Bill Bowerman Essay Example

Bill Bowerman Essay In 1962 Bill Bowerman, the legendary University of Oregon track field coach, and Phil Knight, a University of Oregon business student and middle-distance runner, struck up a partnership to form a company called Blue Ribbon Sports (BRS). BRS imported shoes from Japan to the USA. First-year sales totalled $8,000, and in 1972 BRS changed its name to Nike, named for the Greek winged goddess of victory, and so began the birth of one of the modern worlds biggest and most famous companies. Nike employs 22,000 people worldwide, from Nike World Headquarters in Oregon and Nike European Headquarters in Hilversum, The Netherlands, to nearly every region around the globe, including Asia Pacific, the Americas, and Europe, Middle East and Africa. This includes manufacturers, shippers, retailers and service providers, and nearly 1 million people help to bring Nike to athletes and the public around the globe. Its this sheer scale and variety of operating bases that makes Nike a TNC, and a rather large one at that. Nikes main headquarters is in Portland, Oregon, USA. Yet very little, if any, of Nikes trainers and apparel are manufactured in the USA. Nike, like many large companies, has moved its production into areas of the world that are cheaper, in an effort to reduce manufacturing costs and therefore maximising profit margins. We will write a custom essay sample on Bill Bowerman specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Bill Bowerman specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Bill Bowerman specifically for you FOR ONLY $16.38 $13.9/page Hire Writer Nikes HQ, based in an MEDC, is the centre for all Nikes research and development. In an MEDC the best, most intelligent, experienced and well-educated workers are available for Nikes development program. Being in a rich country also gives access to the latest in technological equipment and research techniques. This allows Nike to stay at the forefront of shoe and sportswear technology, developing shoe technology such as Max Air, Zoom Air, Tuned Air, Shox, as well as clothing technology and fabrics such as Dri-FIT, Clima-FIT, Therma-FIT and Storm-FIT. The increases in technology and innovation mean Nike keeps ahead of its biggest competitors both on the running track and the high street. MEDCs such as the USA and Europe are also Nikes biggest selling grounds, and keeping the HQ in these countries results in closer company-customer relations Nike can see what the consumer wants and needs, and alter its product line-up accordingly. Nike has an established market in the USA, and people like the idea that its a local American company, despite the fact that youll rarely if ever find a Nike product made in the USA. Nikes main production centres are in the far-eastern areas of the world, but in reality Nike would set up their production centres in the cheapest area possible, no matter where it was in the world. Communication and transport have improved so much in the 21st century that its financially cheaper to do this than to keep all your manufacturing and development together. The Internet, e-mail, telephones and fax machines mean that controlling production and retail centres from the HQ is cheap and easy. Cheap carrier ships and airlines means that no matter where in the world a product is made, it can be in a shop on the other side of the world within days. It started in the 1970s when Nike moved its production sites to South Korea and Taiwan. At the time these areas were desperately trying to develop further, and had welcoming governments and space for facilities. Above all they offered the cheapest labour available at the time. So Nike moved in, reducing their production costs vastly, and maximising profits. As TNCs move into these MEDCs they bring with them huge amounts of jobs, money and support industry. This results in these countries becoming more and more developed until they become NICs. Education, healthcare and living conditions will all improve. This is a tremendous benefit to the country in question, however this means that eventually the workers will demand more and more money to do the same job, bad news for Nike. Nike began to sense this back at their HQ and decided to move there main production factories into less developed areas, for the same reasons they moved into Korea and Taiwan in the first places. This is referre d to as Nomadic behaviour, and makes pretty good business sense really. So in the 80s and 90s they moved to China and Indonesia, where labour was cheap and governments keen (or gullible depending on your point of view). These are still Nikes main production bases today, but one day they will become ever-more developed, and Nike will predictably move out again, to somewhere cheaper and less developed (Afghanistan maybe?!) Nike now runs two main types of factory. It still owns the premises in the now developing areas of Taiwan and South Korea, and these produce Nikes high quality, statement products (they produce between 10,000 and 25,000 pairs of shoes a day.) While the newer, cheaper centres in China and Indonesia are Nikes bulk producers, producing well in excess of 70,000 pairs of trainers a day. The other reason Nike likes to have multiple production sites is to avoid trade barriers and tariffs. The best example of this with Nike is their factory in Greece. Greece is within the EU, and therefore Nike technically produces within the EU, preventing any sales quotas or taxes that could be imposed if they just imported all of their produce. Nike also has a secondary HQ within Europe. This is the HQ for all operations in Europe, the Middle East and Africa (shortened to Nikes EMEA HQ). The EMEA HQ is based in a state-of-the-art complex designed by William McDonough and Partners, opened in 1999 in Hilversum, The Netherlands. This allows Nike to change the specification of certain products and lines to fit specific needs within this area. For example in America people may have, on average, wider feet, while in Europe they may have thinner feet. Having two HQs and R;D centres means that Nike