The assignment has chosen “Nike” which is a sport and clothing manufacturer. This assignment will discuss the business ethics that has been the issues in the organization in today’s world. Business ethics has become the problem that creates huge attention at the difficult times. Society wants to generate the high pay jobs to protect the environment but the companies want to decrease the cost incurred to deal with the environmental challenges in terms of production and to improve the growth and productivity. Consumers look for low costs products and inevitable issues occurs with the concept of business ethics also known as ethical dilemma that occur due to the differences in the stakeholders and shareholders interest. Nike also faces some of the ethical dilemmas and it needs to be resolved in an ethical manner by applying proper theories of ethics and stakeholders interest in the organization.
Nike, despite 40 year history in USA, it is very popular in sportswear and footwear in 180 nations. It had the history from the stretch until today and it is very famous for consumers in most of the countries. Nike has established in the year 1960 and it was developed by Bill Boweman and Phill Knight in the year 1960. It was based in footwear, apparels, golf wears and sports - wear etc. until now. The company also exports to Japan, Malaysia, UK and Singapore. Nike possess high quality standards design and brand on customer’s mind. (Ryan, 2010).
As per Crane & Mattern, business ethics is the concept of business activities, scenarios and decisions that addresses the correct and wrong approaches. It is truly viable and brings tremendous values for the organizations. For the media, the good business ethics helps to improve the public image of the business. It is the main turning point in the branding. Without any scandal affects, the shares value helps to maintain the stability and there are improvements of the reputation. This way, the business can improve and attract more number of investments from internal and external associations. Joint ventures occur every time and it has strong importance to the business bottom line. The business can be created or broken on just one joint venture and it can be successful with the help of major factors of extreme powerful companies on desire. The business cannot perform well in joint venture if they lack in ethical roles and practices. (Brubacher, et.al, 2014)
The decision of the board is affected by the external and internal environment influence and it affects the target, mission as well as the output. The stakeholder’s analysis is an important tool to identify the stakeholders and to understand their requirements. It is important to understand the stakeholders who have spent in issues that is based on the project. This is the important tool for Nike to understand the ethical dilemma for the best approach. (Goodlad, 2014)
At the time of unethical policies, there were different negative effects on customers. It made the massive boycott of the society for Nike and consumers felt unethical while using the products of Nike. This occurred when the child in America was attacked because he was wearing Nike shoes in 1990. To add, there were 14 year old boy in a low price apartment and was hampered due to unconsciousness and was left on the tracks of subway just because of wearing the Nike’s Air Jordan shoes at his feet. The organization met difficulties in business strategy.
Shareholders of Nike are considered and the news on unethical practices fail, the share prices also fails of Nike. Thus negative image led to reduce the confidence of the investors in the organization to manage the situations. This creates the fall in the share prices. (Christensen, 2014)
In 1992, the company has decreased the profits by 40% and the association between Nike and Oregon University was very poor because the university joined the rights of Worker Consortium against the firm. The objections of other universities in U.S. are:
The association among Nike and suppliers have huge impacts. Most of the Nike products are formed by the raw materials that are offered from developing nations because Nike can increase profits with low supply of price materials. The major approach is Nike can be influenced from unethical practices of few of the suppliers. For example: supplier can provide the best price of raw material because there is an increase and strict control of employees. The company also faces threats with the quality of the products. (McLaren, 2013).
Ethical dilemma in Nike
Every business has its own dilemma and Nike is a global corporation that has different branches around the world and it involves many employees and suppliers. Thus, the ethical dilemmas are challenges faced by Nike every year. The major ethical dilemma faced by Nike is to create the benefits for the firm for the well – being of the employees.
Poor work environment for workers in Nike is the first ethical dilemma selected for this assignment. Nike faces the same ethical dilemma compared with Foxconn. Foxconn is the partner manufacture of Apple’s product and it has poor work environment. This defines the protests of Vietnamese clearly. As per Vietnam point of view, in the year 2010 of April, thousands of Vietnamese Nike factory workers went on strike due to lack of work situations and low wages. This happens around the world where there is a location of Nike factories. With respect to the low costs, Nike gains it as a competitive benefit. It did not give any attention for the rights of the workers. To add, it resulted that, the protests wave has affected the company’s reputation and for future terms, Nike is called as an unethical company. As per the report of Australian television station in the year 2008 July, the workers revealed that there condition of living is not acceptable. The dormitory houses with high crowded sleeping quarters and un-hygiene toilets and poor sanitation facilities in kitchen were the fact they were going through. The workers also suffers from the conditions of violence in the organization. Nike workers also are being slapped or verbally abused or kicked at factories that creates huge challenges for the workers to continue in the organization. Staffs resist and cope with the situation every day. Employees are being treated in humiliation. (Simon, 2012)
Applying stakeholder’s theory, the company focuses on the responsibility to the wide range of stakeholders. The stakeholder is identified as a person which can affect with the business actions. It involves employees, customers, suppliers and community. The original proposer of the stakeholder theory is known as the vital element of the work environment. This is a concept based on the responsibilities in the today’s world. It might be economic, legal, ethical and philanthropic.
