Nike Corporate Social Responsibility - Essay Example

Nike Inc Corporate Social Responsibility [Supervisor’s Nike Inc Corporate Social Responsibility The paper attempts to discuss Corporate Social Responsibility activities in Nike Inc and aims to provide relationship between CSR activities with financial performance of the company. The paper also provides the role of Human Resource Management in developing policies of CSR for the company and discusses guiding principles of corporate governance. Furthermore, the paper evaluates the role of government in enabling CSR activities of the company. The Company Nike is a US based multinational corporation and headquarter is located in Oregon State. The company employs over 44,000 work forces worldwide. Nike Company was started by two visionary men that redefined the sportswear industry. Bill Bowerman worked as a field coach and Phil Knight was a middle distance runner at Oregon University. Phil Knight sent his footwear ideas to manufacturing companies in Japan after completing his MBA from Stanford University but his ideas were rejected. He was then associated with Tiger Shoes Company and sent free samples to his Oregon University field coach. The idea struck Bowerman and became his partner to form Nike Company (Nike Inc, 2012). Mission Statement The mission of Nike is to entice innovation in every athlete and to encourage inspiration amongst every mankind. Nike considers every human being an athlete if they have a body (Nike Inc, 2012). Part 1 Introduction to Corporate Social Responsibility The concept of CSR is the commitment of companies to act in accordance with ethical guidelines and to participate in economic development of the country to improve lives of the people. The main objective of a business is to earn economic profits, but if social objectives of the community are met then it can offer company with huge financial gains in the longer run. The companies that apply CSR must comply with norms, duties and laws of the particular society. Corporations have a duty towards a society as they have an impact on the decisions of companies. Ethical disposing of waste materials carried out by factories or strategic decisions made by a company are all counted CSR key activities (Schwartz, 2011). Part 2 Nike corporate policy on CSR Nike has a strong ethical base for participating in community work and proving themselves to enhance the development of the society. Social objectives are maintained by the company to achieve them accordingly (Nike Inc, 2009). Cut Energy The company plans to cut the emission of carbon dioxide by 20% till fiscal year 2015. The company believes that carbon emission is the main reason for global warming (Nike Inc, 2012). Reject Toxics The company aims to minimize the utilization of toxic chemicals which are used as an ingredient to manufacture a product. Nike Inc has a stance that the wastes of toxic chemicals are damaging for the environment (Nike Inc, 2012). Support Communities Nike support communities through innovation in their products and advocacy. The company has a target to invest more than 1.5% from the total amount of income before tax for community serving purposes (Nike Inc, 2012). Relationship between CSR and Financial performance of Nike Nike believes that corporate social responsibility can increase financial performance of the company because it changes customers’ perception in purchasing company’s product. Aiding the community can increase customers’ preference in buying a particular company’s products. The particular preference can increase financial performance of Nike which is believed by the top level managers of the company. Intense competition amongst top companies has allowed them to increase their goodwill by supporting ethical working for the betterment of the environment (Nike Inc, 2009). Pressure on Nike to Develop CSR Nike had pressures from worldwide customers and from different states government to develop its CSR plan for future. People enforced Nike to contribute towards community and to avoid using child labor in developing countries. This created negative impression in minds of customers and nearly destroyed the goodwill of the company. Then Nike came up with a huge CSR campaign. My opinion towards Nike social corporate responsibility is that the company is focusing upon taking steps against its suppliers who encourages child labor. I like the company’s stance on decreasing toxic substance in their ingredients and their efforts to cut carbon emission (Nike Inc, 2009). Part 3 Nike Company Child Labor Nike was accused of using child labor in different developing countries around the world and was also blamed of providing very low income to those labors and charging higher price in return from the market. Pakistan had been the country with highest cases recorded for child labor supported by the company. However, the company denied such activity and contacted its suppliers around the world that were hired by Nike to promote its brand. Nike came up with ethical guidelines which were then distributed amongst its suppliers in countries where child labor was reported. Role of HRM in Policies of CSR An important role is played by HRM in developing CSR policies for the company because it helps in managing CSR implementation. HRM helps in recruiting, managing and motivating people for the benefit to achieve employee engagement. HRM is responsible in improving lives of their workforce and implementing strategies