TNC Case Study: Nike

Question 1

Positive impacts on host country

Answer 1

Outsourcing creates substantial employment-over 700,000 contract workers in over 700 factories worldwide
Pays slightly higher wages than other companies
Improves skill base of local population
Success of the global brand may attract other TNCs setting off cumulative causation
Exports are a positive contribution to balance of payments
Contribution to local tax helps pay for new and improved infrastructure

Question 2

Negative impacts on host country

Answer 2

Workers at 9 plants in Indonesia have been found to suffer from sexual and physical violence
Causes economic dependence which can cause unemployment when the company leaves 1980-labour costs rose in South Korea so Nike moved production to Indonesia
Suspicions have been raised over use of child labour
Image and advertising undermines local culture
Huge deal on resources like water and fuel

Question 3

Positive impacts on country of origin

Answer 3

Positive employment impact and stimulus to the development of high level skills in design marketing and development in Oregon
Direct and indirect contribution to local and national tax base

Question 4

Negative impacts on country of origin

Answer 4

Doesn’t manufacture in US which leads to indirect loss of jobs and negative impacts in balance of payments as footwear is imported
Trade unions complain over an uneven playing field because of big contrast in working condition between MEDCs and LEDCs

Question 5

Background information

Answer 5

Global headquarters is located in Beaverton, Oregon

124 plants in many countries including China, Thailand, South Korea and Vietnam