Business Ethics Nike

Nikes case
1. Nike is increasing scope and size of operations, along with increasing costs , have meant that
Nikes suppliers have had subcontracts with cheaper labor markets in other third-world countries
such as Indonesia, China and Vietnam. However, since the mid-1990s, Nike has faced a barrage
of criticsm from labor rights activities, the media, and others for human rights violations in their
factories in third world countries. The accusations include defiencies in health and safety
conditions, extremely low wages and indiscriminate hiring and firing practices. The attention
was given to this issue by the national media, including the number of reports and editorials in
leading newspapers as well as programs on television. Public protests against Nike took the
forms of boycotts and picketing of Nike stores, and universities began canceling their deals with
Nike to produce branded athletic goods.
Initially, Nike was making mistakes in adopting a denial approach. Nikes initial reaction to this
negative publicity was to ignore them. The company explained that it did not own the factories
and were therefore not responsible for labor and human rights violations. Nike claimed to be
marketers and designers laking knowledge about manufacturing. Nike should know that if it
wants to be more successful, it can not neglect local social, labour and environmental factors.
Therefore, Nikes reaction brought bad effects to itself and created a negative image in the
public eye.
2. The main intent of Nikes public reactions tactics was to counter the allegations about labour
and human rights violations. A workplace code of conduct was established to regulate working
conditons in foreign factories. In the mid 1990s, Nike finally intervened in the wage policy of its
factories in Indonesia and announced wage raises above the legal minium wage in 1999. In 1998
a statement of corporate responsibilty addressing the various allegations against Nike was issued
and included several specific steps that Nike intended to implement in its factories.
Nike was attempting to repair its tarnished image. The company hired Michael Jordan as Nike
spokeperson. Letters dealing the acceptable conditions in the factories and stressing Nikes
commitment to corporate responsibility were sent to US universties. Representatives from Nike
also visited campuses and spoke to students, assuring them of Nikes intention toward
responsible corporate citizenship.
3. Nike has learned that an open- minded approach to the issues facing its industry is better than
denial. The company has moved away from focusing on its own code of conduct and toward
creating a standard code of conduct throughout the industry. As part of new Nike, it has moved
beyond their old monitoring system and employed three different types in factories. First, it uses
the SHAPE inspection to determine compliance to regulations regarding environment, safety and
health. Second, Nike hired twenty one staff members and after training them in labour auditing
pratic an, they will help Nike to uncover unclear problems. Finally, Nike encourages independent
monitoring by the Fair Labor Association. Nike now has a compliance team composed of over
ninety people in twenty one countries.
Moreover, Nike has opened the doors of a number of contract factories to research groups from
unviversities. The company hoped that through this research, it can learn more about the business
process and how to better manage production flow and work hours in their factories. Nike has
also implemented the balanced scorecard, a lettered grading system to better assess factory
compliance with the code of conduct. This system gives the company a reliable method for
rewarding high-performance, compliant factories.
Overall, Nike is doing enough to improve conditions in their contract factories.
4. As a result of changes, Nike appeared in Business Ethics magazine s 100 Best Corporate
Citizens list for 2005 and 2006. It has entered the list in 2005 at the number thirty-one and
climbed to number thirteen in 2006. Business Ethics cities its reasons for listing Nike as the
strength of Nikes commitment to commnunity and environment. Nike was actually ranked
number one in the magazines environmental category due to its effort to eliminate waste and
toxic substances from production processes. Nike also made Fortune magazines 100 Best
Companies to Work For list for the first time in 2006, coming in at number 100 and has
received a perfect score on the Human Rights Campain Foundations Corporate Equality Index
two years in a row.
Although Nike admit that it has a long way to go, it is being rewarded for its efforts along the
way, both by positive results and industry response. In my opinion, Nike tried its best to change
the image since it was critized by the public. Putting corporate responsibility at the forefront of
Nikes business is a turning point. As a result, Nike built and improved its relationship with
consumers, achieved a high-quality supply chain, and created top quality, innovative products.
Overall, Nike achieved considerable success because of improvement of its social responsibility
( economic, social, environment)

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Nikes case

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