Nike and Corporate Social Responsibility, Essay Example
Nike, Inc. represents the consumer goods sector of the economics, particularly the footwear industry. This corporation deals with designing, developing, marketing, and selling such products as footwear, equipment, apparel, and accessories. Despite the fact that Nike, Inc. produces its goods specifically for athletic use, quite a large part of its products is used for casual purposes. The products offered by the corporation are presented in such categories as training, running, soccer, basketball, and sport-inspired shoes. Nike, Inc. also markets footwear for athletic use in many other sports including lacrosse, golf, and tennis (âNike Inc. CI B Company Descriptionâ). Additionally, the production of sport accessories and apparels for sports-inspired lifestyle is a large part of the companyâs gross production. As far as Nike, Inc. offers everything related to sport, it also produces sports equipment for a vast number of sports activities. Among the equipment, the most notable and well-known are âbags, socks, sport balls, eyewear, timepieces, electronic devices, bats, gloves, protective equipment, golf clubs, and other equipment designed for sports activities under the brand name of NIKEâ (âNike, Inc. Common Stock Profileâ). As a separate segment of their business, Nike, Inc., through its subsidiaries, sells smaller amounts of different plastic products to other manufacturers. Concerning the geographical diversity of companyâs segments, Nike, Inc. has its reportable operating segments in North America, China, Japan, Central and Eastern Europe, Western Europe, and emerging markets. These geographical segments are aimed at directly managing consumer operations (âNike Inc. CI B Company Descriptionâ).
Nike, Inc. was founded by the two businessmen, namely, by Bill Bowerman and Phil Knight. The former is the legendary track and field coach of University of Oregon; the latter is Bowermanâs middle-distance runner and a business student of the university mentioned. The founders started their partnership in 1964, and invented a brand of footwear called Nike in 1972 (âNike Company Profileâ). Nowadays, according to âNike, Inc. Common Stock Profileâ, the corporation has approximately 38,000 employees worldwide. Moreover, this figure does not include nearly 650,000 workers who âare employed in Nike contracted factories around the globeâ (âNike Company Profileâ Â¶2). This means that the corporation nowadays is international and has its manufactories all over the world.
As stated by the âMarket Watchâ, the stock exchange abbreviation of Nike Inc. is NKE, and the companyâs last yearâs annual revenue was $20,89 billion and net income was $2.13 billion with sales growth up to 9.9% in 2011 (âNike Inc. CI B Company Descriptionâ). Nikeâs, Inc. stocks are âtraded on the New York Stock Exchangeâ (âNike Company Profileâ Â¶4). As far as the facilities are concerned, it is stated by the Financial Review that Nike, Inc. owns facilities in Oregon North Carolina, Tennessee and The Netherlands. Additionally, the structure of the corporation includes leased facilities in 14 Niketowns, more than 200 Factory Stores, a dozen specified Women stores, and over a hundred of administrative and sales offices (âNike Company Profileâ Â¶5).
Despite products sold under the Nike trademark, Nike, Inc. has its subsidiaries used for the production of other trademarks. In particular, (1) Cole Haan Holdings, Inc. sells a line of casual and dress footwear, apparel, and accessories for both men and women; (2) Bauer Nike Hockey deals with manufacturing and distributing of ice skating equipment, and a line of apparel for roller and street hockey; (3) Hurley International LLC creates and distributes youth lifestyle apparel and action sports apparel; (4) Nike IHM, Inc. produces components for Nikeâs products and sells plastic products to other companies; (5) Converse is occupied with designing and manufacturing casual and athletic footwear and accessories under such well-known brand names as Converse, All Star, One Star, Chuck Taylor and Jack Purcell (âNike Company Profileâ Â¶6). Additionally, the wholly-owned affiliates of Nike, Inc. are Umbro and Nike Golf. Umbro is one of Nikeâs trademarks, which is occupied with designing and distributing footwear, apparel and accessories primarily for football, while Nike Golf is occupied with golf equipment (âNike Inc. CI B Company Descriptionâ).
Headquarters of Nike, Inc. are situated in Oregon. The corporationâs retail chain is represented by Niketown stores in the US and all over the world, factory stores and NikeWomen (âNike Company Profileâ Â¶Â¶7-8). It follows that the company aims at being represented with their licensed brand stores all over the world, however, concentrating on the country of its origin, namely, US. Such a situation can be explained with the idea that the company knows US customersâ behavior better than those from Europe. Thus, having more shops in the US ensures Nike, Inc. the success of Nikeâs sales.
