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Transcript

Presentation

Nike a TNC with global connections

Just do it

Index

1 Background

2 What is a TNC

3 How the TNC works

4 The Costs

5 Expansion

6 Imapct on host Country

7 Impact on Country of Origin

8 Future Projects

-Nike's global headquatars is located in Beaverton, Oregon, USA

-Nike employs more than 700,000 contract workers in over 700 factories worldwide
(124 in China, 73 in Thailand, 40 in Indonesia and 34 in Vietnam)
.More than 75% of the workforce is based in Asia

Background

-A transnational corporation (TNC)

-foreign direct investment
-gathering assets in more than one country
-services outside its country of origin
-engages in international production

What is a TNC

1

- Like many TNCs, Nike subcontractors independently own factories in different countries to produce its products.

-Often this takes place in low developed countries (LDCs) where Labour costs are lower than in MDCs.
-Nike say they are in the buisness of "marketing" their products not making them.

How the TNC works

Low Production costs due to cheap labour

But why does Nike manufacture in these locations?

the ability to manipulate governments

Fewer government restrictions

Increase foreign investment intensives

No workers’ rights – trade unions are illegal in Indonesia

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In mid-2003 Nike paid $305 million to acquire retro shomaker Converse. Most large TNCs grow by acquiring other businesses as well as generating their own growth

Expansion

-Contractors are paid an average of $18 a shoe by Nike

(this is made up of $11 for materials, $2 for Labour, $4 for other costs, and $1 for profit)
-Nike sells the shoes to retailers for $36 for the costs of design, research, marketing, advertisement, shipping production management, taxes and of course a profit
-Retailers then increase that to %72 to cover wages, shrinkage, insurance, advertising, supplies and services, taxes and profit.

The costs

Benefits

-Brings jobs to the local community meaning more jobs are created

-They invest money into the local infrastructure
-Substantial employment in Vietnam
-Improves the skills base of the local population

Afflictions

-Can't effectivly Overlook good practices
-Poor working conditions
-Worker sexual and verbal Abuse
-suspicions have been raised over the use of child labour.

Imapct on host Country

+ Info

Benefits

-Positive employment impact

-development of high level skills in design marketing
-development in Beaverton Oregon
-Direct and indirect contribution to local and national tax base

Afflictions

-Nike does not manufacture in the Us which leads to indirect loss of jobs and negative impacts on balance of payments between the employed
-trade Unions complain over an uneven playing field because of the big contrast in working conditions between LEDCs nd MEDCs

Impact on Country of Origin

+ Info

In 1993, Nike setup a Reuse -a-shoe program to encorage people to recycle their old shoes


Future Projects

+ Info

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Thanks for listening!

and just do it