You are on page 1of 14

Corporate Social

Responsibility of Nike

For Assignment or Dissertation Help, Please


Contact:
Muhammad Sajid Saeed
+44 141 4045137
Email:
todrsaeed@gmail.com
Skype ID: tosajidsaeed

2014

Table of Contents
Introduction: Nike.................................................................................................. 3
What is Corporate Social Responsibility?...............................................................3
Corporate Social Responsibility Theories for Nike..................................................4
Management Audit Verification Tool for Nike......................................................5
Role of CEO in Nikes Development.......................................................................5
Process Activity Mapping:................................................................................... 5
Supply chain response matrix:...........................................................................6
Product Variety Funnel:....................................................................................... 6
Quality Filter Mapping:........................................................................................ 6
Demand amplification mapping:.........................................................................7
Decision Point analysis:...................................................................................... 7
Physical structure:.............................................................................................. 7
Stakeholders of Nike.............................................................................................. 7
Conclusion............................................................................................................. 9
References........................................................................................................... 10

Corporate Social Responsibility of


Nike
Introduction: Nike
Established in 1964 Nike was originally known as Blue Ribbon Sports or BRS.
Philip Knight and Bill Bowerman are the key founders of the company in
University of Oregon. The first operations of the company included the supply
chaining of Japanese shoes for Onitsuka Tiger. Later the owner made the first
Nike sports shoes which further earned the fame. With the passage of time the
company expanded its operations with the development of joint ventures. The
formal marketing and advertising were also started through which slogans were
raised for increasing sports activities. Within twenty years the company acquired
numerous apparels and established core business lines. Presently the company is
famous for its sports products and training programs for promoting health
awareness among people. It has sponsored main football teams for gaining the
fame. As of 2012 the total revenue generation was recorded as $25.3 billion with
the net income of $2.24 Billion. Currently it has over 45,000 employees globally.
The expansion of the company is expected to increase in the coming period (Nike
Inc. Financial Report, 2012).

What is Corporate Social Responsibility?


The corporate social responsibility refers to the relationship between global
corporations, government institutions and individuals. However the term majorly
emphasize upon the connection between a corporation and local society. This
also includes the association of stakeholders with the company for its
development (Holme, 1999). The self regulation is highly governed with the
business model in which the firms perform. The business monitors ensure the
ethical standards and laws are well observed. CSR can be taken as a process
through which companys accomplishment persuade to achieve a positive impact
through regulating the environment, employees, stakeholders, communities and
consumers.
The social contract includes the application of unselfish and humane behaviour
which further promotes the self interest and self-centeredness. This can put
forward some influential ideas for collaborative control of the company. The focal
point for the firms is however to maintain the social contract among the
stakeholders and people of the society. This in return increases the value of civil
society (Leonard, 2003). The key area for CSR is to expand the presence beyond
the present members of the society keeping in mind the future scenario. On the
other hand the actions are highly affected by the external environment in which
the company operates. This environment includes the local societal and wider
4

global environments. There are numerous factors which influence this


environment including the usability of natural resources within the production
cycle, effects of competition among itself and other firms, fortification of a local
community through the development of employment opportunities, conversion
of raw materials, distribution of wealth created contained by the owners of the
organization and climatic change of corporate sector (Portney,, 2005).
Due to the presence of uncertainty in the working environment of companies
there are three basic principles that needs to be followed by the companies
including sustainability, accountability and transparency. These factors include
the present steps that are taken and their affect in the coming future. The proper
usability of resources is also included for the future use and in finite quantity.
They emphasize upon proper utilization of resources which further needs
regeneration which can be described through the output models of resource
consumption. It further includes the quantification of the effects of the actions
that are taken and the parties that are involved through the quantification. This
in return implies an exposure to stakeholders for the effects of actions for
organizational development (Crowther, 2008).

Corporate Social Responsibility Theories for Nike


The Milton Friedman theory for corporate social responsibility depicts that in any
business people are the key players who hold responsibility for maximising the
profits. The people who are employed by the business companies have the
accountability towards the business owners for meeting up ht e desires of the
company. Every individual has the perceived liability in areas away from the
business. The main methodology for Nike with respect to the Friedmans theory
should be to dissemble the mutual representation of businesses into individual
businessmen and to present them as what they really are; hence as a combined
effort of individuals who are paid to work due to the bidding of the owners. For
fulfilling these aspects the management of Nike should be motivated for fulfilling
the key roles for creating a large profit margin instead of evaluating their role in
the society.
Nike is focused upon providing athletic brand to the customers
through innovation and motivation to every athlete. It has the major focus on
observing the major challenges that are present today and the future. The
management of the company stress upon applying core strength to bring about a
systemic change in the products including footwear, apparel and sports
equipments (DeTienne, 2005).
The principles of sustainability are strictly followed as a catalyst for
revolutionising the methodologies of business. The social, environmental and
economic challenges are met through seeking opportunities which can be
beneficial for athlete and the environment. This also improves the creation of a
network between the company and customers. Innovative materials are being
used by the company including recycled polyester obtained through plastic
bottles from landfills since four years. Better products are being produced though
transforming markets and perking up the lives of consumers through leveraging

