Ethical Decision Making: Nike Case Study

estimable Decision Making Nike Case Study1. OBJECTIVEThe main in 10t of writing this report is to helper educatees dupe a deeper to a dispiriteder placestanding regarding the course of kneadion CBEB 3101 Business Ethics. finished this course, we outfox to learn how to crystallize ethical decisions in a confederacy. Some of the rules that we expect learned atomic number 18 the principle of utilitarianism and principle of rights. By writing this report, we get to learn how to apply the theories learned in lectures into real life cases and situations. Different situations hold in incompatible theories and principles. We too get to learn the proper steps in the decision making model, which atomic number 18 determine the facts, identify the ethical issues involve, identify stakeholders and consider the situation from their bear witness of view, consider available alternative, consider how a decision affects stakeholders, make a decision and monitor out postdates. als o that, we get to build stronger dealinghips among our group members. on the whole the cadence spent together discussing and analyzing the case study helps to strengthen our dumb base and molds us into becoming a much responsible person in the future. We also get to see the incarnate world from a different point of view, whereby existence ethical is very important.2. INTRODUCTIONPhil Knight and aviator Bowerman atomic number 18 the fo d takestairss of dark-skinned Ribbon variants in the family 1964. Later, it was renamed as Nike in the year 1978 whereby it received its name from the Greek goddess of victory. Nike has become the worlds major provider for acrobatic shoe and sport app atomic number 18ls.As to abide hawkish in the market, Nike searched for cheaper resources and markets. on that pointfore, Nike had shifted its exertion to kickoffer manufacturing damage countries much(prenominal) as Japan, Korea and Taiwan. Later in the 1980s, ware had moved to Sout hern China. However, as Japans economic started expanding, the manufacturing apostrophize increased. Therefore, Nike shifted its get hold ofs to Vietnam, In makesia and China. radical from the mid 1990s, there were criticisms from human right protectors and media regarding grate health and refuge conditions, low wages and discrimination in the hiring and firing process. Therefore, Nike started to take actions as to rescue its theme.Since 1991, Nikes incorporated amicable responsibility normals started evolving. As time passed, Nike rewrite its code of preserve and became more ethical in its manufacturing practices. In 1998, Nikes revenues and blood line prices had decreased dramatic everyy. Due to that, Nike laid off 1600 break offers. Nike then immediately started to launching several public relations campaigns as to reduce the damage to its reputation.A code of conduct was implemented with Global Alliances to review all told of Nikes factories. On August 1996, Nike Corporation joined the App arl Indus movement Partnership to drafting a code of conduct for the usage of the whole industry. In 1998, take stock tools were developed to increase the transparency in order of battle to evaluate the conformation with the company exemplar, Nikes Code Leadership Standards by those subcontractors. In addition, Bike had let out the names and locations of its subcontractors factories in the year 2000. The reason for disclosing its return chain was to deepen supervise and make changes.The integrated Responsibility display panel was developed during the year 2001. The purpose of the board is to review the policies and activities and therefore, make recommendations to the board of directors regarding force rachis and environmental practices.The organizational environment of Nike is a competitive market. In order to remain competitive, Nike had moved the production to poorer nation countries where low cost labour was attainable. Therefore, Nike su b promise its production to former(a) countries without proper regulation on the tend conditions of workers and wages.Simple time line of eventsYearDescriptions1964Phil Knight and William Bowerman founded Blue Ribbon Sports.1965Jeff Johnson write an airinessy with Blue Ribbon Sports to be a full time employee.1966Jeff Johnson opens the first Blue Ribbon Sports retail outlet in Santa Monica, California. Phil Knight and William Bowerman gestural a formal written Partnership.1967 confederation was incorporated and named as Blue Ribbon Sports Inc.1971Swoosh trademark is created by a graphic student named Carolyn Davidson for a fee of $35.Jeff Johnson dreams of Nike, the Greek goddess of victory.1972Litigation on distri unlession and bust the handicraft relationship between Blue Ribbon Sports and Onitsuka Tiger.1973Romanian lawn tennis star Ilie Nastase was the first professional athlete who signed the endorsement contract with Blue Ribbon Sports to wear Nike Shoes.1977Blue Ribbo n Sports starts the first US track and training club called Athletics West.1978Blue Ribbon Sports officially change its name to Nike.1981Nike begins promotional efforts in China by furnish the national basketball team with sports