EthicalDilemma in Nike
EthicalDilemmas in Nike
Ethicsin business is one of the integral yardsticks in determining thesuccess of some of the organizations and business setups today. Overthe past couple of years, business ethics has become a problem formost of the growing multinationals and other business setups thusbeing center of focus in a situation where the competitiveenvironment is much tighter than before(Crane& Matten, 2007). The demands of the society currently push mostof the existing firms to ensure creation of well-paying jobs and atthe same time care about their environment.
Onone hand, most of the companies are always seen to work hard toreduce the costs that are incurred when required to comply with theenvironmental regulations in their production and increase in laborproductivity. The picture is one of the consumers who are painted asin search of lowest price for the commodities. Out of these differentand diverging stands then arises the issue that is known within theframeworks of business as an ethical dilemma. This situation arisesmainly due to the varying interests from the different businessesthat occur between the stakeholders and the shareholders(Boatright,2008).
Justlike other companies, Nike, which deals in the manufacture of sportsclothing, also has found itself in ethical dilemmas. The ethicaldilemmas, Nike has to seek out through appropriate ethics theory andto consider the interests of stakeholders within the company.
Eventhough Nike boasts a 40-year history in the USA, Nike has remained tobe one of the most popular sportswear and footwear brand globally.Nike boasts of its presence in 180 countries worldwide. Founded in1960, Nike has continued to be an affiliate in footwear, sportswear,team uniform and even golf apparel. It has become a brand that if itis within any ethical dilemma then by all standards, such issuesarising must be addressed.
Everyother business has its dilemmas, and so is Nike. Nike currently hasits presence worldwide with many of its branches and factoriesdistributed globally in different countries. This, therefore, meansthat its employees and suppliers are located in different parts ofthe globe. With such wide distribution, Nike faces ethical dilemmaseach year(McGlone& Martin, 2006). Nonetheless, the major ethical dilemma that Nikefaces currently is whether to have its benefits prioritized over thepersonal welfare of the employees. This is a real dilemma for acompany in a competitive environment that has to maintain brand andimage at all cost. One would ask. What is it with making the sport abrand without becoming a brand. Being a brand is something that iswholesome and must be propagated by employees alike. This then leavesthe company in a delicate hanging balance whether to consider thewelfare of employees or to have the benefits of the company first.
WorkEnvironment for Employees
Currently,Nike faces similar dilemma as that faced by Foxconn, a partnermanufacture of Apple’s products. This issue is a poor workingenvironment for the workers. This is clear through the workersprotest that was seen in Vietnam. Most of the Vietnamese workers wenton strike in April 2010 mainly because of the poor work environmentand the low wages that they earned(Pritchard,2013). This has been habitual in most parts of the world where theNike factories are located. Given that the company has enjoyed lowcosts relatively to its competitors, little attention was paid on theplight of workers. In fact, the low cost gave Nike an edge over theother companies. Stemming from this issue, a wave of protest hasinfluenced Nike’s image, and this has made Nike to be considered asone of the unethical companies.
Mostof the workers in this company live in deplorable living conditionswith most of the houses being in overcrowded places. These housingunits have unhealthy lavatory facilities and bad sanitation. Apartfrom this, workers undergo abuses and violence in their workingplaces. It has been alluded that some of the workers are abusedthrough slaps, kicks, and even verbal abuse. Even though suchtreatments are evident in Nike, the staff happens to cope with thesituation. Within the factory, the employees are humiliated. Thecompany might be able to increase regarding its productivity andachieve good results, but the poor environment might lead to a lackof happiness among the workers(Pritchard,2013). This happens to be an application of Utilitarianism. However,reviewing the situation through egoism theory only acknowledges thatemployees have the right to their dignity. Therefore, on this, Nikeappears to have taken the wrong step and move as it facilitates thepoor working environment for its employees.
