Case Study - Nike

Relationships With Host Countries

Do multinational companies create benefits for the countries in which they operate? This simple question disguises the complexity of the answer; some companies offer extraordinary benefits for the countries which host them, while others seem to take much more than they give. In your own research on this topic you will find companies which belong at each end of the spectrum. For now, we will just look at the way in which Nike interacts with other countries.

First, it is worth noting that Nike has generated a great deal of employment in countries which are not known for their job creation programs. For their company reporting purposes, Nike divides the world into four main sections. Some of the pertinent details about each section are:

Region	The USA	Europe, the Middle East and Africa	The Asia Pacific Region	The Americas (other than the USA)
Direct Employment	14,000	6,000	3,282	1,076
Factory Base	There are no factories operating in the USA	There are 104 factories employing a total of 29,242 workers	There are 252 factories employing over 550,000 workers	There are 137 factories employing a total of 44,600 workers
Countries	The USA	Countries include Austria, Bulgaria, Croatia, Hungary, Ireland, Israel, Italy, Norway, South Africa, Slovenia and the United Kingdom	Countries include China, Indonesia, Hong Kong, India, Japan, Korea and New Zealand	Canada, Mexico, Brazil, Argentina and Chile
Revenue (2006)	US$5.7 billion	US$4.3 billion	US$1.0 billion	US$236 million

As you can see, over 600,000 people are working in factories which operate specifically to make Nike clothing and footwear. There are very few companies in the world that can claim to have so many employees in so many countries.

Nike is also very keen to invest in the future of the countries in which it operates. On many occasions the founding partner Mr Phil Knight has stated that the future of the company depends on the growth and productivity of the people who make the products. In this respect, Nike has funded the management training of over 30,000 people every year for at least ten years. In each case, the people receiving the training are those who are from the countries in which the factories operate. Nike employees are also supported when they choose to upgrade their own skills. On site training programs are made available to all employees. For example, many people in South East Asia have used this opportunity to upgrade their computer literacy, while others have learned about making budgets and improving their financial literacy skills.

Finally, Nike is also making a significant capital investment in these countries. In the past, multinational companies were criticized for operating with very few capital resources. In this way, companies were able to leave a country quickly when cheaper labour became available elsewhere. This is no longer the case. As workers become more productive, they become more valuable. This means that Nike has been willing to pay these people the higher wages that they demand, rather than move to a new country.

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