Understanding the Entrepreneurial Aspect of Nike Incorporated
The globalization process makes the option of utilizing entrepreneurial strategies and decisions to insure that a certain business would eventually succeed became fully realized (McDougall & Oviatt, 2000, p. 902). Following this argument, it can even be said that the fast globalization of the business sector made the globalization process of local businesses and international businesses less demarcated in terms of process and transitions (McDougall & Oviatt, 2000, p. 902).
The start of the Post World War II era also started the formulation of entrepreneurship as a new way of making businesses and even from remodeling the whole world for the better (Jones & Wadhwani, 2007, p. 1). After being crippled by the Great Depression and the WWII businesspersons suddenly shifted their focus into the creation of more goods that would answer to the insatiable demand that the whole global market experiences during that time. Liberal marketing policies that remove the barriers and borders between trading countries represent the politics behind the globalization (Typepad.com, 2010).
This is the same global business politics that one of the most successful apparel brands, Nike Incorporated, has to adapt with and deal with to insure the company’s success. The discussions to be undertaken by this research paper is deemed to hold the needed information to create a holistic understanding of a company’s need (such as Nike) to adapt into the globalized business world through high levels of entrepreneurship. For the sake of organization, this research paper divides in five main parts.
The first part of this research paper will include an introduction of the main components of this research paper such backgrounder discussions on Nike Incorporated, globalization and entrepreneurship. The second part will be the body of this paper where all of the needed details will be integrated to the arguments that this research paper will discuss later. This part includes Nike Incorporated’s actual entrepreneurial ventures, company’s challenges, entrepreneurial theory in the context of Nike, the financial growth of Nike through their globalization, entrepreneurial polices, and company-oriented criticisms.
Related essay: Nike: Public relations
Third, this research paper will also include an analysis portion that would simply double check whether this research paper lives to the obligations set by the course requirements. The fourth part of this research paper includes reality based and fact defended entrepreneurial strategies and even business recommendations to explain the arguments presented in the preceding parts. Finally, this research paper will conclude its discussions by insuring that the details prescribed in this paper are critically discussed. Body
Globalization, Entrepreneurship, Nike Incorporated. Nike, Inc. : On the fifth of May 2010 Mark Parker, the President and Chief Executive Officer of Nike Incorporated announced among their shareholders that “Nike is a Growth Company” (Nike Inc. , 2010). After this announcement, many of Nike’s investors, shareholders and even loyal customers pondered a rather simple question, How Nike made it? The question sounds absurd unless contextualized with the historical fact that Nike Inc. before becoming the most popular shoe line came from very minute beginnings.
Two “businesspersons”, Phil Knight and Bill Bowerman, founded the company through a thousand dollar capital in 1964, back then the company is known as Blue Ribbon Sports or BLS (Locke, The Promise and Perils of Globalization: The Case of Nike, p. 4). BLS used to be a company that only imports high quality Japanese shoes, to reinvent the whole shoe making business by providing high quality shoes through low cost labor as compared to mainstream shoe companies that still employ high cost American laborers (Locke, The Promise and Perils of Globalization: The Case of Nike, p.4). In a way, BLS was able to beat out its competitors by offering the same quality products with relatively lower prices as compared to conventional footwear brands in that time. The business design of the tag team made BLS a two million dollar earning enterprise just less than a decade after its founding date (Locke, The Promise and Perils of Globalization: The Case of Nike, p. 4). The tag team in 1972 opted to launch their own brand name Nike as compared to their old outsourced products Onitsuka.
The continuous success of the company then moved its owners to change the company name permanently to Nike Incorporated in 1978 (Locke, The Promise and Perils of Globalization: The Case of Nike, p. 4). After nearly four decades of establishment, Nike Inc. now brags a 5. 1 billion US dollars profit in 2010 and a seven percent shoot up in the future orders of the footwear all around the globe (Nike Inc. , 2010). As the company endured decades filled with oil crises, financial crises and even labor market shortages, Nike Inc. slowly evolved to become a highly globalized and aggressively entrepreneurial business.
