Ethics and Governance of Nike - Case Study Example

Ethics and Governance: NIKE Ethics and Governance: Nike Introduction of Company Nike Incorporation is the leading sportswear organization of the world. Nike is the largest producer of footwear, clothing and other sport accessories in the world. The company manufactures a huge range of sports equipments. Nike employs over 30,000 employees working in 140 countries of the world. Nike products are known for its quality and design (Biz Nike 2009). Nike and Ethical Issues The code of ethics at Nike is as follows NikeGO Program The NikeGO program was started in the year 2002 to work for the welfare of the children. This program helped 150,000 children since it has introduced. Micro-loans Nike has been involved in providing micro-loan to women and has funded more than 15,000 women since 1997 (Webb, T. 2007). Community investment Nike is actively involved in the community investments where it aims to work for the welfare of the children and support the programs related to the global challenges faced by females. Charity work The company is said to be contributing in charity works and providing million of dollars in to the charity organizations. Youth activities Nike is contributing and funding the youth activity programs Women's empowerment The company is involved in several women empowerment programs Cancer initiatives The company is providing funds for the cancer initiatives. Safe and Healthy Work environment Nike is committed to provide safe and healthy work environment to its employees and to the community in which it operates. Environment free from Discrimination and Harassment Nike makes sure that all of its employees are treated equally and no discrimination of any type occurs with any individual working with the company Nike 2009) In the today's world every company is needed to follow an ethical code of conduct to be successful in business environment. Nike has been accused of some ethical issues which involves employing workers at low wage rates and providing working conditions lower than its standards for long time period. Nike is one of those companies of the world which are continuously accused of the ethical issues such as human rights and the working conditions in the Nike factories in the developing and under-developed countries. Despite of abandoning many unethical activities and involving itself in the global social and environmental activities, Nike is still accused for exploitation of labor rights in many countries around the world (Kahle, L. R. & Boush, D.M. & Phelps, M. 2000). The ethical issues and dilemmas faced by the Nike Incorporation are discusses below in detail. Low Wage Rates The manufacturing units of the Nike Incorporations have been established in the developing or under-developed countries because of the cheap labor in these countries. The wages provided by Nike are even lower than the standard wage level in those developed or under-developed countries. The employees at Nike are unable to meet their basic needs. Nike has made an effort to solve the issue by employing the workers at the wage rate as given by those countries. Poor Working Conditions The working conditions provided to the labors at Nike are not up to the mark. Workers at Nike had to work overtime and for long hours. Child Labor Nike is involved in the violation of the global child labor laws. The children of the age 12 to 14 are working at the manufacturing units of Nike. Nike failed to practice the child labor laws in the under-developed countries. Endorsement of Nike products The human rights committees are continuously criticizing Nike for paying huge amounts to the celebrities for the endorsement of their products. The famous sports celebrities are paid millions of dollars to market and advertise the Nike products It is suggested to spend a part of money to improve workers standards of living and in the community building. Sweatshops Another issue involved sweatshops operated by the company. Sweatshops are the illegal and unethical activities like ignorance towards social responsibilities and health and safety hazards. Nike is involved in these activities in the foreign countries in which they operate. Exploitation of Labor rights Nike has been accused of exploitation of the rights of the labors in the foreign countries. Critics demand that Nike should allow examining the manufacturing units of Nike (News, 2005). Expensive Products Another important issue is the cost of the Nike products which is relatively high as the products are manufactured in the countries where the wage rate is lowest and the workers are paid the minimum wages. They earn the huge profits by selling their products at high prices which is ethically and morally wrong. Lack of community development The companies should take care of the community in which they operate but Nike is not concentrating on community building or working for the development of the countries in which they operate. Health Hazards in Nike factories Nike should take care of their workers and employees and make sure that they perform according to the set standards by the International Safety and Health Organization. The chemicals used in the manufacturing units are causing skin and sinus problems (S, R. 2003). Ethical Theories The ethical theories will help analyze the ethical and moral initiatives taken by Nike. The ethical theories are Egoism This theory suggests that Nike Incorporation is placing its personal interest above all the ethical and moral conducts. The company is carrying out manufacturing through cheap labors so that they can have a huge share in profits without realizing that the wages they offer are not even satisfying the fundamental needs of the workers. Social Group Perspective This theory explains that the companies should take decisions which are good not only for themselves but also the surroundings and for those being effected by its decisions. Nike should make decisions by considering the benefits for their partners also which includes employees, suppliers, consumers, stockholders, communities and foreign countries. Cultural Relativism Culture in different in every country. Nike operates in more than 140 countries. The ethical conduct in one country might be viewed as unethical in other country. So it's a challenge for Nike to manage its ethical and moral presence successfully in different countries. The policies should be made which are universally acceptable. Utilitarianism The decisions taken by the company must be viewed as right by the majority of the people. It is necessary that the greater number of group agrees to and accepts your ethical conducts and decisions. Values Clarification Organizations build their own culture within the company. That culture must be acceptable by all the employees and partners of the company and the company should make the rules and policies clear. Deontological Perspective The company should ask for the behavior and conduct from the employees which they are following themselves. The organizations are constrained to provide best product and do good for the community. Ethical Dilemmas The ethical dilemma faced by the Nike during its manufacturing and operations are given below Advertising Budget The famous sports celebrities and personalities are highly paid for marketing and advertising of Nike products. The budget could have been used for the development of the communities and countries in which it operates. Manufacturing ownership The manufacturing units of the Nike Incorporation are located in the foreign countries where the wage rates are minimum working conditions are lower than standard. If the company does not consider the profits, it could have its factories in the home country where they can provide employment opportunities to the people of their own country. Public Relations Nike should employ the individuals from different fields and sectors and build relations with different communities by hiring the employees from diverse groups. The company has not yet hired the individuals from different fields that is the major reason they are facing the accusation from different groups. Employees Enrichment Nike earns the high profits due to lower wage rates in under-developed countries, so the company can make investments with the profits earned in the employee's welfare programs. Nike has come across serious criticism because of its lower standards of operations in the developed and under-developed countries but it has managed to suffer through all the accusations. Nike is doing its best to work for human right activities. The company is engaged in many charity works and social activities, it is working for the betterment of the employees and the communities in which the company is operating, yet they are required to be more involved in such activities to create goodwill and image of the organization. Nike should increase its charity activities and abandon all the unethical activities at once so that they can clear all the charges upon them. Nike has responded to the criticism constructively and working over the image of the company by continuous involvement in employees and community development. Nike is also building personal relations by engaging itself in the social works for children and women. The company should prepare corporate social responsibility statements, follow the global ethical rules and principles to solve the issues related to ethical dilemmas List of References Biz, Nike (2009) [online] Available from [accessed 30th April 2009] Kahle, L. R. & Boush, D.M. & Phelps, M. (2000) [online] Available from "Good Morning, Vietnam: An Ethical Analysis of Nike Activities in Southeast Asia" [accessed 1st May 2009] News, (2005) [online] Available from "International [Global] Business Ethics" [accessed 30th April 2009] NIKE (2009) [online] Available from "Inside the lines: The Nike Code of ethics" < http://phx.corporate-ir.net/phoenix.zhtmlc=100529&p=irol-govconduct> [accessed 30th April 2009] S, R. (2003) [online] Available from Nike Corporation: Jumping the Hurdles of Social Responsibility Disclosure [accessed 1st May 2009] Webb, T. (2007) [online] Available from "Nike and sustainability - Making the running for business ethics" [accessed 30th April 2009] [accessed 1th May 2009] Read More