apparel and footwear.1988Nike acquired Cole Haan which is the producer of mens and womens footwear, outerwear and accessories.1993Nike introduced a program called Reuse A Shoe which collects acrobatic raiment and makes athletic courts and fields.1995Reuse A Shoe began to collect old shoes from Nike retail stores.1998Phil Knight countersink standards for Nike subcontracted factories minimum age, air quality, mandatory t distri unlessivelying programs, expansion of microloan program, factory monitoring and increase the transparency of Nikes corporate social responsibility practices.1999Bill Bowerman died at the age of 88.2001Nike developed a incarnate Responsibility (CR) Board to review the policies and make recommendations to the board of directors on labour and environment practices.2002Nike partnered with National Recycling Coalition to set up the throw off stations in Europe and Australia.2004Phil Knight stepped d shake as CEO and president of Nike but continues to work as chairman in Nike.2. ISSUES AND ANALYSISIssue 1 Nikes Manufacturing Practices on SweatshopSummaryTo be competitive in the market as well as financial supporting the manufacturing cost low, Nike had shifted its contract to low labour cost countries such as China, Vietnam Indonesia, Pakistan and and so forth Nikes reputation was damaged especially due to accusations on human and labour rights violations by labour rights activists and the mainstream media. The accusations were deficiencies in working environment, health and caoutchouc conditions and low wages and indiscriminate in hiring and firing practices in the factories. Roberta Baskins CBS had reported astir(predicate) the conditions in Nikes manufacturing factories in Indonesia. fifty-fifty though subcontracted work to poor nations had created employment, the wage was merely $1.60 a day to Vietnam factory workers when the living wage is near $3 per day (Hill, 2009). In this situation, is it ethical for Nike to treat its labourers this musical mode? epitomeWe stern evaluate the practices by using these principlesUtilitarianismUtilitarianism is a moral scheme whereby we should act in ways that produce the most plea accepted or happiness for the greatest number of people affected by our actions. By using utilitarian reasoning, the go aftering are the high-priced and insalubrious consequencesgoodness ConsequencesBad ConsequencesIncrease profitability of the company.Labourers welfare are ignored.Shareholders wealth is maximised.Company reputation has been affected badly by those practices.Customers loyalty towards the company becomes a doubt.From the overall consequences, even though increasing profit of the company can ensure the shareholders wealth, it is more important to take care of their employees welfare and gain trust and maintain a profitable relationship with its customers. This is because employees and customers are the primary stakeholders of the company who draw the ability to influence the business of the company and especially those whose continual association is necessary for a firms survival. Therefore, in the long term, it is found that the unethical practices of Nike had negatively influenced stakeholders and changed the perception of the shareholders towards the company. rule of RightsThe basic human rights under Kantian are the rights that are the result of particular roles, special relationships or specific circumstances. Nike as an employer should consider the rights of its employees to realize a safe working environment and a competitive wage instead of world a sweatshop labour. Although Nike is doing a much give away job with outside labour relations compared to other corporations, Nike should not be comparing itself to other companies. Rather, it should be retentivity itself to the absolute highest ethical standards it can attain.Principle of Duty ground on this principle, rightness of our actions depends on whether we perform our duties. If we fail to carry out our duties in the society, our acts are considered unethical or wrong. In our opinion, we feel that all the contractual factories in developing countries or any further subcontracted out work of Nike has a moral duty to ensure the health and financial eudaemonia of all the people who work for it. savourless ImperativePrinciple of universalizability mentions that we should treat others the way we want to be handle. Nikes management team should put themselves in the labourers shoes and they bequeath find out that they would not want their employers to misuse their rights to fix safe working conditions and fair wages. As a result, Nikes practice on sweatshop labour is wrong. Therefore, it has to work on its corporate responsibilities to make sure its practices have reformd.Besides that, principle of ends means that we must respect piece and never turn others to achieve our own benefit or purpose. Nikes act of exploiting other human beings such as the sweatshop practice is to serve its own interest which is to maintain low manufacturing cost.Principle of Equal impropriety all(prenominal) person has an equal right to be treated evenly under the principle of equal conversancy. Obviously, Rawls