Question

1. Does Nike have operations overseas? What market conditions would be required to move this operation back to the United States? What would be the advantage? 2. Where is your company located in relation to your primary customer base? What costs would be involved with moving your operation closer to your customer? What would be the cost advantages?

Answer 1

1) Nike has operations overseas in developing countries as the labour costs are much lower in developing countries due to the availability of surplus labour that is ready to work at low wages. If Nike wants to move it's operations back to the US, it would require that the wages in the US decrease in order to keep the cost of production under check. Since most of the customer base as well as the base company of Nike is located in the US, it would save the transportation costs involved in shipping the manufactured goods from the developing countries to the US.

2) If my company is located in a developing country, say India, I would have to bear the additional costs equal to the difference in wages between India and the US. The advantage would be that it will be easier to monitor the manufacturing process and the transportation costs will be saved.