Chapter 4: Data Analysis and Findings
The Nike Corporation had a tumultuous period in the 1990s due to the numerous accusations targeting the company’s business model, abuse of employees, low payment and lack of corporate social responsibility activities (Riddle, 2013). Nike took up corporate social responsibility engagements targeting innovation based on four pillars of materials to use, enhanced processing, better choices and the bringing of choices to scale (Nike, Incl., 2011).
The vision and mission statements of Nike contain a reflection of the company’s commitment to CSR to help enhance its business sustainability. The Nike, Inc. FY10/11 Sustainable Business Performance Summary notes that Nike’s vision statement states that, “Our vision is to build a sustainable business and create value for Nike and our stakeholders by decoupling profitable growth from constrained resources”.
Through the company’s vision statement, it is important recognize its commitment to CSR as it aspires for a sustainable business and enhanced welfare for its stakeholders. According to Riddle (2013), Nike’s commitment to CSR in the modern competitive market is evident in its vision and mission statements and the desire to achieve balance between people, profits and planet. Nike faced criticisms of its treatment to the environment especially in China where it was accused of environmental pollution through the release of poisonous effluents to rivers and other forms of pollution resulting from the overall manufacturing process.
The publicity created by Nike for its commitment to CSR in its vision statement is a convincing indication of the its intent to realize a better working environment for all associated stakeholders including the planet itself. Riddle (2013) notes that Nike adopted a policy to recycle its products in an effort to help reduce the level of environment pollution caused by its products around the world. The commitment to this process was never existent in the 1990s when it was accused of concern for only its profits and not the environment or its employees.
Through Nike’s vision, it is evident that the company embraces innovation as a tool for corporate social responsibility to help enhance its sustainability in the complex business market. Riddle (2013) notes that the corporation innovates to bring about enterprise-level sustainability and to make innovation the centre of its business model. The continued increase in the level of innovation at Nike is an indicator of the company’s resolve to enhance its business sustainability by bringing on board new sustainable products. Jackson and Sawayda (2014) argue that Nike has greatly evolved in its commitment to CSR since the company’s criticisms in the 1990s. According to the scholars, the company has embraced various CSR activities such as environmental sustainability.
Environmental Sustainability
Nike’s commitment to CSR through environmental sustainability is demonstrated in its efforts to enhance product recycling as a way of reducing environmental pollution through worn out products. Jackson and Sawayda (2014) observe that in the year 1995 the company’s Reuse-A-Shoe program began collecting shoes across its retail stores to help enhance its efforts to boost environmental sustainability through recycling. The initiative started-off as a CSR technique to show the company’s concern for the environmental dangers its products posed the inhabitants of planet earth. The program gained pace as the world grew more concerned of the CSR activities the companies whose products they consumed engaged in. To help enhance the effectiveness of the Reuse-A-Shoe program in the United States, the company partnered with the National Recycling Coalition in the year 2002 and was able to effectively collected and recycle millions of worn-out Nike footwear (Jackson & Sawayda, 2014).
The Reuse-A-Shoe program gained fame and helped the company exhibit its commitment to CSR by contributing greatly to a safer operational environment in the United States and beyond. Due to the success of the Reuse-A-Shoe program, the Nike management opted to expand the scope of product collection for recycling to other regions around the world and that led to the creation of shoe collection points in Europe and Australia (Jackson & Sawayda, 2014). By the year 2014, the company had successfully collected more than twenty-eight million pairs of worn-out athletic shoes since the year 1990 (Jackson & Sawayda, 2014). The collection of such a large number of sport-shoes for recycling is an indication of the company’s commitment to the realization of a more sustainable operational environment and a better planet earth for future generations.
The creation of a closed business loop at Nike is another element of great concern for environmental sustainability. The Considered Design philosophy is the one used by Nike to help create a closed business loop through which the company monitors its level of wastes at all manufacturing stages (Jackson & Sawayda, 2014). The researchers describe a closed loop business philosophy as one that allows for recycling of all wastes at all production stages in a company. The adoption of a closed loop business philosophy ingrained in the Nike business administration model helps the company enhance its ability to live to its vision and mission statements targeting maximization of CSR.
Jackson and Sawayda (2014) further note that the use of the Considered Design philosophy is not only a common rhetoric at the company but a big reality illustrated by the company’s ability to enlist it in its company ethos. The company uses the most sustainable technology to help ensure production of best products for best athletes. The establishment of guidelines that ought to be met across all the company’s production lines across the world further enhances the realization of Considered Design at the company. Jackson and Sawayda (2014) observe that the company has set the 2020 target as the year to realize total adherence to its set Considered Design guidelines that will help minimize wastes and thus preserve and conserve the environment.
