Case Study
Ethics has a different meaning to many different people and companies. A lot of companies pay lip service to the term ethics and make out to be Corporately Socially Responsible when it is a public relations stunt. A definition of ethics is “The values an individual uses to interpret whether any particular action or behaviour is considered acceptable or appropriate.” In this case we are dealing with the world renowned company Nike. Nike is one of the worlds must recognisable and popular sports brands with the ‘swoosh’ logo becoming a worldwide symbol. They are the “world’s leading supplier of athletic shoes” but this has not come without any controversy. By the end of this case study you can evaluate whether or not you think Nike is an ethical organisation.

Nike’s use of sweatshops and child labour signalled global outbursts, with Activists even creating the “swooshtika”, a swastika made up for Nike “swoosh” logos. Their ethical background could have been said to be non existent and their reputation for profit maximisation at all costs was having a detrimental effect. Nike was being “targeted due to the fact that they were the world’s best selling brand and they in complete denial about any malpractice in which they took no responsibility for the operations that took place in sub contracted factories in third world countries.” Nike were trying to cut costs by setting up manufacturing factories in countries that labour costs would be minimal, so that they could increase their bottom line. Although the protests were loud, gathered momentum and their exploitation of child labour was made public, did this stop people buying their products? This is a factor that Nike had to weigh up.

Nike had a poor track record of CSR. In the late 1990s it was “linked to wage abuse, child labour and trade union discrimination. It was criticised for its culture of disposability and use of toxic materials.” Nike has long faced globally coordinated protests from NGOs and documentary makers like Michael Moore but in 2009 their strategy took a dramatic change. Switching from one of the most unethical businesses across the world to a sustainable marginally ethical business, with the aid of Hannah Jones Nike undertook a new ethical scheme which would shake the earth. “While sustainability issues used to be on the fringes of Nike’s concerns, they are now a key part of planning for the future”. Nike is now the world’s “second largest user of organic cotton”. In the past 12 months cotton prices have risen by 185%, so not only does this help maintain an ethical lifestyle for Nike this is also benefiting their profit maximisation scheme. However, is this ethical lifestyle still all about the money or is it for the good of the environment and the “50000 staff in which they employ?”

Can Nike’s previous actions be overlooked? If sustainability does not reap the rewards for Nike’s owners, will they avail of the low labour costs and will they revert back to wage abuse to help maximise profits. These are the questions on people’s lips. However, people cannot look past the fact that Nike from implanting a more ethical culture and lifestyle into their organisation they have received nothing but benefits. “All the Nike football strips that were worn at the 2010 World Cup were made with polyester extracted from plastic drinks bottles.” If that isn’t impressive enough, Hannah Jones aims to have a closed loop manufacturing operation in Nike by 2020. This would be the first of its kind for a top 5 world retailer like Nike. Newsweek magazine named Nike in the top 10 most greenest companies in America. This is a turn around that could only have been dreamt about in the mid 1990s, with global revenues increasing to £3billion and a 10% growth in annual sales.” It has proven that the ethical approach works but can we actually call Nike an ethical company now?

Some factors that are still clear is that Nike have not made the complete transition phase as of yet. The introduction of Hannah Jones to the main executive board and the change in approach to CSR is still mirrored by the perceptions of people around the world. When such a vivid reputation of child labour and wage discrimination in poor countries is associated with your company, it is hard to change these perceptions. If the “ethical approach” was not reaping the financial benefits, would Nike still be undertaking this scheme? Hannah Jones was quoted saying, “Footwear waste alone cost us $800million for one year”, therefore, would this be a more liable reason as to why Nike undertook such a rigorous ethical scheme?

Overall, Nike is undoubtedly good at what they do. They have such a huge customer base, that whatever they put their hands to sends ripples worldwide, however, their ethical viewpoint is wide open for debate. They have been criticised and they have been praised but the underlying question is, do you think Nike is an ethical organisation?