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 (“Nike Inc. CI B Company Description”). Additionally, the production of sport accessories and apparels for sports-inspired lifestyle is a large part of the company’s 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 “bags, 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 NIKE” (“Nike, Inc. Common Stock Profile”). 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 company’s 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 (“Nike Inc. CI B Company Description”).
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 Bowerman’s 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 (“Nike Company Profile”). Nowadays, according to “Nike, Inc. Common Stock Profile”, the corporation has approximately 38,000 employees worldwide. Moreover, this figure does not include nearly 650,000 workers who “are employed in Nike contracted factories around the globe” (“Nike Company Profile” ¶2). This means that the corporation nowadays is international and has its manufactories all over the world.
As stated by the “Market Watch”, the stock exchange abbreviation of Nike Inc. is NKE, and the company’s last year’s annual revenue was $20,89 billion and net income was $2.13 billion with sales growth up to 9.9% in 2011 (“Nike Inc. CI B Company Description”). Nike’s, Inc. stocks are “traded on the New York Stock Exchange” (“Nike Company Profile” ¶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 (“Nike Company Profile” ¶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 Nike’s 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 (“Nike Company Profile” ¶6). Additionally, the wholly-owned affiliates of Nike, Inc. are Umbro and Nike Golf. Umbro is one of Nike’s trademarks, which is occupied with designing and distributing footwear, apparel and accessories primarily for football, while Nike Golf is occupied with golf equipment (“Nike Inc. CI B Company Description”).
Headquarters of Nike, Inc. are situated in Oregon. The corporation’s retail chain is represented by Niketown stores in the US and all over the world, factory stores and NikeWomen (“Nike Company Profile” ¶¶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 customers’ behavior better than those from Europe. Thus, having more shops in the US ensures Nike, Inc. the success of Nike’s sales.
Among Nike’s, Inc. peculiarities presented on the official website “Nike, Inc.”, diversity and inclusion are stated to be fundamental to the company’s performance. The crucial essence of diversity and inclusion of Nike, Inc. can be better understood from the company’s “Corporate Responsibility Report”. In the report, it is stated that the company’s 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 “has become somewhat of a milestone for the business community, creating a whole new raft of pressures in what is an increasingly complex trading environment” (Hawkins 1). The concept of corporate social responsibility can be defined as “a commitment to improve community well-being through discretionary practices and contributions of corporate resources” (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 “major activities undertaken by a corporation t support social causes and to fulfill commitments to corporate social responsibility” (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 companies’ 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 (¶2). Particularly, CSR has become a profession, while sustainability organizations like Net Impact have become enormously popular. As stated by Epstein-Reeves, “even 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 Relation” (¶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 (¶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 (¶¶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 Nike’s balls changed the situation crucially (¶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, “Nike is now considered a top corporate citizen, according to Corporate Responsibility Magazine” (¶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. Nike’s approach to corporate social responsibility is stated to be striving for better performances (“Responsibility at NIKE, Inc.”). 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 people’s potential through the world of sport (“Responsibility at NIKE, Inc.”). 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 Nike’s patents to license its environmentally friendly materials (¶¶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, Nike’s official websites and web pages that promote its corporate social responsibility have scarce information on its labor practices.
Moreover, there is quite a lot of information stating that, since the 1990s, few changes have taken place in terms of the company’s contractor labor conditions. According to Levenson, despite the fact that Nike, Inc. made its initial efforts like “setting a code of conduct and monitoring compliance”, 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) “despite significant efforts and investments by Nike … workplace conditions in almost 80% of its suppliers have either remained the same or worsened over time” (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 (“Responsibility at NIKE, Inc.”). 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 “green activity”, 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.
“Nike Company Profile.” Financial Review Case Studies with Business News. Financial Review. n.d. Web. 4 Feb. 2012. <http://www.afrbiz.com.au/companies/nike.html>.
“Nike Inc. CI B Company Description.” Market Watch. The Wall Street Journal. n.d. Web. 4 Feb. 2012. <http://www.marketwatch.com/investing/stock/nke/profile>.
“Nike, Inc. Common Stock Profile.” Yahoo! Finance. n.d. Web. 4 Feb. 2012. <http://finance.yahoo.com/q/pr?s=nke>.
“Responsibility at NIKE, Inc.” NIKE, Inc. n.d. Web. 4 Feb. 2012. <http://nikeinc.com/pages/responsibility>
Epstein-Reeves, James. “The Parents of CSR: Nike and Kathie Lee Gifford.” 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. “Citizen Nike.” CNNMoney. 17 November 2008. Web. 4 Feb. 2012 <http://money.cnn.com/2008/11/17/news/companies/levenson_nike.fortune/index.htm>
Walker, Alissa. “GOOD Design Daily: Nike’s Corporate Social Responsibility Agenda.” 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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