Factory Transparency
Nike considers operational and management transparency as an integral function of its efforts to realize business sustainability across its different factories around the world. The company faced accusations of low remuneration for its staffs in the 1990s despite the huge profits and market dominance it enjoyed at the time, prompting the need to adopt better employee welfare management programs such as the provision of sustainable wages. Jackson and Sawayda (2014) argue that through the establishment of the Management Audit Verification (MAV), the company is able to ensure adherence to its code of leadership. The tool ensures harmonization of wages, development and observation of work hours, concern over employee grievances in addition to the stipulation of the guidelines for freedom of association to help enhance the overall employee welfare.
Nike’s commitment to transparently enhancing the overall welfare of all employees’ helps the company stay put to its resolve to ensure business sustainability via CSR. The company cares for the environment as from a CSR perspective is further boosted by the adoption of the Environment, Health and Safety (EHS) audit tool that helps the company adhere to its Considered Design framework. Nike’s adoption of the Safety, Health, Attitude of Management, People and Environment (SHAPE) tool and its subsequent replacement in the year 2007 is a clear revelation of its commitment to environmental and employee welfare sustainability efforts (Jackson & Sawayda, 2014). The company replaced the shape audit tool with a factory self-evaluation tool to help ensure increased adherence to its code of leadership.
The Nike International Corporation brags high accountability and transparency standards due to its ability to disclose its supply chain in addition to monitoring various aspects of its suppliers to help ensure adherence to its code of leadership. The modern operational dynamics at Nike have their anchor on CSR as a model for business sustainability. The company’s ability to take note of the overall adherence to its code of conduct by all its suppliers comes to the fore with the use of a Balanced Scorecard technique. Jackson and Sawayda (2014) opine that the use of the Balanced Scorecard is real at Nike as the company takes consideration of environmental care for all its suppliers and factories around the world. Additionally the technique helps the corporation monitor labor and health issues across all its factories in a bid to help ensure maximum welfare for all its employees around the world.
Nike has a reputation of a leading CSR observe around the world due to the transformation the company underwent after the criticisms of employee and environmental abuse it suffered in the 1990s. The company’s commitment to environmental sustainability as a corporate social responsibility initiative is outlined it its adoption of the Reuse-A-Shoe initiative that has helped it collect and recycle more than twenty-eight million shoes since 1990 (Jackson & Sawayda, 2014). The commitment to environmental sustainability is further exhibited by the company’s resolve to use a Balanced Scorecard as a method of evaluating the labor, healthcare and environmental sustainability efforts put in all its factories to help enhance it business model.
Jackson and Sawayda (2014) note that Nike is highly concerned about its labor and environmental sustainability efforts in its business model as it considers CSR the heart of business success and sustainability in the modern world. This commitment is evidenced by the company’s establishment of a CSR committee to help deliberate on issues regarding the welfare of the employees, customers and environment. The empowerment of the CSR committee at Nike, giving it the powers to analyze policies and draw recommendations to the corporation’s board of management is an indicator of the level of commitment to CSR at Nike. The creation and empowerment of the CSR committee at Nike portrays the relentless efforts and resolve the company has in its efforts to ensure a sustainable CSR oriented organizational and operational environment.
Jackson and Sawayda (2014) observe that the Nike’s CSR vice president directly reports to the company’s CEO while the corporate social responsibility committee comprises at least two board members. This implies that the CSR committee and its work form an integral base for the organization’s operation and activities, hence, critical to the success of the company. Additionally, the management at Nike is noted to be making efforts to ensure the organization’s CSR initiatives are adhered to at all levels (Jackson & Sawayda, 2014).
Sustainability Report: FY 2011
Nike stays highly committed to the realization of sustainable economic growth innovation. Valjakka (2013) notes that the Financial Year 2011 sustainability report of the Nike Corporation indicates great commitment to the realization economic growth through innovation and adherence to set CSR guidelines. Nike’s CSR strategy as noted in the Financial Year 2011 sustainability report categorizes the company’s CSR initiatives into various stakeholder variables that help reiterate the company’s commitment to sustainable growth. The breakdown of the steps undertaken by the company as per the 2011 sustainability report provides sufficient evidence of sustainable strategies the company is employing to help realize its CSR targets. The following breakdown of the sustainability reports brings to the fore the strategies employed by the company to help achieve all the CSR targets:
Customer
In the 2011 financial sustainability report, Valjakka (2013) observes that Nike aspires to be more ethical in its dealing with its customers as a CSR strategy to help enhance its brand and public image. The report indicates that Nike begins and ends with the consumer in addition to aspiring to meet the continued increase in sustainability demands of the client. The company notes that the consumer expectations have been growing with time and there is urgent need to both meet the increasing demand as well as the sustainability of the continued demand increase to help enhance the company’s economic growth. To help achieve this goal, the sustainability report notes that the company was to use an online platform dubbed “Nike Better World” to help exhibit innovative solutions to the increase in customer demand and enhance the sustainability of the increase (Valjakka, 2013). The online innovative platform was expected to respond to environmental issues and social issues affecting customers, hence, an ethical consideration to customer welfare.
