Corporate Social Responsibility of Nike

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 Table of Contents
Introduction: Nike.................................................................................................................................3
What is Corporate Social Responsibility?..............................................................................................3
Corporate Social Responsibility Theories for Nike.................................................................................4
Management Audit Verification Tool for Nike...................................................................................5
Role of CEO in Nike’s Development.......................................................................................................5
Process Activity Mapping:..................................................................................................................5
Supply chain response matrix:...........................................................................................................6
Product Variety Funnel:.....................................................................................................................6
Quality Filter Mapping:......................................................................................................................6
Demand amplification mapping:.......................................................................................................7
Decision Point analysis:.....................................................................................................................7
Physical structure:.............................................................................................................................7
Stakeholders of Nike..............................................................................................................................7
Conclusion.............................................................................................................................................9
References...........................................................................................................................................10

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Corporate Social Responsibility of Nike

Introduction: Nike
Established in 1964 Nike was originally known as Blue Ribbon Sports or BRS. Philip Knight and Bill
Bowerman are the key founders of the company in University of Oregon. The first operations of the
company included the supply chaining of Japanese shoes for Onitsuka Tiger. Later the owner made
the first Nike sports shoes which further earned the fame. With the passage of time the company
expanded its operations with the development of joint ventures. The formal marketing and
advertising were also started through which slogans were raised for increasing sports activities.
Within twenty years the company acquired numerous apparels and established core business lines.
Presently the company is famous for its sports products and training programs for promoting health
awareness among people. It has sponsored main football teams for gaining the fame. As of 2012 the
total revenue generation was recorded as $25.3 billion with the net income of $2.24 Billion.
Currently it has over 45,000 employees globally. The expansion of the company is expected to
increase in the coming period (Nike Inc. Financial Report, 2012).

What is Corporate Social Responsibility?

The corporate social responsibility refers to the relationship between global corporations,
government institutions and individuals. However the term majorly emphasize upon the connection
between a corporation and local society. This also includes the association of stakeholders with the
company for its development (Holme, 1999). The self regulation is highly governed with the business
model in which the firms perform. The business monitors ensure the ethical standards and laws are
well observed. CSR can be taken as a process through which company’s accomplishment persuade to
achieve a positive impact through regulating the environment, employees, stakeholders,
communities and consumers.

The social contract includes the application of unselfish and humane behaviour which further
promotes the self interest and self-centeredness. This can put forward some influential ideas for
collaborative control of the company. The focal point for the firms is however to maintain the social
contract among the stakeholders and people of the society. This in return increases the value of civil
society (Leonard, 2003). The key area for CSR is to expand the presence beyond the present
members of the society keeping in mind the future scenario. On the other hand the actions are
highly affected by the external environment in which the company operates. This environment
includes the local societal and wider global environments. There are numerous factors which
influence this environment including the usability of natural resources within the production cycle,
effects of competition among itself and other firms, fortification of a local community through the
development of employment opportunities, conversion of raw materials, distribution of wealth
created contained by the owners of the organization and climatic change of corporate sector
(Portney,, 2005).

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Due to the presence of uncertainty in the working environment of companies there are three basic
principles that needs to be followed by the companies including sustainability, accountability and
transparency. These factors include the present steps that are taken and their affect in the coming
future. The proper usability of resources is also included for the future use and in finite quantity.
They emphasize upon proper utilization of resources which further needs regeneration which can be
described through the output models of resource consumption. It further includes the quantification
of the effects of the actions that are taken and the parties that are involved through the
quantification. This in return implies an exposure to stakeholders for the effects of actions for
organizational development (Crowther, 2008).

Corporate Social Responsibility Theories for Nike

The Milton Friedman theory for corporate social responsibility depicts that in any business people
are the key players who hold responsibility for maximising the profits. The people who are employed
by the business companies have the accountability towards the business owners for meeting up ht e
desires of the company. Every individual has the perceived liability in areas away from the business.
The main methodology for Nike with respect to the Friedman’s theory should be to dissemble the
mutual representation of businesses into individual businessmen and to present them as what they
really are; hence as a combined effort of individuals who are paid to work due to the bidding of the
owners. For fulfilling these aspects the management of Nike should be motivated for fulfilling the
key roles for creating a large profit margin instead of evaluating their role in the society. Nike is
focused upon providing athletic brand to the customers through innovation and motivation to every
athlete. It has the major focus on observing the major challenges that are present today and the
future. The management of the company stress upon applying core strength to bring about a
systemic change in the products including footwear, apparel and sports equipments (DeTienne,
2005).

