Marketing Ethics and Corporate Social Responsibility Disclosure - Case Study Example

ETHICS ASSIGNMENT QUESTION Ethics Assignment question Customer Inserts His/her Name Customer Inserts Grade Course Customer Inserts Tutor’s Name Date Introduction Marketing ethics and corporate social responsibility disclosure are very controversial issues. Earlier researchers revealed that social responsibility is at the heart of most investors. Most investors look into a company’s social responsibility performance before investing in the companies (Mandal 2010, p 293). Therefore, every company must ensure that all the social activities they get involved in reflect well on the company and make the company remain competitive in the market place. In addition, the companies must handle all its issues transparently and ethically to avoid pitfalls such as criticism from the public and investors. Most companies have taken to releasing annual reports that give details of their operation, working conditions, corporate structures, and financial performance. Maintaining integrity has become a hard issue when it comes to what matters to disclose and what matters to keep off the public eyes (Mandal 2010, p 293). This report explores the dynamics of corporate social responsibility disclosure. Notably, the study analyses Nike’s operations, its corporate values, and corporate governance systems. In addition, it explores the working conditions at Nike’s factories and its human resource policies. The report seeks to find out whether the approach adopted by Nike is ethically acceptable or not. To this end, the report discusses instances where the company had issues that tested its decision-making organs. The paper does not seek to condemn nor criticize Nike’s practices or course of action. Rather, the report seeks to provide insight to other companies that seek to keep in touch with the public and maintain their ethical standards. Nike Corporation Nike was founded in 1964 as Blue Ribbon Sports and Phil Knight. Its name was later changed to Nike in 1978. Nike is the world’s largest seller of athletic footwear and apparels. This achievement did not occur overnight but through years of strategy, innovation, and business ingenuity. Notably, Nike faced a number of challenges such as attacks on the working conditions in their shoes factories and accusations of being opaque to outsiders. Therefore, the company had to change its mode of operation. Nike’s corporate values and corporate governance systems A company’s corporate values form the foundation upon which the company and its stakeholders work and conduct themselves. Most of these values do not change. In addition, the values underlie everyone’s work in the organization, how they interact with each other, and the strategies the organization adopts to achieve its goals (DeTienne & Lewis 2005). Over the years, Nike has adopted a number of values that made it the reputable company that it is today. Nike believes in innovation. The company has invested heavily in innovation to ensure their products are the best and to make it compete favorably with other sports companies and also do not cause any environmental pollution. For example, Nike has invested a lot of money on a technology that produces a lighter recyclable shoe box. This ensures that every shoebox is recycled, consequently, saving over 200,000 trees annually. Nike also believes in simplicity. The company designs most of its products to have a short life cycle in terms of technology and fashion. The company also identifies the importance of its customers and, therefore, strives to understand and meet their needs. The company stands for integrity, honesty, transparency, responsiveness, and the promotion of diversity and sustainability. For instance, to prove its stand on transparency and honesty Nike releases a corporate social responsibility report giving details of its operations, factories conditions, and employee report. In addition, it releases reports on the companies whose contracts were cancelled because they violated the work ethics and policies set by Nike (Inclusive Corporate Responsibility 2012, p 42). In my opinion, Nike’s corporate values show that the company has a great corporate governance system and that it is as a model company. Their value for innovation has enabled them to develop great products and still conserve the environment. For example, when Nike came under criticism for using a global warming gas in their air soles, their research and development team developed a new way of using nitorgen and sealing the shoes such that carbon dioxide could not escape into the atmosphere. In addition, the company’s stand on integrity and responsiveness shows that Nike is an ethical company. For example, when, Hytex one of Nike’s contracting factories, faced criticism for the poor working conditions and poor pay. The Nike management team investigated the matter immediatedly and resolved all the issues at the factory. In addition, each worker was provided with a phone number to call in case they experienced any form of injustice from the company’s managers. Therefore, these values serve to make Nike a great company. Strategy The strategies a company adopts to achieve its goals need to reflect well with the public. In addition, they need to promote a safe and healthy working condition for the company’s workers. The strategies also need to promote the company’s ethical standing (Inclusive 2005, p 25). Years ago, Nike faced harsh criticisms on their use of sulfur hexafluoride, a global warming gas, in the manufacture of Air Sole. The use of the gas to make shoes comfortable was Nike’s legacy and had made their shoes very popular with athletes. Therefore, making a switch to other methods without compromising on the quality and comfort of the shoes was a daunting task for the company. On the other hand, criticisms of their contribution to global warming continued to gain heat. After much trial and error over a number of years, the company’s Research and Development team came up with a way of replacing sulfur hexafluoride with nitrogen gas. This new method eliminated the release of carbon dioxide into the atmosphere. In addition, the company gained new insight on the value of innovation. Therefore, innovation became the company’s core strategy that enabled it gain market dominance (Incl. 2009, p 4). In addition, the company’s public image improved because people felt Nike had their needs at heart (Carrigan & Attala 2001). Besides innovation, the company has instituted programs to make their customers and the surrounding communities to feel as part of the Nike family. The company launched a social platform called nikegamechangers.com where consumers discuss and come up with solutions to their social and environmental problems. The company also targets the youth through a number of forums where the youth discuss issues that affect them. These programs have helped the Nike win the loyalty of most of its consumers (Incl. 2009, p 133). In my opinion these strategies illustrate Nike’s stand on ethics. For example the company is conscious to conserve the environment through innovation. In addition, the company’s interest in the community, especially the youth shows that Nike is not only interested in making money. The company sets aside time