The company realized that consumers were more responsive to the quality of products in the market and as a result, opted to produce excellent products suiting customer tastes and demands. The company’s initiative to create products designed to meet customer expectations and increased demand is in line with its resolve to be more ethical in its customer dealings in addition to boosting its economic position. The realization of increased economic performance in this case was not a primary goal but rather a secondary product of the CSR initiative of enhancing ethical behavior in dealing with customer demands and expectations.
To help realize the ethical CSR initiative through this process, Valjakka (2013) notes that the 2011 sustainability report proposes the need for the company to ensure increased transparency. Higher levels of transparency at the organization were considered integral to the realization of better care and concern for customer welfare. The creation of strategies to address the needs of customers in line with the company’s customer welfare CSR initiative was important in helping it realizing sustainability through the innovative CSR programs. The company understood the need to improve customer welfare as an ethical consideration to help change the public perception held about the company in the 1990s. Nike appreciates the efforts of all stakeholders and considers it ethically important to meet the exact customer demands in addition to ensuring high product quality despite the limited resources.
Shareholder
Nike aspires to attain sustainable growth through the reduction of the production costs with the maximization of innovation margins. Valjakka (2013) observes that the organization aspires to decouple profitable growth from constrained resources to help bring about economic growth that can help boost the economic soundness of the corporation and the shareholders themselves. The increase in the level of innovations at Nike is important in helping ensure reduced production and operational costs while enhancing the amounts of profits. The motive to increase the welfare of shareholders is economic and the company labors to achieve this CSR motive through the struggle to maintain sustainable economic growth. The determination to achieve sustainable economic growth for the sake of shareholders is a great show of the company’s concern for the welfare and economic growth of its shareholders. The commitment by the company to provide better shareholder benefits through reduction of production costs and enhancement of innovation margins is achievable if the company grows sustainably as envisaged.
Employee
As per the Financial Year 2011 sustainability report, the company outlines its commitment to the realization of improved overall employee welfare as an ethical move in line with its CSR objectives and goals. Valjakka (2013) notes that the 2011 Nike sustainability report identifies the areas that the company has enhanced focus to help realize increased concern and care for customer welfare. The main areas that the Nike Corporation is noted to have put so much focus with regard to employee welfare include; workers safety and welfare, regulation of overtime services, enhancement of workers’ freedom of association and labor. The company’s CSR initiatives with regard to the welfare of employees are highly anchored on the realization of a happy, committed and satisfied workforce.
In the care for employees, the Financial Year 2011 sustainability report notes that Nike embraces the employee welfare through dissociating itself from both forced and child labor. Child labor and forced labor are both unethical and illegal, hence, can result in legal proceedings that can hamper the company’s brand and public image leading to low and unsustainable business performance. The modern-day business environment is highly sensitive to a company’s friendliness to its stakeholders and he environment in addition to the quality of its products, hence, Nike cannot afford to fail in its quest to undertake CSR activities.
Valjakka (2013) notes that Nike believes in a talented, diverse and inclusive workforce that creatively contributes to the realization of a wide variety of super brand products that stay unmatched in the competitive footwear industry. The creation of an enabling environment is central to the realization of a productive workforce and through which the company produces distinctly creative brands. The 2011 sustainability report indicates that the Corporation achieves the CSR of employee welfare maximization through coaching to inspire employee teams, rewarding outstanding employees, developing talent at first sight and sustainable manufacturing among others (Valjakka, 2013). The employee quality and enhancement programs established by the Nike Corporation will greatly help achieve organizational goals and targets with much ease.
Supplier
The Financial Year 2011 sustainability report indicates that the company has a liberal stand when dealing with its suppliers and wishes to have them understand the need to be responsible in undertaking their contracts with the company’s factories. The responsible behavior expected when dealing with suppliers is such that the company expects them to ensure they observe obvious CSR programs such as environmental care and employee welfare. In its resolve to CSR, Nike understands its inability to change the mode of operation of its suppliers directly but uses its powers to influence the operation of its suppliers such that they adhere to Nike’s code of conduct.
