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Nike: Factors of Production
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Factors of Production:
Nike
Payton Mayer, online economics, hour 1
https://marketrealist.com/2014/12/overview-nikes-supply-chain-manufacturing
https://about.nike.com/
Factors of Production
Land
Labor
Capital
Entrepreneur
Land
Land
Natural resources are used to produce the goods and services.
Labor
The effort people devote to a task for which they paid.
Capital
-Physical Capital - Any human-made resource that is used to create other goods or services.
-Human Capital -Knowledge and experience a person gains which can be used to provide goods and services.
Entrepeneur
Entrepreneur
-Ambitious leader who combines land, labor, and capital to create and market new goods or services.
Summary
Nike has become a part of the daily lives of millions of people everywhere. Formerly called Blue Ribbon Sports, Nike was founded in 1964 by Bill Boweman and Phil Knight. They opened their first retail outlet in 1966 and launched the Nike brand shoe in 1972. The company, located in Beaverton, Oregon, is ranked as the world's most valuable sports brand worth $15 million and employs over 74,000 people worldwide. 99% of all shoes sold in the United States and manufactured abroad, but Nike solicits the services of independent manufacturers located in fourteen countries around the world. This offers a serious competitive edge. It means that productive costs, and high returns. Nike's corporate strategy rests in a supply chain that is lean, agile, and centered on the customer.
Phase 1: Production
Land- The products are made with multiple ingredients. The cotton is used for shirts. Oil is used for the factories and power plants. Silk is used for threading of the shoes.
Labor
There are over 1 million manufacturers/employees that make and create the products. These people provide new ideas or designs and then produce the products. The type of people include executives of the company or professional athletes.
Capital
Using machines to create the products contribute to the faster speed of getting developed to make more products. To make the logo, workers use a heat press or sewing machine. All products are made in factories. Another new, also updated tool Nike uses is the 3D printer for new running shoes.
Phase 2: Packaging
Land: There are 3 main packaging tools that are used for all Nike products. These include plastic for wrapping, cardboard for boxes, and paper to put in the shoes within the box. Both the paper and cardboard for the boxes are using the resource of trees.
Labor
There are employees that work at the assembling part factories. The owners of the factories are responsible in the packing department. Owners also keep track of the amount of production being created each day and make sure the factories are efficient.
Capital
Shoe and cardboard boxes are used for shipping. Along with that, bubble wrap is used to ensure that each product is safe and not damaged. Another tool that is used is tape to keep all the boxes closed and sealed. These are examples of tools used for packaging.
Phase 3: Distribution
Land- Trucks are a main source for shipment of products. For these trucks, oil is needed for the gasoline that gets used when driving the vehicle. For labels and tags that are made, paper from trees are being used. Another tool that is used is metal for racks that the products get moved to.
Labor
To help promote products or advertise the company, companies use famous athletes or celebrities. The companies include these people in commercials, posters and sponsor sports teams. This advertising is also helpful to retail stores that carry and sell Nike products. This helps to increase the sales.
Capital
There are a few different tools used to distribute and deliver all the products to the stores. One major way is using semi trucks and shipping trucks to get the products to the correct places. Another is the packages that the products come produced in along with racks or trolleys to get the boxed packages into stores.
Phase 4: Customer Satisfaction
Overall Nike has become a very popular sports company for athletic wear. Nike sells 400,000,000 shoes per year. This means 13 shoes are sold per second. There's such a large quantity and variety of all the products including shirts, shoes, shorts, socks, etc. are bought by millions of people each year. Along with that and the products having the long lasting quality, this makes customers trust Nike and keeps them coming back for more. Even with the other competitive companies such as Puma, Reebok, Under Armour, and Adidas, there are multiple options of where to buy products making it difficult to choose one company compared to another. All products are comfortable to customers and can be worn or used for multiple engaging activities.