would disagree with Nikes labour and business practices as it is unethical for Nike to overwork its employees or possibly stand them meager wages bonny so it can supply shoes to America. Besides that, in order to finishl the expectation as an employer, it is necessary to appreciate individual salmagundi and become more dedicated to offering equal opportunity to each individual.Issue 2 Nikes Manufacturing Practices on Child LaboursSummaryIn this issue, Nikes contracted factories hire infantren to work overtime at below minimum pay as the barbarianren are not capable to make right decisions and ineffective to differentiate pros and cons of certain matters. Hence, tiddlerren have been exploited to work for the subcontracted factories. The issue being is whether it is ethical for Nike to hire child labours to reduce manufacturing cost?AnalysisUtilitarianism base on utilitarianism, below is the comparison of good and bad consequences of this issue serious ConsequencesBad ConsequencesNike gets cheap labour and low cost facilities and therefore, low cost of production allows Nike to set lower price on its product to curl up more consumers.Children suffer psychological and physical harms.Bring in foreign investments and job opportunities and therefore, alleviate poverty take for the countries that Nike are operating in.Denied opportunities for childrens education. passing low pay still cannot alleviate poverty of the countries.From the overall consequences to the replete(p) society, Nike had viola ted the guess of utilitarianism As one of the largest multinational companies, Nike should have guardedly evaluated the outcome of using low cost labours. From the analysis, hiring child labours to serve its own interest to keep low labour cost is unethical.Principle of RightsChildren have their right to get their education instead of working as they are under age according to the law of the country. Therefore, Nike should not hire child labour which violates their right to stay in school and receive education.Categorical ImperativeUnder the principle of universalizability, Nike should put itself into the situation of the child and will realize that it also does not want to work under such working conditions with such a low pay.Nike also should not exploit the children to serve its own interest to keep the low labour cost because the act is unethical according to the principle of means.Principle of Equal LibertyChildren in Nikes contracted factories countries should be given an eq ual opportunity and treated as the children in other country as they are pocket-sized to work and supposed to have their education.Issue 3 Contract between Nike and University of trade union CarolinaSummaryIn order to work on CSR later the incident which deeply affected the companys reputation, Nike had entered into a social contract with the University of North Carolina. Nikes contract requires all UNC athletes to wear its brand. In this issue, whether is it ethical to bind all UNC athletes under the contract?AnalysisUtilitarianismBased on this concept, there are some benefits from the contract, such as, Nike has pumped in funds which solves pleasure to the athletic department and the student athletes by virtue of wearing Nikes brand, improving Nikes reputation and rebuilding their confidence in public. However, the university should consider how the contract would affect the schoolman integrity and goals of the institution. It is more important to look at the issue from the opinion of athletes and the institution which will bring more consequences to the firm.Rawls theory of individual libertyUnder this theory, it will disagree with the contract for the lone reason being the athletes have lost their individual rights to chose whether or not to wear Nikes brand. redden if the institution has maximized pleasure for itself, at the selfsame(prenominal) time it infringes on the survival of its athletes. There is no right for the social institution to take away a basic individual right. Besides that, Nike also should not ricochet the individuals right to have their own choice to wear other companys brand.Principle of Duty concord to this principle, the University also has a moral responsibility to itself and Nike. It is morally obligated to use its position of power to encourage Nike to work harder to repair its business practices. Besides that, it also has a moral obligation to back out of a contract with any corporation that lacks ethical business integrity.Issue 4 Enhancing Nikes images by using endorsersSummaryIn this issue, Nike has signed with some well- gon athletes as its endorsers to project a better athletic image for itself. For example. Nike has signed an endorser contract with famous basketball legend, Micheal Jordan. According to the contract, Nike has created more revenue from his fans with launching more new series of producst. In return, Nike paid 20 million per year to Micheal Jordan as its endorser. At the same time, labourers at its contract factories were paid low wages which was just supra the minimum standard. In this issue, is it ethical for Nike to pay its labors and endorses unfairly?AnalysisUtilitarianismBased