Valjakka (2013) argues that Nike influences the behavior of its suppliers towards embracing its CSR programs that abhor both employee mismanagement and environmental destruction. The concern for the activities of Nike’s suppliers is an initiative that requires all suppliers to take note of the correct standards of both legal and ethical considerations in line with its CSR motives. The company’s concern for the welfare and conduct of its suppliers is important in ensuring it never falls into the trap of accusations of being a beneficiary of failed systems that abuse the rights of employees, shareholders, customers and the environment. The positive influence on suppliers at Nike is realized through the insistence that all suppliers adhere to the company’s codes of ethics and leadership.
Sustainable manufacturing also helps ensure all suppliers comply with the set company regulations that help enhance environmental care and employee welfare. The company also ensures a sustainable supply chain by ensuring suppliers make effort towards embracing clean energy, balance between profits and people in addition to empowering people to fight for their rights at all times. Thus, Nike ensures responsible supply chain programs through the influencing them to abide by the acceptable legal and ethical standards.
According to Lam et al. (2014), Nike has enjoyed tremendous market growth around the world as a result of its innovative creativity in the footwear and apparel industry. The company innovatively embraced CSR as an ideal tool of endearing itself to consumers around the world and this paid off as the company recorded increased sales and profitability throughout various periods as indicated below:
Fig. 1. Collegiate apparel sales growth (Lam et al., 2014).
The figure above is testimony to the continued global market growth at Nike that helps confirm the success of the market strategies employed by the company; of which CSR remains the principal strategy. In the American market, the Nike market growth still keeps rising, showing that the company indeed meets the people’s expectations to help warrant their trust.
Fig. 2: Nike revenue breakdown (Lam et al., 2014).
The figure above indicates that Nike experienced an upward growth in revenues throughout the five years of study, hence, exhibiting a sustainable economic growth for the company which translates to successful market strategies. CSR being the lead strategy employed by the company thus seems very effective in helping the company achieve sustainable revenue and economic growth.
Chapter 5: Conclusion and Recommendations
Conclusion
Corporate social responsibility is an essential part of company operations around the world. Through CSR, companies behave responsibly in running their organizational errands without hurting the environment or those associated with their manufacturing process. The study of CSR is wide and anchors on various models that help categorize the level of involvement of a company in CSR activities in addition to outlining the benefits of CSR to a company’s business sustainability and community welfare. The CSR concept came up from the need for organizations to be responsible for their operations in addition to giving back to the societies around their regions of operation that help sustain their economic growth and revenue flow.
There is a global requirement for companies to adhere to some set guidelines that exhibit their commitment bettering the welfare of their employees, environment and society. At Nike, CSR was not a matter of special concern until the revolt against the company due to the revelation of the way it was mistreating its employees and polluting the environment in the 1990s. Nike reacted to a damning report of disregard to employee welfare, forced labor, child labor, low wages and environmental pollution across its various factories in Asia and other parts around the world.
The negative publicity accorded Nike due to the disregard to CSR services around the world led to a major decline in the company’s economic and revenue growth. The company suffered a significant drop in earnings during the tough times of negative publicity and resolved to rebrand itself in line with ethical CSR requirements to help ensure the welfare of employees, community, shareholders and the environment formed the core of its operations. The diligent adherence to the needs of customers helped Nike build its brands around creativity and innovation to help achieve sustainable market growth.
In response to the abuse of employee rights that greatly dented Nike’s brand and public image, the company decided to embrace a CSR strategy designed to help enhance employee welfare and relationship. The company developed codes of leadership and conduct that provided for the care of employees across all its factories. The employee welfare CSR initiative at Nike provided guidelines for sustainable remuneration to ensure the wages accorded employees are commensurate with the services they provided and match what can sustainably be offered by a leading company such as Nike.
The use of child labor and forced labor was abhorred from the company as evidenced by its Financial Year 2011 sustainability report as the company opted to be highly ethical and compliant to all legal employment guidelines. The abolishment of forced and child labor helped alleviate the company’s reputation and its increased care for employee welfare helped enhance its bond with customers around the world. In the concern for employee welfare, Nike is also noted to have enhanced the employees’ freedom of association helping them to share their experiences and boost each others’ creativity and innovation through close interactions and teamwork. Nike additionally trains its employees to help them gain proper skills and experiences that help translate to successful market performance. Motivated employees are a great recipe for organizational success in the modern labor market. Nike embraces the employee motivation technique through its employee welfare CSR and which results in increased creativity, innovation and market performance to help it remain a market leader in the sports footwear and apparel industry.
