+1 862 207 3288 Corporate Social Responsibility – Nike Case Study
There are two uploaded documents: first is the case study background with the THREE questions that need answering and secondly some notes on this topic regarding each question.
The writer should not write in their personal opinion however only analysing the theories and aligning them with the questions for example, question 1 is about labour conditions – here the deontological view could be mentioned in the senses that people are not used like resources the way most view Nike doing.
Furthermore, i expect the writer to make strong moral statements with support of theory both for and against. This assignment should include the works of Crane and Matten, Buchholtz and Carroll and Milton Friedman.
CASE STUDY IS ABOUT LABOUR CONDITIONS, HUMAN RIGHTS AND DISCRIMINATION
Task 1
Is about labour conditions i.e. policies (refer to appendix 2);
• UNICEF – Do they really help? What do they say on child labour?
Make strong moral statements (Week 9 – Support with theory) and arguments for and against.
• HR – What is the use of HR? Use Matten and Crane (p 239 – 248). If HR is a means to an end then this contradicts Kants’ 2nd principle. Deontological theory does not use people like resources. How does this fit in with Nike?
• Women on boards – Why is this not the case? Women take breaks and maternity.
• Policies:(Can be mentioned in Q3)– Impact on stakeholders; communities and employees (families losing jobs and industrial accidents) are poor so losing a job will impact heavily. Lack of unions to represent the people or even worse no HR.
– Hiring and Firing – Who legislates these rules and on what grounds? How much right do the people have? Redundancy and Maternity? Employee shareholder law in this case is receiving employee rights instead of shares (exchange). Freedom of speech (whistleblowing, victimisation, right to privacy).
• Customers – It may be a safe product but it was not made in a safe way.
• Is there an overlap on organisational policy? Employee/Citizens interests may be represented by company?
• Individually it may be wrong, organisationally ok. So is this to say only a few are accountable?
• Discrimination and Culture: Whose morals/culture/values are we using? The west emphasises on leading best practice but fail to adopt it. For example, women are second class citizens are harassed (wellbeing). Sick pay, holiday entitlement, work conditions, salary (UK comparison to 3rd World both top manager bonuses and pay gap).Nikes’ governance structure in centres compared to 3rd world.
• Management: Micro management, bureaucratic, tall structures. Compare head office with operational staff.
• Why don’t Nike apply some rules oversees (Mainland)? Or does it apply the law of the land? What is the implication of this? Bad publicity and practice? Possibly do as the romans? Is it good or bad, right or wrong – look at the theory.
• Nike intends to make maximum profit and this sheds light onto Friedman’s theory.
• Use Chryssides and Kaler (1996) model.
Pick two or three examples and do not use exhaustively.
Task 2
Is about normative ethical theories;
• Relevatism: ‘’I am not responsible because ethically it’s about what is right in the environment, standards and norms.’’ In this country such practices are acceptable although ethically it may not be.
• The utilitarian view accounts that the means justifies the end, ‘’I am responsible for employees, not just shareholders.’’
• Deontology – Are these rules personal, shareholders or the companies (How much is based on trust?). This theory takes the view that the rules and standards should be applied as it is in the UK or the US, child labour is not acceptable. Human Rights – where does this come from and how do you apply it? (Apply ethics to our own behaviours)
• Kant’s’ 3 Maxims: (Fisher and Lovell) – 1) Act according to that will become universal law and 2) Act in such a way that you treat humanity, whether in your own person or in the person of any other, always at the same time as an end and never merely as a means to an end.
• Kohlberg – Organisational ethical development model (CSR model) and moral development
• This section entails an analysis of where Nike fits in stages 1 –5, as well as where the CEO should sit?
• Governance Structure?
Task 3
Is about CSR;
• Use CSR theories: Friedman would have big influence on this.
• Use articles on Fairtrade (future of Fairtrade and CSR)
• Possibly a PESTLE analysis on environment. Do we live for tomorrow?
