Nike: From Sweatshops to Leadership in Employment Case Study

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Nike: From Sweatshops to Leadership in Employment Practices

Nike

Discern how a more effective ethics programs and a more viable code of conduct could have mitigated the ethical issues faced by Nike.

Ethics programs are expressions of the increasingly common point-of-view that corporations, as legal persons, have an ethical responsibility to society as well as to shareholders. Early on in its corporate history, Nike branded itself as a youth-friendly brand, and many of its customers were idealistic and cared about ethics. Its philosophy of being the best one can be seemed to cohere with a particular ethical worldview that stressed personal empowerment. Thus, it was a great shock to the world when it was revealed that Nike products were manufactured under ethically questionable circumstances (Ferrell, Fraedrich, & Ferrell 2011: 217).

Nike stated that workers in its factories were paid above the minimum wage in the nations where it based. Its critics contended that these wages are still too low. A code of conduct states the ethical principles under which the company is operating in a concrete way and holds the company accountable to specific practices (Ferrell, Fraedrich, & Ferrell 2011: 388). Codes of conduct can also mandate what the company looks for in a supplier. Nike would have been able to refer to its code of ethics, when evaluating and defending its practices, and also had some contingency plans to deal with charges of ethical misconduct.

Q2. Describe an ethics training and communications program that may have kept Nike from encountering the ethical issues it did in this scenario.

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One of the problems with Nike's manufacturing system was the lack of control and oversight it had over companies it subcontracted. Nike needed to communicate its standards to these entities, as well as to members of its own workforce. Ethics oversight cannot be limited to Nike personnel. Also, when a company is as diverse and internationally-based as Nike, there will be very different ethical standards on a country-by-country basis. Regarding acceptable environmental standards, many nations in the developing world have very lax requirements as to what constitutes a toxic substance or unsanitary working conditions. Nike should have been more mindful of cultural differences in the developing world, and taken these into consideration when briefing employees and subcontractors regarding its expectations of good labor practices.

Today, according to the Nike website, the company states: "We expect our suppliers to share our standards and operate in a legal and ethical manner...the Code of Conduct addresses contractors that manufacture Nike-branded products. It directs them to respect the rights of their employees and to provide them with a safe and healthy work environment" (Ethics and conduct, 2011, Nike Biz).

Q3. Determine and discuss how Nike could have benefited early on from ethics auditing.

An ethics audit is a comprehensive program to determine whether a company's ethics program is effective (Ferrell, Fraedrich, & Ferrell….....

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