UNIVERSITI KUALA LUMPUR

BUSINESS SCHOOL
JULY SEMESTER 2022

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EIB20103

BUSINESS ETHICS AND CORPORATE GOVERNANCE

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GROUP TITLE:
NIKE

PREPARED BY:

NAME ID NUMBER

AHMAD YASSIR BIN MOHD KHAIRIL HAZMIE 62211121406

MUHAMMAD HARRIS IRSYAD BIN IZWAN RAZIF 62211121386

NOR ASHIKIN BINTI NOOR AZMAN SHAH 62211121802

SITI AISHAH BINTI SAZALY 62214222171

SITI NOOR FATIHAH BINTI ISMAIL 62214222078

PREPARED FOR:
DR. NOR FAIRUZ SYAZANA

SUBMISSION DATE:
7th September 2022
TABLE OF CONTENTS

Contents Pages

Company Background 2

Mission, Vision & Core Values 2-3

Ethical Issues of the Nike 4

Stakeholders and Particular Issues 5-7

Nike Response and Handle 8-9

Major Outcome of Ethical Issues and Effect 10-11

Solutions of the Unethical Issues 11-12

Suggestion and Solutions 12-14

References 15

1
Company Background

Blue Ribbon Sports, which later became known as Nike, Inc., is an American
sportswear corporation with its headquarters located in Beaverton, Oregon. Bill Bowerman,
who coached track and field at the University of Oregon, and Phil Knight, who had been one
of Bowerman's students, established the company in 1964 under the name Blue Ribbon
Sports. In 1966, they built their first storefront, and four years later, in 1972, they introduced
the first shoe under the Nike brand. In 1978, the firm was rebranded as Nike, Inc., and in
1980, it went public on the stock market. Nike, Inc. is an American multinational corporation
that is engaged in the design, development, manufacture, and worldwide marketing and
sales of clothes, footwear, accessories, equipment, and services. At the beginning of the
21st century, Nike had retail outlets and distributors in more than 170 countries, and their
emblem, which was a curved check mark dubbed the "swoosh," was known everywhere in
the world.

The late 1980s marked the beginning of Nike's steady expansion of its business and
diversification of its product line through numerous acquisitions. These acquisitions included
the shoe companies Cole Haan (1988; sold in 2012) and Converse, Inc. (2003), the
sports-equipment producer Canstar Sports, Inc. (1994; later called Bauer and sold in 2008),
and the athletic apparel and equipment company Umbro. Cole Haan was acquired in 1988
and Converse, Inc. was acquired in 2003. (2008; sold in 2012). Nike ACG, which stands for
"all-conditions gear," is a division of the firm that was established in 1996 and is responsible
for marketing products for extreme sports including snowboarding and mountain biking. At
the beginning of the 21st century, Nike started selling sports-technology accessories. These
accessories included high-altitude wrist compasses and portable heart-rate monitors.

Endorsements from professional athletes like Michael Jordan, Mia Hamm, Roger
Federer, and Tiger Woods have contributed to the success of Nike to a certain extent. While
paying homage to these and other business spokespersons, the NikeTown chain of stores,
the first of which debuted in 1990, provides customers with the opportunity to purchase the
entire assortment of Nike products. During the 1990s, revelations about poor working
conditions in the company's factories located overseas brought the company's image
temporarily into disrepute.

Mission

Nike mission is to bring inspiration and innovation to every athlete in the world. This mission
drives Nike to do everything possible to expand human potential. We do that by creating
groundbreaking sport innovations, by making our products more sustainable, by building a
creative and diverse global team and by making a positive impact in communities where we
live and work.

Vision

Nike sees a world where everybody is an athlete — united in the joy of movement. Driven by
our passion for sport and our instinct for innovation, we aim to bring inspiration to every
athlete in the world and to make sport a daily habit.

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There are components of Nike's vision and mission are as follows:

● Inspiration: Nike has learned how to use marketing to create and boost demand as a
consumer company. The Nike business model is based on this. In fact, Nike spends
billions of dollars annually to increase consumer demand for their goods.
● Nike markets itself as an innovative business that is willing to continuously reinvent
its products. As innovation means the replacement of the old with the new, this is yet
another crucial component.
● Who is an athlete for the company, please? "If you have a body, you are an athlete,"
states Nike. This relates to the motivating element. Nike's demand generating
strategy includes using an inspirational tone in the majority of its slogans.
● Groundbreaking sports innovations: By innovating, you can create new products that
will see an increase in demand.
● Sustainability: Nike has made sustainability a key component of its management
because younger generations are drawn to mission-driven businesses.

