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Geo file 464
Paul Guinness
In 1997 it became the largest Wal-Mart is constantly trying to stay Figure 4: Citigroup revenues, 2002
employer in the US with 680,000 ahead of the competition. Many of
Citigroup revenue, 2002 $bn
employees, with an additional its standard stores are being replaced
115,000 workers in other by huge supercentres. It has Latin America 2.7 CEEMEA 2.8
more than 1,100 units abroad. Such is the size of the company that
More than 100 million customers its sales figures are as much an Japan 1.1
1938: Born, Portland, USA swoosh is designed by 1985: Knight signs unknown 1998: Signs $17m (11m)
1959: Graduates from the Portland University design basketball rookie Michael annual deal with Brazilian
University of Oregon where student Carolyn Davidson, Jordan football team
he met coach Bill Bowerman who is later paid in shares 1987: Nike launches Air Max 2000: Nike signs 300m
1962: Graduates from 1972: Bowerman invents the 1988: Nike adman Dan deal with Manchester United
Stanford University where waffle trainer shoe Wieden says you guys just giving it rights to all of
his MBA paper was on 1974: Jimmy Connors wins do it at a meeting, A Uniteds merchandise
trainer manufacturing Wimbledon wearing waffle company slogan is born 2003: Nike announces third
1964: Sets up Blue Ribbon Nikes 1997: Nikes rookie golfer quarter results with sales up
Sports with Bowerman to 1980: Nike lists on the New Tiger Woods wins the 6% to $2.4bn (1.4bn) and
import trainers from Japan York stock exchange Masters by a record of 12 profits of $125m. Annual
strokes sales are forecast to be
1971: Nike, named after the 1984: Carl Lewis and Nike $10.6bn
Greek goddess of winged dominate the LA Olympics
victory, is founded. The
that have their critics. According to expertise is in design, development, in more than 800 contract factories,
The Citigroup Watch run by Inner marketing and sales. In 2001 Nikes employing more than 600,000 people,
City Press (June 9th 2003), total sales were $9.5 billion with in more than 50 countries
Citigroup engages in questionable profits of $590 million (6.2% of throughout the world, including the
high interest rate lending in low sales). Phil Knight, co-founder and United States. In mid-2003 Nike
income communities across the chief executive, is the public face of paid $305 million to acquire retro
United States, and now globally. the company. Figure 6 is a profile of shoemaker Converse. Most large
Through its investment bank, Knights role in the development of transnationals grow by acquiring
Citigroup underwrites and trades in the company. other businesses as well as generating
pools of loans issued by other their own growth.
predatory lenders. Citigroup finances The figures supplied by Nike for its
and is involved in such cost/price chain are as follows:
environmentally destructive projects
as the Chad-Cameroon pipeline and Contractors are paid an average of
Chinas Three Gorges dam. $18 a shoe by Nike. This is made
Citigroups prominent role in the up of $11 for materials, $2 for
foreign exchange markets has been labour, $4 for other costs, and $1
criticised by a number of writers for profit.
(Figure 5). Nike sells the shoes to retailers
for $36. The mark up of 100%
accounts for the costs of design,
A transnational contracting research and development,
out marketing, advertising, shipping,
Peter Dickens definition of a production management, other
transnational corporation is a firm sales and business costs, taxes and
which has the power to co-ordinate of course a profit.
and control operations in more than Retailers mark up another 100%
one country, even if it does not own to $72 (on average) to cover
them. Some of the most high profile wages, shrinkage, insurance,
TNCs such as Nike (Case Study 5) do advertising, supplies and services,
not actually own any factories depreciation, taxes and profit.
abroad. Although perhaps as well Nike currently produces its products
known as Wal-Mart and Citigroup,
Nike is a considerably smaller entity
as the sales figures in Figure 6 show.
Focus Questions
1. Discuss the reasons why Africa has been bypassed by the benefits
of globalisation.
Case Study 5
Nike 2. (a) Identify the locations of the raw materials used to make Wimbledon
Nike, the worlds largest maker of tennis balls.
athletic shoes, does not make any (b) Why are these tennis balls no longer produced in Britain?
clothes or shoes itself. It contracts
out production to South Korean and 3. (a) Examine the development of Wal-Mart over its 40 year history.
Taiwanese companies. These (b) Why do some large companies like Wal-Mart decide to expand beyond
companies operate not only in their the boundaries of their home countries?
home countries but also in lower
wage economies such as the 4. Using case studies 3, 4 and 5, discuss some of the criticisms levelled at
Philippines and Vietnam. Nikes large TNCs.