(Refer to notes)
A few points to consider:
– Fighting job market, people (customers), fear, control.
Advice
• Use keywords from module
• Not about personal opinion
• Clear arguments
• Proof read
• Use journals from: Journal of Business Ethics and Journal for Society and Business
CSR: Nike Case Study and Assignment Brief
Details:
Nike and the reality of corporate social responsibility.
The Nike case study
This case study is based on an article by Simon Zadek in the Harvard Business Review for 2004. The case study has however been adapted and supported by academic commentary from other noted authors. There are two appendices. The first gives more detail to the activities taken by Nike. The second consists of some ideas and debates from noted authors. Business ethics and corporate social responsibility are new aspects of international business. From these quotations, from academic literature and from coverage of international events through news media, it is clear that subjects covered by the terms ‘business ethics’ and ‘corporate social responsibility’ are exercising ever greater influence on the policy and strategies of large companies. Employees and customers live in many different countries. These large companies need the support of, or at least the tolerance of, national governments to be able to operate in different locations across the world.
The multinational context
Nike has not been the only company to be attacked for its highly cost efficient, but ethically questionable, labour practices globally. It has been struggling with its public image to show it takes seriously its attitude to corporate social responsibility (csr). Auditing and reporting practices have come under scrutiny. The processes of organisational learning have happened on the way to constructing strategies of social responsibility. Nike has seen csr as an essential part of the realities of globalization.
In the 1990s protesters attacked Nike for the sweatshop conditions of its overseas suppliers. Nike’s every move was examined so as to strengthen the view that Nike management was driven by irresponsibility and greed. But Nike had a practical problem. According to Crane and Matten (2010:71) ‘Nike had long claimed that the identity and location of their suppliers could not be revealed because it was commercially sensitive information that their competitors could exploit’. That same defence could plausibly be used by other companies as well.
It can be said that companies need to identify and respond to society’s awareness of particular issues, even if the awareness is partly wrong or misinformed. Pharmaceutical companies, for example, are asked to sell life-saving drugs cheaply, even if full prices are needed to sustain research and development. Issues which were once radical, or unimportant, in the business environment, can become central to a company’s strategy. Nike seems to have experienced rapid changes.
Nike has a similar business model to other companies: namely to market highly expensive consumer products through cost efficient supply chains. The protests have forced the company to look at csr in tough new ways. The public have evolving ideas about csr.
Many companies pass through five distinctive stages of organisational learning in the process of developing csr. Please see the Appendix for a fuller explanation of the stages.. Learning is therefore both organisational and societal.
Stage 1 Defensive ‘Its not our job to fix that ‘, the defensive stage, denial of event or ‘It was not our fault’
Stage 2 Compliance ‘We’ll do just as much as we have to’ the compliance stage often visible to critics. Nestles for example offered compliance to the law but the public wanted Nestle to show commitment to take more than legal action
Stage 3 Managerial ‘It’s the business stupid’. This is the stage for managers to take responsibility for the core problem, to make changes and to seek solutions.
Stage 4 Strategic ‘It gives us a competitive edge’’ Responsible business practice can help contribute to the company’s long term success.
Stage 5 Civil ‘We need to make sure everybody does it’. Companies promote collective action to meet the concerns of a society. Diageo and other drinks companies promote responsible drinking.
Nike’s story.
In 1990s the company was surprised when activists launched a hostile campaign because of worker conditions in its supply chain. Nike did make some mistakes. The company now participates in, and finances initiatives to improve worker conditions in global supply chains, and is keen to promote corporate responsibility more generally.
Stages 1 and 2 From denial to compliance
Nike has worked exclusively through global outsourcing. It has not made anything itself, except the first example, the prototype, in its design studio. Most competitors operated with similar organisational structures, with appalling working conditions in some suppliers’ factories.