The principles of sustainability are strictly followed as a catalyst for revolutionising the
methodologies of business. The social, environmental and economic challenges are met through
seeking opportunities which can be beneficial for athlete and the environment. This also improves
the creation of a network between the company and customers. Innovative materials are being used
by the company including recycled polyester obtained through plastic bottles from landfills since
four years. Better products are being produced though transforming markets and perking up the
lives of consumers through leveraging sustainability as the greatest aspect for innovative
opportunity (McWilliams, 2006).

As sport is the universal language it helps the societies to encourage joint effort, teamwork,
collaboration, creativity, emotional and physical health and flexibility. It also encourages people to
develop self confidence and is taken as the greatest investment a society can make, hence Nike is
focused upon maintaining the sustainability and accountability factors through an ease of access to
sports for the people (Vogel, 2006).

On the contrary Nike has not been the most successful company to follow the CSR policies. However
it managed to rotate its image in the recent decades as it was characterized as the symbol of abusive
labour. As the labour prices increased in South Asia including Korea and Taiwan the authorities
moved its labour market to China and Indonesia. It further developed a department whose job was

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to improve the efficiency of labourers. However the company faced several insistent criticisms for
the promotion policies of products for which the Fair labor Association was created. This was an
organization of Nike who represented the human rights and ethical code of conduct for all the
employees. It also restricted the minimum working age and labor hours for people. Due to the
introduction of such policies other famous brands also joined the venture of introducing such laws.
Regular audits were formed for solving the problem areas of the company. The company was the
first one to complete the list of factories it agrees with due to the publication of project reports
which reveals the situations and pay the factories acknowledging the issues (Hess, 2001).

Management Audit Verification Tool for Nike

For the observance of Friedman’s theory by the employees the management of Nike makes use of
management audit verifications frequently. The tool helps the management to observe the four core
areas of the employee management including the number of hours worked, total wages, benefits,
labour relations and complaint systems. The tool helps the management of Nike to comprehend the
impact analysis of employee management through frequent visits and addressing noncompliance
issues. The local law and Nike’s code of conduct is followed through Code Leadership Standards
(Belal, 2002).

During the year of 2007 the MAV tool was added by the head management of the company for
monitoring purposes and replacing the management audits. Hence the already existing tools were
revised with the decreased number of audits to be conducted. During the following year MAV audits
were conducted throughout the 80 factories which resulted in better individual performance of the
employees and increased manufacturing performance due to the Olympics games. The year 2009
was considered as beneficial due to the improvement in apparel factories and supply chain
management. The critical issues identified were clearly addressed by the management due to the in
depth analysis by the tool and qualitative analysis of the root causes. The action plans were created
for following the Nike’s Code Leadership Standards for monitoring the progress and development of
the company. The Safety Health Attitude People and Environment audit was conducted during 2007
for fulfilling the self evaluation criteria for focusing upon the ways for employees to fulfil the
requirements of corporate social responsibility. The ESH management standards were introduced
through conducting this audit for improving the capacity of people and factories for managing
critical issues efficiently.

Role of CEO in Nike’s Development

The Chief Executive Officer plays a key role in monitoring the activities of the company. As Nike’s
CEO mapping tools should be applied for proper management of the tasks by the management of
the company.

The stream mapping tools are derived from numerous origins. These include: operations
management, research, logistics, engineering and actions. Following are the stream mapping tools
described in the article:

Process Activity Mapping:

The derivation of this tool is from industrial engineering as the concept revolves around the
techniques and methodologies involved in elimination of waste and discrepancies for obtaining

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quality in the products and services. It is a cost reducing element in which services are improved for
the customers. The main steps in the mapping include (Burgess et al., 2006):

Observing flow of procedure  recognition of waste  rearrangement of process in proficient

sequence  obtaining better flow pattern  reassessing of flow of pattern and removal of
unnecessary steps

The case example of Nike should adopt this procedure for obtaining a simple flow of information
starting from preliminary analysis of the process followed by observing the detailed footage of all
entries in each step and process. Each of the steps taken is classified into numerous activity types
including operation, inspection and storage. The labour involved and logistic support can be easily
calculated for every step that is to be taken through eliminating all waste from the procedure and
improving the overall efficiency. Hence the procedure for adopting such a methodology was
beneficial for pinpointing the relevant details of every step to be taken.

