Nike Competitive Advantage
Bargaining power of suppliers: How dependent is the business on its suppliers? If the business has only one major supplier and no available alternatives, the supplier has great bargaining power. Conversely, a business can have bargaining power over the supplier. For example, Nike doesn’t manufacture its own sneakers; it uses private contractors in Vietnam to produce the sneakers. Workers are paid very low wages, which indirectly gives Nike a great deal of power over these oftentimes helpless factory workers. In effect, because Nike can easily switch factories, it controls the suppliers.
Bargaining power of consumers: Satisfied customers are the key to long-term success. How much does the business depend on the consumer? Consumers of footwear have power because they can shift to other manufacturers on a mere whim or because of a new style, better price, higher quality, greater convenience, and a host of other reasons. However, consumers lose power when they are loyal to a business like Nike and want to buy only Nike footwear. Because there are many consumers who want Nike products, Nike is in a strong position as long as it continues to offer appealing …show more content…
Liz Claiborne, Inc. was an international company that designs, manufactures and markets fashion apparel and accessories. Like Nike, Liz Claiborne did not own any capital-intensive manufacturing factories and relied on independent suppliers from 60 countries, such as China, Indonesia, Hong Kong and Sri Lanka. In El Salvador, where many well-known companies such as Kohl’s, Gap, Liz Claiborne and Nike have subcontracted manufacturing factories, serious problems within the factories were prevalent. According to a government report, many of the 229 apparel factories in the country did not provide basic safety equipment, operated under unhealthy air and water levels and at temperatures exceeding 90 degrees, and mandated 80-hour work weeks. Employees were not paid for overtime when they fell short of production quotas. Many workers also complained about wages that were “insufficient to satisfy their family needs with dignity” (Greenhouse,