Core Values

● Inspiration
● Innovation
● Every athlete in the world
● Authentic
● Connected
● Distinctive

Nike places a strong emphasis on the necessity of maintaining top inspiration among its staff
in order to ensure that they design and produce innovation-driven items that are not only
genuine but also those that adapt to the requirements of athletes located anywhere in the
world. The requirements of the company's first through fourth core values are thereby met by
the business in this manner. The fact that the company places such an emphasis on
developing relationships with everybody and everyone it comes in contact with is one of the
things that sets it apart from other businesses.

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What are the ethical issues of the company?

Nike have faced some ethical issues that past over the year. As we all know Nike
was a global company that engages in the development, marketing and sales of various
products mainly athletics footwear, apparel, accessories and services. Even though there
are regulations against child labour in some countries, Nike nevertheless chooses to ignore
them, forcing kids as young as 12 to work lengthy shifts in the factories. Nike has taken the
necessary action to comply with the law's established starting age limit. Even though some
countries' minimum ages are lower than 16, Nike has gone a step further and decided not to
hire anyone who is younger than 16 years old.

Nike has faced ethical issue of expensive endorsements. NIKE is frequently singled
out for criticism by human rights organisations, yet despite this, they are able to keep up
their high reputation thanks to the endorsements of famous people like Tiger Woods and
Michael Jordan. When Air Jordans were first debuted in 1984, Michael Jordan was one of
their major endorsers. He reportedly makes almost $60 million a year. A pay that is high
enough to allow workers to maintain a reasonable quality of life would be more ethically
advantageous to the people who create the shoes by enhancing their salaries and allowing
them to live better lives.

Nike outsources all of its production to underdeveloped or emerging nations. Nike still
fails to hire individuals at a rate that can enable the individual to support their basic needs
despite the fact that these countries' wages are far lower than those in wealthy nations. Nike
is blatantly taking advantage of cheap labour. Nike has made an effort to address this issue
by hiring individuals at a rate at least comparable to the nation's minimum wage.

Nike is known to sell the products are very high prices despite it being common
knowledge that their products are manufactured in contracted factories on foreign lands
where labour costs are low. Workers in the factories are paid $7 per shoe and the average
retail price of NIKE shoe is $66.85. With the cost of production being significantly lower than
the retail price it means that NIKE can generate enormous amounts of profits in sales
revenue.

In 2017, there was a case that saw numerous instances of mass fainting among
women working in Nike factories in Cambodia, which was attributed to the unfavourable
working conditions they endured. Women who were working 10 hour days six days a week
were the ones who passed out. In factories that were overly hot, with temperatures reaching
37C, these extended work weeks left the women feeling exhausted and hungry. Nike is
expected to install fans or air conditioning at these temperatures. Nike strengthened the
management of labour laws and ensured that the air in workplaces was clean.

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Who are the stakeholders and how are they affected due to the particular issues?

Nike Inc. maintains corporate social responsibility to address the interests of its major
stakeholder groups. According to Carroll, stakeholders are individuals or groups that have a
significant stake in what a business does. As a global business, Nike Inc has a wide variety
of stakeholders with significant influence on the sales of the firm’s sports shoes and other
products. However, the company’s corporate social responsibility programs target only
several major stakeholder groups. Nike also has the following stakeholders, arranged
according to the firm’s prioritisation:

1. Customers
2. Communities
3. Employees
4. Governments
5. Interest Group

1. Customer

Nike’s corporate social responsibility strategy gives top priority to customers as a

stakeholder group and top priority customer as a stakeholder group. Customers are
significant because they affect the company’s revenues from the sports shoes, apparel, and
also equipment market. In the case of Nike Inc, these stakeholders’ interests include
high-quality products and reasonable prices.

In the effect on stakeholders considering high profitability and growing sales revenues,
Nike’s corporate social responsibility effectively satisfies the interests of customers as a
top-priority stakeholder group. Although, protests were very popular during the Nike
sweatshops crisis.

