Essay on Nike Doing Business in Indonesia

Submitted By Lightsey23
Words: 3228
Pages: 13

Nike Doing Business in Indonesia
Firm Profile
Indonesia is a difficult entrant country environment for corporations to do business in which have constraints like: child labor, low wages, mandatory overtime, and education. Low wages are beneficial for Nike; on the same token the constraints like child labor, unfair work conditions, and mandatory overtime can harm the world renowned brands repetition. The media has painted negative picture of Nike, because productivity of shoes and other athletic apparel comes with the cost of unethical work conditions and labor practices. Arguments have been made that the effort of Nike outsourcing it’s manufacturing to factories in Indonesia, is the wrong choice. Furthermore, Nike has a social responsibility to maintain a satisfactory standard in the facilities where its products are manufactured. Condoning mandatory overtime is unethical. Importance should be placed on upholding the dignity of its workers. We will determine if doing business in Indonesia is a decision that Nike should maintain, due to the negative back lash that they receive in the United States from the Media. Along with indicating what is the best strategy should be applied for doing business in Indonesia.
The name Nike is the Greek goddess of victory (Ballinger, 1997) .Nike Corporation was originated by Phillip Knight an athlete from Beaverton Oregon. Knight in his beginning started importing shoes from Japan in efforts to compete with athletic companies like Puma and Adidas. There are three segments for Nike which is footwear, apparel, sports equipment. Out of these segments footwear generates the most revenue. All three segments were outsourced to entrant countries for the best rates in manufacturing. Knight outsourced the manufacturing of his shoe in Japan because they are more cost effective there, the effective cost lead to Nike grossing $149 million dollars in revenue by the year 1979(Ballinger, 1997).Nike’s would utilize the buy low sell high method of operation in order to stay competitive in the market place.
Nike shoes and apparel is manufactured in, China, Vietnam, and Indonesia. These three countries are also the top suppliers for Nike’s three segments footwear, appeal, and sport equipment (Ballinger, 1997). These products are then imported all over the country and sold at Nike location, and various department starts all over the world. Some of those department stores are: Dicks sporting Goods, Sports authorities, and other authorized Nike venders. The main objective for Nike’s operation is to provide products designed for true athletes, all while being comfortable enough for the average consumers to enjoy.
Nike’s organizational structure puts emphasis on finding the cheapest manufacture to make its product, then selling that same product in U.S. markets for high prices. This is the reason in 1970 that Japan was the first country Nike contracted to manufacture its footwear and apparel (Ballinger, 1997).Nike has a general focus that has spread its footwear, apparel, and equipment on major stages: such as basketball, Football, soccer, track and field etc. The most important stage for Nike is the Olympics; this stage has secured its position as the third largest distributions of footwear, and apparel in the world.
The Nike organization has four stakeholders which are employees, investors, manufactures, and consumers. These stakeholders affect the corporation’s innovation, price points, and the overhead. In an article called “Engagement & Reviews” Nike expressed the affects that the stakeholder has on its organization (Nike, 2012). The employees are the listening ear to what the consumer wants in Nike Products. The ear that is referred to is the determinations made off of research and development conducted by employees with consumer in mind. The second stakeholder for Nike is the Manufacturer. The manufacturer affects the cost to product Nike’s footwear, and