Globalization of Nike
Essay title: Globalization of Nike
Nike, Inc. was founded in 1964 by Phil Knight and Bill Bowerman through an investment of $500 by each individual. Nike, Inc. was then called Blue Ribbon Sports and has evolved from being an importer and distributor of Japanese specialty running shoes to becoming the world leader in the design, marketing, and distribution of athletic footwear. Nike’s business model was developed by Knight while attending Stanford Business School in the early 1960’s. Knight realized that the United States’ consumer appliance and electronic markets were beginning to be dominated by the lower-cost, higher quality Japanese producers. Most of the leading footwear companies were still producing their own shoes in higher-costing companies such as the United States and Germany, and Knight believed that by outsourcing shoe production to lower-cost Japanese producers, Blue Ribbon Sports could undersell its competitors and break into this market. As a result of this model, Blue Ribbon Sports began to import sports shoes from Japan and sales increased to almost $2 million in the early 1970’s. The Nike brand was launched in 1972, and the company changed its name to Nike, Inc. in 1978.
Originally, Nike developed a strong working relationship with two Japanese shoe manufactures, but as costs increased in Japan during the 1970’s, Nike began to search for alternative producers. The costs continued to increase in Japan and the United States in the early 1980’s, so Nike looked to Korea since the Korean government created incentives for manufacturing of footwear. Nike closed its United States factories in the 1980’s and sourced their primary production from Asia. In 1982, 86% of Nike’s athletic footwear came from Korea and Taiwan.
As costs began to rise in Korea and Taiwan due to development within these countries, Nike began to urge their suppliers to re-locate to other lower-cost countries such as Indonesia, China, and Vietnam. Nike