MGT 620

Case study 2: Nike’s CSR Challenge

Presented to: Dr. Ziad Haddad

Presented by: Christine HMEDEH
ID: 201900524

1-Discuss the challenges regarding corporate social responsibility that companies in the
apparel industry face in their supply chains around the world.

Apparel means all garments or items of clothing any part of which is a textile produced by
weaving, knitting, or felting; and all shoes and other footwear, it is something that everyone can
make, so for companies they need to find a way to keep their prices competitive but also provide
quality products.
This case provides some insight into what was occurring in the South Asian factories that make
Nike's sneakers. These unfavorable circumstances are not Nike's fault; rather, they are the result
of the suppliers' efforts to deliver the goods to Nike quickly enough to prevent them from
switching plants.
Or the challenges in this case reside on several complex situations:
 Restricted bathroom access and drinking water.
 Denial of a day off in seven days
 Working employees more than 60 hours/week
 Wages are below the legal minimum.
 Refusal of overtime is punishable.

However, factories in developing nations must work longer hours to keep up with demand,
which leads to bad working conditions and overtime, but the same number of Asian factories
deny employees at least one day off every seven. 25% of employees who refuse to work extra are
penalized and work more than 60 hours per week. All of this could result in the issues reflected
in this case.
In other words, the apparel business may be most vulnerable to social responsibility concerns.
The business still requires a fair amount of labor and is wage constrained. As an example, in
developing nations, apparel and sports manufacturers lack trained personal, information on CSR
implementation and benefits and insufficient infrastructures for initiating CSR, but 25% to 50%
of the factories in the South Asian region restrict access to toilets and drinking water during the
working day. There is a lot of contract manufacturing in this sector, where a foreign company is
hired to handle all the output for the business that owns the brand.
2. Discuss the meaning and implications of the statement by a Nike representative that
“consumers are not rewarding us for investments in improved social performance in
supply chains.

According to this claim, businesses that spend resources on "above-standard compliance" will
outperform others that are less concerned with compliance. Because of this, businesses who are
concerned about compliance must either cut back on their profit margins or risk losing market
share if they charge more for greater social performance. However, it is not a valid justification
for not acting morally. Even while competitors can be using unethical tactics and customers
might not care about the working conditions of overseas workers, these circumstances do not
provide a basis for socially irresponsible behavior. will raise the price of their products.
Since Nike does not compete in the bottom end of the market, one may suppose that the high
price of the brand could enable changes in pay and working conditions. It should be noted that
consumer opinions and concerns might shift, and a company might find itself dealing with a
fruitful PR campaign targeted at its methods. Due to their international hiring policies, such
enterprises may become vulnerable as consumer "rewarding" shifts.

3. What does it mean to have an industry open-systems approach to social responsibility?

What parties are involved? Who are the stakeholders?

Open-system approach refers to the organization views its actions in terms of the impact it has on
bigger social structure that's not only concerning with internal part of companies such as
employees, manager, material, equipment and production, and labors, but also all elements,
which includes environment-such as competitor, suppliers, distributors and governmental
regulator, as well as citizenship and its internal elements.
In this situation, everyone is essentially involved, including the government, the business, and
even the clients or buyers. People who have an interest or concern in business are stakeholders.
The company considers its impact on suppliers, investors, regulators, and communities,
regardless of where they are located, in addition to being socially responsive to internal
stakeholders.
To add, the stakeholder approach indicates that a business is not only responsible to its owners
but also has obligations to various stakeholders, such as employees, customers, business partners,
government and non-governmental organizations.
In other terms, to have an open-systems approach means that although businesses must make a
profit in order to survive, they must equal out their desire for profits against the needs and desires
of the society. The parties involved would be the company and the society in which it is
affecting. The stakeholders would be anyone that can affect or be affected by the actions or
decisions of the business.
4. What is meant by “leadership beyond borders”?
In organizations who owns control over production of goods or services in one or more
countries, as multinational companies, managers had to deal with the problem of people with
different languages, different cultures and different understands of economics to work together,
which can often lead to problem and ineffectiveness in processes. Because of this development
new leadership skills were required, and this was when “leadership beyond borders” came up to
deal with the complexity by an increasingly interconnected world.
It means also, that leadership moves beyond borders or barriers created by others. it means
people who can see across borders created by others, such as the borders of their jobs and reach
across borders to engage in dialogue and action to address systematic problems. In addition, It is
looking at the impact constant change is having on the organizations and how these changes
affect the leadership and the need to drive long-term success in today's global economy.
For example, leaders in the apparel industry would attempt to extend their influence beyond the
company borders in order to deal with the CSR issues.

