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Nike Inc., Essay Example

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Essay

A multinational corporation is a term used to describe a business entity that has ventures in at least two countries from any region around the globe. Such companies have large capital base and significant control on the economy from their country of origin. Fortune 500 companies offer a list of businesses that have a stake across the borders of the host country. For this study, concentration is on the business activities of Nike Inc and the external environment influencing its activities.

Nike Inc is a public company that deals with the manufacture and supply of clothing, sportswear, and equipment. It is based in United States of America and has its headquarter at Beaverton, Oregon. The company was cofounded by Bill Bowerman and Phil Knight in 1964, and was formally known as Blue Ribbon Sports before adopting the name Nike Inc in 1978. Statistically, Nike stands out as the leading manufacturer of athletic shoes, apparel and sports equipment. According to the financial report for the fiscal year ending 31 May, 2012, the company recorded whooping revenue in excesses of US$24 billion. It is also worth noting that Nike brand is valued at $10.7 Billion, hence rated as the most valuable as far as sportswear brands are concerned. The company sponsors many renowned athletes and teams across the globe, with their distinctive Swoosh logo (Frisch, 2008).

Operations in foreign markets demand that the multinational company braces itself to deal with the variation in the market and legal systems. For instance, United States of America embraces Capitalistic form of the market system whereas China has elements of socialistic structure. These differences hampers or reduces the profit margin of Nike in countries that have a socialist structure as the company is forced to adhere to the laws of such a country. Similarly, legal systems differ from one country to the other. For example, running adverts in United States is an open affair that does not elicit many emotions. However, the case is different in a nation such as China where Nike was forced to apologize in the court of law for running an advert that was offensive to their culture (Miakhel, 2009).

Business entities operating in either local or foreign markets are bound to face political risks emanating from their external business environment. However, this risk is much pronounced for those entities operating as multinationals. Since Nike Inc is a multinational company, it faces a number of political risks from the foreign governments. For example, the presence of Nike Inc ASME of these countries implies that the local manufactures are given a run for their money as far as sportswear and apparels are concerned. This trend is not encouraged for any economy because much of the local currency is remitted to the motherland of the multinational. As such, governments in such countries resort to imposing barriers for this company in order to minimize its influence on the local market. The barriers could be in the form of a trade embargo or unusually high taxes, which in turn raises the operational costs. The high costs translate in high prices for the Nike products, which in turn minimize their popularity in such markets. As a political consultant for Nike, I would advise the company to win the goodwill of the foreign governments by adhering to their code of conduct such as minimum wage, and by supporting developmental projects in such countries.

Various stakeholders are interested in the operations of Nike Inc. They include the shareholders in the company, the local government, the foreign governments, and consumers. As such, Nike has a duty of ensuring that these interests are harmonized and addressed adequately. For instance, the shareholders may demand that the minimum wage in the various countries should be set in accordance to the level of economy of the country. This implies that the minimum wage for an employee in United States of America must differ to that of an employee in Nigeria. Unfortunately, this decision might not augur well with the authorities in Nigeria, who might then resolve to impose trade barriers to the company operations. Similarly, consumers across the globe have difference tastes and preferences as well as economic empowerment. Therefore, Nike Inc must take off the diversity of interest and tailor their products to definite markets (Hill and Jones, 2009).

Nike Inc has clearly stipulated code of conduct that governs its operations and decision-making. In its first aspect of conduct, the company is against the idea of forced or child labor. Secondly, the company ensures that its employees are not manipulated in any manner whatsoever. For instance, it takes a keen interest to ensure that employees are paid at minimum wage or the prevailing industry wage. In addition, it complies with the local rules for employees who work overtime by fully compensating them for the extra time. On matters of environment and health, the company understands its role in ensuring that the environment is kept free from pollutants and its employees are safe from work related injuries and illnesses. Lastly, the company maintains proper records and documentation that indicate their compliance with the code of conducts and other laws governing its operations. In this regard, it is worth noting that the company needs to stick to this code of conducts while operating in foreign countries. This will serve to boost their relationship with employees, consumers and authorities in such countries, and thus enjoy political goodwill (Kochan and Schmalensee, 2003).

Besides focusing in the manufacturing business, Nike Inc has also embraced social challenges and resolved to help mitigate some of them to the best of their ability. A case in point is the collaboration with the United Nations Commission for Refugees (UNHCR) where it initiated the www.ninemillion.org. The sole objective of the program is to focus global attention on the over 9 million youths in refugee camps across the globe, as well as raise funds to provide education and sporting facilities. In this campaign, the Nike Company engaged the services of Ronaldo to shade light about the plight of refugee youths in nations such as Uganda, Azerbaijan, and Thailand. In another scenario, FY07, who are Nike designers, came up with a multisport ball designed to withstand the harsh environmental conditions in most refugee camps. These 40,000 balls together with curriculum were donated in support of such children who otherwise, would not have access to sport programs (Contreras, 2008).

Lastly, the success of any businesses is not only determined by its present authority in the market, but also by its ability to monitor trends in the market and make informed investments. Nike Inc needs to observe the trends in the sporting industry to guide them on where and when they should invest. For instance, sporting activities have become a key attraction across the globe. However, it is undeniable that there are some regions, which are still lagging behind as far as sports are concerned. As such, Nike can capitalize on the slowly growing interests in sports to guide future investment decision (Miakhel, 2009).

References

Contreras, M.E. (2008). Corporate Social Responsibility in the Promotion of Social Development: Experiences from Asia and Latin America. Washington, DC: IDB.

Frisch, A. (2008). The Story of Nike; Built for Success. New York: The Creative Company.

Hill, C. & Jones, G. (2009). Strategic Management Theory: An Integrated Approach. London: Cengage Learning

Kochan, T.A. & Schmalensee, R. (2003). Management: Inventing and Delivering Its Future. New York, NY: John Wiley and Sons.

Miakhel, A.S. (2009). Nike in Asia: Opportunity or Exploitation? Beijing: GRIN Verlag

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