Transnational Corporation (TNC): NIKE

Match the following

• Established

• 1992

• Revenue in 2014

• US$25.3 billion

• Number of Contracted Factories

• 1972

• Code of Conduct

• 700 in 45 countries

• Average Pay of a Nike Factory in Vietnam

• US$54 (three times the minimum wage).

Nike Job Benefits

• training

• Subsidised meals

• education.

• healthcare,

Negative Effects of Nike Factories

• Chemicals that dye clothing may leak into water sources, causing contamination.

• Emission of carbon dioxide and carbon monoxide - enhancing global warming.

• Toxic fumes causes dermal and respiratory problems for workers (e.g. a factory in Thailand).

• Many sweatshops around the world exploit workers with harsh working conditions and punishments.

Nike is a global sportswear company headquartered in ​ (a)   in the United States.

• Oregon
• New York
• Chicago
• LA

Benefits for LEDCs:

• Nike has invested in and promoted the development of transport infrastructure in the areas near the factories

• Nike factories create new jobs in countries like China, Vietnam, Thailand and Indonesia, allowing poorer people to earn a wage.

• The standard of living for many people improves, increasing the ability to access food and quality housing.

• Better roads make it easier for the population to get around, and this has a positive ripple effect on other economic activity.

• Stable income and more reliable than farming

in one Cambodian factory that produced apparel for Nike, several women collapsed after working ​ (a)   , (b)   aweek, and they reported feeling hungry and exhausted.

• 10 hours
• 6 days
• 7 days
• 5 days
• 12 hours
• 6 hours
• 8 hours

Problems/Costs for the USA

• Company image damaged due to outsourcing

• Balance of profit to cost isn't passed onto the customer 

• Indirect loss of jobs as manufacturing is outsourced 

• High level skills in design, R&D in demand 

Benefits for the USA:

• Substantial employment 

• High level skills in design, R&D in demand 

• Bigger profits made as manufacturing costs are lower

Solutions

• In 2010, 20,000 workers in Vietnam went on strike demanding higher pay

• Nike set up 1992 Code of Conduct for all factories to improve working conditions and create a fairer rate of pay/ working hours

• More monitoring of employee skills & development from 2001 and set environmental targets

  From 2012 inspections into greenhouse emissions

•    In 2007, Nike decided to relocate from Indonesia which lead to  demonstrations as many other industries depended on the factory workers as a market

Why does Nike employ people in SE Asia

• Raw materials produced locally; cheap to obtain

• cheaper labour = higher profits

• Near to other countries with expanding markets; so lower transport costs to these countries than from USA

• Slacker laws; longer work hours, poor conditions, environmental laws; cheap