The controversies based on the tax affairs of the reputed companies have brought the theory of stakeholders. Thus, the measures should be legal and it is experienced as unethical. The staffs cope up every day. Employees are treated in a humiliation manner. With the application of the stakeholder’s theory, the concept helps to achieve the good outcomes but the poor work environment and other situation and complaints lead to the workers that creates lack of happiness in the workplace. Employees have the rights for the respect and dignity. Nike has wrong actions due to lack of management to the employees. (Forman & Pufall, 2012)
The other ethical dilemma faced in Nike is based on the low wages & long time. Nike is a kind of sweatshop. The other challenge is to pay the low wages in Nike and the excessive time to the worker in the developing nations like China, Vietnam etc. Nike is a sweatshop by large amount of people in developing nations.
The sweatshop defines that the employees are paid by low wages and work with long term. In Vietnam, few of the workers described that the 4000 VND meals were not limited or safe enough to meet the productivity. After an increase in the wages of the employees, workers were not happy and with the application of utilitarianism theory, Nike is focusing on the right thing because the company involved in reducing the unemployment condition and increase the growth of the company. With respect to the big image, the actions of the company lead to lots of advantages to a nation. In micro perspectives, the employees are dissatisfied with the salary that could harm the business with respect to less productivity. The theory is not successful while scanning it to the basic policies of international labor organization that possess the rules of the global economy that should be focused at improving the rights and safety as well as the opportunities of people & families as well as societies in the world. Nike feels caught for the issues with the causes. (Bass & Steidlmeier, 2008).
Utilitarianism is the basic definition that something is moral or good when it forms the high amount of good for the volume of people. It is the theory of normative ethics if the action is good or bad or immoral. Utilitarianism focuses on the question with the help of economic analysis that concentrates on human lives & it has actions that helps people to feel good. In this case, it results to improve the lives of the people in Nike.
This way, the ethical theory & morals are separated into good & bad. Good is said as the pleasure and lack of pain and it is known as utility. The action increases the utility and increases the benefits and reduces the negative consequences for high volume of people. Utilitarianism is called as the best principle of happiness that defines the moral action and increases the total uses in the world. If the action is moral, it helps to increase the happiness and allows to be ranked with morality. If the action creates happiness, it is moral. (Fullan?2013)
The utilitarianism theory can be applied to the Nike for the great benefits to the society and it is the greatest good for the greatest number. The principle of utilitarianism expands too many variations of rules and it helps to understand the benefits as well as losses of the satisfaction of personal preferences on economic terms. Utilitarian also differ in their views while making an ethical decision.
