TERM REPORT

CASE STUDY: NIKE

 Assignment 04
Name of Group Members Zahra Hussain (02-111221-124)
Waizah Naz (02-111221-246)
Samia Sohail (02-111221-072)

Class: BBA 4E

Name of institute: Bahria University Karachi

Course Title: Business Ethics

Assignment Case study: Nike

Questions:
Q:1 Why did Nike fail to address corporate social media responsibility?
Q:2 Evaluate the Nikes response to social and consumer concerns about its
contract manufacturing?
Q:3 What are the challenges facing Nike in the future?
Q:4 Summarize the case in your own words.

Letter of Acknowledgement

First of all, we all are thankful to Allah Almighty for giving us the opportunity to work on this
report successfully and in turn right way, Secondly, we are very grateful to Sir Jawad Ali, the
professor of our course, who gave us the opportunity to discover our potential and was very
helpful and encouraging. We acknowledge that without his guidance we are not able to complete
this project. Lastly, I would like to appreciate the efforts of my group members. Once again
thanks to all of you for your contribution and dedication to this report.
 NIKE:
What is Nike?
Nike is a well-known multinational company that specializes in athletic footwear,
apparel, equipment, and accessories. They are recognized globally for their iconic "swoosh" logo
and their commitment to innovation and performance in sports. Nike sponsors numerous athletes
and teams and is known for its marketing campaigns that promote inspiration, motivation, and
the pursuit of excellence. They have a wide range of products for various sports and are popular
among athletes and sport enthusiasts worldwide.

How was Nike founded?

The story of nike begins with the story of blie ribbons sports back in 1964. Around that
time, Phil Knight had just gone through University of Oregon followed by a sint at Stanford for
his MBA, leaving him with two crucial experiences that set the trajectory of his future.

Why Nike fail to address corporate social media responsibility:

The reason Nike failed to address its corporate social responsibility issues earlier
was because it moved its shoe factories to other countries with lower labor costs in order to
remain competitive, continue to produce products at lower costs, and increase profit to CSR to
meet the expectations of stakeholders and contribute positively to society.
Despite the challenges Nike has faced in the past few decades, the company has come
far. Indeed, Nike’s corporate social responsibility (CSR) practices have been evolving since .
Nike could be classified as having evolved from the defensive stage, through the compliance
stage, to the managerial stage. The company’s initial CSR report in 2001 was intended to show
how Nike had handled complaints by labor rights and student groups who wanted to see better
conditions at contract factories worldwide. In its second report in 2005, the company disclosed
the names and locations of factories that produced its sneakers, apparel, and other products—a
first for the industry and an appeal to critics. This represented a genuine effort to invite critics to
review its factories. By its third CSR report, Nike officials said they were moving away from
using corporate responsibility as a crisis-management tool and were instead using it as an
opportunity for innovation and growth Nike must now grow fully into the fourth and fifth CSR
stages. The company must continue to develop its corporate responsibility strategies and increase
enforcement of its policies in its factories to ensure its market share dominance in the footwear
industry. With its new emphasis on corporate responsibility as an innovative tool, Nike is
migrating into the notion that implementing further CSR initiatives will make the company an
industry leader and thus give it a competitive edge in the footwear industry. T.
At first Nike’s approach to CSR could be characterized as insufficient and generally
lacking in any true forms of regulation and implementation throughout its global supply chain.

Corporate responsibility can evolve through five stages:

1. Defensive: “It’s not our fault.”
2. Compliance: “We’ll do only what we have to.”
3. Managerial: “It’s the business.”
4. Strategic: “It gives us a competitive edge.”
5. Civil: “We need to make sure everybody does it.”

Nikes Response to Social And Consumer Concerns About Its

Contract Manufacturing:
As a response to societal concerns and critics Nike used multiple tactics to repair
its destroyed image.
Its first strategy was to damage control. It launched a large public relations campaign
involving customer retailors and large university contracts to combat the damaging allegation of
child labour, inhospitable working conditions and law or non-existent wages. Nike visited
several colleges’ campuses, opening dialog with students to tour the Indonesian and Vietnam’s
factories for three weeks at Nikes expense. It focused on improving labour standards in each of
its factories. As these factories subcontract out to the local workforce in becomes increasingly
difficult for Nike to regulate their working environment. It took extra measures to ensure that the
independent subcontractors used to supply the workforce in their factories do not engage in any
legal activities.
Nike also implemented a code of conduct for all its suppliers and has been working with
the global alliance. To help review its factories. In Aug 1996, Nike joined the Apparel Industry
partnership, a coalition of companies, labour and human rights group assembled by the Clinton
administration to draft an industry wide code of conduct. Like other athletic brands, Nike has
used celebrity endorsers to support its products. Representatives from Nike also visited campuses
and spoke to students, assuring them of Nikes intention towards responsible corporate
citizenship. Nike is clearly distressed at how it has become a central focus in this controversy.
Nikes public relations department also has faced large repercussions for its attempts to control
damage allegations.