The company was not only able to endure the challenges of the economic crunches of the past decades; it was also able to adapt and even exploit the new opportunities that the economic crunches created. This assumption creates the need for this paper to discuss globalization and entrepreneurship to insure a more in context discussion of Nike Inc. ’s success story. Globalization and Entrepreneurship: The business landscape is continuously remodeling itself according to the requirements and implications of globalization (Etemad & Wright, 2003, p. 3).
Characterizing globalization is the removal of economic barriers imposed by governments such as taxes and tariffs; this allows even the smallest businesses to take active roles even in the biggest market bases (Etemad & Wright, 2003, p. 4). The opportunities abound in globalized economies create more room for those the inculcation of the basic principles of entrepreneurship (Stevenson, 2000, p. 1). The globalized economy allows the necessary economic movements for the full realization of entrepreneurship such as seen in cases of bountiful resource allocation and even the wider marketing venues in a globalized economy (Stevenson, 2000, p. 2).
Entrepreneurship, as used in this paper, is referred to as the process of taking advantage over opportunities, economic opportunities, which others cannot see or which others deem to be too risky to act upon (Formaini, 2001, p. 2). Following this definition, it can be said that the entrepreneurial process is an economic process that is very personal in nature. The decision making process of entrepreneurs need not to be based on group consensus or large-scale projection researches. Instead, the ability to innovate and take risks defines entrepreneurship or at least the main principles of it (Formaini, 2001, p. 2). Therefore, an entrepreneur is someone who is capable of spotting economic opportunities given the fact that finding one does not necessarily translate that it is profitable. An entrepreneur based on this nature remodels himself or herself to become a resource manager, an exploiter of opportunities and innovator (Formaini, 2001, p. 3). To become an entrepreneur, ordinary individuals must balance themselves according to the predicaments of entrepreneurship; falling short will make “businesspersons” a more fitting term no matter how profiteering individuals can be.
Interdependence represents the relationship between globalization and entrepreneurship; the mobility provided by globalization allows the movement needed by most entrepreneurs (AACSB, 2006, p. 52). Since the globalized economy revolutionizes the terms and conditions of conducting business, entrepreneurs can find themselves easily fitting in the new economic playing field. The dynamic nature of entrepreneurs makes them a necessary catalyst of economic growth in the new globalized market (Dahms, 2006, p. 1).
The success trends of the new globalized economy support the previous statement by pointing out that the only way to succeed globally is through innovation and taking risks (Indiana University, 2007). This relationship between entrepreneurship and globalization slowly created a new kind of entrepreneurship- transnational entrepreneurship. This process of entrepreneurship involves actual migration of entrepreneurs from one place to another in their continuous attempts to increase their profitability and even to find new and untapped resources and markets (Drori, Honig, & Wright, 2007). Read also are entrepreneurs born or made introduction
The migration of entrepreneurs creates more social linkages and attachments that can spur the start of more economic processes; thus, creating a more economically fluid environment. On the other hand, the relationship between globalization and entrepreneurship sometimes is deemed to be a detriment in the economic landscape as a whole. Leading entrepreneurship experts believe that for entrepreneurs to succeed in the globalized economy, they should first be able to avoid being victimized by the high competition in that economy (Indiana University, 2007).
Entrepreneurs are constantly required to fill in a market niche or lose what investments he or she procured in the long- run (Indiana University, 2007). These are the contexts and definitions that this research paper will fully utilize. To support the arguments why the owners of Nike, Inc deserve to be called as entrepreneurs this paper sees these contexts and definitions the essential elements for such discussions to be true. Why Nike Inc. is a result of pure Entrepreneurship? Nike is a growth company.