sustainability as the greatest aspect for innovative opportunity (McWilliams,


2006).
As sport is the universal language it helps the societies to encourage joint effort,
teamwork, collaboration, creativity, emotional and physical health and flexibility.
It also encourages people to develop self confidence and is taken as the greatest
investment a society can make, hence Nike is focused upon maintaining the
sustainability and accountability factors through an ease of access to sports for
the people (Vogel, 2006).
On the contrary Nike has not been the most successful company to follow the
CSR policies. However it managed to rotate its image in the recent decades as it
was characterized as the symbol of abusive labour. As the labour prices
increased in South Asia including Korea and Taiwan the authorities moved its
labour market to China and Indonesia. It further developed a department whose
job was to improve the efficiency of labourers. However the company faced
several insistent criticisms for the promotion policies of products for which the
Fair labor Association was created. This was an organization of Nike who
represented the human rights and ethical code of conduct for all the employees.
It also restricted the minimum working age and labor hours for people. Due to
the introduction of such policies other famous brands also joined the venture of
introducing such laws. Regular audits were formed for solving the problem areas
of the company. The company was the first one to complete the list of factories it
agrees with due to the publication of project reports which reveals the situations
and pay the factories acknowledging the issues (Hess, 2001).

Management Audit Verification Tool for Nike


For the observance of Friedmans theory by the employees the management of
Nike makes use of management audit verifications frequently. The tool helps the
management to observe the four core areas of the employee management
including the number of hours worked, total wages, benefits, labour relations and
complaint systems. The tool helps the management of Nike to comprehend the
impact analysis of employee management through frequent visits and
addressing noncompliance issues. The local law and Nikes code of conduct is
followed through Code Leadership Standards (Belal, 2002).
During the year of 2007 the MAV tool was added by the head management of the
company for monitoring purposes and replacing the management audits. Hence
the already existing tools were revised with the decreased number of audits to
be conducted. During the following year MAV audits were conducted throughout
the 80 factories which resulted in better individual performance of the
employees and increased manufacturing performance due to the Olympics
games. The year 2009 was considered as beneficial due to the improvement in
apparel factories and supply chain management. The critical issues identified
were clearly addressed by the management due to the in depth analysis by the
tool and qualitative analysis of the root causes. The action plans were created for
following the Nikes Code Leadership Standards for monitoring the progress and
development of the company. The Safety Health Attitude People and
6

Environment audit was conducted during 2007 for fulfilling the self evaluation
criteria for focusing upon the ways for employees to fulfil the requirements of
corporate social responsibility. The ESH management standards were introduced
through conducting this audit for improving the capacity of people and factories
for managing critical issues efficiently.

Role of CEO in Nikes Development


The Chief Executive Officer plays a key role in monitoring the activities of the
company. As Nikes CEO mapping tools should be applied for proper
management of the tasks by the management of the company.
The stream mapping tools are derived from numerous origins. These include:
operations management, research, logistics, engineering and actions. Following
are the stream mapping tools described in the article:

Process Activity Mapping:


The derivation of this tool is from industrial engineering as the concept revolves
around the techniques and methodologies involved in elimination of waste and
discrepancies for obtaining quality in the products and services. It is a cost
reducing element in which services are improved for the customers. The main
steps in the mapping include (Burgess et al., 2006):
Observing flow of procedure recognition of waste rearrangement of process
in proficient sequence obtaining better flow pattern reassessing of flow of
pattern and removal of unnecessary steps
The case example of Nike should adopt this procedure for obtaining a simple flow
of information starting from preliminary analysis of the process followed by
observing the detailed footage of all entries in each step and process. Each of
the steps taken is classified into numerous activity types including operation,
inspection and storage. The labour involved and logistic support can be easily
calculated for every step that is to be taken through eliminating all waste from
the procedure and improving the overall efficiency. Hence the procedure for
adopting such a methodology was beneficial for pinpointing the relevant details
of every step to be taken.

