TNCs - Nike - Lecture notes PDF

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Transnational Corporations nike

Background Info Nike is an American TNC that is engaged in the design, development, manufacturing and worldwide marketing and sales of footwear, apparel, equipment and accessories The company was founded on January 25, 1964, as Blue Ribbon Sports, by Bill Bowerman and Phil Knight, and officially became Nike, Inc. on May 30, 1971 The company went public in the 1980's and Nike successfully profited 50% of the market share in the United States Nike pays top athletes in many sports to use their products and promote and advertise their technology and design Revenue: $30.6bn

Where? (Structure, Spatial Distribution) Nike’s global headquarters is located in Beaverton, Oregon, USA. Nike employs more than 700,000 contract workers in over 700 factories worldwide. The list includes 124 plants in China, 73 in Thailand, 35 in South Korea and 34 in Vietnam s) where labour costs are lower than in MEDCs More than 75% of the workforce is based in Asia In mid-2003 Nike paid $305 million to acquire retro shoemaker Converse. Most large TNCs grow by acquiring other businesses as well as generating their own growth

Impacts Host Country Outsourcing creates substantial employment in Vietnam which will help to improve the skills base of the local population. Exports are a positive contribution to the balance of payments and the contribution to local tax helps pay for new and improved infrastructure. Workers at nine Nike plants in Indonesia (including Jakarta) have been found to suffer from sexual and verbal abuse, lack of medical attention and compulsory overtime. Suspicions have been raised over the use of child labour. Company image and advertising may help to undermine national culture. Huge demand on water resources & use of fossil fuels. In the late 1980s labour costs in South Korea rose, so Nike decided to move production to Indonesia where costs were lower.

Country of Origin Positive employment impact and stimulus to the development to high level skills in design marketing and development in Beaverton Oregon. Direct and indirect contribution to local and national tax base. Nike does not manufacture in the US which leads to indirect loss of jobs and negative impacts on balance of payments as footwear is imported. Trade unions complain over an uneven playing field because of the big contrast in working conditions between LEDCs and MEDCs...