Nike Shoes and the Nutella Chocolate Spread

Globalized Products: Nike Shoes and the Nutella Chocolate Spread

The integration of national economies into a one globalized operation has greatly affected the conduct of business in today’s society. In a report published by the National Bureau of Economic Research, Hanson (2001, para.1) observes that as a result of globalization, “Firms are more able to fragment their operations internationally, locating each stage of production in the country where it can be done at the least cost”. This means that consumers are able to purchase products more cheaply today as compared to the past. In fact, due to the outcomes of globalized production, most of the brands that are popular among people today are cheaper than they were before.

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One of such brands is Nutella, which is very popular among young people. It is owned and managed by an Italian family, but is produced in a number of countries. Despite having been founded in Italy, Nutella chocolates are very popular in a number of other countries, such as France and Germany (ATB Chartered Accountants, 2016). An important point about this brand is that although production of Nutella is done as closely as possible to the largest markets, the raw materials used in its production are sourced from diverse countries, key among them Nigeria, Turkey, and Malaysia.

The major production point for Nutella is Ontario, Canada, but raw materials are obtained from different countries and shipped by sea to North America. Once the production process is completed in Canada, the finished products are distributed to different points of sale. Without this globalized kind of production, the Nutella chocolate would most likely be a very rare product because it would be difficult to obtain necessary raw materials in Italy or Canada.

The Nike brand is very popular among people of different ages. From jumpers to shoes and athletic wear, Nike occupies a special position in the apparel industry. The company is headquartered in the United States and is ranked as one among the “leading worldwide sellers of sports footwear, apparel, equipment and accessory products,” (Christensen, 2009 p.134). It is interesting to note that Nike does not make its footwear. According to Lechner (2009), Nike shoes are made in different countries, including Japan, Korea, Taiwan, Indonesia, and Vietnam. An interesting remark about the production of Nike shoes is that “American runners might wear shoes designed in Oregon but made by Indonesian women supervised by Korean managers,” (Lechner, 2009 p.90). This statement shows that globalization has helped companies such as Nike to diffuse their value chain such that different processes required for the complete production and delivery of a commodity are done in diverse places. This way, efficiency is increased; the final product delivered to consumers is also more appealing.

The main reason why Nike outsources its production processes to various countries is the low cost of factor inputs in those countries. Outsourcing gives the company sufficient time and resources to concentrate on designing, developing, and marketing finished products to the global market (Christensen, 2009). Based on this fact, it would be correct to say that if Nike did all the designing, production, manufacturing, and marketing activities in the United States, the world would not possibly have the unique, trendy athletic footwear there is today. In addition, it is possible that very few people would afford a pair of Nike shoes as the high production costs incurred by the company would have to be passed on to the consumer.

 

References

ATB Chartered Accountants. (2016). The global spread of Nutella. Retrieved from https://www.atb.net.au/the-global-spread-of-nutella/

Christensen, J. (2009). Global experience industries: The business of the experience economy. Aarhus; Oakville, CT: Aarhus University Press.

Hanson, G. (2001). The globalization of production. Retrieved from https://www.nber.org/reporter/spring01/hanson.html.

Lechner, F. J. (2009). Globalization: The making of world society. Chichester, U.K: Wiley-Blackwell.

 

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