Nike's Comparative Advantage

In: Business and Management

Submitted By aallan3319
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The Company

Nike, Inc is a major publicly traded sportswear and equipment supplier based in the United States. The company is headquartered near Beaverton, Oregon, which is part of the Portland metropolitan area. It is the world's leading supplier of athletic shoes and apparel and is also a major manufacturer of sports equipment. Nike currently employs around 38,000 people worldwide. Nikes products are known worldwide and there is high demand in most countries globally.
The company was founded in January 1964 as Blue Ribbon Sports by Bill Bowerman and Philip Knight, and officially became Nike, Inc. in 1978.. Nike markets its products under its own brand as well as multiple other brands such as, Nike Golf, Nike Pro, Nike+, Nike Skateboarding and subsidiaries including Cole Haan, Hurley International, Umbro and Converse. In addition to manufacturing sportswear and equipment, the company operates retail stores under the Niketown name.

Comparative Advantage
Nike uses its involvement in multiple countries to gain some sort of comparative advantage. This refers to the increase in production efficiency through specialisation in separate countries which perform a task in some way better, in this case cheaper. Nike, although based in the US, produces all of its goods outside the US in many different countries.
In Shoe production, for example, in 2010 products were produced in Vietnam, China, Indonesia, Thailand and India. This diversification of production gives not only a comparative advantage in cheap labour when producing these shoes, compared to producing domestically, but also gives a closer proximity and possibly cheaper transport costs to large markets such as Europe.
Nike also manufactures its shoes in Countries such as Argentina and Brazil using agreements with independent factories. Shoes produced through these agreements are meant primarily for sale…...

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