Supply chain response matrix:


The tool focuses upon the supply chain management which further enlightens
the logistics support and improving the condition of people involved in it for
product innovation and export. The logistic analysis spotlights scheduling and
routing of transportation and logistics equipments for perking up the customer
services. This includes the improvement in vehicles through tactical decisions.
These include the long-standing resource allocation for strategic routing
decisions and short term resource allocations (few days) for tactical
transportation.
The procedure implemented in the case study included the techniques for
inventory analytics which further emphasise upon inventory management
7

parameters for covering the service levels with lowest investments. These
parameters include order capacity, safety of stock and cycles involved in product
development. The mapping consists of horizontal and vertical axis through which
inventory amounts can easily be detected for improving the further steps that
should be taken for managing the logistical support.

Product Variety Funnel:


The tool originates from operations management processes and focuses upon
the type of production operation to be used with respect to the required
functions. Hence the usage of inventory can be maintained through using this
tool through observing the clear picture of type of manufacturing being done at a
particular facility. It is related to the IVAT analysis which also gives and portrays
the image of internal operations of the company. Each of the step analyse the
type of plant that is being operational, for instance I plants comprises the
unvarying production of manifold similar items which includes the chemical
plants and V plants are typically for textiles and fabrication industries (Bell,
1997). Hence the funnel helps to understand the resemblance and difference
among the industries for supply chain operations.

Quality Filter Mapping:


The main question for every industry is the process involved in the
manufacturing of the product. However evaluation of the quality of the product
can be accessed through this tool which looks deeply into the numerous parts of
the manufacturing chain and filter out the problems related to products, service
or internal scrap. Hence the determination of type of defect can focus upon the
defect in chain of production.
As the company in the case study implemented this strategy it was easy for the
management to look deeper into the details of product manufacturing for
improving the quality. Getting rid of waste at every step was proven useful in
recuperating and managing the supply demands for manufacturing of products.

Demand amplification mapping:


The process is also known as Forrester effect in which poor decision making
power is emphasised. High costs can be due to irregular timings, mishandling of
data and delays in supplies in the manufacturing plants. This can also result in
increasing the fiscal years results. Hence mapping the appropriate demand for
the needed supply chain and timely decisions through elimination of waste can
lend a hand in increasing the profits of the company. Hence the tool focuses
upon maintaining the timely decisions with respect to the required demand.
The methodology was adopted in the case study, however benefited the
company but on longer terms can be proven injurious due to either incompetent
production or excessive inventory. The distribution channels are not wholly used
which can also invoke poor customer services due to the damage in financial
conditions.

Decision Point analysis:


The tool focuses upon the manufacturing of products to match with the number
of orders that are demanded by the consumers. The supply chain is being carried
out against the forecast alone. The decision point can be taken as the point from
regional distribution centre to the national distribution centre for meeting the
manufacturing needs. However it is necessary to obtain a downstream or
upstream point for ensuring the operations.
The overall performance of the company in the case example improved through
visualising the consequences of every step to be taken by the administrative
issues for product management. The outcome for events, resource costs and
usefulness of supply chain was verified before decision making which resulted in
lower costs and higher profits.

Physical structure:
The tool focuses upon the examination of the whole structure of the industry
through production chain. Every inch of detail is examined including the raw
materials, assemblers and the affect of product in the market. Hence the whole
chain of production can be determined and weak points can be extracted for
obtaining better results. Cost for each step is also determined through observing
the physical structure.

Stakeholders of Nike
Stakeholders include the groups of people who are interested in the business for
expanding its operations (Harrison and Freeman, 1999). The main stakeholders
for Nike include consumers, shareholders, financial agencies, local communities,
labourers, governmental agencies, suppliers and pressure groups. They share
common interests for Nike and are brought on a single policy, for instance
including the customer question time, surveys for staff members and staff
forums. However the management of Nike emphasise upon three major
stakeholders including consumers, suppliers and employees. The consumers are
asked for their feedback through which their views are heard and according to
which better services are provided for making the managements role stronger.
The suppliers are also treated well and due to which Tesco has the best supply
chain management and employees who are encouraged to give their feedback
through Viewpoint Staff Survey in which responses to Staff Questions, Time
sessions and staff forums are observed. The stakeholder mapping can be done
as follows (Woods, 2007):
Recognition of relevant groups analysis of stakeholders interests mapping
of related objectives of stakeholders ranking of stakeholders
Stakeholder mapping holds vital importance for Nike as the needs of the firm
makes the job for objective meeting easier. The problems prevailing in the
business can be determined which can further help to devise a solution for the
management of Nike. However the mapping procedure requires revising on a