For the solution of ethical dilemma, the actions must be focus on the dilemma and it is vital to help the company not to face any issues in the future that can impact the company. To resolve the ethical dilemma, the company should focus on better solution that could create high values to the organization. For the challenges of poor environment, this issue is very important to handle because it impacts directly not only on the quality of the products but also the image of Nike. In case of sweatshop challenge, the challenge is related with the non-profit organization of human rights such as fair labor association and it could create negative issues to the company’s stakeholders. To manage those issues, Nike focuses on appropriate goals and strategies for internal as well as external environment. Nike organized the internal survey among employees dependent on the satisfaction pyramid to conduct the employee satisfaction chart. (Champy, 2015)
Nike developed the code of conduct to meet the individual factory and it needs suppliers to pay the employees at least the local minimum wage and other advantages in the individual employee contract or collective bargaining agreement. This way, the actions could be made for any factories not to meet the standards. Thus, the challenge is to assure that the workers get the advantages and improves the work situations. (Farber & Ascher, 2011)
To meet the compliance with the code of conduct, Nike focuses on monitoring teams dependent on 21 nations to deal with the partners. With the long term establishment of SHAPE, the proper inspection of image of labor, environment, safety and health safety and standards. This way, it provides high assessment of the labor management practices and work situations at the factory. Thus, the FLA with the responsibility of the unannounced inspections of supplier factories. When collecting the output from the teams, Nike focus on grading systems for their suppliers. This system reflects the information about the work situation and this way, the proper solutions protects from unethical challenges. (Fullan, 2015)
This way, Nike does not focus on the image but also it improves the challenges faced by the stakeholders. Thus, the data helps to generate the outcome from the teams and Nike can manage the operations well and can resolve the bad for the Nike suppliers. Thus, to improve the work conditions, workers need to focus on change of positive thinking of the company and it will be the resources in media and to get rid of negative thoughts about the company. The firm can deal with the effectiveness of the renovation. Some of the factories appear to remain close to the full compliance with the company’s code of conduct and others suffer from persistent with wages and work roles and safety issues. (Fullen, 2016)
The other reaction to Nike records the video tour of its contracted facilities of shoes in Vietnam. This way, it produces video films of its factories in Indonesia, China and Thailand. With this skill, Nike can spread the message that helps to generate the safe and clean work place. This way, it develops clean and happy workers. These actions will have positive impacts and it will improve the business ethics of the brand image and it will increase the improvement of the environment as well as the social situations and human resources. This is vital to improve the different skills that will help to improve the organizational image as well as the image of the employer. This is because of the reason the company had great impacts toward the stakeholders if there will have an image of great employer who offers good work place with multiple advantages. It is important for the company to deal with the projects implementation or programs and it will be the major focus of the target market. This way, it will meet the level of interests of society regarding the environment. Children plays the vital image for the company at the time of implementing the goals and objectives. (Doyle, 2009).
Transformational leadership theory
The transformational leader is a facilitator who focuses on decision making to establish proper conversations among the stakeholders. It is driven by different values and mission. It has more generalized vision and it focuses on the best interests. To transform something, there is a need to focus on the vision and proper communication. Thus, to remain transformative and to deal with the ethical dilemma in Nike, application of transformation leadership helps to care honestly about the people in the organization. They care for their people. He is strategic from planning perspectives and he is a good communicator and can be trusted for both passion and concentration to deal with the success. The transformational leader will help to motivate, empower and increase the morale of the employees. It will help know the people and their beliefs in a different way. It will help to mobilize the people and develop the safe place to communicate and create innovative ideas. (Leithwood? 2014)
The transformation leader builds trust and in case of Nike’s ethical dilemma, the leader will identify the ethical issues in the organization and the leader will apply the process of ethical decision making to resolve the ethical issues and to make the ethical decision. Transformational leader influence motivation and fulfill their commitment. Thus, to recommend, the transformation leader in Nike should focus on visiting the factories in developing nations. Therefore, by visiting the factories, it will not only assure the child labor who works under the illegal age but to make sure that there is no poor work environment and situations on developing nations. Apart from this, the tools and technologies could reduce the challenges associated with long time communications. With the help of internet, mobile phones and video calls and other options, it can easily help the leader to communicate with the suppliers and manufacturers. (Deal & Peterson, 2012)
Nike can also hire the controller to deal with the monitoring tasks in the organization and to help support the different areas to reduce the challenges and errors made between the worker as well as the employer. Controller is responsible for the product quality to meet the material for the quality standards. The skills and control of the material types will be checked. Nike also solved problems of low wages on different nations. Nike can also focus on national minimum wage rates to help the employees paid by sufficient wages and look for the details of salary before setting any factories in the developing nations. (Strauber? et.al, 2011)
To conclude, Nike was the first sports organization to focus on the names and addresses of the factories received from the products. This helps the non-profit organizations to meet the work goals and to improve all the laws while employing the staff for the job. Nike has to involve in CSR activities to help people feel pleasure by coordinating the important tasks. Any kind of ethical dilemma occurs at the time of business tasks need to be managed in a professional manner and in an effective way so that it could help people feel motivated and not to remain the part of victim. Thus, based on the theory, it is important to analyze whether the challenge is ethical or not. The need is ethical for worker because of egoism theory and Nike’s action is important with respect to the utilitarianism. The major important part is that Nike need to manage the benefits of both the ways.
Transformational leadership influence its envisioning to set the high standards for the company. The inspirational motivation helps to involve in the shared goals and objectives. Its intellectual simulation provides important solutions to problem. Its individual consideration helps to deal with an individual and it also provides equal and growth related opportunities through mentoring, coaching and training. (Liontos, 2011).
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