Nike was targeted by activists not because the company was any worse than other companies, but because of its high profile brand. Indeed its business practices might be seen as being better than the activities of its competitors. Crane and Matten report that ‘Nike’s ‘Reuse-A-Shoe’ programmes have turned 23 million used sports shoes into material used by sports surfacing companies for gym flooring and soccer fields’. (Crane and Matten 2010:430).
The company’s first response was defensive, a response which quickly turned out to be unworkable. Early attempts to build credibility failed. Labour activist demands affected the highly profitable youth markets in North America and Europe. In 1998 Nike created a Corporate Responsibility department: a recognition that the aspect had to be managed by the company.
Stage 3 Managing responsibility
By the year 2000, 80 employees worked on labour issues. Expensive external professionals audited 900 suppliers. But Nike was exposed for not sincerely following its own publicised practices After a 6 month review, senior managers concluded that factory practices were not the problem, but rather problem lay in the common structure of performance incentives based on price quality and delivery times. Codes would be bypassed by buyers to hit targets and secure personal bonuses. The tension was between short term financial goals and long term strategy to protect the brand. To introduce and manage corporate responsibility meant challenging the entrepreneurial spirit that had brought success to the company over 30 years. The reaction was not just against change. Nike’s efforts to create better worker conditions had little effect on profitability. Most investors wanted only short term profits.
The American and British governments supported developed initiatives to help resolve such situational difficulties. The American Fair Labor Association and the British Ethical Trading Initiative helped to bring about compliance in higher labour cost standards by a number of companies.
Stage 4 Responsible business strategies
The important trade agreement in the clothing industry was the Multifiber Arrangement which caused Nike to search for spare quotas of production at lower prices from developing countries. Longer term commitments to suppliers would be impossible. The arrangement expired in 2005 leaving Nike freer to work with fewer, larger suppliers. Lean manufacture has followed, reducing the number of workers through the use of advanced production technologies. Workers need to learn these new production methods, so helping them increase their skills and receive higher wages.
In 2004 Nike acquired the footwear brand ‘Starter’, sold at large retailers such as Wal-Mart. ‘Starter’ operates to high production volumes and low margins, creating challenges to maintaining the company commitment to its labour codes. Customers seeking value focus on price, and are generally less interested in ethical concerns. Nike is however clear that it is committed to good wages for anyone who works in the supply chain. Nike has argued for regulated international labour standards, to deal with any disadvantage that might happen if it acted alone. Cooperation between competing companies makes sense.
Stage 5 Towards civil action
In July 2000 CEO of Nike Phil Knight attended the launch of the ‘Global Compact’ organised by the United Nations. He was the only CEO of a US company out of 50 company chief executives. Knight announced Nike’s support of ‘mandatory global standards for social auditing’ asserting that ‘every company should have to report on their performance ’against these standards. (Zadek 2004:132)
Bibliography
Buchholtz A and Carroll A (2012) Business and society, Ethics and StakeholderManagement, 8th edition, South Western, Cengage Learning
Crane A and Matten D (2010), Business ethics, 3rd edition, Oxford, Oxford University Press
Griseri P and Seppala N, (2010) Business ethics and corporate social responsibility, South Western, Cengage Learning
Wicks A C, Freeman R E, Werhane P H, Martin K E, (2010) Business ethics, amanagerial approach, Boston, Prentice Hall
Zadek S (2004) The path to corporate social responsibility, Harvard BusinessReview 82, December 125-32
Guidance, instructions, and questions.
YOU MUST USE relevant theory from the module to answer all the questions. Each question carries equal marks.
When you have fully understood the case, write an essay for each question below. The word length for each essay should be a minimum of 1000 words. The total word length should not exceed 5000 words. To achieve a grade of 60% or above you must include at 2 academic journal articles in the total assignment: not for each question. Do not include general unreferenced sources from Wikipedia or other sources without peer academic review.