Supporting the company investment byline, this research paper deems Phil Knight and Bill Bowerman embody the necessary attributes to be called an entrepreneur. Following this assumption, this paper further assumes that Nike Inc. is one of the most distinct entrepreneurial success stories. The success of Nike Inc. is a miracle or an overnight success story; instead following the history of the whole company would lead to an inevitable truth that the company is the fruit of high- level entrepreneurial thinking. Phil Knight and Bill Bowerman started the humble beginnings of Nike, Inc.
by finding an economic opportunity that they can exploit for their own benefit. As said earlier, the tag team in their business designing stage found out that most footwear companies in the United States are still employing the high cost labor in producing their products (Locke, The Promise and Perils of Globalization: The Case of Nike, p. 4). Given the small available capital the tag team did not immediately opted to exploit the weakness of the footwear industry by finding cheaper labor rates for production. The tag team simply opted to buy and sell Japanese rubber shoes in the American market.
Their partnership with the Onitsuka Tiger shoe brand in Japan grew stronger due to the high demand for their products since they are cheaper but made in competitive quality. Eventually, the tag team was able to come up with a multimillion-dollar enterprise from their original one thousand dollar investment (Locke, The Promise and Perils of Globalization: The Case of Nike, p. 4). What used to be a collaborative business between Onitsuka Japan and Blue Ribbon Sports became a personal venture for Bowerman and Knight.
Their dream became fully realized in their founding of Nike Inc. in 1978. The social network that the tag team was able to create in the Japanese footwear market made the implementation of Nike Inc. ’s business plan easier. The tag team opted to outsource the production of their Nike Inc. branded shoes to leading Japan based producers (Locke, The Promise and Perils of Globalization: The Case of Nike, p. 5). At the onset of their operations, the profit was skyrocketing due to the cheaper price of Nike shoes as compared to other American leading footwear brands.
In that period, Japan experienced a financial crunch due to the oil crisis that forced the tag team to search for new options in producing low cost. Nike Inc. opted to open factories in the United States- Maine and New Hampshire to try whether producing domestically can offset the shipping costs of outsourcing production (Locke, The Promise and Perils of Globalization: The Case of Nike, p. 5). The most vivid entrepreneurial move that the Nike Inc. tag team showed was to continuously search for cheaper labor production sites. Their search succeeded that resulted to the establishment of Nike Inc. factories in Taiwan and Korea.
As the long-run footwear market revealed the cheaper labor costs in Korea and Taiwan prove to be more profitable as compared to the less shipping costs in domestic production sites of Maine and New Hampshire. Noting this, the tag team immediately closed down their factories in the United States and continued their original business plan of outsourcing production (Locke, The Promise and Perils of Globalization: The Case of Nike, p. 5). This resulted to the eighty-six percent share of Korea and Taiwan in the total Nike Inc. production (Locke, The Promise and Perils of Globalization: The Case of Nike, p. 5). In the next few decades, Nike Inc. ’s Korea and Taiwan production facilities are confronted with higher labor costs because these countries started developing as well. To mitigate the profit losses due to the higher labor costs, the tag team tapped other cheaper labor markets such as those found in China, Vietnam, Thailand and Indonesia (Locke, The Promise and Perils of Globalization: The Case of Nike, p. 5). The establishment of production sites in these countries shifted back the profit venue of Nike Inc. through low production costs due to low cost labor rates.
The tag team used innovative management such as the assigning of old Nike employees to new sites to facilitate training and quality control (Locke, Qin, & Brause, Does Monitoring Improve Labor Standards? Lessons from Nike, 2007, p. 3). Upon the establishment of these new production sites, Nike Inc. was not only able to create more profit; it was also able to fully integrate itself to the Southeast Asian footwear market (Locke, The Promise and Perils of Globalization: The Case of Nike, p. 5). Even today, the production of Nike Inc. products is done offshore the company’s main office in America.
