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Nike Inc.s Pattern of Internationalization
Nike is one of those companies whose success is an example for many and is constantly being studied. This sportswear company started with shoes and has since grown to become the worlds largest sportswear corporation, producing everything from footwear and apparel to smart gadgets. The corporation presently has over 700 factories in 42 countries and a global brand worth $34.8 billion (Koziello, 2020). In addition to high-quality products, the company has been able to expand through the use of excellent global strategies and entry modes, which have helped to expand its business globally and gain market share worldwide.
The company used various entry modes to enter different markets, which depended on the markets characteristics and the conditions at that moment. Nike became an international company when it opened an office in Taiwan in 1975, and it now has branch offices worldwide (Koziello, 2020). Products are manufactured in 112 factories in 12 countries and are sold almost all over the world. The main entry modes are export, licensing and franchise, partnership and strategic alliance, acquisition, and greenfield venture (Fuchs, 2022). Nike prefers exporting in most markets as it is the easiest way to enter the international market. The advantage of this way of entering the market is that Nike avoids the cost of opening operations in a new country. Active marketing and advertising, coupled with agreements with local companies and distributors, have made it successful in most markets.
However, in China, the company has chosen a different strategy. Nike began in China with a manufacturing unit in the 1970s. Nike made $150 million in revenue during this time period and was preparing for an IPO (Koziello, 2020). At the same time, China had yet to become a global industrial powerhouse and was far from the worlds fastest-expanding economy. As a result of the convergence of these variables, Nike realized that China, with its skilled workforce and inexpensive salaries, provides several prospects. The process of establishing a new fully owned subsidiary is complicated and costly, but it provides the firm with maximum control and the largest profit potential (Gereffi et al., 2021). Given the costs of establishing a new firm in a new nation, the costs and risks were significant (Gillespie & Swan, 2021). However, Nike was already a reasonably successful corporation at the time and could get it.
Nike first entered the Chinese market as a major sponsor of a variety of sporting events, including professional leagues. The firm established sports leagues and was instrumental in the spread of American streetball culture throughout the country. Nike was able to establish a strong brand presence in this manner, resulting in a high level of Chinese customer familiarity.
References
Fuchs, M. (2022). Market Entry Modes. In International Management (pp. 179-230). Springer Gabler, Berlin, Heidelberg.
Gereffi, G., Lim, H. C., & Lee, J. (2021). Trade policies, firm strategies, and adaptive reconfigurations of global value chains. Journal of International Business Policy, 4(4), 506-522. Web.
Gillespie, K., & Swan, K. S. (2021). Global marketing. Routledge.
Koziello, W. (2020). A study of key success factors for enterprises. Analysis of selected companies. IOSR Journal of Business and Management (IOSR-JBM), 22(3), 55-59. Web.
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