M6A3 - Running head M6A3 COMPETITIVE IMPACT SUMMARY...

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Running head: M6A3: COMPETITIVE IMPACT SUMMARY MILESTONE 2 1 M6A3: Competitive Impact Summary Milestone 2 – Production and Industry Analysis Antwaun A. Hill Excelsior College Managerial Economics ECO508 Dr. Cory Kanth
2 TOPIC Competitive Impact Summary Milestone 2 – Production and Industry Analysis DISCUSSIONS Factors influencing input and production costs Input costs are the overhead and items such as labor and material used in the production of goods or services. In regards to Nike, Inc. there are many factors that influence input costs such as outsourcing, labor wages, and social responsibility. In regards to outsourcing, Nike, Inc. is taking advantage of outsourcing to produce at lower costs. However, the company has been criticized for sourcing its products in factories/countries where low wages, poor working conditions, and human rights problems were rampant. Further, a series of public relations nightmares; involving underpaid workers in Indonesia, child labor in Cambodia and Pakistan, and poor working conditions in China and Vietnam; combined to tarnish Nike’s image. (Locke, 2002) In fact, during a speech from Nike head, Phil Knight, he described Nike as being synonymous with slave wages, forced overtime, and arbitrary abuse. (Nisen 2013) Initially, Nike was slow to respond to allegations regarding subpar treatment of foreign workers. They did not accept responsibility for the circumstances of these workers on the grounds that they were not Nike employees. (Locke, 2002) In some countries Nike did raise the minimum working age it would allow. However, Nike continued to jeopardize its reputation and its brand by failing to adopt two key matters. (Wilsey & Lichtig, n.d.) The first was “the mission of a commitment to pay workers a living wage based on purchasing
3 power”. (Wilsey & Lichtig, n.d.) That is, although Nike agreed to pay workers the minimum wage established in their country, the wage was insufficient to allow workers to make a decent living. The wage also discouraged the interest of foreign investors. Second, Nike also

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