Nike in General, Nike Has Term Paper

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This acts as a hedge in business swings both regionally and with respect to major customers. The company's sales are split between North America (35.2%), Europe (20.4%), Greater China (9.1%), Emerging Markets (10.7%), Central and Eastern Europe (6%), Japan (4.6%) and "other businesses" (13.3%), the latter including for example its Cole Haan clothing line. This diversification has allowed Nike to enjoy strong performance even with the economic downturn, as increased sales in emerging markets almost completely offset sales declines in Western markets. Nike hopes to increase its degree of geographic diversification in the future in order to better insulate itself from regional economic difficulties.

In its supply chain, Nike typically utilizes third-party producers. These producers are typically dependent on Nike for volume. The company's supply chain is focused on three countries primarily, those being Vietnam, China and Indonesia, which account for 94% of Nike's production. Production is also diversified, with the largest factory accounting for only 5% of total footwear production. The use of low cost provider countries is essential in footwear especially, as that product is labor-intensive. This allows Nike to expend significant amounts of money on marketing expenses, which is the single most significant part of the company's value chain.

Nike has also undertaken a significant effort to boost its image.

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The company had in past come under fire for some of the labor practices at its suppliers, and suffered reputation damage as a result. Since that point, Nike has initiated a turnaround by improving its ethics policies, applying more pressure on its suppliers and embarking on a public relations campaign in an attempt to restore its image.

Overall, Nike's strategy has remained relatively stable in recent years. The company's formula of endorsing high-profile athletes and engaging in intensive marketing has been successful for the company over the years. The positive consumer associations that are created through these tactics, combined with the considerable brand exposure, have allowed Nike to excel. More recently, the company has turned to diversification as a means of building its business. The Nike brand has been extended to a large number of sports with which it has not previously had a strong association (for example, signing hockey players to help promote in Canada). The company has also made inroads into emerging markets as a means of offsetting the sluggish growth associated with more mature Western markets. These tactics have helped Nike succeed in recent years, despite the struggles in Western economies and difficulties associated with a challenging competitive environment.

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