Business sustainability in the modern world is based on a wide variety of services that companies provide to their employees, customers, quality of products and environmental concern. Nike faced accusations of environmental pollution from its factory operations in addition to the environmental dangers posed by millions of its worn-out footwear around the world. The company realized it could not sustain profitable market operations by only minding of its financial welfare through concern for profitability while ignoring the effect it posed to the environment and communities around its factories. Business was no longer sustainable and the company reputation was greatly hampered by the inability of companies to set strategic corporate social responsibility guidelines.
The decision by the company to set up product recycling services helped it position itself as an environment sensitive corporation and this proved to be an ideal CSR initiative that could largely help rebuild its reputation and brand name. Nike’s Reuse-A-Shoe environmental conservation strategy helped the company recycle more than twenty-eight million shoes globally in addition to helping reduce environmental pollution by a great margin as the dangers of worn-out shoes got mitigated. Various studies reveal that Nike strategized to meet its environmental care CSR initiative using creativity and innovation through which the company could make the best out of the available scarce resources without causing environmental havoc.
Through innovation and creativity, Nike manufactures high quality brands that suit the definite consumer demands and expectations. These brands help meet the company’s ethical CSR initiative of ensuring it meets all consumer demands and expectations. The company fuses transparency to its operational model to help ensure all information with regard to the quality of its brands and its impact to the environment is unreservedly disclosed to consumers to help enhance their confidence in Nike. Additionally, the disclosure of supplier information helps the public gauge the reputation of the suppliers to help check whether they are ethically and legally responsible for all their operations. Supplier information disclosure is particularly important in helping the public analyze whether Nike is indeed a brand that lives to its codes of conduct and leadership across all organizational levels and affiliations. In case the company relies on suppliers that abuse their employees and the environment, it will be assumed the company is indirectly responsible in its operations and this could dent its reputation and economic growth as it will lose customers.
The Nike case study provides a great insight of how companies can engage in CSR in addition to outlining how CSR activities can help enhance company reputation and business sustainability. Nike faced accusations of inability to be responsible to its operations in the 1990s as the company was regarded inconsiderate to the welfare of its employees and environment, leading to a widespread condemnation that dented its reputation and market performance. The Organization’s turn around anchored on vibrant CSR initiatives saw it bounce back to economic sustainability that has seen it rise to be a model of reference on issues to do with corporate social responsibility. The Nike case study proves that CSR plays an integral role in boosting company reputation and business sustainability, hence, the need for organizations to embrace CSR in all their operations at all organizational levels.
Recommendations
Nike seems to have largely benefitted from its CSR initiatives especially in terms of gaining corporate reputation business sustainability due to the resultant economic growth. The CSR benefits at Nike are enviable though the company needs to move a notch higher in its CSR activities by setting clear guidelines to help attain market success. Nike needs to set forth guidelines on its level of responsibility to employee issues especially in case suppliers fail to meet employee demands or suddenly pull off the market without meeting employee dues.
The reliance on positive supplier influence can only help the company ensure the welfare of supplier workers is taken care of but cannot help out in case of a professional supplier misbehavior. If Nike for instance shuts down its factory in some country, suppliers will automatically lose their jobs, a situation that will reverberate to their workers. Nike’s workers will benefit from severance compensations but the supplier workers may have to deal with the unemployment shock without cushion. Thus, it is important that the CSR guidelines at Nike strongly run down to their suppliers to help ensure sustainability of all workers across all organizational and supplier levels.
Additionally, this study recommends that Nike adopt clear-cut oversight services across all its factories to help ensure its CSR initiatives are adhered to across all factories around the world. The globalization of the company leads it to entry into various economies with diverse cultures and practices. The cultural diversity that comes with the expansion of the company exposes some employees to challenges like language barriers that may make some of them ineffective in their service delivery and this may lead to harassment. The diversity of the environments of Nike operations make the company susceptible to breaches in its employee welfare CSR initiatives, hence, the need for advanced operational oversight at all levels.
Comprehensive oversight roles at all Nike factories will help the company ensure all its millions of employees worldwide enjoy same services and operational environments just like those in the United States do. With such a strategy, the company will help ensure its codes of leadership and conduct are abided to across all Nike factories around the world. The adoption of these recommended strategies will help Nike enhance its organizational brand reputation and business sustainability around the world in the modern dynamic business environment.
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