1 Examine and justify actions Nike could take to improve the labour conditions of its workers in developing countries.
2 Assume you are the Chief Executive Officer (CEO). Discuss whether or not you should carry any personal responsibility for alleged misdeeds in the multinational company. What moral theories could you use?You should focus on normative ethical theories, not on theories related to corporate social responsibility.
3 Is it reasonable, or fair, to expect a large company in one part of the world to be responsible for the activities of a supplier in another part of the world? Include your assessment of future trends and developments for csr.
Confine your answers to the moral and csr aspects of this case. Seek guidance from your tutor in case of doubt, at an agreed scheduled session during the module. Your lecturer will not mark emailed draft assignments. You should NOT use the case to express any personal opinions about the nature and operation of modern capitalism.
Appendix 1: the five stages of organisational learning.
STAGE WHAT ORGANISATIONS DO WHY THEY DO IT
Defensive Deny practices outcomes or responsibilities To defend against attacks to their reputation that in the short term could affect sales, recruitment productivity and the brand
Compliance Adopt a policy based compliance approach as a cost of doing business To mitigate the erosion of economic value in the medium term because of ongoing reputation and litigation risks
Managerial Embed the societal issue in their core management processes To mitigate the erosion of economic value in the medium term and to achieve longer term gains by integrating responsible business practices into their daily operations
Strategic Integrate the societal issue into their core business strategies To enhance economic value in the long term and to gain first – mover advantage by aligning strategy and process innovations with the societal issues.
Civil Promote broad industry participation in corporate responsibility To enhance long – term economic value by overcoming any first mover disadvantages and to realize gains through collective action
Appendix 2. Some texts from noted authors
The texts below are given to highlight some of the issues in the subject areas of business ethics and corporate social responsibility. Not all comments from these authors can be used directly in the answers to the case study, but they should encourage you to think about company behaviour and practice. The texts illustrate some of the very real dilemmas faced by managers and policy makers in large organisations.
1 ‘It is being increasingly recognized by managers, policy-makers and researchers that business ethics in the global economy is simply too important to be left merely to chance. Global corporations such as McDonalds’s, Shell, Nike, Nestle and others have realized to their cost the threat that perceived ethical violations can pose to their zealously guarded reputations’. (Crane and Matten 2010:184)
2 ‘No issue has been more consistently evident in the global business ethics debate than the MNCs’ (Multinational Corporations’) use and abuse of women and children in cheap labor factories in developing countries. The major players in this controversy , large corporations, have highly recognizable names –Nike, Walmart, Reebok…..The countries and regions of the world that have been involved are also recognizable – Southeast Asia, Pakistan, Indonesia, ….’ (Buchholtz and Carroll 2012: 358)
3 Nike like ‘Many companies have discovered (or their critics have discovered for them) that in their suppliers’ factories, workers have been paid below a living wage, subjected to physical and verbal abuse, worked compulsory overtime, failed to have time off recognized, and even engaged in child labour.’ (Crane and Matten 2010:416)
4 ‘Nike’s problems with global outsourcing became an international scandal as pictures of children working in deplorable conditions reached mainstream newspapers…Boycotts, started on University campuses, prompted changes in policy for Nike’s outsourcing strategy. Eventually, Nike changed many of its policies and is now a leader in disclosing the conditions of its factories. Nike now performs many of the tasks that had previously been left to the factories or outside monitoring agencies.’ (Wicks et al 2010:378-379)
5 ‘Nike was heavily criticized in the 1990s for buying footballs from companies that used child labour in Pakistan…In 2006 Nike reacted to the concerns (over the continuing use of child labour) by shifting its football production to China and Thailand. This however had a harmful effect on employment in the area where football production takes place in Pakistan. A local newspaper commented on the decision as follows: “By severing its contract with the local company, Nike scored moral points with its customers in the West at the expense of 20,000 families who were affected, since 70 percent of local workers relied on Saga Sports for employment.” Since then Nike has reviewed its decision…’ (Griseri and Seppala 2010:180)
The following information is important when:
• Preparing for your assessment
• Checking your work before you submit it
• Interpreting feedback on your work after marking.
