The chief aim of composing this study is to assist pupils derive a deeper apprehension sing the class CBEB 3101 Business Ethics. Through this class, we get to larn how to do ethical determinations in a company. Some of the rules that we have learned are the rule of utilitarianism and rule of rights. By composing this study, we get to larn how to use the theories learned in talks into existent life instances and state of affairss. Different state of affairss have different theories and rules. We besides get to larn the proper stairss in the determination doing theoretical account, which are determine the facts, place the ethical issues involve, identify stakeholders and see the state of affairs from their point of position, see available option, see how a determination affects stakeholders, make a determination and proctor results.
Besides that, we get to construct stronger relationships among our group members. All the clip spent together discoursing and analysing the instance survey helps to beef up our bond and model us into going a more responsible individual in the hereafter. We besides get to see the corporate universe from a different point of position, whereby being ethical is really of import.
Phil Knight and Bill Bowerman are the laminitiss of Blue Ribbon Sports in the twelvemonth 1964. Subsequently, it was renamed as Nike in the twelvemonth 1978 whereby it received its name from the Greek goddess of triumph. Nike has become the universe ‘s major provider for athletic places and athletics dresss.
As to stay competitory in the market, Nike searched for cheaper resources and markets. Therefore, Nike had shifted its production to take down fabrication cost states such as Japan, Korea and Taiwan. Later in the 1980s, production had moved to Southern China. However, as Japan ‘s economic started spread outing, the fabrication cost increased. Therefore, Nike shifted its contracts to Vietnam, Indonesia and China.
Get downing from the mid 1990s, there were unfavorable judgments from human right defenders and media sing labour wellness and safety conditions, low rewards and favoritism in the hiring and fire procedure. Therefore, Nike started to take actions as to deliver its repute.
Since 1991, Nike ‘s corporate societal duty patterns started germinating. As clip passed, Nike revised its codification of behavior and became more ethical in its fabrication patterns. In 1998, Nike ‘s grosss and stock monetary values had decreased dramatically. Due to that, Nike laid off 1600 workers. Nike so instantly started to establish several public dealingss runs as to cut down the harm to its repute.
A codification of behavior was implemented with Global Alliances to reexamine all of Nike ‘s mills. On August 1996, Nike Corporation joined the Apparel Industry Partnership to outline a codification of behavior for the use of the whole industry. In 1998, audit tools were developed to increase the transparence in order to measure the conformity with the company criterion, Nike ‘s Code Leadership Standards by those subcontractors. In add-on, Bike had disclosed the names and locations of its subcontractors ‘ mills in the twelvemonth 2000. The ground for unwraping its supply concatenation was to heighten monitoring and do alterations.
The Corporate Responsibility Board was developed during the twelvemonth 2001. The intent of the board is to reexamine the policies and activities and hence, make recommendations to the board of managers sing labor and environmental patterns.
The organisational environment of Nike is a competitory market. In order to stay competitory, Nike had moved the production to poorer state states where low cost labor was come-at-able. Therefore, Nike subcontracted its production to other states without proper ordinance on the on the job conditions of workers and rewards.
Simple clip line of events
Phil Knight and William Bowerman founded Blue Ribbon Sports.
Jeff Johnson signed an understanding with Blue Ribbon Sports to be a full clip employee.
Jeff Johnson opens the first Blue Ribbon Sports retail mercantile establishment in Santa Monica, California. Phil Knight and William Bowerman signed a formal written Partnership.
Company was incorporated and named as Blue Ribbon Sports Inc.
Swoosh hallmark is created by a in writing pupil named Carolyn Davidson for a fee of $ 35.
Jeff Johnson dreams of Nike, the Greek goddess of triumph.
Litigation on distribution and broke the concern relationship between Blue Ribbon Sports and Onitsuka Tiger.
Rumanian tennis star Ilie Nastase was the first professional jock who signed the indorsement contract with Blue Ribbon Sports to have on Nike Shoes.
Blue Ribbon Sports starts the first US path and preparation nine called Athletics West.
Blue Ribbon Sports officially change its name to Nike.
Nike begins promotional attempts in China by providing the national hoops squad with athleticss dress and footwear.