2. Communities

The stakeholder group of communities has a significant influence on Nike’s corporate social
responsibility standing. Consumers tend to buy more products that have a positive impact on
communities. The interest of these stakeholders includes the development of communities.

The ‘Nike Community Impact Fund’ supports grassroots organisations to get kids moving,
bringing the benefits of sports to their communities. In 2005, the Nike Foundation started its
community development programs in developing countries, with a focus on supporting the
empowerment of girls. The company also has a variety of “Community Impact” corporate
social responsibility programs, such as the Active Schools & Youth Sports program, which
donates funds and sports shoes, apparel and equipment to promote physical activity among
students.

3. Employees

Nike recognizes the significance of employees as a stakeholder group that influences

organisational effectiveness. For instance, employees’ performance directly translates to

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business performance. The interests of these stakeholders include fair compensation, career
development opportunities, and a sense of purpose.

The effects on employees is many employees of Nike were and a few still are being affected
by a crisis like a sweatshop crisis. Something like harsh work conditions and low wages
affects these workers daily and install fear in these employees’ minds that they will not be
able to provide for their families.

4. Governments

As a part of its corporate social responsibility strategy, Nike Inc. identifies governments as a
stakeholder group. These stakeholders are important because they also affect how Nike
operates in terms of its permits, limits, and legal actions in certain markets for sports shoes,
equipment, and apparel.

For this effect, governments are interested in legal and regulatory compliance, as well as
business contributions to tax revenues and also, community development. However, the
community development interest is addressed through Nike’s corporate social responsibility
programs for community development.

5. Interest Groups

Nike’s corporate social responsibility policies also address the interests of some interest
groups. These stakeholders have a significant effect on Nike in terms of potential
government intervention and in terms of consumer perception regarding the company and its
sports shoes, apparel, and equipment.

Lastly, the effect on the interests of these stakeholders is varied, including fair labour
practices, business sustainability, and environmental conservation. Nike Inc addresses these
interests through the Nike Foundation’s initiatives, as well as sponsorships of a variety of
related programs. The company also has corporate social responsibility policies for
improving labour management and environmental impact. The considerations indicate that
Nike Inc. satisfies the concerns of interest groups as stakeholders.

Particular Issues

Legitimacy is a perception or assumption, Nike departed from societal norms, but it

still retained legitimacy as the departure goes unnoticed by society. Stakeholders were not
aware of what was happening to Nike’s subcontractors until the media disclosed the
situation. Moreover, the legitimacy claim, in this situation, was brought only by children and
workers in the sweatshops, which at that moment were not salient stakeholders for the
company, thus making their claims not relevant for Nike, which decided to adopt the strategy
of ignoring them.

Stakeholders’ expectations were changed, as they reputed a company’s

responsibility to monitor what was happening in the suppliers’ factories, exactly as if the
company was the owner of those factories. Nike soon realised that it was losing its
legitimacy and changed its strategy: instead of denying the problem, it recognized it and
engaged in a proactive approach, participating in multiple initiatives and associations,

6
adopting standards and code of conducts, and so on. However, due to the unethical
behaviour adopted in the past and its high visibility, Nike is still the target of social activists
and media scrutiny much more than other companies, thus confirming that repairing
legitimacy is much more difficult than maintaining it.

The effect of media pressure, by disclosing corporate activities, can force companies
to handle the new situation that has been reported. As it is possible to see, the situation of
Nike was very different before and after media disclosure of the sweatshops in the Third
World countries. Before this, the stakeholder network was less dense, with the company in a
central position able to enforce its norms over the stakeholders. The flow of information
about what was happening in the factories of Nike’s subcontractors was hindered by this
fact. To be directly connected to them, and that it could therefore exchange information with
other stakeholders in the network. This role has been taken by the media who make their
direct relationship with Nike’s suppliers and have been able to report about the working
conditions in those factories.

Nike and sweatshops, along with the issue of child labour, are clear examples of a
situation in which a company has to adopt proactive behaviour with respect to the problem,
although it could be considered legal to avoid the such approach. Such consideration is
based on the normative ground, but as it has been shown previously, there are also
economic reasons. Nike in the beginning adopted an indifferent attitude about the sweatshop
issue, but soon it has been forced to deal with it actively, as media and social activist groups
expressively asked to do so. Not taking into consideration society's expectations and
keeping passive behaviour may have cost the company an extremely greater amount of
resources due to a bad reputation. In fact, the literature points out the role of CSR in building
a company’s reputation, and in this way, CSR commitment affects performance and market
valuation.

