Nike Doing Business in Indonesia

Nike Doing Business in Indonesia

Firm Profile

Indonesia is a difficult entrant country environment for corporations to do business in which have constraints like: child labor, low wages, mandatory overtime, and education. Low wages are beneficial for Nike; on the same token the constraints like child labor, unfair work conditions, and mandatory overtime can harm the world renowned brands repetition. The media has painted negative picture of Nike, because productivity of shoes and other athletic apparel comes with the cost of unethical work conditions and labor practices. Arguments have been made that the effort of Nike outsourcing it’s manufacturing to factories in Indonesia, is the wrong choice. Furthermore, Nike has a social responsibility to maintain a satisfactory standard in the facilities where its products are manufactured. Condoning mandatory overtime is unethical. Importance should be placed on upholding the dignity of its workers. We will determine if doing business in Indonesia is a decision that Nike should maintain, due to the negative back lash that they receive in the United States from the Media. Along with indicating what is the best strategy should be applied for doing business in Indonesia.

Operation

The name Nike is the Greek goddess of victory (Ballinger, 1997) .Nike Corporation was originated by Phillip Knight an athlete from Beaverton Oregon. Knight in his beginning started importing shoes from Japan in efforts to compete with athletic companies like Puma and Adidas. There are three segments for Nike which is footwear, apparel, sports equipment. Out of these segments footwear generates the most revenue. All three segments were outsourced to entrant countries for the best rates in manufacturing. Knight outsourced the manufacturing of his shoe in Japan because they are more cost effective there, the effective cost lead to Nike grossing $149 million dollars in revenue by the year 1979(Ballinger, 1997).Nike’s would utilize the buy low sell high method of operation in order to stay competitive in the market place.

Nike shoes and apparel is manufactured in, China, Vietnam, and Indonesia. These three countries are also the top suppliers for Nike’s three segments footwear, appeal, and sport equipment (Ballinger, 1997). These products are then imported all over the country and sold at Nike location, and various department starts all over the world. Some of those department stores are: Dicks sporting Goods, Sports authorities, and other authorized Nike venders. The main objective for Nike’s operation is to provide products designed for true athletes, all while being comfortable enough for the average consumers to enjoy.

Organization

Nike’s organizational structure puts emphasis on finding the cheapest manufacture