The Business Ethics Used At Nike Commerce Essay

Lets take Nike for example. Founded in 1964, and the brand name created in 1971, head office in Oregon USA, it is the biggest manufacturer of sportswear in the world, selling footwear and apparels and related sports equipment. Also outsourcing contracts to 500 factories that operate in 160 countries, they employ nearly 1 million people directly or indirectly (Business-humanrights ; 2009).

According to NIKE, ‘A good name and reputation result in large part from their collective actions. That means the work-related activities of every employee must reflect standards of honesty, loyalty, trustworthiness, fairness, concern for others and accountability. They are expected to be sensitive to any situations that can adversely impact NIKE’s reputation and are expected to use good judgment and common sense in the way to conduct business'(nikbiz ;2010).

NIKE is one brand which achieved the top in world class by setting high standards and following the business ethics by forming a code of conduct. This code of conduct was mandatory and was to be followed by all of the team members of NIKE whether they were the Sales Agents, Consultants, Representatives, independent Contractors or even external temporary workers.

NIKE understands that in order to obtain optimum performance from an employee, they must provide them with an environment void of harassment and discrimination of all sorts such as that related to age, gender, religion, disability, ethnic group, marital status, veteran status or any other similar status relative to class or caste. Sometimes people feel harassed and this harassment doesn’t come against the protected law. Human acts which cause hurt and emotional strains like rude & abusive, insensitive & impolite behavior shown to people is against the company’s’ code of conduct and will fall in the act of harassment against a person or group of people. Incase of any complaints, the harassed must report to the concerned manager. This code of conduct also applies to all the business partners who manufacture NIKE products. Harassments of any sort is strictly forbidden whether pertaining to legal laws or company policies. But in any case if such a situation may arise, NIKE has made sure of an effective complaint process through the Employee Relations or Human Resources Department.

On the social responsibilities, NIKE further adds, ‘NIKE is committed to socially responsible sourcing practices. We are driven to do not only what is required by law, but also what is expected of a leader. We expect our business partners to do the same. We do this through the NIKE Code of Conduct, which covers contractors who manufacture NIKE product. (SampleBusiness ;2009.)This code calls for our partners’ management practices to respect the rights of all employees, to minimize the impact on the environment, provide a safe and healthy work place, and promote the health and well being of all employees. As a member of the NIKE team, when presented the opportunity, you have a responsibility to promote compliance with the NIKE Code of Conduct and to report any instances of non-compliance, of which you become aware, to the Corporate Responsibility Compliance Group.’ (nikebiz.com).

That being the social interpersonal issues of the company, NIKE claims to also comply with the health and safety rules and regulations. They feel that their duty is to not only provide innovative products to their clients but also be finite in knowing that the products supplied are safe and non-hazardous in all ways. This not only helps gain public confidence but also grants a better competitive ranking in the lucrative market. And the certainty of the safety does not end here. They also emphasize that the employees be an environmentally responsible citizen and so if they feel that a condition may cause a potential impact to the surroundings either socially, scientifically or economically, they report to the authorities immediately. (Schwartz, J. ; 2010)

Like with all organizations, NIKE also expects its customers to be sincere and loyal by protecting the Nike info, ideas & intellectual property. Every now & then, a company’s strategic plans, sales figures, financial info, product designs,

negotiations, software, employee’s personal info, trade secrets, patents, trademarks and similar info is brought into the notice of one or several members of the organization and since the market is competitive, NIKE employees are prohibited to share or sell out any piece of detail, either manually or electronically .

The employees must also safeguard the assets and records present under the ownership of the organization. Nike prioritizes privacy and hence it is committed to giving respect to all the rights of their customers.

All the departments handling the confidential information have to be on one foot at all times. That said because, no company can afford mishandling of information. Incase data is ever lost or misplaced, or even otherwise, the new records must never be made up or false statements, misleading, misinterpretations, or material omissions.

Even more special care has to be taken with financial transactions. They should be accurate, fair and transparent. NIKE expects their work related activities to reflect extreme standards of trustworthiness, concern for others and accountability. Acts of fraud theft, or cheatings in anyway are strictly forbidden. NIKE relies in making relationships based on integrity. It is NIKE’s policy to compete fairly anywhere and everywhere and expect their product and service developments, manufacturing and sales to conform to highest ethical standards.

These anti-trust competition laws, if violated could result in mega fines or even imprisonment. Even though NIKE requires its members to be strictly sincere and loyal, however, at the same time NIKE does respect the rights of their employees to participate in other business opportunities outside of the NIKE

Organization (Peter;2000). But care must be taken, keeping in mind all the rules & regulations of the company policies, which pertains to non-confliction of interests with Nike. That may include situations such as a team member exploiting opportunities for himself which were actually discovered through NIKE’s assets and information (nikbiz ; 2010).

