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Essay on Nike Dilemma

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Nike Dilemma

Facts

Nike was accused of allowing the continuation of sweatshops. Although their workers worked for excessive hours, they continued being paid low wages. Additionally, they worked under poor working conditions, whereby, they were dismissed with no reasons (Nike Solution for the Ethical Dilemmas Marketing Essay, 2015). The employees were also intimidated and harassed by the company’s management. The management verbally and physically abused the workers. Nike was accused of protecting their workers’ rights (Wazir, 2001). For instance, in Vietnam, the workers were exposed to toxic fumes. Employees in other companies around the world also complained about low wages and poor working conditions.  There is poor management of the workers by the firm’s leaders.

Stakeholders and their stakes

They include clients who are likely to be criticized for wearing shoes or clothes from a brand that has negative reputations. Other stakeholders that are likely to be affected by Nike’s dilemma include the employees (Neudorf, 2013). They are directly affected by the dilemma. For instance, they are poorly treated and paid low wages. The vendors are also likely to be affected by negative publicity of the brand. Their sales are likely to fall as people may avoid purchasing the brand.

Secondary stakeholders

The stakeholders involved in the case include the primary stakeholders (Neudorf, 2013). They include the investors who are affected by their actions. The investors are likely to lose following the drop of the company’s sale due to bad publicity. The top management would also be negatively affected by unfavorable publicity. The management will be faced with a court case due to harassment of the workers and denying them their rights. The top management is required to ensure that all the government laws are followed (Fernando, 2010). The communities may also be affected by Nike’s ethical dilemma.  Communities have a huge impact on Nike. Clients purchase a product that has a positive influence on communities. The bad image may affect the various community developments that are supported by the company.

Dilemma/ Issue before the scandal

Prior to the sweatshop scandal, Nike’s management faced with various dilemmas. First, the company worked towards increasing its profits at all cost (Birch, 2012). The management had to come up with different strategies that would assist the company in attaining its goals. Secondly, Nike was working towards becoming the world’s leader. In this case, the management had to come up with ways of ensuring that it maintained its image and at the same time become a leading company in the world.

Action that the management took

Following the ethical Nike ethical dilemma, the management decided to take various actions. First, the management had to lay off workers as the sales declined. The company also decided to be transparent about the issues that it faces (Nike Solution for the Ethical Dilemmas Marketing Essay, 2015). The management acknowledged that there were problems with forced overtime and abuse of the workers. They admitted that consumers would not want to buy products from a company that has a negative reputation (Nisen, 2013). The admission assisted in encouraging positive sentiment toward the enterprise. Additionally, the management decided to raise the minimum wage.  The suppliers are required to pay at least minimal wages as well as additional benefits highlighted in every employee contract.  Additionally, the company enhanced oversight of labor practices. It ensured that the managers properly treated all the workers. They also made sure that the working environment was conducive for the client. The factories had to have clean air. In this case, the company minimized the toxic fumes that affected the worker’s health. Nike started the “Code of conduct so as to ensure that every company followed it.

Benefit analysis of management actual course to stakeholder

Primary stakeholders

One of the primary stakeholders include the employees. The management’s actions will highly benefit the workers. First, they have an opportunity to work in safe environment. They are offered high wages which will help them support their families. Employees are also protected from harassment, and they could enjoy their rights. Customers are also primary stakeholders (Neudorf, 2013). The management’s decision will have a positive impact on the consumers. The employees can work towards the company’s goals which are providing high-quality products for their clients. The customers can purchase high-quality products at good prices. The company can satisfy the interests of the consumers. 

Other stakeholders include the suppliers (Neudorf, 2013). They are positively impacted by the positive company’s image. Their sales are likely to increase as clients would feel free purchasing products from the enterprise. The vendors are also expected to increase profitability with the increase in sales. Other primary stakeholders that will be affected by the manager’s decisions include the investors. The decisions will have a positive impact on the investors return. They will enjoy high benefits due to increase in sales. The investors’ confidence in the business’ ability to handle issues will increase. 

The secondary stakeholders include the communities (Neudorf, 2013). They will be positively impacted as the company will increase its involvement in community development. Nike will be in a good position to handle different issues within the community. Additionally, the general public will benefit from the company’s decision. Nike will work towards fulfilling the general public interest. They will ensure that the workers are well treated, and there is no environmental pollution.

Ethical principle to review the benefit analysis

Being just is one of the ethical principles that can be used to review the benefits (Goodwin, 2012). Nike has to ensure that it is fair to all its stakeholders. The management decisions affect all the stakeholders, and they should have equal benefits from it.

Another ethical principle is helping others, Nike has to ensure that it benefits it stakeholders as well as others who might be affected by the decision (Goodwin, 2012). Another ethical benefit that can be used is respecting autonomy. The people have the right to exercise freedom of thought.

