Changes in Economics of Nike Company - Research Paper Example

The brand alone is valued at $10.7 billion, making it the most valuable brand among sports businesses. Due to its presence in many countries, Nike has had to make several payments about various cases occurring in different countries in its manufacturing process. In the year 2012, Nike paid Indonesian workers 1 million US dollars after it emerged that the workers had worked overtime of 600,000 hours for two years without pay (The Guardian, 2012). In the year, 1987, Nike was sued by Capitol Records for using a Beatles song in their advertisement, the paid capital recorded $250,000 who had the rights to the song at that time. 

In late June 2005, a case against Nike by a Minor threat of them using their cover photo in their album also led to out of a court settlement where Nike apologized to the band and settled them (Brian, 2002). Nike like most multinational companies has a huge stash of profits offshore that it hasn’t paid U.S taxes on. It’s also known that they have paid little or no taxes in these foreign countries. Nike reportedly said that its cache of “permanently reinvested offshore profits” ballooned from $5.

5 billion to $6.7 billion in the past year — this means that the corporation moved up by $1.2 billion of its profits offshore. It also reveals that if it were to pay the U.S. taxes on its offshore stash profits, it would be approximately $2.2 billion, which is a tax rate of just under 33 percent. The federal income tax is usually known to be 35% deducting any taxes corporations have paid to foreign jurisdictions (CTJ, 2013). With this information, it’s easy to conclude that Nike has paid no tax on its offshore profit stash.

Nike has a long list of various offshore subsidiaries others with different names while others bear Nike’s shoe brand. In the year 2012, Nike signed a deal with the state of Oregon where its headquarter is based, to enable it to pay its current tax for the next 40 years as long as it invests more than 150 million dollars within the state and can create 500 jobs within a five-year term (Brian, 2002). This is a good gesture for Nike by the state to let it expand as much as it can but still be able to pay the current tax status.

Nike has done most of its advertisements by investing largely in famous athletes around the world. This is done by various sponsorship deals with the individual athletes or the whole team in some cases. One of their all-time successful athlete in advertising their brand was Michael Jordan a basketball player who in 1984 promoted the Nike brand throughout his career. They also sponsor various teams across the world, this way they advertised their brand wherever the athletes went. The “Just Do It” slogan, also gave Nike a boost in the advertising industry as it was listed as one of the top five ad slogans in the 20th century (e-comlaw, 2010).

Nike has used various insurance companies in different countries to cover its workers, especially in health-related matters. They offer their workers a wide range of health policies, from which they are expected to choose the one that best suits them (Brian, 2002). They do this to ensure the wellness of their families and a positive working environment. That is why every region provides for variable health coverage, fitness center memberships, time off, retirement savings, and more. Though this will be largely affected by your position, region, and the number of years you worked with the company (Nike).