In conclusion, in the 1990s, when the media disclosed the poor working conditions
and the employment of children in Nike’s supplier factories. From that moment, a legitimacy
gap arose between societal expectations and the company’s activities. Although it was not a
legal responsibility of Nike to check suppliers’ sweatshops, society expected Nike to go
beyond what was established by the law and to commit to ethical responsibilities too.
Stakeholders started organising themselves against Nike’s operations, thanks to the help of
media and social activist groups. Even if in the beginning Nike denied any responsibility, as it
saw its legitimacy and reputation at risk, it started to adopt measures for solving the problem.

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Does the company response and responsible to handle with the issue? Justify your
answer using appropriate theories.

Nike has responded and has taken responsibility for handling the situation. In the
1990s, the article states, Nike started keeping an eye on the working conditions in the
factories where their products were made. The SHAPE code of ethics was created for the
factory. The environment, people, safety, health, and attitudes are given priority in this code
of ethics. As a result, Nike started a campaign in 1998 to switch its petroleum-based
solvents with less risky water-based ones. Nike "modified less dangerous chemicals in its
production, established a local exhaust ventilation system, and taught key people in
occupational health and safety problems a year later," according to the report.

Moreover, The Nike brand subsequently founded the Global Alliance for Workers and
Communities, a non-governmental organisation affiliated with a variety of other
organisations, including the International Youth Foundation. To demonstrate the finest
improvements, the group publishes a report on the company and its ambitions. The reaction
that Nike Inc. had after hearing the Global Alliance's answer in 2001, which excluded current
events like strikes, layoffs, and a lack of communication with their Indonesian operations.
Nike also audited its factories 600 times between 2002 and 2004, giving each one a rating of
A, B, C, or D after grading them on a scale of 1 to 100. When a factory receives a D, Nike
intends to stop the factory's operations.

Furthermore, starting in 2004, Nike intends to broaden its monitoring approach to

cover environmental and health concerns. In Nike factories, monitoring is now the most often
used strategy for enforcing rules. This method was discovered to be less successful than
expected after analysing the audit data. It is crucial to consider how the monitoring was
carried out, who participated in it, and what the inspection's objectives were while reviewing
the monitoring process. So, whether or not the visitor wishes to find fault with the factory, he
must enter the premises impartially. It has been shown that inspectors working for
businesses covered up mistakes, and those working for NGOs or other interest groups
overstated results.

Thus, the serious problem is seen to have a potential remedy in the increased
engagement of high-level Nike workers, such as those working for the corporate system.
Nike items' patterns have been restricted close to the design stage to protect workers from
being unable to supply goods. Nike is capable of creating an improved work environment in
manufacturing by distributing advantages to workers from positions of authority.

As a result, the reaction activities demonstrate that Nike is responsible and takes into
account the viewpoints of their stakeholders, where they start to understand their demands
and look after the connection between stakeholders. The management of Nike should be
aware of the need for ethical responsibility in the business since it is their obligation to make
judgments and conduct actions that will advance both the organization's and society's
welfare and interests. Human rights, governance, ethics, development, employee working
conditions, customer happiness, connections with the company's suppliers and consumers,
and lastly respect for different cultures are all included in this.

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 According to this perspective, treating stakeholders fairly is acceptable since it is
required to meet economic goals.Therefore, Nike made the decision to discuss the nature
and idea of Corporate Social Responsibility (CSR) in order to assess how their activities
might affect diverse interest groups.

Overall, Nike utilises their management on Carroll's Pyramid of CSR theories:

1. Philanthropic responsibilities

The term "philanthropic responsibility" describes a company's desire to

actively improve society and the environment. As an example, Nike has
invested $10 million a year to create a code that ensures the safety, health,
attitude, people, and environment in the plant to prevent damage from
occurring. Furthermore, by using a monitoring system, Nike is able to create a
better working environment in manufacturing.

2. Ethical responsibilities

Ethical responsibility is the ability to perceive, understand, and act on

numerous principles and values within a specific sector. As an example,
higher-level Nike workers who support the corporate structure are being
sought after as a potential solution to labour issues. By providing rewards to
factory workers from a prominent position, Nike is able to enhance the
working environment in the manufacturing setting.

