Impact of Trade Agreements on Nike Inc. Expansion in Brazil

Impact of Trade Agreements on Nike Inc. Expansion in Brazil

Nike Inc. is an American multinational firm that is engaged in the manufacture of footwear, accessories, apparel, and the provision of other services. The company is among the world-leading producer of sportswear and clothing. Therefore, with the increasing world population, it has resorted to investing more in the developing states to set up manufacturing firms (Angeles, 2014). In this case, Nike Inc. opts to take advantage of the trade agreements that exist between the United States of America and the South American continent. It is appropriate that land is a significant resource for the company to establish within the South American region. Therefore, Brazil, being a developing state, is rich with large pieces of land that remain unutilized. Nike Inc., thus, can take advantage of the tremendous large pieces of land within Brazil to set up a local firm. Moreover, Brazil is a country that is significantly associated with athletics. It has several football clubs that are a significant opportunity for the company. Hence, it is right to depict that Nike seeks to take advantage of strategic location in Brazil to expand its global market in the production of footwear and athletic apparel.

Furthermore, resources such as rubber and polyester are widely available within Brazil. The natural resources, therefore, making it economical for the company to manufacture and produce locally within Brazil rather than export products that are produced from its headquarters Beaverton, Oregon. The resource of skilled labor and unskilled labor that is readily available within Brazil further makes the company significant in the manufacturing process within Brazil. Hence, it is evident to establish that Brazil is richly endowed with the natural resources that are required by Nike Inc. company to facilitate the production of footwear and apparel within it locally.

The existing trade agreements between the United States and the South American continent makes it strategic for Nike Inc. to set up a business within Brazil region. It is appropriate to indicate that the Latin America and Caribbean Free Trade Agreement (LAC-FTA) enables countries within the region to conduct business at lower costs with each other (Moreira and Antoni, 2018). Hence, America having the opportunity to expand the services of Nike Inc. in Brazil takes advantage of the benefits of the trade agreement. It is probable to indicate that LAC-FTA removes the trade sanctions and minimizes the tariffs that can be imposed on the US to set business with the state (Bohigues and Manuel, 2019). The trade agreement further allows Nike Inc. to be provided with the opportunity to free trade through the provision of licenses to set up local firms within Brazil. Moreover, the agreement sets up policies that are meant to benefit local citizens within Brazil as well as expand the revenue of Nike through a more comprehensive market opportunity in the developing state of Brazil.

The other existing Preferential Trade Agreements within the Central, South, and North American region alongside LAC-FTA is focusing on the provision of a single tariff with the continents. Thus, Nike would have the opportunity to expand its activities within Brazil. In this case, the net revenue obtained from the region will see the country increase its net worth with the limited tariffs that exist as a result of the preferential trade agreements (Whalley, 2018). Moreover, the economic integration between the two continents helps to boost the manufacturing activities of Nike within Brazil. It facilitates the provision of necessary legal agreements for the country to establish other producing firms in Brazil.

It is further correct to indicate that social structure within Brazil favors multinational production within the country. In this case, it is right to depict that the political structure and social integration of the citizens of Brazil provides a favorable environment for business opportunities within the country. It is worth establishing that the peace and security that is obtained within the region facilitates the ability of Brazil to further focus on providing a broader market to Nike Inc. without the company being affected by political clashes. Moreover, the robust judicial system within Brazil makes it possible for the relevant trade agreements and licenses to be obtained by Nike to facilitate the set up of multinational firms within the region of Brazil. The business environment is also supported by an improving economic standard of the individuals that make it possible to purchase the products that Nike produces. The numerous athletic activities taking place in Brazil is reason enough to increase local production in Brazil through the Nike Inc. corporation.

In conclusion, it is reasonable to maintain that Nike Inc. company that majors in the production of footwear and athletic apparel can set up a business with the developing nation of Brazil. Moreover, the LAC-FTA trade agreement makes it possible for the company to trade in the region with limited tariffs freely. Furthermore, resources such as rubber, land, and labor are appropriate. The business environment is also favored with peace and security with the region.