Nike acquired Cole Haan which is the manufacturer of work forces ‘s and adult females ‘s footwear, outerwear and accoutrements.
Nike introduced a plan called Reuse A Shoe which collects athletic places and makes athletic tribunals and Fieldss.
Recycle A Shoe began to roll up old places from Nike retail shops.
Phil Knight set criterions for Nike subcontracted mills: minimal age, air quality, compulsory instruction plans, enlargement of microloan plan, mill monitoring and increase the transparence of Nike ‘s corporate societal duty patterns.
Bill Bowerman died at the age of 88.
Nike developed a Corporate Responsibility ( CR ) Board to reexamine the policies and do recommendations to the board of managers on labor and environment patterns.
Nike partnered with National Recycling Coalition to put up the bead off Stationss in Europe and Australia.
Phil Knight stepped down as CEO and president of Nike but continues to work as president in Nike.
2. ISSUES AND ANALYSIS
Issue 1: Nike ‘s Manufacturing Practices on “ Sweatshop ”
To be competitory in the market every bit good as maintaining the fabrication costs low, Nike had shifted its contract to moo labour cost states such as China, Vietnam Indonesia, Pakistan and etc. Nike ‘s repute was damaged particularly due to accusals on homo and labor rights misdemeanors by labour rights militants and the mainstream media. The accusals were lacks in working environment, wellness and safety conditions and low rewards and indiscriminate in hiring and fire patterns in the mills. Roberta Baskin ‘s CBS had reported about the conditions in Nike ‘s fabrication mills in Indonesia. Even though subcontracted work to hapless states had created employment, the wage was “ simply $ 1.60 a twenty-four hours to Vietnam mill workers when the life pay is about $ 3 per twenty-four hours ” ( Hill, 2009 ) . In this state of affairs, is it ethical for Nike to handle its laborers this manner?
We can measure the patterns by utilizing these rules:
Utilitarianism is a moral theory whereby we should move in ways that produce the most pleasance or felicity for the greatest figure of people affected by our actions. By utilizing useful logical thinking, the following are the good and bad effects:
Increase profitableness of the company.
Laborers welfare are ignored.
Stockholders wealth is maximised.
Company repute has been affected severely by those patterns.
Customers ‘ trueness towards the company becomes a uncertainty.
From the overall effects, even though increasing net income of the company can guarantee the stockholders ‘ wealth, it is more of import to take attention of their employees ‘ public assistance and addition trust and keep a profitable relationship with its clients. This is because employees and clients are the primary stakeholders of the company who have the ability to act upon the concern of the company and particularly those whose continual association is necessary for a house ‘s endurance. Therefore, in the long term, it is found that the unethical patterns of Nike had negatively influenced stakeholders and changed the perceptual experience of the stockholders towards the company.
Principle of Rights
The basic human rights under Kantian are the rights that are the consequence of peculiar functions, particular relationships or specific fortunes. Nike as an employer should see the rights of its employees to hold a safe working environment and a competitory pay alternatively of being a sweatshop labor. Although Nike is making a much better occupation with foreign labour dealingss compared to other corporations, Nike should non be comparing itself to other companies. Rather, it should be keeping itself to the absolute highest ethical criterions it can achieve.
Principle of Duty
Based on this rule, rightness of our actions depends on whether we perform our responsibilities. If we fail to transport out our responsibilities in the society, our Acts of the Apostless are considered unethical or incorrect. In our sentiment, we feel that all the contractual mills in developing states or any farther subcontracted out work of Nike has a moral responsibility to guarantee the wellness and fiscal wellbeing of all the people who work for it.
Principle of universalizability references that we should handle others the manner we want to be treated. Nike ‘s direction squad should set themselves in the laborer ‘s places and they will happen out that they would non desire their employers to go against their rights to hold safe on the job conditions and just rewards. As a consequence, Nike ‘s pattern on sweatshop labor is incorrect. Therefore, it has to work on its corporate duties to do certain its patterns have improved.