5-Is it possible to have “a compatibility of profits with people and planet”? Whose
responsibility is it to achieve that state?
There are two approaches considering the subject of “a compatibility of profits with people and
planet.”: Some would say that it is possible. But Companies' first aim is profit. Through making
profit a company can survive, in neglection of the way it should provide it. And some would
look at it as idealistic as the thought might seem it is impossible to be able to satisfy everyone. In
a world of competitors to elevate their name/brand/business above the rest; a company can does
not take on all "social responsibility" with people and planet and still have a constant profit gain.
As an example, a person can't control the other person actions; even when a company take on a
great rale of balance between people and planet; if everyone in that industry does not agree or
adapt to a standard mode of operation it will remain unbalanced. As of now, a company can
decide to do their part as it relates to people and planet; yet, with the constant change of
environment, needs, wants, behaviors, and competition...this concept will remain idealistic.
At the same time, company should take care of its members and employees; In addition,
environment is also very important. Company should protect the environment as well as making
profit. Environment should not be neglected. Therefore, the organization should be spent on the
wellness of its members and environment.
In resume, this is an idea of socialism and in some point it does not work. It’s everyone
responsibility to care for each other and everything. It is a base of culture on corporation not
competition with not just humans, but also everything that lives on the planet including other
animals and resources. This is a social ideal ecosystem. Some people work hard toward the needs
of others and the planet, while others will exploit. So, it must be mixed with areas of competition
in order to maintain a balance of cooperation with competition.
6-Research Nike’s CSR actions since the time frame and why it has earned the reputation
as one of the world’s foremost organizations in sustainability.
This case talks about CSR challenges that Nike is facing. The fact is not only Nike, but also other
industries are facing these challenges. However, Nike devotes itself to making a new strategy. It
makes a positive environment. Besides, leadership is also a challenge for Nike and other
industries. Companies should focus on "leadership beyond borders “ in order to attain the
position of Sustainability which means:
 Meeting the needs of the present without compromising the ability of future generations
to meet their own needs.
 Improving the quality of human life while living within the carrying capacity of the
Earth’s supporting eco-systems.
 Stabilizing the currently disruptive relationship between earth’s two most complex
systems—human culture and the living world.
Or Nike supports green change. It is a collaborative effort on the parts of Nike and Creative
Commons to provide a database that would allow businesses to exchange ideas and technology
that have the potential to solve important global and industry wide sustainability challenges. It is
a system for sharing innovation.
Also, Nike Considered Design creates performance products that minimizes environmental
impact and waste. ‘Nike designers make smart, sustainable design choices at the start of their
creative process, working to achieve breakthroughs to solve the big problems that hinder
progress toward a sustainable future.
Additionally, When Nike adopted open-system approach, they had believed that the future of the
company will be dependent on internal and external element. They believe that good society will
bring good profitability and thus it would contribute to sustainability, Nike managed to create a
green life cycle, were Nike has managed to eliminate waste in production and harmful
substances, and ensure that all their products are recyclable and re-usable.
Despite Nike’s efforts to take the lead in the apparel industry to form a Global Alliance to
improve labor conditions, not only in its own factories and sub-contractors, but also among its
competitors on the footwear and other apparel industries, incidents.