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Nike: Focusing on Reducing Globalization

Izak Munoz

South Texas College

Management Theory II CBE

Professor Jennifer Guerra

June 12, 2022

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Nike: Focusing on Reducing Globalization

Nike has been the primary face in sportswear for a long while now, but up until the

1980’s they were just another clothing company in the shadows of monster brands such as

Reebok, and Nike would have to get very creative and take big risks to stand out. Stand out is

just what they did, when they employed their “Just Do It” campaign and went all in on making

sneakers into fashion statements, which no one had done so up until that point “…Suddenly they

realized that they need to come out with something to encounter the perception of public by

introducing the “Just Do It” campaign, which give the spirit of doing something without

hesitation…” (Nayak, 2017, p. 1). The key to Nike’s success has been successful brand

management and catering to all consumer levels whether it be gender, age or variety, Nike

addresses it all. There’s no question that Nike has created its own everlasting brand that will

undoubtedly be around for decades, but what is in question however is the labor standards in

which Nike upholds when outsourcing. Nike tends to wipe their hands clean from being

associated with unfair wages and labor from overseas outsourcing because they “have no

control” over what the laborers get paid from their contractors. I plead with Nike to make an

organizational change and make whoever they contract overseas to pay their laborers more than

fair wages and stop with the globalization heavy approach and manufacture more in the U.S. or

in the very least invest in automation in U.S. factories.

“…Nike's core business is the worldwide design, development, manufacture and

marketing of high-quality footwear, clothing, equipment and accessories. Nike is the largest

seller of sports shoes and clothing in the world…” (Nica, 2021, p. 70). This statement confirms

that Nike constructed a well thought out balanced scorecard, because their mission has always
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been to be innovative with their footwear technology, but at the same time be appealing to the

general public, not just runners or people in athletics. Nike’s mission, vision and strategy has

always been about being innovative and pushing boundaries about what a simple shoe can mean

to consumers “…Nike wanted to expand its operation to target every American, regardless of

age, gender, or physical fitness. “Just Do It” succeeded in that it convinced Americans that

wearing Nikes for “every part of your life” was smart and hip…”. (Nayak, 2017, p. 5)

Nike would not have the success it has had without a great foundation and team

surrounding the brand. Co-founder and chairman Phil Knight has done a brilliant job in

implementing Fayol’s 14 principles of management. He has carried out every principle

successfully, from specialization of labor and unity of direction, all the way to stability of tenure,

which is a very important principle because that is what determines the retention rate of the

employees “Nike believes that a skilled and involved workforce is the key to growth and

sustainability. In their view, the employees involved means that they are valued and want to

contribute positively and actively to business objectives” (Nica, 2021, p. 21). This is one of the

keys to success and sustainability of Nike, the retention of its employees and making sure their

opinions are heard and valued. Phil Knight loves getting input from any employee and is always

happy to hear out any suggestion, as bizarre or wild as it may sound, as long as the employee is

showing initiative and drive. As you can see, Nike has made a huge effort in building its

company the right way. Every employee knows their respective role and contribution expected,

everyone feels heard and everyone’s happy with their compensation. Everyone except the

laborers getting paid pennies on the dollar, that is. Every Nike employee in the U.S. is more than

fairly compensated and most are content with what they are getting paid, but no one has ever

given a thought if the people actually making the clothes by hand are getting paid fairly for the
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work they’ve done. “…Numerous reports have described exploitative working conditions in

global supply chain plants. Workers are paid only a few dollars and required to work excessive

hours, often in poorly lit and unsafe conditions…” (Locke, 2007, p.4). This quote provides just a

glimpse of what the laborers overseas have to deal with. This suffrage can come to an end if

Nike is willing to make an organizational change with globalization and outsourcing. Nike must

only do business with contractors that promise to pay their workers more than fair wages, and

make sure the environment their employees are working in, is safe and non-hazardous. This

graph will show the data for the next three years if this change is implemented.

90
80
70
60
50
40
30
20
10
0 Laborer Satisfaction Rate
Year 1
Year 2 Outsourcing Pay
Year 3

As you can see, if outsourcing pay increases, the laborer satisfaction rate goes up as well.

The laborers getting compensated what they deserve is a due that should have been mandated

long ago, but it is never too late to correct our wrongs. The people resisting this change would

most likely be the Finance department, due to the fact that Nike is not looking to hire the

cheapest factory that comes their way, but one that is willing to accept these conditions for the

sake of the laborers, and if they wish to continue to do business with Nike (Locke, 2007).

Another solution to reducing globalization and outsourcing is to increase the amount of

automation factories for Nike in the U.S. “The high cost of labor in the United States is the main
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factor pushing production abroad, but as robotic technology improves, companies like Nike have

the opportunity to remove these unnecessary costs and resume many of their production

operations” (Nica, 2021, p. 71). The graph below shows how increasing automation factories

will reduce the amount of outsourcing done overseas.

70

60

50

40

30

20

10

0
Year 1 Year 2 Year 3

Outsourcing Automation Factory

The benefits of increasing automation factories in the US are plentiful. One huge factor at play is

how much this will reduce costs from all the resources that go into outsourcing. Instead of giving

money to other countries and workers, we can invest in our own economy by hiring hard

working Americans for our automation factories. The only downside of all this is upfront costs,

which will be expensive at first, but these factories will be a long-term investment. Nike has to

do what’s right and implement this organizational change to reduce globalization (Nica, 2021).
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References

Locke, R. Brause, A. (2007) Does Monitoring Improve Labor Standards? Lessons From Nike p. 2-13

Nayak, T. (2017) “Just Do It” Ad Campaign: The Case of Nike Inc. p. 1-5

Nica, Ionuț, Chirita, Nora, Ionescu, Ștefan (2021) Using of KPIs and Dashboard in the analysis

of Nike company's performance management. p. 2-10