Transnational Corps

Readings:
• Dicken: Transnational Corporation
• Dicken: Conflict and Collaboration
• Locke: The Case of Nike

As stated in one of the readings, a transnational corporation (TNC) is a firm which has the power to co-ordinate and control operations in more than one country, even if it does not own them. The most interesting of these three readings, The Case of Nike, exemplifies that statement very factually and in good detail. As Locke presents, before Nike even became Nike, the two founders took advantage of a globalized shift in the economy, seeing how domestic companies manufacturing appliances are being outsold by international companies, they applied the same logic to sportswear and ventured into Asia, one step at a time.
Nike being a transnational corporation, has clearly adhered to the three basic characteristics of a TNC, that being in short co-ordination of production chains between different countries, the ability to take advantage of factors of production, more specifically in Nike’s case, labor and the ability to switch locations when one location becomes too expensive oftentimes as a direct result of the country’s progress on an industrial level. Nike executed these three values very well and as a result has seen extreme profits over the years.
One argument made with “logic” reasoning, was that a corporation will eventually have to internationalize for one of two reasons. As competition becomes more global, firms no longer compete on a domestic level but are forced to compete with international companies entering your home market. Also the simple calculation yet extremely complicated application of Profit = Revenue - Costs comes into play. I agree with these reasons to a point, even though it states directly that these rules or guidelines will not apply to all corporations/firms. It still suggests a rather bleak future for companies that venture otherwise, who will eventually be outsold, outperformed and overshadowed by the larger, more powerful conglomerates.
Focusing back on Nike, the perils of globalization that Nike was battered with in the 1990’s through accusations of child labor, unsafe work environments and extremely low wages (as low as $1/day), heavily damaged their reputation and forced them, for lack of better words to take action and begin to play a role in selection of their suppliers, establish guidelines and enforce/maintain them. At the same time the question was brought forward, should Nike be responsible for their subcontractors? My opinion, most definitely, beyond the fact that they can easily afford it, beyond the fact that people across the world have to work in such conditions, look at it from a business perspective. It would help create or in Nike’s case, re-establish a better image for the company. Oftentimes people will decide whether to purchase a product base on quality, price and availability. Taking it one step further, people will not want to purchase products from a company that exploits child labor or low wages just to get the product on the shelf. We have seen this exemplified once more in the Cappuccino Trail video we viewed in class, the bag of coffee beans that is sold for $50 has a turnover of $20,000 worth of coffee sold. The poor stay poor, the rich get richer, the sad truth and inept weakness of globalization for developing nations. Back to Nike, yes they should be responsible for their suppliers if only through setting up guidelines, standards and maintaining them. They not only help the people that ultimately are their workforce, they help themselves by re-creating their global image and using globalization honestly and effectively as tool that benefits everyone in their company.