Moreover, an employee is not allowed to accept a gift, gratuity, entertainment or favor over a certain limited amount and that also in non-cash form. An amount of $200 is considered a threshold limit over which, it is considered as a bribe. He is forbidden to give or take cash at any time. The bribery is not only unacceptable between a member and clients but also to government officials, civil servants or, as a matter of fact, anyone at hand in order to influence them. An action shall be taken and employees will be taken into charge if they use any deceptive methods or abuse the confidential information to have an unjust exploitation over competitors, suppliers, or customers.

Laws, rules and regulations are not only limited to the organizations and affiliated parties within the USA. NIKE is very strict in complying with the laws of the country they do business with, even if it means losses on their part of the organization. Like majority of the US companies, NIKE is also governed by the U.S. Foreign Corrupt Practices Act (FCPA) according to which,” It is illegal for anyone at NIKE to offer, promise, or pay money or anything of value, directly or indirectly to any foreign government official or employee, political party, or candidate for public office for the purpose of obtaining or maintaining business or for any other business advantage.”(nikzbiz ;2010). The FCPA only allows payments under some specific circumstances for which, if the need arises, the team member can consult the NIKE legal department. (Schwartz;2010).

Other than these rules, NIKE also has certain boycotting laws, with which NIKE complies strongly. For instance, if a certain Country A has boycotted a certain Country B, and if NIKE is doing business with Country A and that Country is asking for a certification that supplies not be made in Country B, then NIKE is not liable to accept the request of Country A, as it is against the USA Anti-Boycott law and NIKE will eventually be reporting it to the US authorities.

A summarized view of NIKE’s Ethical code of conduct:

Keywords

The Nike Code of Conduct

Memorandum of Understanding. Obligations of subcontractors/suppliers

Basic principles

Principles governing the conduct of business:

— trust

— teamwork

— honesty

— mutual respect

Nike expects compliance with the same principles by its trading partners

Human rights

Respect of human rights

Forced labour

Forced labour — prison or otherwise — must not be used at any stage of production

Non-discrimination

Nike is a company made up of persons of all origins, which appreciates individual diversity and is dedicated to equal opportunity for each individual

No discrimination in hiring, salary, benefits, advancement, termination or retirement on the basis of gender, race, religion, age, sexual preference or ethnic origin

Safety and health

In accordance with local regulations

Health insurance, life insurance and workers’compensation

In accordance with local regulations

Responsibility of a global enterprise

To do what is expected of a leader by participating in the betterment of people’s lives through sport and fitness

—

Legal requirements

In accordance with local trade legislation as regards:

— minimum wages

— overtime

— child labour

— leave, public holidays

— mandatory retirement benefits

Compliance with:

— local regulations

— practices established by Nike

A Nike representative is responsible for the day-to-day application of the Memorandum in each subcontracted factory. Nike production managers update the Memorandum every two years.

Nike may request an independent monitoring of plants at any time.

In the event of non-compliance with the Memorandum, Nike may require that the situation be corrected or it may terminate its trade relations.

All subcontractors must:

— keep any documentation which may be necessary to prove the correct application of the recommendations contained in the Memorandum; and

— agree to provide these documents to Nike for any inspections required by the company

Environment

To minimize impact on the environment. Implementation of the three “Rs”of environmental action: Reduce, re-use and re-cycle

(Sajhau ; 2010)

NIKE’S LEGAL BATTLE FOR VIOLATION OF ETHICS:

The criticism was started in early 90’s about Nike being involved with child labor issues, employees suffering from safety and health problems and physical harming of employees.

One of the major issues that was raised at NIKE in 1996, which put NIKE’s integrity at risk was the child labor issue in Pakistan. Young children aged between 9 to16 years were made to work and pictures of hand sewn footballs were splashed all over the net. NIKE was accused of labor and human rights violations. A lawsuit had been filed and NIKE appealed legally.

On the personal upfront, NIKE responded with labor codes, personal letters, campus visits and newspaper releases. The US Supreme Court decided 5-3 to postpone ruling on NIKE vs. the prosecutor. NIKE made a charity settlement, giving $1.5 million to the fair labor association. (Canizares;2001).

“That experience forced us to decide who we were when it comes to corporate social responsibility, and forced us to really figure it out,”(nikbiz ;2010) confessed EITEL, one of the business executive remembering the difficult time the company faced. EITEL not only had to reassure the external bodies who were criticizing the goodwill and ethics of the corporate dealing but she also had to deal with the question and queries of 500,000 employees in 58 countries. Through a hard learned lesson, EITEL believes that the code of ethics is not to be put on shelf and forgotten about, but has to be embedded by the executives in the roots of the corporate and make it THE culture. In this way the corporate can up guard their moral values under any difficult timing and can be up to face any legal or moral challenge (Cr; 2009).

It has been an enormous change in a decade that NIKE has come forward by charting a different course in corporate citizenship and all other aspects of their dealings from the face of a corporate villain where laws of child labor were dusted.