Besides that, rule of terminals agencies that we must esteem humanity and ne’er exploit others to accomplish our ain benefit or intent. Nike ‘s act of working other human existences such as the sweatshop pattern is to function its ain involvement which is to keep low fabrication cost.
Principle of Equal Liberty
Each individual has an equal right to be treated every bit under the rule of equal autonomy. Obviously, Rawls would differ with Nike ‘s labor and concern patterns as it is unethical for Nike to overwork its employees or possibly pay them meager rewards merely so it can provide places to America. Besides that, in order to carry through the outlook as an employer, it is necessary to appreciate single diverseness and go more dedicated to offering equal chance to each person.
Issue 2: Nike ‘s Manufacturing Practices on Child Labours
In this issue, Nike ‘s contracted mills hire kids to work overtime at below minimal wage as the kids are non capable to do right determinations and unable to distinguish pros and cons of certain affairs. Hence, kids have been exploited to work for the subcontracted mills. The issue being is: whether it is ethical for Nike to engage kid labors to cut down fabricating cost?
Based on utilitarianism, below is the comparing of good and bad effects of this issue:
Nike gets inexpensive labor and low cost installations and hence, low cost of production allows Nike to put lower monetary value on its merchandise to pull more consumers.
Children suffer psychological and physical injuries.
Bring in foreign investings and occupation chances and hence, alleviate poorness degree for the states that Nike are runing in.
Denied chances for kids ‘s instruction.
Highly low wage still can non relieve poorness of the states.
From the overall effects to the full society, Nike had violated the theory of utilitarianism As one of the largest transnational companies, Nike should hold carefully evaluated the result of utilizing low cost labors. From the analysis, engaging kid labors to function its ain involvement to maintain low labor cost is unethical.
Principle of Rights
Childs have their right to acquire their instruction alternatively of working as they are under age harmonizing to the jurisprudence of the state. Therefore, Nike should non engage kid labor which violates their right to remain in school and receive instruction.
Under the rule of universalizability, Nike should set itself into the state of affairs of the kid and will recognize that it besides does non desire to work under such on the job conditions with such a low wage.
Nike besides should non work the kids to function its ain involvement to maintain the low labor cost because the act is unethical harmonizing to the rule of agencies.
Principle of Equal Liberty
Children in Nike ‘s contracted mills ‘ states should be given an equal chance and treated as the kids in other state as they are minor to work and supposed to hold their instruction.
Issue 3: Contract between Nike and University of North Carolina
In order to work on CSR after the incident which profoundly affected the company ‘s repute, Nike had entered into a societal contract with the University of North Carolina. Nike ‘s contract requires all UNC jocks to have on its trade name. In this issue, whether is it ethical to adhere all UNC jocks under the contract?
Based on this construct, there are some benefits from the contract, such as, Nike has pumped in money which brings pleasance to the athletic section and the pupil jocks by virtuousness of have oning Nike ‘s trade name, bettering Nike ‘s repute and reconstructing their assurance in public. However, the university should see how the contract would impact the academic unity and ends of the establishment. It is more of import to look at the issue from the position of jocks and the establishment which will convey more effects to the house.
Rawl ‘s theory of single autonomy
Under this theory, it will differ with the contract for the lone ground being the jocks have lost their single rights to take whether or non to have on Nike ‘s trade name. Even if the establishment has maximized pleasance for itself, at the same clip it infringes on the pick of its jocks. There is no right for the societal establishment to take away a basic single right. Besides that, Nike besides should non curtail the person ‘s right to hold their ain pick to have on other company ‘s trade name.
Principle of Duty
Harmonizing to this rule, the University besides has a moral duty to itself and Nike. It is morally obligated to utilize its place of power to promote Nike to work harder to better its concern patterns. Besides that, it besides has a moral duty to endorse out of a contract with any corporation that lacks ethical concern unity.
Issue 4: Enhancing Nike ‘s images by utilizing subscribers
In this issue, Nike has signed with some well-known jocks as its subscribers to project a better athletic image for itself. For illustration. Nike has signed an subscriber contract with celebrated hoops fable, Micheal Jordan. Harmonizing to the contract, Nike has created more gross from his fans with establishing more new series of producst. In return, Nike paid 20 million per twelvemonth to Micheal Jordan as its subscriber. At the same clip, laborers at its contract mills were paid low rewards which was merely above the minimal criterion. In this issue, is it ethical for Nike to pay its labours and endorses below the belt?