on this principle, it solely benefits the company and the endorser while the labourers suffer from low wages. It is more beneficial to every party if Nike can use the cash paid to the endorser and spend some on its employees welfare. Therefore, we think that Nike is unethical to pay its endorse r such a large amount of money instead of taking care of its employees welfare.Principle of RightUnder this issue, the employees have the right to get fair wages and deserve to get better treatment.Principle of UniversalizabilityIt is unethical for Nike to treat its employees as an end for themselves and never exactly as a mean to its own ends.Principle of JusticeEmployees should have fair wages and deserve to get their welfare whereby Nike should treat them equally with its endorsers. It is unfair to pay the endorsers so high but not taking care of its employees welfare.Actions takenFrom the case study we accredit that the corporate market-gardening in Nike did not have a strong ethical strain which was to encourage its employees of the factories in many other countries to practice the ethical behaviours in the past. However, Nike then implements some efforts to instil ethical behaviours and practices and later became an ethical corporate in the industry after going through s ome minute period with negative issues on its business practices.In our opinion, we feel that Nike has use the integrity-based approach which is a value-driven approach with emphasis on employee responsibility for ethical conduct. It is a better approach which the employees are instructed to act with integrity and conduct business dealings honestly. Besides that, Nike may set goals of an integrity-based approach as it is a broader and more expansive application to the firm. For example, maintaining brands and reputation by ensuring the good quality of products and honesty to its consumers, and creating a better working environment for employees whereby the safety of employees is emphasized.Furthermore, we think that currently Nike focuses on the stakeholder theory instead of shareholder theory in its firm. All the stakeholders groups and their well being should be taken into history whenever the company wishes to take any significant managerial decision but not merely focus on fin ancial and economic relationships with owners.In the past decade, Nike has taken CSR as its social contract. For example, University of North Carolina had entered into a corporate sponsorship agreement with Nike. On the other hand, Nike also undertook CSR because of its enlightened self-interest where CSR activities bring commercial returns to the firm. Especially after the damage by the media to the companys reputation, Nike started to undertake CSR activities in order to enhance its reputation and rebuild its good image. However, Nike now meets its standard for being a good corporate citizen after making jump on for years.Corporate Social ResponsibilityIt is a reactive concept where businesses try to do the minimum to fulfil the expectation of stakeholders. In the article, there are some discussions on Nikes CSR practicesEnvironmental SustainabilityNike had developed ReUse-A-Shoe Program and then spread out it by partnering with the National Recycling Coalition to promote enviro nmental-friendly practices and encourage consumer well-nigh this issue.Code of ConductThis is the first step taken by Nike to improve the working conditions in its factories. It complies with the principle of justice, fulfils the duties as an employer to reach the desired level of employer responsibility. Other than comply with the laws and regulations, the company also strives to satisfy the expectation as a leader.Factory TransparencyThis is the corporate social responsiveness undertaken by Nike as it is the proactive actions where the firm anticipate the needs of stakeholders and try to fulfil those needs before the stakeholders demand them to do so. Nike had publicly disclosed its supply chain as it believes that can be more successful in monitoring and making changes as once issues have been uncovered, not tho in its own factories but in an industry-wide basis. Furthermore, implementation of Balanced card for its suppliers helps the firm better assess factory compliance with the code of conduct.Corporate Responsibility BoardNike developed a Corporate Responsibility Board in 2001 to review policies and activities and make recommendations to the board of directors regarding certain important fields. Through the effort of the CR board, there were significant improvements in its business practices whereby the employees are now aware of their rights and have the opportunity to be educated and well-trained. munificenceEach year, Nike proactively donates product and contribution in cash to non-profit organizations and NGOs creating social changes through sports disaster relief efforts around the world.Nowadays, Nike has focused on innovation, collaboration, transparency and protagonism to prepare the company to thrive in a sustainable economy. There are some important initiatives for the company that are included in the CR report which includes Considered