to give back to the community, which is an ethical thing to do. Nike’s Human Resource Approximately 600 contract companies that employ in excess of 800,000 workers manufacture Nike products. With such a large workforce, challenges are likely to emerge. Nike’s main goal is to ensure that the workers in these factories operate in a safe and healthy working environment. Nike had developed a comprehensive strategy to document the activities and conditions of all its operations in all its contract factories. In addition, the large workforce continually tests the company’s ethical standards and corporate values. Nike seeks to demonstrate that their operations meet the applicable health, safety, and labor standards. The report also touches on the employees’ wages, grants, freedom of association, and other benefits that improve the working conditions (Incl. 2009, p 33). In 2008, Hytex Apparels Limited, one of Nike’s contracting companies came under criticism for its deplorable working conditions. The company employed hundreds of migrant workers yet it failed to provide the workers with adequate housing, hygienic toilets, and kitchen sanitation. Moreover, the managers slashed the migrant workers’ wages to cover for their work permits, confiscated their passports, and denied the workers a copy of their labor contracts. Nike immediately investigated the reports and met with Hytex managers to resolve the issues. Every worker was issued with a copy of his or her contract with the company, their passports were returned to them and the wages paid in full. In addition, Nike provided every employee with a phone number to call in case of any future problems (Incl. 2009, p 73). This example illustrates one of the challenges Nike has faced in attempts to streamlines the working conditions in the contract companies. In addition, it illustrates the company’s responsiveness and value for integrity and transparency. The act of providing each employee with a phone number to call illustrates that Nike values the freedom of its employees. These attempts to provide workers with the best and healthy working conditions show that Nike is an ethically sound company (Jennings 2009, p 33). Earlier efforts to streamline the working conditions in the contracted factories included the institution of a Code of Conduct. The Code of Conduct was a set of rules that sensitized the employees on the rules to follow while working and their rights as employees. Nike has reviewed and updated the code of conduct severally. In addition, Nike has made it mandatory for all the contract companies to ensure that their employees understand the rules and abide by it. Moreover, Nike has a Code of Leadership Standards against which it monitors the operations of all its contract companies. Nike then discontinues orders at companies that do not comply with the standards set (Incl. 2009, p 53). The Donaldson approach states that a company needs to set ethical rules to govern its way of operation. In addition, this will enable the company earn the trust of its stakeholders as an ethical company. Nike has set up a number of codes of conduct that govern the operation of all its contract factories. These codes of conduct guide the decision making of every employee, from the directors to the lowest paid employee. This further proves that Nike is an ethical company with a strong corporate governance system (Marcic & Daft 2008, pp 123-131). On the issue of wages, Nike requires that all the contract companies pay their workers at least the locally outlined minimum wage and benefits. In addition, Nike ensures that the contract factories comply with standards against which Nike can audit easily to maintain accountability and transparency (Incl. 2009, p 56). Moreover, Nike has adopted an approach where the workers associate freely with each other. Notably, Nike strives to make sure that the contract companies dialogue with their workers constantly. In addition, Nike shares the best practices to improve factory grievance systems and even intervenes directly in matters that affect the workers’ freedom of association. Nike’s Human Resource Team also offers regular training to the contracted manufactures to equip the manufacturers with the relevant skills on resolving issues that affect their employees (Incl. 2009, p 67). In my opinion, it is ethical to ensure all the workers are paid at least the minimum wage. Nike has set up rules to ensure all workers are paid. In addition, Nike has shown its commitment to ensure that its workers are free to interact and do as they will as long as they do not violate the code of conduct. These further show that Nike’s ethical standards are high. Nike also strives to improve the environment. The company has adopted a number of strategies aimed at reducing waste in their factories. In addition, Nike creates products that minimize environmental impact by using environmentally friendly materials and by eliminating toxics. Moreover, the company seeks to minimize its carbon footprint by adopting technologies that reduce the rate at which their products release carbon dioxide to the atmosphere. For instance, the company designed a method of using nitrogen in their Air Soles instead of sulfur hexafluoride, a global warming gas. Another notable illustration of Nike’s commitment to protecting the environment is shown by their adoption of a fully recyclable and lighter shoebox. This recyclable shoebox is expected to save at least 200,000 tress annually, which is a very noble and ethical activity in this era where companies destroy the environment to make huge profits (Incl. 2009, p 99). Conclusion These illustrations on Nike’s efforts to improve the working conditions in its contract factories, maintain its integrity and transparency, and conserve the environment show that it is indeed an ethical company. Though problems are bound to arise in future, the company has shown a strong commitment to address them in a manner that is acceptable to all its stakeholders. In addition, the company has instituted a board of directors and a corporate responsibility committee whose roles are to make sure the company maintains a balance between its marketing practices and its relationship with the consumers. Therefore, Nike is an ethically conscious company and a model for other companies to emulate. References DeTienne, K. B & Lewis, L. W 2005, The Pragmatic and Ethical Barriers to Corporate Social Responsibility The Pragmatic and Ethical Barriers, Journal of Business Ethics, pp 359–376. Carrigan, M & Attalla, A 2001, The myth of the ethical consumer - do ethics matter in purchase behaviour?, Journal of Consumer Marketing Vol. 18 Iss: 7, pp 560 - 578. George, J. M & Jones, G. R 2008, Essentials of Contemporary Management, Third Edition.McGrawHill, New York. Incl., N,. Nike Inc :Corporate Responsibility Report FY07-09: Viewed 30 May 2013, . (May 30, 2013) Inclusive, N 2005,Corporate Responsibility Report, Nike Inclusive, New York. Inclusive, N., Corporate Responsiblity. Viewed 30 May, . Jennings, M 2009, Business Ethics: Case Studies and Selected Reading, Cengage Learning, Oklahoma. Mandal, S 2010, Ethics In Business & Corp Governance, Tata McGraw-Hill Education, New Delhi. Marcic, D & Daft, R. L 2008, Understanding Management,Cengage Learning , Baltimore. Read More