Thesecond issue arises from the low wages paid by the company despiteworkers being engaged to work overtime. This second issue is mainlywitnessed in most of the developing countries like Cambodia andVietnam. In Nike, the employees are paid low wages, and they work forlong hours. In Vietnam for instance, the workers are paid 4000 VND anequivalent of $0.21 amount that is not sufficient for meals, and ifit served the purpose of the meals, then the amount would not sustainproductive day’s work. The much that Nike did was to increase thewages by 5% though the workers were still unsatisfied. In applyingthe theory of Utilitarianism, Nike is on the right track given thatthe company has done all its best to reduce the unemploymentsituation and effectively boost the economy. From a widerperspective, it appears that the activities of Nike results intonumerous reimbursements to a nation, and this is quite moral forNike.
Onthe other hand, the employees are unsatisfied with their pay and mostlikely harm the company owing to their low productivity. Upon taggingthe theory to the normal standards of the international labororganization, it is apparent that the theory fails. According to therules and standards, the global economy improves the rights, thelivelihoods, the security and opportunities of individuals andcommunities globally. Nike does not meet the criteria and standardsset in full.
Stepsand Solution to the Issues
Thebusiness entity has to take up concrete steps whenever there arecases of dilemma that emerge. This is usually critical to ensure thatthe company does not face any major problem in the future and preventany major impacts that the company may face. A case in point is theissue that the company faces about poor environment. The dilemma inthis point is very critical given that it has direct effects on thequality of the products and the reputation of Nike as well. In thecase of the second issue where the workers are engaged overtime andpaid less, the issue is with the human rights organization, FairLabor Association. This is likely to affect and affect thestakeholders and the company negatively.
Tohandle the issues in the desired manner, Nike must put in placeproper strategies to cater for both its external and internalenvironment(Ferrell& Fraedrich, 2014). Nike has to engage the staff members, andthis can be done through surveys among the internal members. Thesurvey should be grounded on the satisfaction levels or pyramid.
Additionally,for the company to take full advantage of the business ethics inimproving their brand image, it is critical that it focuses more onimproving the environment, the social conditions both at work placesand at the areas of living and offer better human resource services.
Thecompany can additionally focus on having in place differentactivities that help them to improve and ultimately realize theirorganizational identity and employer image. This is because it has agreat effect on the various interested stakeholder. In the event thata firm or organization carries with it the image of being a greatemployer with the better working environment then the benefits willbe massive. Additionally, it is important that the company emphasizeon instigating more programs that can take into consideration theplights of youths. The focus on the youths is mainly informed by thefact that they are the primary target of their products(Pritchard,2013). Improving the general welfare of the workers will raise thestatus of the company and make them an equal employer. Nike willrealize an increase in productivity levels and the ethical dilemmaswill be outdated.
Comparisonand Contrast of Other Corporates
Equally,some corporates have faced almost similar ethical dilemmas butcritical enough has been the manner in which they get out of suchdilemmas. For instance, in acknowledging the well-being of theemployers and other stakeholders, Nike has to hold dear the roleplayed by Children while facing a dilemma of making the welfare oftheir workers better, McDonald came up with “UNICEF McDonald andRonald McDonald House.” The company could raise funds for thechildren through this means. Also, as part of maintaining the betterimage by the company, McDonald ensured that its partnership withUNICEF was a success as UNICEF has better image globally. Nike shouldensure that it follows the examples of McDonald to get the best outof its brand(Valax,2012).
Giventhat Nike in its dilemma is faced with allegations of being anirresponsible company, Nike can learn from PepsiCo that has worked tomaintain its status and seen as a responsible company. PepsiCo tookthe lead in helping in contribution to disaster relief to a tune of$1 million. This elevated PepsiCo and would later be seen andacknowledged as a responsible company. Doing such contributions canhelp Nike improve its image.
Wal-Martalso faced similar ethical dilemmas as far as treating of labors andtime of work is concerned. In addressing the issue, Wal-Mart came upwith a detailed code of conduct that specifically specifies theethical practices and various act that its supports. Through this,the workers can be treated humanely and with integrity that itdeserves. Further, Wal-Mart has set-up minimum wage and this theyhave done in line with each of the respective countries where theyoperate. Nike needs to borrow a leaf for their workers to have decentwages and live within the acceptable living standards. The companyneeds to set-up minimum working hours each day and a day off just asWal-Mart did. Further, in instances where the employees are workingovertime, Wal-Mart adjusted the pays to cater for overtime wagessomething that is not practiced largely by Nike, especially indeveloping countries.
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