Based on this rule, it entirely benefits the company and the subscriber while the laborers suffer from low rewards. It is more good to every party if Nike can utilize the money paid to the subscriber and pass some on its employees ‘ public assistance. Therefore, we think that Nike is unethical to pay its subscriber such a big sum of money alternatively of taking attention of its employees ‘ public assistance.
Principle of Right
Under this issue, the employees have the right to acquire just rewards and merit to acquire better intervention.
Principle of Universalizability
It is unethical for Nike to handle its employees as an terminal for themselves and ne’er merely as a mean to its ain terminals.
Principle of Justice
Employees should hold just rewards and merit to acquire their public assistance whereby Nike should handle them every bit with its subscribers. It is unjust to pay the subscribers so high but non taking attention of its employees ‘ public assistance.
From the instance survey we know that the corporate civilization in Nike did non hold a strong ethical focal point which was to promote its employees of the mills in many other states to pattern the ethical behavior in the yesteryear. However, Nike so implements some attempts to instil ethical behaviors and patterns and subsequently became an ethical corporate in the industry after traveling through some critical period with negative issues on its concern patterns.
In our sentiment, we feel that Nike has used the integrity-based attack which is a value-driven attack with accent on employee duty for ethical behavior. It is a better attack which the employees are instructed to move with unity and behavior concern traffics candidly. Besides that, Nike may put ends of an integrity-based attack as it is a broader and more expansive application to the house. For illustration, keeping trade names and repute by guaranting the good quality of merchandises and honestness to its consumers, and making a better working environment for employees whereby the safety of employees is emphasized.
Furthermore, we think that presently Nike focuses on the stakeholder theory alternatively of stockholder theory in its house. All the stakeholders groups and their well being should be taken into history whenever the company wishes to take any important managerial determination but non simply concentrate on fiscal and economic relationships with proprietors.
In the past decennary, Nike has taken CSR as its societal contract. For illustration, University of North Carolina had entered into a corporate sponsorship understanding with Nike. On the other manus, Nike besides undertook CSR because of its enlightened self-interest where CSR activities bring commercial returns to the house. Particularly after the harm by the media to the company ‘s repute, Nike started to set about CSR activities in order to heighten its repute and reconstruct its good image. However, Nike now meets its criterion for being a good corporate citizen after doing advancement for old ages.
Corporate Social Responsibility
It is a reactive construct where concerns try to make the lower limit to carry through the outlook of stakeholders. In the article, there are some treatments on Nike ‘s CSR patterns:
Nike had developed ReUse-A-Shoe Program and so expanded it by partnering with the National Recycling Coalition to advance environmental-friendly patterns and promote consumer about this issue.
Code of Conduct
This is the first measure taken by Nike to better the on the job conditions in its mills. It complies with the rule of justness, fulfils the responsibilities as an employer to make the coveted degree of employer duty. Other than comply with the Torahs and ordinances, the company besides strives to fulfill the outlook as a leader.
This is the corporate societal reactivity undertaken by Nike as it is the proactive actions where the house anticipate the demands of stakeholders and seek to carry through those demands before the stakeholders demand them to make so. Nike had publically disclosed its supply concatenation as it believes that can be more successful in monitoring and doing alterations as one time issues have been uncovered, non merely in its ain mills but in an industry-wide footing. Furthermore, execution of Balanced Scorecard for its providers helps the house better buttocks mill conformity with the codification of behavior.
Corporate Responsibility Board
Nike developed a Corporate Responsibility Board in 2001 to reexamine policies and activities and do recommendations to the board of managers sing certain of import Fieldss. Through the attempt of the CR board, there were important betterments in its concern patterns whereby the employees are now cognizant of their rights and have the chance to be educated and well-trained.
Each twelvemonth, Nike proactively donates merchandise and part in hard currency to non-profit organisations and NGOs making societal alterations through athleticss catastrophe alleviation attempts around the universe.