Among Nikeâs, Inc. peculiarities presented on the official website âNike, Inc.â, diversity and inclusion are stated to be fundamental to the companyâs performance. The crucial essence of diversity and inclusion of Nike, Inc. can be better understood from the companyâs âCorporate Responsibility Reportâ. In the report, it is stated that the companyâs responsibility approach is one focused on making business more sustainable by bringing people, planet and profits into balance for long-term success. Thus, corporate responsibility is one of the most notable emphases of the company in line with manufacturing and distribution.
In general, it is claimed by Kotler and Lee that each company decides what social issues to support, and which ones to reject (ix). As stated by Hawkins, corporate social responsibility âhas become somewhat of a milestone for the business community, creating a whole new raft of pressures in what is an increasingly complex trading environmentâ (Hawkins 1). The concept of corporate social responsibility can be defined as âa commitment to improve community well-being through discretionary practices and contributions of corporate resourcesâ (Kotler and Lee 3). This definition means that the company is presupposed to voluntarily decide upon its social practices and contributions to the sustainability. Moreover, the notion of sustainability, as well as the term well-being in the definition, includes both human conditions and environmental factors (Kotler and Lee 3). It follows that the notion of sustainability is what the companies deal with in their policies of social responsibility.
Following their corporate social responsibility policies, companies are occupied with corporate social initiatives, which are claimed by Kotler and Lee to be âmajor activities undertaken by a corporation t support social causes and to fulfill commitments to corporate social responsibilityâ (3). The most supported causes are those related to the environment, safety, the community health, education, employment, economics, and community development (Kotler and Lee 4). According to Kotler and Lee, these commitments exist in various forms like grants, cash contributions, advertising, publicity, and sponsorships (4).
It is noted that the modern companies have started to try overarching each other in corporate social responsibility (CSR). In particular, it is noted by Kotler and Lee that, in the past years, there was a large increase in companiesâ reporting on CSR (5). This way, the companies are trying to both compete among each other in the aspect of CSR and to advertise their activities publicly in order to get more respect among the consumers. Moreover, CSR policies and activities have become vitally important for companies in terms of their ranking and estimating their performance and potential. According to Epstein-Reeves, in the past years, the popularity of corporate social responsibility has increased dramatically (Â¶2). Particularly, CSR has become a profession, while sustainability organizations like Net Impact have become enormously popular. As stated by Epstein-Reeves, âeven CSR-focused think-tanks and trade media have proliferated: The Corporate Responsibility Officers Association joined the ranks of Ethical Corporation which followed Business for Social Responsibility that stood on the shoulders of the Center for Corporate Community Relationâ (Â¶2). Despite the fact that nowadays CSR represents a variety of activities for companies, it originated from the sweatshops and child labor in the apparel industry. Nike, Inc. made a direct contribution to the emergency and development of corporate social responsibility in the world, according to Epstein-Reeves (Â¶3).
Regarding Nike, Inc., as claimed by Epstein-Reeves, the community got to know about its efforts to make the production as more low-cost as possible, and about its contractors in Indonesia subverting minimum wages in the 1990s (Â¶Â¶4-6). Nike took a position of ignorance, claiming that they are not responsible for their suppliers. However, the photo of a Pakistan child assembling Nikeâs balls changed the situation crucially (Â¶6). Moreover, it made the executives admit the slave labor conditions of their overseas contractors, and to take measures on implementing US operating rules in their subsidiaries abroad alongside with a rigorous auditing regime. This was crucially beneficial in terms of the development of CSR, as it was the first time a company with a world famous brand name has taken a responsibility for its supply chain. Furthermore, this situation made other companies unable to keep the practices of their suppliers out of control. As stated by Epstein-Reeves, âNike is now considered a top corporate citizen, according to Corporate Responsibility Magazineâ (Â¶10).
The past CSR activities have influenced a lot the present commitments of Nike, Inc. In particular, nowadays the company sees its CSR as the means of growth, and an innovative approach to business. Nikeâs approach to corporate social responsibility is stated to be striving for better performances (âResponsibility at NIKE, Inc.â). In these terms, the company does not only address impacts throughout its supply chain but also creates values and innovations for the better world. Namely, by using the power of brand and the potential of people, Nike, Inc. accepts proliferating environmental, economic and social challenges. The company focuses on its core areas of impact related to their long-term strategies. This way, it uses environmentally preferred materials, improves the labor conditions in their contract factories and unleashes peopleâs potential through the world of sport (âResponsibility at NIKE, Inc.â). Hence, Nike, Inc deals with obtaining the highest performance in environmental sustainability and social well-being and makes its goals public, so that consumers could hold Nike to the goals.