regular basis for evaluating that how well the meeting with the parties of interest
go and the steps to be taken to change the strategic steps (Walsh, 2008).
The corporate social responsibility refers to the relationship between global
corporations, government institutions and individuals. However the term majorly
emphasise upon the connection between a corporation and local society
(Lindgreen, 2010). For Nike this also includes the association of stakeholders with
the company for its development. The self regulation is highly governed with the
business model in which the firms perform. The business monitors for Nike can
ensure the ethical standards and laws are well observed. CSR can be taken as a
process through which Nikes accomplishments can be persuaded to achieve a
positive impact through regulating the environment, employees, stakeholders,
communities and consumers (Jones et al., 2005). For Nike the social contract
includes the application of unselfish and humane behaviour which further
promotes the self interest and self-centeredness. This can put forward some
influential ideas for collaborative control of the company. The focal point for Nike
is however to maintain the social contract among the stakeholders and people of
the society. This in return increases the value of civil society. The key area for
CSR in Nike expands the presence beyond the present members of the society
keeping in mind the future scenario. On the other hand the actions are highly
affected by the external environment in which the company operates. This
environment for Tesco includes the local societal and wider global environments
(Andersen, 2009). There are numerous factors which influence this environment
including the usability of natural resources within the production cycle, effects of
competition among itself and other firms, fortification of a local community
through the development of employment opportunities, conversion of raw
materials, distribution of wealth created contained by the owners of Tesco and
climatic change of corporate sector.
The stakeholders lend a hand in prioritizing key problems and widen the
corporate responsibility policies. Through a great deal from the interactions it
was concluded that productive engagement with stakeholders is most frequent
approach that enhance the best approach to the challenges Nike have in
addressing (Doane, 2004).
Nike connects with a wide range of stakeholders on a continuing base together
with civil society, industry, government, consumers and shareholders. Nike
performs this unceremoniously, through set of connections and organizations
that it contributes in or is affiliate of and as a prearranged part of its policies on
issues and challenges. Nike in addition accomplishes this through our official
enterprise work. Each of Nikes key enterprise is presided over by agreements,
union and operating principles, encouraging the responsibility and governance of
each partnership. Nike have also worked to appreciate how multi-sector
corporation are finest brokers and how to make them accomplish something.
Nike considers that increasing and cleansing skills of paying attention and sense
are serious to a company's success. This has been factual for Nike's record of
taking notice to and innovating for athletes to deliver performance product and
the approach of Nikes corporate responsibility efforts. Lately Nike has
10

commenced to take appointment with the external world to a new level. Nike has
developed a register of stakeholders for harmonizing the requirement to meet up
the following different criteria: Understanding and aptitude to remark on the
company through previous interactions, aptitude to make available new and
different perspectives, proficiency and standing in corporate responsibility
strategy and specific contented areas, Geographic, gender and subject variety.

Conclusion
Numerous methods are present for managers of Nike to take decisions. However
corresponding to a method for a problem is one of the expertises. The present
day manager needs to act as a partner, investor, customer and coach to take
decisive decisions. For achieving the upper level of innovation managers need to
be completely occupied for making strategic planning and decisions. However
they also need to consider the employees way of thinking. Through balancing
the knowledge of science and philosophy, the complexities of Nikes CSR
management can be resolved in the present competitive market. With the
passage of time the concept and theory of CSR is becoming the top most
significant theories among the management theories. It explains the internal
sources with respect to Sustained Competitive Advantage or SCA. It proposes
that if an organisation is aimed at achieving the state of SCA it must manage the
controlling Valuables, Rare, Inimitable and Non-substitutable resources. It must
also have the capabilities to apply the resources which are obtained through
dynamic decision making, competence and Knowledge Based View (KBV). RBV is
famous for its simplicity due to its core message. However it has been criticised
for negative aspects for dynamic market contexts. However following are some
outcomes that CSR strategies can fac

11

References
Andersen, M., & Skjoett-Larsen, T. (2009). Corporate social responsibility in global
supply chains. Supply Chain Management: An International Journal, 14(2), 75-86.
Basu, K., & Palazzo, G. (2008). Corporate social responsibility: A process model of
sensemaking. Academy of Management Review, 33(1), 122-136.
Belal, A. R. (2002). Stakeholder accountability or stakeholder management: a
review of UK firms' social and ethical accounting, auditing and reporting (SEAAR)
practices. Corporate Social Responsibility and Environmental Management, 9(1),
8-25.
Brunk, K. H. (2010). Exploring origins of ethical company/brand perceptionsA
consumer perspective of corporate ethics. Journal of Business Research, 63(3),
255-262.
Buchholtz A and Carroll A (2012) Business and society, Ethics
StakeholderManagement, 8th edition, South Western, Cengage Learning

