Nike’s global headquarters is in Beaverton, Oregon, USA.

Nike employs more than 700,000 contract

workers in over 700 factories worldwide. Manufacturing of Nike takes place in 40 countries. The
clothing is mainly made in the Asia Pacific area and footwear in China, Indonesia, Vietnam and
Thailand (1% of footwear is made in Italy). No Nike clothing or footwear is made in the USA. The list
includes 124 plants in China, 73 in Thailand, 35 in south Korea and 34 in Vietnam. More than 75% of
workforce is based in Asia. Like many TNC’s Nike subcontracts or uses independently owned
factories in different countries to produce its products. Often this take place in less economically
developed countries (LEDCs) where labour costs are lower than in MEDCs. Nike say they are in the
business of “marketing” their products, not making them. Nike shops are located mainly in southern
and western Europe, also Asia and North America (very few in South America or Africa). Sales are
highest in Canada, USA and Europe.

The costs

The figures supplied by Nike for its cost/price chain are as follows:

Contractor are paid on an average of $18 a shoe

This is made up of $ 11 material $2 of labour $4 for other costs and $1 for profit

Nike sells the shoe to retailers for $36 the mark up of 100% accounts for the costs of design,
research and development marketing advertising shipping production management other sales and
business costs taxes and course a profit

Retailers mark up another 100% to $72 (on average) to cover wages shrinkage insurance advertising
suppliers and services depreciation taxes and profit

Nike has a huge number of customers. e.g., in the year 2000. 70% of 16–24-year-olds in the UK
bought at least one item of Nike clothing or footwear.

In 2004, Nike made $1.6 billion profit! In 2004. Nike paid out $1.7 million to get athletes and teams
to wear its gear, increasing its appeal to customers across the world.

Some Facts:

 It employs sports scientists.

 It has a website and is therefore accessible worldwide.
 The benefits of Nike going global
 Greater profit can be made by increasing revenue and reducing costs.
 Costs can be reduced by using cheaper labour in LEDCs.
 Revenue can be increased by increasing the size of the market.
 Advertising can be wide.
 Savings can be made by producing goods on a large scale (economies of scale).
 Trade barriers can be overcome.
 Countries with special expertise can be tapped into (e.g., Italy used for making
 high fashion shoes).

Nike's manufacturing takes place in LEDCs for several reasons:

 Wages are lower.

  Land is cheaper to buy.
 The workforce is more flexible,
 Access can be gained to global markets.
 Trade restrictions can be avoided.
 Factories can be sub-contracted (new factories do not have to be built).

Impact on host countries

 Outsourcing creates substantial employment in Vietnam.

 Nike pays (slightly) higher wages than local companies.
 Improves the skills base of the local population.
 The success of the global brand may attract other TNCs setting off cumulative causation.
 Exports are a positive contribution to the balance of payments.
 Contribution to local tax helps pay for new and improved infrastructure

Impact on country of origin

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