Supply chain response matrix:

The tool focuses upon the supply chain management which further enlightens the logistics support
and improving the condition of people involved in it for product innovation and export. The logistic
analysis spotlights scheduling and routing of transportation and logistics equipments for perking up
the customer services. This includes the improvement in vehicles through tactical decisions. These
include the long-standing resource allocation for strategic routing decisions and short term resource
allocations (few days) for tactical transportation.

The procedure implemented in the case study included the techniques for inventory analytics which
further emphasise upon inventory management parameters for covering the service levels with
lowest investments. These parameters include order capacity, safety of stock and cycles involved in
product development. The mapping consists of horizontal and vertical axis through which inventory
amounts can easily be detected for improving the further steps that should be taken for managing
the logistical support.

Product Variety Funnel:

The tool originates from operations management processes and focuses upon the type of
production operation to be used with respect to the required functions. Hence the usage of
inventory can be maintained through using this tool through observing the clear picture of type of
manufacturing being done at a particular facility. It is related to the IVAT analysis which also gives
and portrays the image of internal operations of the company. Each of the step analyse the type of
plant that is being operational, for instance I plants comprises the unvarying production of manifold
similar items which includes the chemical plants and V plants are typically for textiles and fabrication
industries (Bell, 1997). Hence the funnel helps to understand the resemblance and difference among
the industries for supply chain operations.

Quality Filter Mapping:

The main question for every industry is the process involved in the manufacturing of the product.
However evaluation of the quality of the product can be accessed through this tool which looks
deeply into the numerous parts of the manufacturing chain and filter out the problems related to
products, service or internal scrap. Hence the determination of type of defect can focus upon the
defect in chain of production.

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As the company in the case study implemented this strategy it was easy for the management to look
deeper into the details of product manufacturing for improving the quality. Getting rid of waste at
every step was proven useful in recuperating and managing the supply demands for manufacturing
of products.

Demand amplification mapping:

The process is also known as Forrester effect in which poor decision making power is emphasised.
High costs can be due to irregular timings, mishandling of data and delays in supplies in the
manufacturing plants. This can also result in increasing the fiscal year’s results. Hence mapping the
appropriate demand for the needed supply chain and timely decisions through elimination of waste
can lend a hand in increasing the profits of the company. Hence the tool focuses upon maintaining
the timely decisions with respect to the required demand.

The methodology was adopted in the case study, however benefited the company but on longer
terms can be proven injurious due to either incompetent production or excessive inventory. The
distribution channels are not wholly used which can also invoke poor customer services due to the
damage in financial conditions.

Decision Point analysis:

The tool focuses upon the manufacturing of products to match with the number of orders that are
demanded by the consumers. The supply chain is being carried out against the forecast alone. The
decision point can be taken as the point from regional distribution centre to the national distribution
centre for meeting the manufacturing needs. However it is necessary to obtain a downstream or
upstream point for ensuring the operations.

The overall performance of the company in the case example improved through visualising the
consequences of every step to be taken by the administrative issues for product management. The
outcome for events, resource costs and usefulness of supply chain was verified before decision
making which resulted in lower costs and higher profits.

Physical structure:
The tool focuses upon the examination of the whole structure of the industry through production
chain. Every inch of detail is examined including the raw materials, assemblers and the affect of
product in the market. Hence the whole chain of production can be determined and weak points can
be extracted for obtaining better results. Cost for each step is also determined through observing
the physical structure.

Stakeholders of Nike
Stakeholders include the groups of people who are interested in the business for expanding its
operations (Harrison and Freeman, 1999). The main stakeholders for Nike include consumers,
shareholders, financial agencies, local communities, labourers, governmental agencies, suppliers and
pressure groups. They share common interests for Nike and are brought on a single policy, for
instance including the customer question time, surveys for staff members and staff forums. However
the management of Nike emphasise upon three major stakeholders including consumers, suppliers
and employees. The consumers are asked for their feedback through which their views are heard

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and according to which better services are provided for making the management’s role stronger. The
suppliers are also treated well and due to which Tesco has the best supply chain management and
employees who are encouraged to give their feedback through Viewpoint Staff Survey in which
responses to Staff Questions, Time sessions and staff forums are observed. The stakeholder
mapping can be done as follows (Woods, 2007):

Recognition of relevant groups  analysis of stakeholder’s interests  mapping of related

objectives of stakeholders  ranking of stakeholders

Stakeholder mapping holds vital importance for Nike as the needs of the firm makes the job for
objective meeting easier. The problems prevailing in the business can be determined which can
further help to devise a solution for the management of Nike. However the mapping procedure
requires revising on a regular basis for evaluating that how well the meeting with the parties of
interest go and the steps to be taken to change the strategic steps (Walsh, 2008).