NIKE, in their newly-published Corporate Responsibility (CR) Report for fiscal years 2007 to 2009, commented on its new strategy which is, “Reaching a closed-loop business model where the goal is to achieve zero waste in the supply chain and have products and materials that can be continuously reused – no pre- or post-consumer waste. “NIKE CEO Mark Parker writes in the report’s introduction, “We see sustainability, both social and environmental, as a powerful path to innovation, and crucial to our growth strategies.” (Connor ; 2010).

At present, the main concern of the brand is to watch for labor human right violation. The company has three main product lines- footwear, apparel and equipment. Nearly 60 percent of the work force is in North Asia and 31 percent in South Asia. One major difficulty is that contract apparel factories generally produce for multiple brands, making it very difficult to maintain standards.

NIKE insists that monitoring the contract factories for working conditions, wages and overtime and several other issues, including possible unionization is not a piece of cake. “While we can point to many examples of improvements, challenging issues remain for our company and our industry in systemically identifying and tackling how to affect long-term system-wide change,”(nikbiz ;2010) the company says. (Canizares;2001)

“In evaluating where our targets fell short, we saw a consistent pattern: a focus on auditing against a set of criteria sometimes results in on-the-ground improvements for workers, but it rarely produces systemic change in the area of concern,” (Canizares;2001). NIKE says. “On further reflection, we realized that, if we want to make sustainable improvements for workers, we need to significantly change the way we engage and interact with our supply chain as a whole”(nikbiz ;2010).

One subject that NIKE shows loads of concern towards is a workers overtime. “Asking factories to manufacture too many styles is one of the highest contributors to factory overtime in apparel. We have an opportunity to reduce this pressure by reducing the number of apparel styles and partnering with the factories to improve efficiencies through lean production method.(nikz ;2010).

Recently, NIKE took a very ambitious initiative. That is,” A goal of reducing excessive overtime for workers in their supply chain by 2011″ (nikbiz;2010). This reminder came in response to the criticism that NIKE received frequently, which eventually lead the way to innovative solutions to labor rights challenges.

NIKE was the first to make its list of affiliated factories public in 2005 for open inspection for anyone who felt the need to spy for violation of any labor and human rights. By doing this they provided another ethical example of protecting human rights by elimination of overtime work and by altering their own internal buying practices(.Icmrindia; 2002).

NIKE also undertook a very Eco-Friendly approach by launching a shoe called “CONSIDERED” in 2005 (Icmrindia; 2010). This was a step towards a more healthy and safer product line which was devoid of harmful adhesives and more of re-used materials. It also eliminated sulphur hexafluoride (a very harmful chemical to health) from its shoes called “NIKE AIR”(nikzbiz ;2010). It also started making sports surfaces from recycled shoes and manufacturing waste. It further started worldwide collaboration with NGOS to reduce the damage to the environment through its human and monetary resources and to eventually reduce the effects of Global Warming. “The concept was further extended to be used in apparel and sports equipment that the company produced. NIKE had developed an index called ‘Considered Index’ using which NIKE’s designers could get a ranking based on the environmental friendliness during the design phase before they went for commercial production. Nike aimed at making its own facilities and business travel climate neutral by 2011. (-1.html”Sporting Goods Business ;2009). It had set a target of making all its footwear meet the minimum standard of ‘Considered Index’ by 2011 ,its apparel by 2015, and sports equipment by 2020″(nikbiz ; 2010). In other words, NIKE truly took a step to fulfill their code of ethics to support and safeguard the health and safety of every person associated with them. (Schwartz ;2010)

NIKE has been on the list of the most ethical companies in the world from 2007-2010 every year, along with several other mega awards (Canizares ;2001). Even though NIKE tries its max to set the best possible ethical standards, there are two noted watchdogs, the Oxfam’s NIKE Watch and TeamSweat, who constantly find loopholes with NIKE’s performance and other agendas. (Connor ; 2010). But NIKE has not been defied by such activists and they are continuing to lay examples of how the process of good reporting can lead to data being gathered, metrics developed and performance benchmarks set. NIKE has learnt a great deal from its past experiences, and it has not been deterred in its work but only grown stronger in every way possible. Says the CEO Parker, “We learnt to view transparency as an asset, not a risks” (Connor ; 2010).

This document depicts the Pros and Cons of NIKE’s Organization, and this only proves that No body is free of the unethical code of conduct. Yet, there are ways to improve under good intentions or even improvise if needed.

In conclusion, just a reminder for us all:

THE ETHICS OF EXCELLENCE REQUIRES A SENSE OF PERSPECTIVE. LOOK AT THE BIG PICTURE : IF YOU LIVE FOR THE MOMENT, DO YOU

MORTGAGE THE FUTURE? WHAT HAPPENS IF YOU PUT YOUR REPUTATION AT RISK..…& LOSE THE BET?

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