and

Burgess, K., Singh, P. J., & Koroglu, R. (2006). Supply chain management: a
structured literature review and implications for future research.
International Journal of Operations & Production Management, 26(7), pp
703-729.
Castello, I., & Lozano, J. (2009). From risk management to citizenship corporate
social responsibility: analysis of strategic drivers of change. Corporate
Governance, 9(4), 373-385.
Crowther, D., & Aras, G. (2008). Corporate social responsibility. BookBoon.
DeTienne, K. B., & Lewis, L. W. (2005). The pragmatic and ethical barriers to
corporate social responsibility disclosure: The Nike case. Journal of Business
Ethics, 60(4), 359-376.
Doane, D., & Abasta-Vilaplana, N. (2005). The myth of CSR. Stanford Social
Innovation Review, 3(3), 22-29.
Doh, J. P., & Guay, T. R. (2006). Corporate Social Responsibility, Public Policy, and
NGO Activism in Europe and the United States: An InstitutionalStakeholder
Perspective. Journal of Management Studies, 43(1), 47-73.
George, J. M., Jones, G. R., & Sharbrough, W. C. (1996). Understanding and
managing organizational behavior. Reading, MA: Addison-Wesley.
Hess, D. (2001). Regulating corporate social performance: A new look at social
accounting, auditing, and reporting. Business Ethics Quarterly, 307-330.
Holme, R., & Watts, P. (1999). Corporate social responsibility. Geneva: World
Business Council for Sustainable Development.

12

Harrison, J. S., & Freeman, R. E. (1999). Stakeholders, social responsibility, and


performance: empirical evidence and theoretical perspectives. Academy of
management Journal, 42(5), pp 479-485.

Husted, B. W., & Allen, D. B. (2006). Corporate social responsibility in the


multinational enterprise: Strategic and institutional approaches. Journal of
International Business Studies, 37(6), 838-849.
Jones, P., Comfort, D., & Hillier, D. (2005). Corporate social responsibility and the
UK's top ten retailers. International Journal of Retail & Distribution Management,
33(12), pp 882-892.

Kahle, L. R., Boush, D. M., & Phelps, M. (2000). Good Morning, Vietnam: An
Ethical Analysis of Nike Activities in Southeast Asia. Sport Marketing Quarterly,
9(1).
Leonard, D., & McAdam, R. (2003). Corporate social responsibility. Quality
progress, 36(10), 27-33.
Lindgreen, A., & Swaen, V. (2010). Corporate social responsibility. International
Journal of Management Reviews, 12(1), 1-7.

Maignan, I., & Ralston, D. A. (2002). Corporate social responsibility in Europe and
the US: Insights from businesses self-presentations. Journal of International
Business Studies, 33(3), 497-514.
McWilliams, A., Siegel, D. S., & Wright, P. M. (2006). Corporate social
responsibility: Strategic implications*. Journal of management studies, 43(1), 118.
Morsing, M., & Schultz, M. (2006). Corporate social responsibility communication:
stakeholder information, response and involvement strategies. Business Ethics: A
European Review, 15(4), 323-338.

Nike
Financial
Report,
2012
[online]
Available
at:
http://investors.nikeinc.com/files/doc_financials/AnnualReports/2012/docs/nike2012-form-10K.pdf
Portney, P. R. (2005). Corporate Social Responsibility. Environmental Protection
and the Social Responsibility of FirmsPerspectives from Law, Economics, and
Business.

13

Somers, M. J. (2001). Ethical codes of conduct and organizational context: A


study of the relationship between codes of conduct, employee behavior and
organizational values. Journal of Business Ethics, 30(2), 185-195.
Sutton, M. (2003). Between a rock and a judicial hard place: Corporate social
responsibility reporting and potential legal liability under kasky v. nike. UMKC L.
Rev., 72, 1159.
Valentine, S., Godkin, L., & Lucero, M. (2002). Ethical context, organizational
commitment, and person-organization fit. Journal of Business Ethics, 41(4), 349360.
Vogel, D. (2006). The market for virtue: The potential and limits of corporate
social responsibility. Brookings Institution Press.
Woods, M. (2007). Linking risk management to strategic controls: a case study of
Tesco plc. International Journal of Risk Assessment and Management, 7(8), pp
1074-1088.
Williams, C. A., & Aguilera, R. V. (2008). Corporate social responsibility in a
comparative perspective. Oxford handbook of corporate social responsibility,
452-472.

14