The corporate social responsibility refers to the relationship between global corporations,
government institutions and individuals. However the term majorly emphasise upon the connection
between a corporation and local society ( Lindgreen, 2010). For Nike this also includes the association
of stakeholders with the company for its development. The self regulation is highly governed with
the business model in which the firms perform. The business monitors for Nike can ensure the
ethical standards and laws are well observed. CSR can be taken as a process through which Nike’s
accomplishments can be persuaded to achieve a positive impact through regulating the
environment, employees, stakeholders, communities and consumers (Jones et al., 2005). For Nike
the social contract includes the application of unselfish and humane behaviour which further
promotes the self interest and self-centeredness. This can put forward some influential ideas for
collaborative control of the company. The focal point for Nike is however to maintain the social
contract among the stakeholders and people of the society. This in return increases the value of civil
society. The key area for CSR in Nike expands the presence beyond the present members of the
society keeping in mind the future scenario. On the other hand the actions are highly affected by the
external environment in which the company operates. This environment for Tesco includes the local
societal and wider global environments ( Andersen, 2009). There are numerous factors which
influence this environment including the usability of natural resources within the production cycle,
effects of competition among itself and other firms, fortification of a local community through the
development of employment opportunities, conversion of raw materials, distribution of wealth
created contained by the owners of Tesco and climatic change of corporate sector.

The stakeholders lend a hand in prioritizing key problems and widen the corporate responsibility
policies. Through a great deal from the interactions it was concluded that productive engagement
with stakeholders is most frequent approach that enhance the best approach to the challenges Nike
have in addressing (Doane, 2004).

Nike connects with a wide range of stakeholders on a continuing base together with civil society,
industry, government, consumers and shareholders. Nike performs this unceremoniously, through
set of connections and organizations that it contributes in or is affiliate of and as a prearranged part
of its policies on issues and challenges. Nike in addition accomplishes this through our official
enterprise work. Each of Nike’s key enterprise is presided over by agreements, union and operating
principles, encouraging the responsibility and governance of each partnership. Nike have also

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worked to appreciate how multi-sector corporation are finest brokers and how to make them
accomplish something. Nike considers that increasing and cleansing skills of paying attention and
sense are serious to a company's success. This has been factual for Nike's record of taking notice to
and innovating for athletes to deliver performance product and the approach of Nike’s corporate
responsibility efforts. Lately Nike has commenced to take appointment with the external world to a
new level. Nike has developed a register of stakeholders for harmonizing the requirement to meet
up the following different criteria: Understanding and aptitude to remark on the company through
previous interactions, aptitude to make available new and different perspectives, proficiency and
standing in corporate responsibility strategy and specific contented areas, Geographic, gender and
subject variety.

Conclusion
Numerous methods are present for managers of Nike to take decisions. However corresponding to a
method for a problem is one of the expertises. The present day manager needs to act as a partner,
investor, customer and coach to take decisive decisions. For achieving the upper level of innovation
managers need to be completely occupied for making strategic planning and decisions. However
they also need to consider the employee’s way of thinking. Through balancing the knowledge of
science and philosophy, the complexities of Nike’s CSR management can be resolved in the present
competitive market. With the passage of time the concept and theory of CSR is becoming the top
most significant theories among the management theories. It explains the internal sources with
respect to Sustained Competitive Advantage or SCA. It proposes that if an organisation is aimed at
achieving the state of SCA it must manage the controlling Valuables, Rare, Inimitable and Non-
substitutable resources. It must also have the capabilities to apply the resources which are obtained
through dynamic decision making, competence and Knowledge Based View (KBV). RBV is famous for
its simplicity due to its core message. However it has been criticised for negative aspects for dynamic
market contexts. However following are some outcomes that CSR strategies can fac

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