Nike as an inc

NIKE

TEXTE EXPOSÉ :

Background

Nike was founded in 1964 as Blue Ribbon Sports by Bill Bowerman and Phil Knight and officially became Nike, Inc. in 1972.Today, Nike is one of the world’s most valuable sportswear brands, with an annual revenue of $75 billion.

Nike’s headquarters are located in Beaverton, Oregon, USA, where most research and product development take place. The brand is known for its innovative sports technology Nike’s 'swoosh' logo and 'Just Do It' slogan are globally recognized, making it one of the most influential brands in the sports industry. The company operates in over 300 cities worldwide and sponsors top athletes such as Michael Jordan, Cristiano Ronaldo, Serena Williams

Nike has expanded through acquisitions, including Converse, Hurley, and previously Cole Haan and Umbro. It continuously invests in digital retail, with Nike apps and direct-to-consumer strategies reshaping its global presence.

2. Features of Nike as a TNC

A Transnational Corporation (TNC) is a company that operates in multiple countries with decentralized decision-making. Nike exemplifies this through its global supply chain and marketing strategies.

Decentralized Production: Nike does not own factories but subcontracts manufacturing to third-party companies.

Global Market Presence: Nike sells products in more than 170 countries, with key markets in the USA, China, Europe, and emerging economies like Brazil and India.

Host Country Adaptation: Nike adapts products to local markets, offering special editions and regional collaborations.

Sustainability Initiatives: Nike promotes eco-friendly initiatives such as Move to Zero, aiming for zero carbon emissions and zero waste.

Nike employs over 30,000 people directly, but more than 700,000 workers produce its goods in over 700 contract factories across 52 countries, primarily in China, Vietnam, Indonesia, Thailand, Bangladesh, and India.

3. Costs and Global Expansion

Nike's global value chain refers to the entire process of designing, producing, distributing, marketing, and selling its products worldwide. This value chain is highly outsourced, with a focus on cost efficiency, innovation, and brand strength.

Nike’s outsourcing strategy is driven by:

Lower Production Costs: Manufacturing in developing countries reduces labor and material expenses.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

Government Incentives: Some governments offer tax breaks and relaxed regulations to attract foreign companies.

Fewer Labor and Environmental Regulations: Countries like Vietnam and Indonesia have minimal restrictions on wages and working conditions.

Supply Chain Efficiency: Nike’s factories are concentrated in Southeast Asia, reducing transport costs and production times.

Market Expansion: As countries develop, Nike benefits from growing middle-class consumers.

However, Nike has faced multiple controversies:

Poor Working Conditions: Reports of low wages, long hours, and abusive supervision in supplier factories.

Environmental Damage: Factories in China and Indonesia have been accused of river pollution due to chemical waste.

Labor Strikes: In 2010, 20,000 workers in Vietnam went on strike for higher wages.

Factory Closures: In 2007, protests in Indonesia followed Nike’s decision to relocate, causing economic instability.

4. Impact on Host and Home Countries

Positive Impacts:

Employment Creation: Over 620,000 people work in Nike contract factories, with 75% in Asia, mostly young women under 25.

Economic Growth: Nike’s presence stimulates local businesses, supply chains, and retail sectors.

Infrastructure Development: Nike invests in transportation, energy, and logistics in manufacturing regions.

Technology Transfer: Introduction of modern manufacturing techniques and skill development.

Foreign Investment: Nike’s operations boost GDP and attract other multinational corporations.

Negative Impacts:

Worker Exploitation: Reports of child labor, unsafe conditions, and low wages in supplier factories.

Job Instability: Nike frequently shifts production to lower-cost countries, leaving many unemployed.

Environmental Issues: Nike’s manufacturing has been linked to high water consumption, pollution, and CO₂ emissions.

Social Backlash: Protests from labor

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