response to discussion post – In your response, comment on the conclusions drawn. Add any of your own observations about the firm and how the selected microeconomic concept applies. Additionally, discuss how the concepts chosen in the post would be applied to current or future work in business administration.
One thing I would recommend to Adidas is to create factories here in the US to make their sneakers – perhaps not their entire inventory, but a good portion of it. We know the reason a lot of companies build factories in China and other countries in Asia is because labor is so much cheaper than here in America or European countries. But then these companies have to ship the products made to the US or wherever else they may be going, which is another added cost. If Adidas would build several factories with human workers in the US, it would mitigate the cost of shipping, insurance, etc. Especially if new tariffs come down on the footwear market (Thomas, 2019). Tariffs would add another burdening cost that would most likely force companies like Adidas to raise the cost of their footwear in order to keep their profit margins where they need to be. But this could hurt their sales (and the entire market) if less people begin to buy their product because prices are too high.
In moving the production of their goods to the US, Adidas’ biggest concern would be the cost of labor. On average, a Chinese factory workers wage is only around $1.36 USD, while an American factory worker can make around $23.32 USD per hour (Kavoussi, 2017). Of course, the cost of living in China is much lower. The huffpost article found though, that US factory workers are more than twice as productive than their Chinese counterparts (Kavoussi). If this is the case, and Adidas pursued this route, they could potentially make up some of the labor cost through a higher quantitative product output. Since Adidas is consistently a top three brand in the athletic footwear market and has such a historic story, this would be a bold and aggressive move on their part, but could prove worth it in the long run. Since Adidas is also trying to grow in the US market, this could be a huge push for that. They would be able to tout that now the shoes being sold in America, were produced in America as well – something Americans are always proud of.
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