can tailor its products more to its consumers, hopefully increasing customer satisfaction and therefore sales. So weve established that, in terms of production, Nike is a global company, but it is just as important to realise that Nike is also one of the most global and universal brands in terms of sales and marketing. Nike sells its products in virtually every country in the world, an almost perfect example of globalisation. There is rarely a place on the planet where there isnt Nike produce available and where Nike products cant be found on any of its inhabitants. The Antarctic might have been an exception until recently, when they invented their Therma-FIT fabric for base layers and fleeces for outdoor explorers. Nike sells and markets its products in similar way throughout the world. Like most companies they use classic techniques such as television, radio, and billboard advertising, but Nike exploits one area more than virtually any other company on earth, sponsorship and role models. The formula is simple: pay a well-known sports celebrity or role model to wear your produce, or sponsor a popular team in a sport. Whenever people see the star or team in question they see the brand and associate it with the company. It enforces the if its good enough for you its good enough for me attitude and this endorsement strategy works wonders for Nike. The most famous of all Nike patrons is Michael Jordan, the worlds most famous basketball player, and he even had a range of Nike produce named after him. Other famous individuals include football players Ronaldo, Luis Figo and Eric Cantona, basket-ballers Kobe Byant and Michael Jordan, golfer Tiger Woods and runners Paula Radcliffe and Maurice Green. In fact Nike sponsors individual sportsmen and women in just about ever sport imaginable. They also make the official kits of many major teams such as Manchester United, Arsenal, the England and South African Rugby squads and many of the major American basketball and ice hockey teams. In fact, as with individuals, they sponsor or make kit for just about every sport imaginable, from socks to sunglasses, from trainers to t-shirts, on every continent. This method of marketing is, on the whole, very successful (if a tad expensive). However if a sportsman, woman or team that Nike sponsor performs poorly then it can all go horribly wrong, reflecting badly on Nikes company image. Nikes reputation is usually one of the highest quality and latest technology, being the best of the best, but all it take is a couple of high-profile slip-ups for this outstanding public image to be destroyed. When Tiger Woods emerged as one of the worlds brightest young stars Nike were quick to pay him huge amounts of money, and within months he was seen wearing Nike t-shirts, caps, sunglasses, jumpers, trousers, socks, golf-shoes, probably even underwear, while in the public eye. The man was a walking swoosh, and he was even playing with Nike golf clubs. Nike isnt seen as a classic golf club brand, like Titelist or Slazenger, but it pinned its hopes or Tiger Woods raising the reputation. Unfortunately for Nike, since he started playing with their clubs he h asnt won a single thing, and after a big tournament publicly destroyed his set of clubs. Whether it was Nikes clubs or Woods form that failed, it still reflected badly on Nike, so although Nikes form of marketing and advertising can work exceedingly well, it can also have some major drawbacks. So who are the major parties affected by Nikes often controversial business strategy? This can effectively be split into 3 groups: Consumers are subject to huge mark up prices, but are aware that they are getting a high quality, world famous product at the forefront of modern technology. They are happy in the fact that by wearing Nike clothes they are in someway closer to there sporting idols, and know that wherever in the world they are going to come across Nike products. They have huge brand confidence in Nike. The consumers are the main player in any business, without them Nike would not exist. Consumers can influence TNCs because they are so necessary to the company, what they require Nike must give them, or risk losing consumer confidence. Workers Many would say workers, especially in the poorer countries, are over worked and underpaid, treated misfairly and taken advantage of. However at the end of the day Nike is providing them with a job that they would otherwise not have, isnt it better to be paid 5p an hour than nothing at all? Unfairness in woman and child labour needs to be addressed, but at the end of the day Nikes strategy has its upsides for the workers, the consumer and the company. The real downside is that by moving production overseas, Nike is taking jobs away from its home country, the USA. There are often huge protests in Oregon by the large numbers of unemployed about the lack of jobs provided by Nike, but the question has to be asked if they really want the jobs or if the people are just so desperate for money that they would do anything. If the people dont really want the jobs, then work rates and quality may not be as high as required. Workers can also influence TNCs. If there are large presences o f keen workers, prepared to work for a fairly low amount of pay, then that could be a major attraction to a TNC. Countries/Governments The LEDCs into which Nike moves production are being assisted greatly by Nikes provision of money and jobs, and as was seen in South Korea and Taiwan, the effects can be colossal, turning them from LEDCs into NICs in a relatively short space of time. They can influence the movement of TNCs by providing grants and opportunities to avoid barriers or tariffs. Conclusions Nike is one of the worlds largest, most successful companies and they have achieved this through a ruthless business strategy, featuring nomadic manufacturing plants and hard-hitting expensive marketing techniques. At the end of the day Nike are prepared to do anything to maximise their sales and their profit margins, and its this hard-nosed, forward facing way of thinking that has worked so well for them.