3. Legal responsibilities

Legal duties indicate the firm's responsibility to follow the laws that govern
commercial activity. Nike has established a score for each plant through the
Global Alliance for Workers and Communities, a non-governmental
organisation. The score is therefore the law that the management of each
plant must abide by. With this result, the factory will continue to treat each of
its employees fairly and uphold the firm's good reputation.

Finally, there are additional things to improve in order to satisfy the requirements of
stakeholders. To maintain its market share supremacy in the footwear sector, the firm must
continue to strengthen its corporate responsibility initiatives and step up enforcement of its
regulations in its factories. Nike is introducing further CSR activities as part of its renewed
emphasis on corporate responsibility as a cutting-edge instrument to establish the business
as a market leader and give it a competitive edge in the footwear sector. It is necessary to
take the employee's salary and working hours into account. This is significant since CSR
enables you to recruit and keep staff. CSR gains because they contribute to the
improvement of a good and productive work environment.

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What are the major outcomes from the ethical issues that might or have affected the
company?

Nike had looked at several ethical issues including human rights, worker's rights,
supply chain management, pollution and toxics, habitats & resources, environmental
reporting, use of controversial technologies, political activities, anti-social finance and animal
rights.

The Washington Post reported in February 2020 that many Nike supplier factories
had been hiring Uighurs from China's Xinjiang province, including Qingdao Taekwang Shoes
Co. The Uighurs were employed at the Taekwang factory under circumstances that clearly
resemble forced labour. The Uighur Muslim minority was producing shoes for the American
brand in circumstances that implied they were being forced, according to a second
Washington Post piece from March that reads "Nike said it was reviewing its supplier’s
employment policies in China." Nike also scored the lowest score in The Clean Clothes
Campaign's 2019 Tailored Wages UK report, which was released in June 2019. According to
the audit, "The brand can offer no record of paying any workers a Living Wage." When
Nike-sponsored Olympic champion runner Alysia Montao went out about how the business
threatened to terminate her contract and stop paying her if she had a child, Nike also came
under fire.

Due to its unclear stance on the use of pesticides and herbicides, Nike's cotton
sourcing strategy received the lowest grade possible from Ethical Consumer. Although
cotton only covers 2.78% of the world's arable land, it accounts for 12.34% of all pesticide
sales and 3.94% of all herbicide sales. Nike partially utilised cotton that was certified by the
Better Cotton Initiative (BCI) and organic cotton. Businesses who care about the
environment should make it known that they only use cotton that is 100 percent sustainable.
Leather is another important component of Nike's business. To preserve leather, the leather
industry mixes a number of dangerous chemicals. Tanneries are a highly polluting industry
since their effluent contains significant amounts of various pollutants that can contaminate
the land, the air, and the water supply.

Nike is a dubious company in terms of financial ethics and political activities. The
highest paid executive at Nike earned an astounding $13,968,022 in 2019. Five listed
Executive Officers received more than £1 million in total compensation in the same year,
which is excessive pay in the eyes of Ethical Consumer. Additionally, the corporation owns
subsidiaries in nations that Ethical Consumer considers to be tax havens, including
Bermuda, Delaware, Netherlands, Taiwan, Hong Kong, and Singapore. At least 21 of them
were regarded as high risk company types due to the likelihood that tax avoidance
techniques would be used. Additionally, according to reports from 2019, 32 of the 38
lobbyists for Nike Inc. previously worked for the government. Nike engages in lobbying as
well. According to Ethical Consumer, USCIB is a corporate lobbying organisation that
promotes free trade at the expense of the environment, animal welfare, human rights, and
health protection.

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 Nike lost a whole mark under Ethical Consumer’s animal rights category because it
retailed several products containing animal-based materials including leather, wool and
feathers. Nike received a failing grade for having an unclear anti-mulesing policy. In order to
produce more wool, Merino sheep are intentionally bred to have wrinkled skin. Fly eggs are
found in skin wrinkles and sheep can be eaten alive by maggots. The practice of "mulesing"
which entails slicing wide pieces of skin and flesh from the backs of lamb’s legs and the area
surrounding their tails is used by Australian ranchers to prevent this problem.

What are the solutions for the unethical issue are as stated in the case?

