Nike Case Study

1746 Words7 Pages
My argument is that Nike’s business model has always been to design footwear but to contract out the manufacture of the product to countries where it could be done more cheaply. (Locke, 2002, pp.4) When purchasing a product in a ‘free market’, as defined by Adam Smith, that market is regulated to prevent theft and fraud, and the purchasers have full knowledge of the product which they are buying. If those assumptions are approximately true, then market forces drive down prices everywhere - so the manufacturers cannot take an unreasonable profit, and the market operates efficiently. But those ideal assumptions are never fully realised in the real world. And when we are trading globally, we are not in a single market. So they’re not even workable assumptions. We only have limited knowledge. And we have no guarantee that our native legal and ethical rules are in place and enforced. When we don’t enquire where a product came from, then the cheapest items on offer in a partially unregulated market are always the product of theft or exploitation. In summary, I believe that the question which has caused so much trouble for Nike was really ‘Why is this product significantly cheaper than it can be made around here?’ Nike didn’t ask that question and suffered reputational damage. Then, they knew to ask that question and pay some attention to the answer. Largely, that fixed their problem. When Nike was founded, as ‘Blue Ribbon Sports’, the original business plan was
Open Document