Presents, Nike has focused on invention, coaction, transparence and protagonism to fix the company to boom in a sustainable economic system. There are some of import enterprises for the company that are included in the CR study which includes Considered Design, GreenXchange ( GX ) , Lean and Human Resource Management ( HRM ) , Sport for Social Change, Energy and Climate Change Strategy.
In 2008, Nike launched a footwear energy efficiency plan with five contract makers. Nike ‘s committedness to coaction on this undertaking has shown first-class early consequences where the contract mills absolute CO2 footmark was down 6 per centum despite a 9 per centum addition in production.
Due to the ethical issues discussed in the Nike instance, we have come up with several recommendations on how to work out the jobs occurred throughout the instance. We hope that this can besides function as a guideline to other companies as good.
First of wholly, the company direction should be stricter on the regulations and criterions set by themselves. This will do certain that they follow or obey the regulations of the company. In this instance, the top direction of Nike in the US should guarantee that all the other retail mercantile establishments or mills all around the universe follow a standard process in everything that they do. This will assist them in supervising all the other mercantile establishments around the universe. This can besides assist avoid the issue of hapless conditions, child labor, widespread torment and maltreatment that has happened in some states.
When other makers all over the universe know the criterion and codification of moralss that they should follow, they will non make what they have done that caused all the issues to originate. This is because they have a guideline to follow and they know that whatever process that they are making will be monitored by the top direction. The top direction should do certain that they provide a healthy and safe workplace for all its employees. This is because their employees have the right to be in a healthy and safe workplace. A hapless status of the workplace is incorrect and is one of the chief allegations that Nike had to cover with.
Next, the direction squad and employees should besides be sent for developing one time in awhile. This is of import as it helps to set up a better corporate civilization. This civilization shapes the people who are members of the organisation as it is a blend of thoughts, beliefs, imposts, traditional patterns, company values, and shared significances that aid define and usher normal behavior for everyone who work in a company. It is of import to continuously develop its employees so that the employees become more disciplined and responsible. They will ever believe of the best involvement of the company and non be easy influenced by other factors that might convey the company down. This will assist them hold a sense of answerability and duty towards the company.
One of the chief issues that Nike was confronting was child labor. Therefore, we have come up with an thought that might assist work out this job. Nike began to offshore its production of footwear and other featuring equipment because it wanted to stay competitory and maintain fabrication cost at a low. To work out this, alternatively of utilizing child labor, Nike can really put in and utilize machines in it production. At the get downing it might be a small dearly-won but in the long tally, it will assist the company salvage a batch of money. It is non merely faster, but it besides helps Nike salvage money in the long tally and the direction does non hold to worry about any child labour allegations or hapless on the job conditions.
Besides that, the top direction of Nike can besides execute employee monitoring. The sort of employee monitoring meant over here is look intoing out the work done by the employees. They could possibly direct some undercover agents or 3rd parties to see how the employees perform their work but at the same clip non allow the employees know that they are being watched.
Last, the moralss and conformity system should besides be improved. Presently, there is merely one individual in charge of 10 mills and review is merely done for approximately 25 per centum of the mills. The top direction should do certain that it inspects every mill. This can be done by puting up a chart or timeline whereby they have already discussed and come to an understanding on when and which mill should be inspected throughout the twelvemonth. This is a more systematic attack and the direction must do certain that they follow what they have drawn up.
Runing a company every bit large as Nike is decidedly non an easy occupation as the direction has to fulfill non merely the stockholders of the company, but the stakeholders excessively. No affair what has happened in the yesteryear, Nike has learned its lesson. Staying competitory and maintaining fabrication costs at a low should non be the lone aim of the company. Due to its carelessness in certain countries, Nike ‘s allegations of hapless conditions and child labor has become a planetary issue. This is non merely bad for Nike ‘s image but it has for good tarnished its repute. However, Nike ne’er gave up and has continued to win back the Black Marias of its stakeholders by transporting out a batch of CSR. Even though it may still hold a long manner to travel in the country of corporate duty, it can be seen that it is easy having good responses from the industry. Nike will ever go on to be a major trade name throughout the whole universe.