Answer 12

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

Question 13

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

Answer 13

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

Question 14

What should consumers consider before purchasing sporting goods?

Answer 14

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

Question 15

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

Answer 15

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

Question 16

What are global commodity chains?

Answer 16

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

Question 17

What example illustrates the complexity of global production?

Answer 17

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

Question 18

What are key features of the global sporting goods industry?

Answer 18

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

Question 19

How does late capitalism relate to the sporting goods industry?

Answer 19

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

Question 20

When was Nike founded and incorporated?

Answer 20

Nike was founded in 1971 and incorporated in 1978.

Question 21

Who are some of Nike’s key endorsees?

Answer 21

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

Question 22

What was Michael Jordan’s endorsement fee with Nike?

Answer 22

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

Question 23

What is Nike’s primary business goal?

Answer 23

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