Economic Geography- MNC's

With reference to one MNC you have studied, examine how its distribution is influenced by global factors.

An MNC I have studied is Nike. Nike has a global approach to production and marketing, and its ability to trade on a global scale is down to improvements that have been made in the areas of transport, telecommunications, supply of raw materials, labour supply and government taxes.

As an MNC, Nike is an example of a footloose industry, meaning it has flexibility in relation to where it can expand its operations. Nike follows a pyramid structure where the headquarters is located in Beaverton, Washington. Most research and development is done from here. They have annual sales of $10 billion and directly employ 16,000 people. In its headquarters, the company employs a highly skilled and high wage workforce with an emphasis on research and the development of its main products, namely footwear and sports clothing. The HQ is the centre of decision-making and controls and monitors all Nike operations around the world.

Nike has many regional headquarters in Europe and Asia that control regional operations. However most of its production is outsourced to other companies. They have contracts with more than 700 shops around the world and have offices located in 45 countries around the US. Most of these factories are located in Asia, including Indonesia, China, Taiwan, India, Thailand, Vietnam, Pakistan, the Philippines and Malaysia. Nike is hesitant to disclose information about their contract companies, but they are said to employ up to half a million people. 

From the early 1970's to the 1980's, Nike operated production activities in core economies, including the USA, Ireland and Britain. However, due to rising labour costs and increased union activity, the company relocated these manufacturing units to cheaper labour markets, particularly in South-East Asia (South Korea and Taiwan, and more recently Indonesia, Thailand and China). Here, production activities are outsourced to over 30 different companies. During the 1990's, Nike was investigated due to concerns over potential exploitation of labour in these developing countries. Significant media coverage was given to these claims that Nike goods were manufactured in sweatshop conditions. IN an effort to reduce negative media attention, Nike joined the Fair Labour Association, which guarantees basic minimum wages and decent working conditions. Nike is an example of an MNC which has adapted a global approach to attain economic advantages related to the supply and cost of labour in the global periphery.