for their growth. Therefore, the child labor issues and unethical working conditions are monitored by HRM department because it is responsible for the company’s workforce. This ensures a contribution of HRM in making CSR policies for the company (Simons, 2011). Principles of Corporate Governance Corporate governance is an arrangement of systems through which businesses are managed and directed. It has an influence on the performance of the company and set future objectives of the business. The main principles of corporate governance have been described below: To identify and recognize responsibilities of management and the Board of the company. Structuring of the Board To promote ethical decision making The rights of shareholders to be respected To minimize risks To enhance and encourage performance To make timely disclosure of the company Safeguarding the integrity of the company Respect the rights of Stakeholders (Tricker, 2012). Government’s Perspective As the government is included as the shareholder for the public limited company and they appoint some members of the board of directors, therefore, the government’s perspective on corporate governance is very clear. The government has a view that board of directors should have the power in governing corporations which also include hiring of a CEO. The government believes that the company would perform good when mutual consent would be included from all members of the board. Roles and Responsibilities of Government Regulations Enforced by Government Since the industrial revolution, the entire responsibility to fulfill social objectives of the company relied solely on government. However, the rising trend of companies’ involvement in supporting CSR activities increased just to make a positive impression in minds of customers. This trend has been fully supported by government of states because the social responsibility of the government was minimized. Legislations, the taxation system and regulations have become a tool for government in protecting social objectives of the company. These tools are reflected on the company procedures and decision making as they have to comply with government rules and regulations. Pressure from Business Organization Over recent years, organizations have forced and negotiated with government institutions to make favorable changes in laws and regulations to minimize their control over business activities (Schwartz, 2011). Companies have claimed that the government should provide them freedom in managing their business activity in terms of supporting communities. Pressure from Society Society pressurizes the government to enforce laws that manage business activities in supporting the community and the general public. The societies have a perception green and clean environment and they prefer companies to support communities and respect the environment or they boycott in the purchase of that company’s product. Nike Manages Downsizing and Employee Discrimination While downsizing, Nike evaluates the job importance of each employee with their respective contribution in company’s performance. Individual participation is then monitored by the human resource department. Compensation is provided to an employee who gets an approval for being laid off from the company so they do not get de-motivated. Nike has a specific secret box in which employees can drop their complaints caused in the work place. The drop box is reviewed each day by the company top official. Nike uses this strategy to tackle employee discrimination and work related problems (Nike Inc, 2011). Conclusion Main Problems Globally Nike had been facing many issues globally regarding child labor, providing low income and charging higher price for the product in the market for a lesser investment cost. These global issues had significantly resulted in decrease of sales of Nike’s products. This decline had caused a stir amongst the top managers of the company. The company decided to distribute ethical guidelines to all its suppliers around the world in managing their operations. Reasons for Problems The major reason for these problems includes handling of outside operations of suppliers that are operating in developing countries. The company had no control over their suppliers and franchises; neither had they developed a proper guideline that could govern their business practices. List of References Nike Inc, 2009. Corporate Responsibility Report. Corporate Responsibility Report. Oregon: Nike Inc. Nike Inc, 2011. Nike Inc Annual Report. Annual Report. Oregon: Nike Inc. Nike Inc, 2012. History & Heritage. [Online] Viewed at: HYPERLINK "http://nikeinc.com/pages/history-heritage" http://nikeinc.com/pages/history-heritage [Accessed 01 November 2012]. Nike Inc, 2012. Nikes Mission Statement. [Online] Viewed at: HYPERLINK "http://help-en-us.nike.com/app/answers/detail/a_id/113/p/3897" http://help-en-us.nike.com/app/answers/detail/a_id/113/p/3897 [Accessed 01 November 2012]. Nike Inc, 2012. Raising the Bar. [Online] Viewed at: HYPERLINK "http://www.nikeresponsibility.com/" http://www.nikeresponsibility.com/ [Accessed 01 November 2012]. Schwartz, M., 2011. Corporate Social Responsibility: An Ethical Approach. 1st ed. New York: Broadview Press. Simons, R., 2011. Human Resource Management: Issues, Challenges and Opportunities. 1st ed. Canada: CRC Press. Tricker, B., 2012. Corporate Governance: Principles, Policies and Practices. 2nd ed. Hampshire: Oxford University Press. Read More