Assessment Criteria
The module Learning Outcomes tested by this assessment task are indicated on page 1. The precise criteria against which your work will be marked is as follows:
Analyse concepts and theories of Corporate Social Responsibility (CSR) and business ethics.
Discuss the relevance of ethical and CSR concepts in organisational contexts.
Differentiate CSR issues from the perspective of different stakeholders
Evaluate the outcomes of CSR strategies and provide reasoned predictions on the future use of CSR, and ethical perspectives, within organisational policy making.
Avoid Plagiarism: You must use available and relevant literature to demonstrate your knowledge of a subject, however to avoid plagiarism you must take great care to acknowledge it properly. You should therefore always use of the Harvard style referencing system in all cases.Plagiarism is the act of stealing someone else’s work and passing it off as your own. This includes incorporating either unattributed direct quotation(s) or substantial paraphrasing from the work of another/others. For this reason it is important that you cite all the sources whose work you have drawn on and reference them fully in accordance with the Harvard referencing standard. (This includes citing any work that you may
have submitted yourself previously).
Module code & title 6BU004 Corporate Social Responsibility and ethics
Module Learning outcomes: Tick if tested here
LO1 Analyse concepts and theories of Corporate Social Responsibility (CSR) and business ethics.
?
LO2 Discuss the relevance of ethical and CSR concepts in organisational contexts. ?
LO3 Differentiate CSR issues from the perspective of different stakeholders.
?
LO4 Evaluate the outcomes of CSR strategies and provide reasoned predictions on the future use of CSR, and ethical perspectives, within organisational policy making. ?
Assessment type: Essay (100% Weighting) Weightings Essay
Performance descriptors
Performance descriptors indicate how marks will be arrived at against each of the above criteria. The descriptors indicate the likely characteristics of work that is marked within the percentage bands indicated.
% Work will often demonstrate some of the following features
1 70-100
The work varies from very good (70-79%), excellent (80-89%) to outstanding (in excess of 90%). Very good, possibly outstanding or exceptional level of analysis, showing deep critical engagement with a comprehensive range of contextual material. Demonstration of independent thought resulting in creative responses to the assignment brief and some telling insights. Clear evidence of understanding of current scholarship and research based on an extensive range of relevant sources. Clarity of structure demonstrating complete focus of argument. Little or no obvious errors in referencing or grammar or syntax. Mature links made between relevant ideas, theories and practice.
2:1 60-69
Clear links between theory and practice. Good coverage of assignment issues. Full understanding of core issues. Evidenced level of understanding of appropriate theory and concepts. Some small repeated errors in referencing or grammar or syntax as appropriate
2:2 50-59
Identifies main issues and relevant theory. Coverage of most of assignment issues. Competent application of relevant theory and states obvious links to practice. Some repeated errors in grammar or syntax possibly failure to apply Harvard referencing standard correctly in places.
3 40-49
Makes few links between theory and practice. Answers question in a very basic way. Describes relevant theory accurately, and some relevant ideas offered. Possibly failure to apply Harvard referencing standard correctly. Limited coherence of structure.
Fail 30-39
Some learning outcomes and / or assessment criteria not met. Inadequate content with issues not addressed; insufficient evidence of understanding of relevant theory and concepts and only partial understanding shown. Very limited application of theory. Use of extensive quoted passages is evident. Evidence of sufficient grasp of learning outcomes to suggest that the student will be able to retrieve the module on resubmission.
Fail 0-29
No learning outcomes fully met. No demonstration of adequate knowledge or understanding of key concepts or theories. There is no recognition of the complexity of the subject. Little attempt to engage with assignment brief and has not met learning outcomes. Inadequate demonstration of knowledge or understanding of key concepts, theories or practice.
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