The company even opted to expand its operations and market by including the production of apparel products. The company’s expansion made Nike Inc’s production outsourcing specialized in certain areas. For example, the footwear production allowed Nike Inc. to have a long-term relationship with Korean and Taiwanese production firms; while the apparel production allows the cultivation of a healthy economic relationship with Southeast Asian developing countries (Locke, The Promise and Perils of Globalization: The Case of Nike, p. 8). The production efficiency of Nike Inc.
is nothing but a small part of its overall success as a company. Its continuous innovations not just in the footwear industry, but also in marketing strategies and promoting corporate social responsibilities make the company a bigger success. Nike as of today is marketing its products to more and more suppliers through high-end database of supply and by promoting its business venue to be exceptionally sustainable (Nike Inc. , 2010). The innovations of the product line and with the diverse supplier accreditation of Nike Inc. make it boast the sustainability of its products. While doing so, Nike Inc. is still trying to tap other market niches such as seen in its expansion in North America and Greater China (Nike Inc. , 2010). The successes of Nike Inc. did not obscure its owners’ view in promoting corporate social responsibility such as the use of its product to promote environmental awareness. Mapping out Nike Inc. ’s Entrepreneurship and its Challenges The definitions of entrepreneurship used in this research paper are embodied by the business plan of Nike Inc. ; even in the onset of the launch of the product brand, the decision to outsource the production of the products is an initial sign of strong entrepreneurship.
If businesspersons such as Bowerman and Knight opt to improve their business design by lowering the production costs intrinsic to their current business design, they should be relegated to a new identification- entrepreneurs (Carper, 2010). Nike Inc. ’s expansion to different key countries in different regions, such as its expansion in North America and Greater China, shows the company’s innovative and strategic plan to geographically position the company to key market bases. However, among the different manifestations that Nike Inc.
is truly a result of an entrepreneurial venture, the company’s continuous effort to invent new product lines justifies the entrepreneur inside Knight and Bowerman. Nike Inc. ’s company profile shows that the company is putting resources and time in researching and inventing new products; this company activity resulted to the thousands of Nike products circulating around the world. Nike Inc. in all aspects is truly an example of an entrepreneurial venture. However, even the success of Nike Inc. is not free from criticisms, which are most pronounced in the aspect of labor conditions in their production facilities.
A typical pair of Nike sneakers would amount around sixteen dollars in manufacturing sites as compared to its reselling price of one hundred dollars per pair in the developed countries (Jensen, 2000). The case of Indonesian Nike factory is just one of the many allegations that the company is guilty of unfairly outsourcing production to countries, which would work for very low wages. In Indonesian Nike factories, an ordinary employee would earn sixty-five dollars per month, a very small amount as compared to the sale profits that the company would make by selling the output of an individual who earns sixty-five dollars (Jensen, 2000).
The worsening conditions of the Nike’s production facilities earned it a distinct account for supposedly running sweatshops in Southeast Asia (Jensen, 2000). Conclusion and Recommendations Nike Incorporated as a business firm has a very elaborate production and marketing plan that separate it from the other footwear brands. The market share that Nike gets every year is constantly shooting up only because of the innovations that the company was able to integrate to its products and undeniably entertaining advertisements.
The company byline, “If you have a body, you are an athlete”, was able to debunk the conception that Nike products are for athletes only. This research paper deems that the discussions it used was able to integrate the important parts of mapping entrepreneurial activities. This research paper would end on the note that even if Nike Inc. is a global success, the management should not lax even for a while in addressing criticisms towards the company. The Indonesian Nike production facility was improved by the management through the direct orders from Nike Inc.’s administrations to change some of the materials that pose health hazards to the employees. Criticisms no matter how real or false will only create negative impacts on the company, which will reflect on the sales of the brand’s products. Bad public representation can lead to boycott movements that would force the company to make decisions that would compound the problems such as by being forced to lay off employees or to close down factories. If Nike Inc. will be able to balance its success as well as the responsibilities that come along with its success, its successes for the years to come will inevitably come.
If everything is properly put into place, this paper revokes its labeling of “businesspersons” to Knight and Bowerman. They are one of the best entrepreneurs that the world would ever see.