Challenges Facing Nike In The Future:

In 2006, Nike veteran Mark Parker, formerly co-president, took over as
CEO and director. Parker has been with Nike for nearly thirty years, has been part of most of
Nike’s top innovative plans, and is recognized as a product visionary. Ethisphere magazine
praised him for his leadership under which Nike shoes have become more eco-friendly and
questionable suppliers have been fired.
Nike appeared in the magazine “100 best corporate citizens” list for 2005-2007. Business
Ethics magazine cited its reasons for listing Nike as the strength of Nike’s commitment to
community an environment. Nike was actually ranked no.1 in the magazine’s environmental
category. The news has not all been good for Nike. In March 2008, one of Nike’s contract
factories in China was found to have under age workers unpaid wages for employees and to have
falsified document for worker permits. In response Nike detailed the efforts it has been made to
enforce compliance with its code of conduct and with Chines law.
Nike’s contract factory in Malaysia reported that workers were living in substandard housing
conditions. The fact is that Nike’s current supply chain has major flaws in both contract
negotiation and supplier oversights. Even though some experts herald Nike as a leader in CSR,
it’s use of hundreds of international contractors make detection and enforcement of abuses
incredibly difficult, while Nike has come a long way, it’s ethic and compliance system has a lot
of room for improvement. Nike’s target audience has broader from mainly male athletes to
females and more fashion-oriented offering as well. As its target audience widens, being
perceived as an ethical company will help attract and retain new customers. Nike plan to develop
more innovative sustainable products. Nike continues to strives to raise the bar and improve
operations. It has worked hard to implement new policies. It also joined coalitions.
 SUMMARIZE THE CASE:
Company history:
Nike was founded in 1964 by Phil Knight and his University of Oregon track
coach, Bill Bowerman. Initially, the company operated as a distributor for a Japanese athletic
shoe company, Onitsuka Tiger, but later developed its own brand of athletic footwear. Nike's
popularity grew rapidly, but so did allegations of labor and human rights violations in third-
world countries where manufacturing had been subcontracted. Critics accused Nike of using
sweatshop labor in countries such as Vietnam, Indonesia, and China, with workers facing poor
conditions, child labor, and low wages. Nike faced criticism from labor rights activists, the
media, and customers, leading the company to seek to clean up its image. Despite this, Nike
continues to face criticism for its manufacturing practices and human rights violations.
Nike faced criticism in the 1990s for labor conditions in its factories, particularly in
Vietnam and Indonesia, where employees were exposed to chemicals and experienced health
problems. An audit by Ernst & Young commissioned by Nike found unacceptable levels of
exposure to chemicals and documented cases of resulting employee health problems, as well as
other infringements of the established code of conduct. In response, Nike took rapid measures to
rectify problematic policies and lack of international oversight of its operations. The company
implemented a code of conduct for all suppliers and worked with the Global Alliance to review
its factories. Nike also faced challenges related to the textile industry as a whole, including
environmental problems such as water deficits, climate change, and pollution. Critics have
suggested that Nike should improve transparency measures in its factories, allow independent
inspection, and make all audits public. In response to the controversy, Nike launched a public
relations campaign, hired an independent review, and settled a lawsuit with a plaintiff who
claimed that the company's defense of its reputation was misleading.
Nike has evolved from a defensive stance on corporate social responsibility (CSR) to a
more proactive approach, as the company has faced criticism for labor practices and
environmental impact. Nike's CSR practices have progressed through five stages: defensive,
compliance, managerial, strategic, and civil. The company has made efforts to improve working
conditions, environmental sustainability, and transparency. Nike's code of conduct sets the
standard for ethical practices, and the company conducts regular audits to ensure compliance.
The company has also implemented a recycling program, ReUse-A-Shoe, and created a
corporate responsibility board. While Nike has made progress, the company must continue to
enhance its CSR initiatives to maintain its market dominance and demonstrate its commitment to
ethical practices. In 2000, Nike became the first company to publicly disclose the names and
locations of its contract factories producing licensed college products. This move was seen as a
proactive step towards increasing transparency and accountability in the supply chain. The
company's Corporate Responsibility Board was established in 2001 to review policies and
activities related to labor and environmental practices, community affairs, and philanthropy. The
board is composed of ten members, including eight independent directors, and reports directly to
the CEO of Nike Inc. Nearly 120 Nike employees work on corporate responsibility issues. Nike's
philanthropy initiatives have resulted in $315 million in grants, product donations, and other
support through 2011 to provide underprivileged youth with access to sports programs. The
company contributes an additional $100 million annually in cash and products to nonprofit
partners around the world.
Nike has faced challenges in its supply chain, including labor abuses in
contract factories in China and Malaysia. Despite these issues, the company has made efforts to
enforce its code of conduct and comply with Chinese law. Nike has also been recognized for its
commitment to sustainability, including the use of recycled materials in its products and efforts
to improve working conditions in its supply chain. The company has a long way to go in terms of
monitoring and improving its supply chain, but has been praised for its efforts and is seen as a
leader in corporate responsibility
with personal notes of
encouragement. He was a
great asset to the company
and
known as the „Soul of
Nike‟.
1980-89: In late 1980,
Nike offered its IPO,
however this transition
phase was
hindered as some of the
early pioneers decided to
move on elsewhere. Even
Phil
Knight removed himself as
President and become the
CEO and chairman of the
board. In the mid 80‟s,
Nike slipped as the
industry leader, luckily
however, they
decided to endorse
Michael Jordan, which
was a huge boost for
Nike. In 1987,
Nike‟s marketing
revolution began with
their new Air Max shoes
and their
memorable TV ad featuring
the Beatles song
Revolution with the tag
line „Just do