Nike case study
CASE STUDY: A multi-national company/TNC - NIKE
Nike trainers are sold and worn throughout the world. Nike is a typical transnational corporation (TNC). Its headquarters are in the USA, where all the major decisions and research take place, yet its sports shoes are manufactured in many countries around the world.
Like many TNCs, Nike subcontracts or uses independently owned factories in different countries to produce its trainers. Often this takes place in less economically developed countries (LEDCs) where labour costs are low. Nike says they are in the business of "marketing" shoes, not making them. However, Nike dictates the terms to the contractor: the design, the materials, the price it will pay.
Nike’s main activities are in South-East Asia, and up until recently it manufactured many of its trainers in South Korea. In the late 1980s labour costs in South Korea rose, so Nike decided to move production to Indonesia where costs were lower. China boasts the largest number of Nike contract factories - 124 in total.
Many of the workers in the Indonesian factories come from the surrounding countryside where they live in poverty. The conditions they move to are better, but not much. Some of the problems they face are:
Low wages and long hours
Industrial accidents
No workers’ rights – trade unions are illegal in Indonesia
Where workers do complain or protest they can lose their jobs. The contractors say they cannot afford to pay the workers more and Nike says that it is difficult to control what is happening in individual factories. This means that in a nation where unemployment is high and employees can be easily replaced, workers will continue to be open to exploitation.
Human rights and aid groups have for years criticized Nike for not doing enough to tackle poor working conditions in its supply chain, particularly in developing countries.
Chairman Phil Knight admitted that the company had been slow to respond to evidence of
Nike trainers are sold and worn throughout the world. Nike is a typical transnational corporation (TNC). Its headquarters are in the USA, where all the major decisions and research take place, yet its sports shoes are manufactured in many countries around the world.
Like many TNCs, Nike subcontracts or uses independently owned factories in different countries to produce its trainers. Often this takes place in less economically developed countries (LEDCs) where labour costs are low. Nike says they are in the business of "marketing" shoes, not making them. However, Nike dictates the terms to the contractor: the design, the materials, the price it will pay.
Nike’s main activities are in South-East Asia, and up until recently it manufactured many of its trainers in South Korea. In the late 1980s labour costs in South Korea rose, so Nike decided to move production to Indonesia where costs were lower. China boasts the largest number of Nike contract factories - 124 in total.
Many of the workers in the Indonesian factories come from the surrounding countryside where they live in poverty. The conditions they move to are better, but not much. Some of the problems they face are:
Low wages and long hours
Industrial accidents
No workers’ rights – trade unions are illegal in Indonesia
Where workers do complain or protest they can lose their jobs. The contractors say they cannot afford to pay the workers more and Nike says that it is difficult to control what is happening in individual factories. This means that in a nation where unemployment is high and employees can be easily replaced, workers will continue to be open to exploitation.
Human rights and aid groups have for years criticized Nike for not doing enough to tackle poor working conditions in its supply chain, particularly in developing countries.
Chairman Phil Knight admitted that the company had been slow to respond to evidence of