Nike: The Outsourcing Strategy

Subject: Management
Pages: 1
Words: 309
Reading time:
2 min
Study level: Bachelor

Job outsourcing strategies are an inseparable part of the growing global economy. Such strategies are beneficial for both the country of origin of the transnational corporation and for developing countries, which offer labor. Developed countries, including the United States, gain access to cheaper products with reliable quality, whereas developing countries receive significant investments. I strongly agree that the current legislation designed to protect and support domestic industries may have adverse effects on international corporations and hence negatively influence the national economy. However, I also support the idea of providing frameworks that maintain an enabling environment for domestic companies. Therefore, it may be necessary to introduce further development of the existing “America First” policies in order to provide sufficient support to the domestic economy without complicating international relationships. Nike’s outsourcing strategy is relatively unique as it outsources manufacturing almost completely. Even though such an approach may be highly effective, it may represent some ethical issues (Osuji et al., 2020). It might be complicated to supervise and control outsourcing partners, and hence these companies may violate labor legislation, providing poor working conditions.

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Harry’s Razors Strategy

Harry’s Razors’ decision to purchase a foreign factory turned out to be highly beneficial. Controlling most of the production cycle instead of outsourcing manufacturing is a common practice in the low-price segments. For example, Zara is able to produce high-quality products for a reasonable price due to high control of manufacturing. However, such a strategy may only be suitable for large companies as it benefits significantly from the economy of scale. Another significant aspect of Harry’s strategy was the choice of the manufacturing country. Although Germany does not provide cheap labor, it offers high quality of manufacture, and more importantly, it is known for it. Consequently, the purchase of the German factory influenced brand development positively, making Harry’s products more reliable in the eyes of consumers.

References

Osuji, O., Jamali, D., & Ngwu, F. N. (2020). Corporate social responsibility in developing and emerging markets: institutions, actors and sustainable development. Cambridge University Press.