Over the years, Nike has adopted a number of values that made it the reputable company that it is today. Nike believes in innovation. The company has invested heavily in innovation to ensure their products are the best and to make it compete favorably with other sports companies and also do not cause any environmental pollution. For example, Nike has invested a lot of money on a technology that produces a lighter recyclable shoe box. This ensures that every shoebox is recycled, consequently, saving over 200,000 trees annually.

Nike also believes in simplicity. The company designs most of its products to have a short life cycle in terms of technology and fashion. The company also identifies the importance of its customers and, therefore, strives to understand and meet their needs. The company stands for integrity, honesty, transparency, responsiveness, and the promotion of diversity and sustainability. For instance, to prove its stand on transparency and honesty Nike releases a corporate social responsibility report giving details of its operations, factories conditions, and employee report.

In addition, it releases reports on the companies whose contracts were cancelled because they violated the work ethics and policies set by Nike (Inclusive Corporate Responsibility 2012, p 42). In my opinion, Nike’s corporate values show that the company has a great corporate governance system and that it is as a model company. Their value for innovation has enabled them to develop great products and still conserve the environment. For example, when Nike came under criticism for using a global warming gas in their air soles, their research and development team developed a new way of using nitorgen and sealing the shoes such that carbon dioxide could not escape into the atmosphere.

In addition, the company’s stand on integrity and responsiveness shows that Nike is an ethical company. For example, when, Hytex one of Nike’s contracting factories, faced criticism for the poor working conditions and poor pay. The Nike management team investigated the matter immediatedly and resolved all the issues at the factory. In addition, each worker was provided with a phone number to call in case they experienced any form of injustice from the company’s managers. Therefore, these values serve to make Nike a great company.

Strategy The strategies a company adopts to achieve its goals need to reflect well with the public. In addition, they need to promote a safe and healthy working condition for the company’s workers. The strategies also need to promote the company’s ethical standing (Inclusive 2005, p 25). Years ago, Nike faced harsh criticisms on their use of sulfur hexafluoride, a global warming gas, in the manufacture of Air Sole. The use of the gas to make shoes comfortable was Nike’s legacy and had made their shoes very popular with athletes.

Therefore, making a switch to other methods without compromising on the quality and comfort of the shoes was a daunting task for the company. On the other hand, criticisms of their contribution to global warming continued to gain heat. After much trial and error over a number of years, the company’s Research and Development team came up with a way of replacing sulfur hexafluoride with nitrogen gas. This new method eliminated the release of carbon dioxide into the atmosphere. In addition, the company gained new insight on the value of innovation.

Therefore, innovation became the company’s core strategy that enabled it gain market dominance (Incl. 2009, p 4). In addition, the company’s public image improved because people felt Nike had their needs at heart (Carrigan & Attala 2001). Besides innovation, the company has instituted programs to make their customers and the surrounding communities to feel as part of the Nike family. The company launched a social platform called nikegamechangers.com where consumers discuss and come up with solutions to their social and environmental problems.

The company also targets the youth through a number of forums where the youth discuss issues that affect them.

Read More