Nike is a company that expanded to China. Discuss the following. Delineate the l

Question

Nike is a company that expanded to China. Discuss the following. Delineate the legal systems and discuss which legal system and political ideology applies to the country you chose that the company does business in. • Delineate the economic systems and discuss which economic system applies to the country you chose that the company does business in. • Discuss the culture of the country (both verbal and nonverbal) and how it may impact the way the company does business internationally. Introduction 2. Competition(both domestic and foreign 3. Geography 4. U.S. based company 5. Economic system 6. Culture 7. Legal/Political

Explanation / Answer

History

Nike was originally called as Blue Ribbon sports which was initially used by athlete Phile Knight. It slowly gained popularity for its use among top athletes and runner. This positively affected the sales and profit of the company which as initially situated in Santa Monica.

It got the name Nike in the year 1978 and the promotion, endorsements by athletes was its main selling point and USP. The famous ‘Just Do it’ ad campaign also got enormous significance and the advertising campaign became a rage. The youngsters especially felt connected to the product and preferred the sports shoes and products from Nike.

Economic and political system

According to Leslie and Philip in 2012; the political and legal environment of the country has a huge impact on the brand and business situation. China has certain aggressive policies which also favours the local brands and products. There is encouragement given to local goods. There is also not a very friendly relation between US and china. This can be not a very conducive factor for Nike to grow enormously in China.

There is huge revenue opportunity in a highly expanding country like china; the spending rate of the consumers is high. This can be a great opportunity for Nike in china.

Cultural and social factors

There is a great sense of focus given to health and well being. Thus people will tend to prefer fitness related products and there is also a spur in gyms and health centers. This is positive for Nike for its brand.

The ethical system of countries like China with the pressure from nongovernmental and civil groups is high. Thus Nike has to be careful about implementing only ethical practices and follow health and safety standards for the company employees.

There is a huge problem of Counterfeit products in China. Fake Nike products are easily available in china and with the advent of easy online websites to sell fake products; it will be challenging for Nike to deal with this.

The positive aspect of Nike in the international market is its strong portfolio; it has an international reputation of being a global leader. Thus there is awareness around the products and the idea of a global western brand is also attractive for the Chinese consumer.

The problem of labourers in the factory pertaining to ethical laws and health and safety standards has caused lot of pressure from civil societies. This should be of major concern for Nike china if it is trying to establish its foot in china and be profitable.

There is an interesting opportunity for huge business expansion with emerging markets like Brazil, Bangladesh. There are multi channel platforms and the reach of the customers worldwide has increased.

Competition and pricing

It faces competition from local products; including international ones like Adidas and Reebok. There are huge sites like Alibaba who focus on selling cheaper goods and the Chinese consumers love these cheap products that are easy on the pocket with wide choice.

Thus the company needs to focus on loyalty of consumers and then set its price understanding if the customers will be willing to pay high price or not.

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