Nike and Reebok Case Study
International Sourcing in Athletic Footwear: Until the 1970's the major players in the athletic shoe market were Adidas and Puma - both German companies - and Phil Knight decided to start his own athletic shoe company - "Nike". Almost from the outset Nike outsourced it's manufacturing to Asian contractors, running only two small facilities in Maine and New Hampshire. They partnered with a limited number of suppliers, and worked closely with their Asian counterparts developing trusting relationship.During the 1980's another athletic shoe manufacture, Reebok, decided to pursue a similar outsourcing strategy in Asia. Reebok's strategy was a little different than that of Nike - Reebok decided that it would be best to diversify its manufacturing between many different overseas partners
The first transition was from the domestic plants to the plants in Mexico. Many of the products that were launched and incubated in their domestic facilities are now being built in Asia, and for about 20% of the cost. They became the world's number 1 and number 2 athletic show manufacturers respectively. Nike and Reebok both decided that, in order to reduce the pressure, to adopt policies governing their contractors overseas. Reebok did spend the necessary money and time to train and audit the facilities. My former employer has plants around the globe, and quite a large number in Asia. as a way to be more adaptive to pricing fluctuations, and supply chain changes. The manufacturing base has shifted within Asia from South Korea, to China, Indonesia, the Philippines, etc. They initially tried to avoid these issues by playing dumb - but the human rights groups would not fall for this. Both Nike and Reebok experienced significant growth during the 1980's. Both documents were meant with skepticism. Once Asia started to open up the production that was in Mexico begun to transfer to Asia, and the Mexican workers started to feel the pain that we had felt a decade earlier. Due to this both Nike and Reebok began fielding numerous questions and allegations about unfair labor practices.
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