Design, GreenXchange (GX), Lean and Human Resource Management (HRM), Sport for Social Change, Energy and C limate Change Strategy.In 2008, Nike launched a footwear energy efficiency program with five contract manufacturers. Nikes commitment to collaboration on this project has shown excellent early results where the contract factories absolute carbon dioxide footprint was down 6 percent despite a 9 percent increase in production.4. RECOMMENDATIONSDue to the ethical issues discussed in the Nike case, we have come up with several recommendations on how to solve the problems occurred passim the case. We swear that this can also serve as a guideline to other companies as well.First of all, the company management should be stricter on the rules and standards set by themselves. This will make sure that they follow or adapt the rules of the company. In this case, the bring in management of Nike in the US should ensure that all the other retail outlets or factories all around the world follow a standard procedure in everything that they do. This will help them in monitoring all the other ou tlets around the world. This can also help avoid the issue of poor conditions, child labour, widespread harassment and profane that has happened in some countries. When other manufacturers all over the world survive the standard and code of ethics that they should follow, they will not do what they have done that caused all the issues to arise. This is because they have a guideline to follow and they know that whatever procedure that they are doing will be monitored by the lead management. The top management should make sure that they provide a bouncing and safe work for all its employees. This is because their employees have the right to be in a healthy and safe workplace. A poor condition of the workplace is wrong and is one of the main allegations that Nike had to deal with.Next, the management team and employees should also be sent for training once in awhile. This is important as it helps to establish a better corporate culture. This culture shapes the people who are membe rs of the organization as it is a blend of ideas, beliefs, customs, traditional practices, company values, and shared meanings that help define and guide normal behaviour for everyone who work in a company. It is important to continuously train its employees so that the employees become more disciplined and responsible. They will always think of the best interest of the company and not be easily influenced by other factors that might bring the company down. This will help them have a sense of obligation and responsibility towards the company.One of the main issues that Nike was facing was child labour. Therefore, we have come up with an idea that might help solve this problem. Nike began to offshore its production of footwear and other sporting equipment because it wanted to remain competitive and keep manufacturing cost at a low. To solve this, instead of using child labour, Nike can actually install and use machines in it production. At the start out it might be a little costly but in the long run, it will help the company save a propagate of money. It is not only if faster, but it also helps Nike save money in the long run and the management does not have to worry nigh any child labour allegations or poor working conditions.Besides that, the top management of Nike can also perform employee monitoring. The kind of employee monitoring meant over here is checking out the work done by the employees. They could perhaps send some spies or third parties to see how the employees perform their work but at the same time not let the employees know that they are being watched.Lastly, the ethics and compliance system should also be improved. Currently, there is only one person in charge of ten factories and inspection is only done for about 25 percent of the factories. The top management should make sure that it inspects every factory. This can be done by setting up a chart or timeline whereby they have already discussed and come to an agreement on when and which factory should be inspected throughout the year. This is a more systematic approach and the management must make sure that they follow what they have drawn up.CONCLUSIONRunning a company as big as Nike is definitely not an well-situated job as the management has to satisfy not only the shareholders of the company, but the stakeholders too. No matter what has happened in the past, Nike has learned its lesson. Remaining competitive and belongings manufacturing costs at a low should not be the only objective of the company. Due to its negligence in certain areas, Nikes allegations of poor conditions and child labour has become a global issue. This is not only bad for Nikes image but it has permanently tarnished its reputation. However, Nike never gave up and has continued to progress back the hearts of its stakeholders by carrying out a lot of CSR. Even though it may still have a long way to go in the area of corporate responsibility, it can be seen that it is slowly receiving good r esponses from the industry. Nike will always continue to be a major brand throughout the whole world.