University of the People
Multinational Management
Unit 1 Written Assignment
Case study: Nike
Explain how Nike came to that situation through its expansion strategy.
Nike 's core busness model was developed by its founder Phil Knight who observing the market noticed that high tech low cost footwear may gain significant market share just as the Japaneese technical and automotive industry did. This observation proved to be right. The constant price/cost monitoring eventually led the company close its factories in USA and seek for more cost effective production sites. Third world countries seemed as the perfect place for the new fabrics due to very low work force costs. For example, a daily fee for a worker in Indonesia during 90 's was less …show more content…
The one that many felt in USA was when Nike closed its production sites. Many left without jobs and means of living. In addition they stopped paying taxes and loans. Unfortunately not just Nike closed USA production, similarly many MNC 's did so expanding their businesses worldwide mainly to developing countries. Negative impacts hit developing countries where labor costs got high and made MNC 's to go elsewhere. For example if a country raised minimal wages the profitability decreased and became less attractive to foreign companies. Child labor is one of the biggest issues globalization brought to third world countries. Nike was addressed to solve it and they did however it was an ongoing international problem. Personally, I believe that those children would work anyway but since they worked for Nike they got an attention and their situation got better. All in all, under international pressure and partly thanks to MNC 's the working conditions, minimal wages in third world countries got …show more content…
In a way they were right, Nike defended itself by saying they do not know what is the real situation at Nike production sites. This position made international human right sensitive audience more aggressive. Non-governmental institutions started independent investigations and they regularly reported the reality to world press. For example Asian-American Free Labor Association 's Ballinger spent four years in Indonesia and reporting to The New York Times and The Economist. (Locke, 2002) The international pressure on Nike was immense, in one point, the global footwear producer got directly associated with slavery and child laboring. The response
Multinational Management
Unit 1 Written Assignment
Case study: Nike
Explain how Nike came to that situation through its expansion strategy.
Nike 's core busness model was developed by its founder Phil Knight who observing the market noticed that high tech low cost footwear may gain significant market share just as the Japaneese technical and automotive industry did. This observation proved to be right. The constant price/cost monitoring eventually led the company close its factories in USA and seek for more cost effective production sites. Third world countries seemed as the perfect place for the new fabrics due to very low work force costs. For example, a daily fee for a worker in Indonesia during 90 's was less …show more content…
The one that many felt in USA was when Nike closed its production sites. Many left without jobs and means of living. In addition they stopped paying taxes and loans. Unfortunately not just Nike closed USA production, similarly many MNC 's did so expanding their businesses worldwide mainly to developing countries. Negative impacts hit developing countries where labor costs got high and made MNC 's to go elsewhere. For example if a country raised minimal wages the profitability decreased and became less attractive to foreign companies. Child labor is one of the biggest issues globalization brought to third world countries. Nike was addressed to solve it and they did however it was an ongoing international problem. Personally, I believe that those children would work anyway but since they worked for Nike they got an attention and their situation got better. All in all, under international pressure and partly thanks to MNC 's the working conditions, minimal wages in third world countries got …show more content…
In a way they were right, Nike defended itself by saying they do not know what is the real situation at Nike production sites. This position made international human right sensitive audience more aggressive. Non-governmental institutions started independent investigations and they regularly reported the reality to world press. For example Asian-American Free Labor Association 's Ballinger spent four years in Indonesia and reporting to The New York Times and The Economist. (Locke, 2002) The international pressure on Nike was immense, in one point, the global footwear producer got directly associated with slavery and child laboring. The response