As for the environmental sustainability, a large portion of activities is undertaken by Nike, Inc. In particular, it has various project devoted to decreasing the environmental footprint of their factories and products. According to Walker, in 2010 Nike stated to have been using environmentally preferred rubber in production of its footwear, promoting jersey made from recycled polyester among professional basketball players, reducing the amount of material spent on the production of its recycled shoeboxes, and launching GreenXchange program for cooperation with other footwear companies in offering Nikeâs patents to license its environmentally friendly materials (Â¶Â¶1-3). Thus, the company takes much effort in obtaining environmental sustainability by itself, and in cooperation with other companies, widely promoting its activities at the same time.
Concerning the socially relevant commitments, Walker stated that Nike, Inc. was promoting sports instead of war in 2010; was intended to installing and refurbishing basketball courts in New York; was supporting a world soccer tournament of homeless people from various countries; built a football training center with HIV education in South Africa. This way, Nike, Inc. made a significant contribution to diverse aspects of social sustainability. However, Nikeâs official websites and web pages that promote its corporate social responsibility have scarce information on its labor practices.
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Moreover, there is quite a lot of information stating that, since the 1990s, few changes have taken place in terms of the companyâs contractor labor conditions. According to Levenson, despite the fact that Nike, Inc. made its initial efforts like âsetting a code of conduct and monitoring complianceâ, it was not able to end abuse across hundreds of its contractor factories (1). One more effort was made by Nike, Inc. in 2005 when it was the first to release the names and locations of its overseas factories in order to show transparency, and to encourage competitors to strive for better labor conditions (Levenson 2). As admitted by Locke (cited by Levenson) âdespite significant efforts and investments by Nike … workplace conditions in almost 80% of its suppliers have either remained the same or worsened over timeâ (2).
Even though the government regulations are weak in emerging economies, Nike, Inc. does not directly police its suppliers. Moreover, when trying to drop the troubled supplier, they make things even worse owing to large-scale losses in local workplaces (Levenson 2). It follows that even with a direct intention and attempts to improve labor conditions in its overseas contractors, Nike, Inc. did not achieve success since scandalous events of 1990s.
In its attempts to be a good citizen-directed company, Nike, Inc. has strived a lot. The company seems to have made real strides in environmental sustainability along with the social activities. Moreover, it initiates numerous programs of sponsorships, development, granting schools and non-profits, decreasing the chemical discharge, spreading AIDS awareness, and helping children and homeless (âResponsibility at NIKE, Inc.â). However, despite extensive work in improvement labor conditions, Nike, Inc. is still blamed for allowing abuse and underpayments on their overseas factories. Probably the problem is that the company really strives for reducing its costs in its âgreen activityâ, but does not strive for addressing these savings to its workers. In this way, environmental and social commitments are more valuable than creating truly acceptable labor conditions.
âNike Company Profile.â Financial Review Case Studies with Business News.Â Financial Review. n.d. Web. 4 Feb. 2012. <http://www.afrbiz.com.au/companies/nike.html>.
âNike Inc. CI B Company Description.â Market Watch. The Wall Street Journal. n.d. Web. 4 Feb. 2012. <http://www.marketwatch.com/investing/stock/nke/profile>.
âNike, Inc. Common Stock Profile.â Yahoo! Finance. n.d. Web. 4 Feb. 2012. <http://finance.yahoo.com/q/pr?s=nke>.
âResponsibility at NIKE, Inc.â NIKE, Inc. n.d. Web. 4 Feb. 2012. <http://nikeinc.com/pages/responsibility>
Epstein-Reeves, James. âThe Parents of CSR: Nike and Kathie Lee Gifford.â The CSR Blog. Forbes. 6 August 2010. Web. 4 Feb. 2012 <http://www.forbes.com/sites/csr/2010/06/08/the-parents-of-csr-nike-and-kathie-lee-gifford/>
Hawkins, E. David. Corporate social responsibility: balancing tomorrow’s sustainability and today’s profitability. Houndmills: Palgrave Macmillan, 2006. Print.
Kotler, Philip, and Nancy Lee. Corporate social responsibility: doing the most good for your company and your cause. Hoboken, NJ: John Wiley and Sons, 2005. Print.
Levenson, Eugenia. âCitizen Nike.â CNNMoney. 17 November 2008. Web. 4 Feb. 2012 <http://money.cnn.com/2008/11/17/news/companies/levenson_nike.fortune/index.htm>
Walker, Alissa. âGOOD Design Daily: Nike’s Corporate Social Responsibility Agenda.â GOOD Design. 4 January 2010. Web. 4 Feb. 2012 <http://www.good.is/post/good-design-daily-nike-s-corporate-social-responsibility-agenda/>
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