Case Study: Nike

Background information

Nike is a transnational company.

• Nike employs 79,400 people directly and one million others are involved in making, supplying and selling goods.

• Nike utilises a vast global network for contractors for manufacturing (not directly employed by Nike), estimated to be over 1 million workers.

• In 2024, Nike had a revenue of $39.02 billion.

• Nike sponsors Tiger Woods, Cristiano Ronaldo, Kylian Mbappe, Serena Willaims and Nelly Korda. These people are seen around the world wearing Nike clothing. Nike also has long standing partnerships with the The National Basketball Association (NBA) and The National Football League (NFL), providing uniforms and apparel.

What are the reasons for choices of locations?

Nike Headquarters (Quaternary Industry)

The company headquarters is located in Oregon, USA (a high-income country, HIC) for the following reasons:

• The country has a high level of technology.

• Highly educated people are available therefore the headquarters can hire expertise.

• There is a highly developed transport infrastructure so workers can get to meetings easily.

• The USA influences the world in terms of the latest trends and fashion so the headquarters is at the core of this and can pick up ideas quickly.

• This is a prestigious location.

Nike Retail (Tertiary Industry)

The goods made in the factories are sold in Nike shops, which are located mainly in southern and western Europe, but also in North America and Asia (and a very few in South America and Africa). Sales are highest in Canada, USA and Europe (HICs).

• The main markets are in HICs where customers are more affluent.

• In HICs people are more influenced by adverts they see on TV or computers and are more likely to buy goods with a recognisable label.

Nike Manufacturing (Secondary Industry)

Nike has factories in 40 countries around the world. Clothing is mainly made in the Asia Pacific area and footwear in China, Indonesia, Vietnam and Thailand (just 1% of footwear is made in Italy and no clothing or footwear is made in the USA. The PT Kukdong International factory in Jawa Barat, Indonesia, is an example of a typical secondary industry in a Low Income Country (LIC). The factory makes sports clothes, footwear and equipment for Nike.

Nike has located its manufacturing here for the following reasons:

• Improvements in technology mean that production can be far from Nike’s headquarters in Oregon, USA.

• Nike can pay lower wages to workers in LICs and Middle Income Countries (MICs).

• The workforce is more flexible than in HICs.

• The factory is already there so Nike can subcontract it and not have to build a factory.

• Improvements in transport mean that goods can be manufactured far from the market and then flown or taken by ship to the market.

• Access can be gained to markets all over the world.

• Trade restrictions can be avoided.