Alternatives open to management

The Nike’s management should understand the importance of ethical accountability. The ethical aspects that the management needs to consider include leading by example. The senior management should show that they are openly committed to social responsibility as well as ethical conduct (Wieland, 2013). They have to ensure that they renew the ethical values regularly. They should also focus on social responsibility.   Additionally, they should actively communicate to the employees about issues that are taking place in the company. It should have publications as well as directives. Most importantly, the management should make sure that they communicate through actions. The company’s management should set the tone of the company. They should ensure that all the rules and regulations are stipulated clearly.

Impact of Option courses of action on stakeholders

The alternative courses of actions would meet the interests of the workers. They will be free to talk to the management without feeling intimidated. Excellent communication within the company will motivate the employees. The consumers’ expectations will be met as the workers will work toward fulfilling the business’ objectives (Neudorf, 2013). They will ensure that they produce high-quality products that will meet the consumers’ interests. The actions will have highly affect the investors. They will enjoy the benefits of the good relationship between the management and the workers. The actions have minimal impact on the communities. Additionally, the actions will have minimal benefits for the general public. Nike’s decision will mainly be directed to the workers rather than the general public.

Ethical principle

One ethical principle to review the course of action is trustworthiness. The workers should be able to trust the management as well as other stakeholders. The concern of others is another ethical principle that should be considered.  Loyalty is another ethical principle that can review the benefits analysis (Goodwin, 2012). The management should be committed to ensuring that they meet the interests of every stakeholder.  The management should be committed to excellence. They should make sure that they meet the stakeholders’ expectations.

Course of action

In Nike’s case, it is clear that the company violated various laws. First, it denied the workers their rights which are against the stipulated human rights (Althobaiti, 2015). Therefore, the upper management should have been answerable for poor management of the workers. The management should ensure that they improve the company’s structure. They can introduce a flat structure which would allow free communication between the employees and the management

(Wieland, 2013). They can as well set regular meetings so as to listen to the employees’ grievances. Also, the management should have come up with different shifts that would ensure that the employees are not overworked. Every work should be assigned to one shift per day. This will make sure that they are not overworked. In case of any extra hours, the management should pay the workers.

Aftermath of incident

After the incident, Nike acknowledged that the company had taken part in allowing the exploitation of its employees. Nike uncovered cases that involved workers’ harassment in their different companies. Nike included non-governmental businesses to help in monitoring and inspection of the factories (Nisen, 2013). It also introduced employee education program. The program allowed the employees enjoy free secondary school courses. Families were also offered a loan as an extended benefit.  The organization also funded research on responsible business. This will ensure that the company is updated on the best practices.  The company also laid off some of the workers due to the decrease in sales. However, the Nike has to ensure that it develops strategies that would help it enhance competitive advantage. 

One thing that other companies should learn from the case is the importance of ethical practices within the enterprise (Goodwin, 2012). Employees and other stakeholders play an essential role within the enterprise. Hence, it is important for an organization to consider their interests. Furthermore, a brands negative image may impact all the stakeholders involved. It is likely to affect its sales and entire operations.  Another lesson that other firms should learn is the importance of proper management of workers. They should consider the employees’ rights when developing strategies.

Questions

  • What do you consider as the best ethical practices for a company when handling workers?
  • What are the ethical principles?
  • How does a company make ethical decisions when it is facing an ethical dilemma?
  • How does the interest of the company serve the involved stakeholders?

References

Althobaiti, S. (2015, April 18). NIKE’s Ethical Dilemma. Retrieved March 30, 2017, from

https://prezi.com/vh4dcagji5ow/nikes-ethical-dilemma/.

Birch, S. (2012, July 06). How activism forced Nike to change its ethical game | Simon Birch.

Retrieved March 30, 2017, from https://www.theguardian.com/environment/green-living-blog/2012/jul/06/activism-nike

Fernando, A. C. (2010). Business ethics and corporate governance. Delhi: Dorling Kindersley

(India), licensees of Pearson Education in South Asia.

Goodwin, B. (2012). Ethics at Work. Dordrecht: Springer Netherlands.

Neudorf, D. (2013, October 3). Nike. Retrieved March 30, 2017, from

https://prezi.com/xeez9axaj4l3/nike/.

Nike Solution For The Ethical Dilemmas Marketing Essay. (2015, March 23). Retrieved March

31, 2017, from https://www.ukessays.com/essays/marketing/nike-solution-for-the-ethical-dilemmas-marketing-essay.php.

Nisen, M. (2013, May 09). How Nike Solved Its Sweatshop Problem. Retrieved March 30, 2017,

from http://www.businessinsider.com/how-nike-solved-its-sweatshop-problem-2013-5?IR=T.

Wazir, B. (2001, May 19). Nike accused of tolerating sweatshops. Retrieved March 30, 2017,

from https://www.theguardian.com/world/2001/may/20/burhanwazir.theobserver

Wieland, J. (2013). Standards and Audits for Ethics Management Systems: The European

Perspective. Berlin, Heidelberg: Springer Berlin Heidelberg.

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