NIKE CASE ANALYSIS

In the present intense competitive global marketplace, global companies in various industries have chosen outsourcing strategy as an ultimate choice for having cost-effective solutions, increased efficiency, managing complex supply chain operations, increased productivity, shared risk, reduced operating cost, better quality and more focus on core competencies.

Nike:

Nike is the world’s leader in athletic footwear and apparel. It sells its products in over 170 countries around the world through 690 Nike-owned retail stores, about 23,000 retail stores in the US and via independent distributors and licensees. Virtually all of its footwear and apparel products are produced outside the United States, while its equipment products are manufactured in both the US and abroad. Over the years, the company has built the core competencies of design, development and worldwide marketing of high-quality footwear, apparel, equipment and accessories (Yahoo Finance, 2011).

Reasons for Outsourcing:

Nike decided to outsource all of its manufacturing operations and located them outside the U.S due to numerous reasons. It contracted hundreds of contractors outside the U.S for getting an advantage of low cost of production since companies have to pay high wages in the US as compared to developing countries of the world.  By outsourcing its manufacturing overseas, in particular, in third world economies, Nike gains tremendous benefits of reduced wages to remain competitive in an intensely competitive market of athletic footwear and apparel.

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