Multinational enterprises social responsibility: case of Nike - Coursework Example

Corporate Social Responsibility (Nike) al Affiliation: Nike Company was accused of failing to provide the employees with good working conditions. In addition, it was observed that the firm was participating in environmental pollution in China. However, it was able to intervene accordingly to restore the loyalty of the customers towards the company’s products. Nevertheless, in order to remain competitive, the business requires to be more proactive on issues related to corporate social responsibility. Table of Contents Table of Contents 3 Introduction Nike is the largest producer of Footwear, clothing, equipments, and accessories for the sports and athletic market. It has approximately nineteen thousands retail centers in United States and approximately 140 subsidiaries in different parts of the world. The company’s products are produced by independent contractors and in particular, the footwear is produced in developing countries such as Indonesia, China, Mexico, and Taiwan. With the increasing levels of globalization resulting from liberalization of markets, efficient flow of information, and integration of all economies in the world, the level of competition in the global market has increased tremendously. This results from the entry of multinational companies such as Adidas which have a huge financial base that enables them to segment the market, position their products strategically in the market, and attract the loyalty of the customers towards their products and services (Segerlund, 2010). In order for Nike to remain competitive, it has been forced to use any means possible to minimize the costs of production in order to offer the target with low-priced products. On the other hand, the firm has been participating in corporate social responsibility which is a business practice that involves participation in different initiatives that are of great benefit to the society. Analysis Nike was being accused of violating labor practices and polluting rivers in China. The company has 700 contracted companies across the world. However, working conditions in these factories is one of the major aspects that have raised eyebrows of various non-governmental organizations that agitate for better working conditions. It was stated that the factories were characterized by harassment and abuse by the company officials. It was alleged that the firm has been outsourcing its operations to poor and developing countries which has less developed labor regulations. As a result, they have been maximizing their returns through cheap labor and overworking the employees. Statistics by an independent body indicated that 30.2% of the employees had been abused personally while 56.8% indicated that they had observed verbal abuse. 7.8% of the subordinates stated that they had experienced sexual abuse while 3.3% of the employees had been abused physically (Soule, 2009). Moreover, there were allegations of biasness in the recruitment and promotion processes. Furthermore, a high number of the workforce was not satisfied with the supervisors and the managers respectively. Another report had indicated that the situation was even worse in Mexico and Taiwan. Nike was also accused on being the largest player in pollution of Chinese Rivers. For instance, according to Greenpeace report, Nike had played a significant role in toxicating Yangtze and Pearl rivers. These are rivers that provide more than 67 million people with drinking water. After several laboratory tests, it was ascertained that the water contained nonlphenols and perfluorinated chemicals (Hunt, 2011). These are chemicals that are mainly used to make stain and stick resistant. These were chemicals that are restricted in European countries. This is because if they are consumed by fish, they can move up the food chain and disrupt the hormonal balance in human body even at very low levels. CSR Initiatives and Motives In 1998, CEO Phil Knight began a real shift by initiating various programs aimed at improving the working conditions and labor issues. For instance, he increased the minimum age of the workers in order to avoid any case of child labor. In addition, he ensured that the company set up monitoring and evaluation standards for all its subsidiaries. This step was taken after the demonstration of the students who were staging a campaign against the Nike products in the US market. The CEO also vowed to adapt the OSHA clean air standards in all companies across the world (Nisel, 2013). This was in an attempt to ensure that the firms provided the employees with a serene working environment. Moreover, the company created the Fair Labor Association, a non-profit group whose role is to bring firms together, human rights groups, and representatives of various labor unions. The aim of this association was to monitor and set a code of conduct. It also had a mandate of setting the minimum age and working hours per week. This is to ensure that all subsidiaries in the world observe the labor ethics and guidelines. On water pollution issues in China, Nike started the China Environmental and Transparency Program to ensure that all factories comply with environmental regulations. This program covered all contracted companies by Nike, new sources, and key suppliers of raw materials in China (Nike Inc., 2011). The motive of this intervention was to ensure that all companies that were associated with Nike observed the ethical and environmental conservation guidelines in order to avoid tarnishing the reputation of the company in the global market. Evaluation of CSR Initiatives After a series of initiatives aimed at closing the gaps that were existing in terms of labor rights and ethical guidelines, the company was able to win the loyalty of the customers. In 2009, the company was able to record a 16% increase in sales (Soule, 2009). This was as a result of intensive campaign that was aimed at enlightening the customers on the company’s commitment in ensuring that all its subsidiaries provided serene working conditions and observed the ethical guidelines in all stages of production. Furthermore, the stakeholders’ confidence level increased tremendously, an aspect that was replicated in the overall performance of the business in the market. Recommendations The company should make CSR as a continuous practice in order to retain its competitive advantage in the market. This is through supporting various noble projects in the society such as environmental conservation and sponsoring the education of less fortunate children in the society. The company should set up a specific percentage of its profit to go towards improving the living condition of the people around the manufacturing plants in China, Korea, Taiwan, etc. Conclusion The success of the company in the future will depend on how well the firm will safeguard its reputation in the market. In order for the organization to remain competitive, it needs to expand the CSR initiatives to different parts of the world and ensure that all contracted companies observe the ethical guidelines and labor rights. References Hunt, K. (2011). BBC News - Greenpeace links big brands to Chinese river pollution. Retrieved from http://www.bbc.com/news/business-14134034 Nike Inc. (2011). Nike News - NIKE, Inc.’s Response to Greenpeace Report. Retrieved from http://news.nike.com/news/nike-inc%E2%80%99s-response-to-greenpeace-report Nisel, M. (2013). How Nike solved its sweatshop problem - Business Insider. Retrieved from http://www.businessinsider.com/how-nike-solved-its-sweatshop-problem-2013-5 Segerlund, L. (2010). Making corporate social responsibility a global concern: Norm construction in a globalizing world. Farnham, Surrey: Ashgate. Soule, S. A. (2009). Contention and corporate social responsibility. New York: Cambridge University Press. Read More