This paper is about the ethical responsibility of a company and in our case would be the ethical responsibility of Nike. Ethics is very hard to define in a precise way. Ethics deals with internal values that are a part of the corporate culture and shapes decisions concerning social responsibility with respect to the external environment.
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Nike is one of the famous franchises in the world that sells sportswear for all ages. But is mostly famous for their athlete shoes and apparel and Nike is also one of the major manufacturers of sport equipment as well. The slogan for Nike is “Just Do It”. Nike was founded in January 1962 in Oregon, United States by Philip Knight and Bill Bowerman. The company was originally known as Blue Ribbon Sports but it officially changed its name to ‘Nike’ in 1978.
The company has taken the name of Nike from the Greek goddess of victory. By 1966 Blue Ribbon Sports had grown very quickly and they opened their very first retail outlet in Santa Monica, California on the Pico Boulevard. By the end of 1971 the relationship between the Blue Ribbon Sports and the Japanese shoe maker was coming to an end and Blue Ribbon Sports decided to create its own footwear line, which now would carry the newly symbol of the swoosh. The first show that ever carried the design of swoosh was a football shoe called ‘Nike’.
Nike has somewhere around 700 or more retail outlets spread all over the world, and has approximately 45 offices only outside the United States. And it employs 30,000 people all over the world. Nike had a revenue excess of $16 billion in 2007. Nike’s factories are mostly located in Asian countries like Pakistan, India, Malaysia, China, Indonesia, Philippines, Taiwan, Vietnam and Thailand.
In this case we are talking about the company doing the right thing that it is ethically responsible. Ethics can be defined as the code of moral principles and values that help to oversee the behaviors of the employees or teams with respect to what is right and what is not. To be ethically responsible, Nike decision makers need to act with equity, fairness and impartiality, respect the right of the individuals and provide different treatment to employees and individuals but only when its relevant to the goals and objectives of the company. (Malachowski, 2001)
Ethical Dilemmas Faced By Nike
The organizations these days are also faced with ethical dilemma within the company. Ethical challenges arise in the organization when in a situation each alternative choice or behavior in undesirable because of potentially harmful ethical consequences. Right and wrong is not clearly identifiable in the situation. The ethical challenges (that is the sweatshop debate) that confront the global business of Nike are as follows:-
- The issue of child labor and the sweat shop problem has been one of the legal challenges Nike is faced with.
- Another challenge that is faced by Nike is the workers are given a very low wage and do overtime in countries like Vietnam, China and Indonesia under a subcontract.
- Another challenge that is faced by Nike is poor working conditions, squalid working conditions and forced labor in the factories that manufacture their products.
- And another challenge that is faced by the company is the environmental damage that is done to the society by air and water pollution, noises and change in the climate due to the pollution etc.
The role of the government also plays a major role in these challenges that are faced by Nike. As we know that government laws and regulations differ from country to country and this makes manufacturing of products very difficult challenge for the international companies like Nike. The host governments have laws concerns against consumer protection, information and labeling, employment, wages and salaries and safety of the workers who work in those firms.
The international organizations must keep these rules and regulations in their minds and should abide by them. The most visible changes in the legal-political factors develop and grow out of international trade agreements and the emergence of international trade alliance between different countries for example, GATT or EU etc.
What happened is that the various roles that the host governments of different countries like China, Vietnam or Indonesia played in this particular global business’s operations were that they turned a blind eye towards the poor working conditions of the manufacturing plants. Another role that these governments played was that they did not do anything about the very low wages of the workers for example, in Vietnam the workers were paid 20 cents per hour or a mere $1.60 per day but in actual the living wage in Vietnam was actually $3 per day. And neither of these governments did do anything about child labor problems or the sweatshop problems.
Strategies for Ethical Responsibility
Creating strategies for ethical as well as corporate social responsibility is one of the main jobs of a CEO and the management of Nike because ethical responsibility cannot be implemented within the company without the help from either one, it is a joint effort.
- The management of Nike should look at the employment practices; they should make sure that the company is following the policies on recruitment, training, health, safety and welfare.
- The management of the company should also oversee that the environmental practices. To make sure that the company follows procedures that are responsible in terms of waste disposal and avoidance and energy inputs etc.
- Conduct and design a training program for the employees. Training and development efforts enable the employees to assume expanded duties and greater responsibilities. The management must also remember that training and development programs are not universal solutions to every need of the company. Effective job designs, selection, placement and other activities of the HR department are also very important.
- Create such a program that would help the management in dealing with problematic behaviors of the employees. The company use uses cross functional teams to develop products and services and solve the issues that arise. (Malachowski, 2001)
- Set targets and identify performance measure standards
- Nike has decided to use a PR campaign so that it is able to repair its social image due to the sweatshop debate.
- The management of Nike should understand that why ethical responsibility is needed within the company because it is the obligation of organization’s management to make decisions and take actions that will grow the welfare and interest of the society and as well the organization. It would include activities and commitments that are related to human rights, governance and ethics, development, working conditions of the employees, community involvement, customer satisfaction, relations with the company’s suppliers and customers and lastly respect for diverse cultures and different people etc.
Ethical responsibility is also concerned with the company’s values towards the society. How can organizations be good corporate citizens? With more and more companies doing business internationally ethical responsibility comes to forefront like never before. If the company is not able to meet its ethical commitment then it would lead to problems for the company such as the company would have to face disgruntled employees, customers, stakeholders, partners and communities etc.
Malachowski, A R. (2001), Business Ethics: Critical Perspectives on Business and Management. Taylor & Francis
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