The unethical issue in Nike is on its underbelly. Even though that company is
worldwide in scope, we can see the problems its employees confront because they receive
no benefits. On the other hand, it forces its employees to work in hazardous conditions
since, if they aren't paid a living wage, it will disrupt the workplace by forcing them to put in
long hours without salary. Additionally, using child labour will maintain ignorant workers and
contribute to social inequality. This is allegedly the case since it pays less but requires
employees to put in more hours and move jobs abroad, which accounts for the fact that
many Americans are still without jobs.

The main unethical thing we can notice is the Sweatshop issue. This is because it
does not provide any safe and clean working conditions for its employees. It is a common
condition for workers resulting in them passing out due to overheating because they are
exposed to hot weather conditions while working and their nutrition is very poor. During shift
work, they have been given very harsh treatment, especially towards women. They used to
give harsh and heavy punishments to their employees if they were found talking to other
people while working and female employees were forced to run around the premises if they
did not wear shoes. That's the rule at work. Even if the workers face health problems in their
respective departments, it does not try to shift their departments in order to provide safe
working conditions for the workers. Without following proper ethics in its working place it is
just pampering its customers and creating Brand loyalty through famous celebrities.

The reasoning is that in accordance to Carroll, a company must uphold its economic,
legal, ethical, and discretionary social responsibilities. However, in this case study Nike's
does not provide wages that can improve the financial situation of its employees, and it also
does not keep to the legal working hours. Due to the lack of safe and sanitary working
conditions, Nike does not treat its employees ethically and does not demonstrate discretion
about their safety.

The solution for the unethical issue are as stated in the case is Nike can prevent its
unethical behavior by following the concept of Social responsibility which is by raising the
wages of its employees so that their economic status will be improved. The legal
requirements set forth by the government concerning the working hours of all its employees
must be followed. They should also act with caution in their activities and keep to basic
moral principles that won't impact people's beliefs and behaviours.

Secondly, it needs to make some adjustments to company rules at the same time
such as offering health insurance to workers and preserving sanitary working conditions. It
should carefully watch over the management in each area and make sure that the people

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working for it are not mistreated. In order, to avoid criticism from various groups and unions
the issue should be resolved right away to prevent it from being seen by others. It should be
kept in mind that upholding company ethics is important because it affects shareholders'
confidence. Any company organisation must follow to Carroll's four business it is obligations,
namely Economics, Ethics, Law, and discretion, in order to succeed.

Lastly, before making any strategic decisions, managers should consult with their
staff about the choices and solicit their opinion. By doing this, communication between staff
members and higher-ranking authorities will be increased, and this is crucial for a company's
development.

Suggest or recommend any alternatives solutions rather than as stated in the case.

The management of Nike should examine the hiring procedures. They should verify
that the business is adhering to its rules about hiring, training, health, safety, and welfare.

Firstly, the company's management should also monitor the environmental

procedures. To ensure that the organisation follows appropriate practises for trash disposal,
avoidance, and energy inputs, among other things. Establishing quality management
processes may be as simple as making a list of every step that employees must perform
while assessing the items they get. The management of the company needs to be stricter
about upholding the norms and standards that they have created. This will guarantee that
they follow or observe the regulations of the firm. As a result, Nike's senior management in
the US should make sure that all of the company's other retail locations or manufacturing
facilities adhere to a systematic approach. This will help them keep track of all the other
outlets all across the world. Additionally, this may aid in preventing problems like
unsatisfactory working conditions, child labour, pervasive harassment, and abuse, all of
which have been reported in a number of countries. Other manufacturers will step up to the
plate when they are aware of the standard and code of ethics they should follow. This is due
to the fact that they must go by a set of rules and are aware that any technique they adopt
will be reviewed by senior management. All employees should have a safe and healthy
workplace, according to top management. This is as a result of their employees' legal
entitlement to a safe and healthy workplace.

However, one of Nike's most significant challenges was child labour. Nike has stated
that it cannot guarantee that its products would not be created using child labour in a report
intended to address the allegations that have plagued the brand. Nike acknowledges it
cannot guarantee that none of its vendors would exploit underage labour and calls the issue
its "most troublesome." Although we are working hard to end child labour in our contract
factories, we know that incidents will still happen. Nike says it has fully addressed instances
of child labour and that a team of people is hired to inspect its factories. We have thus
developed a strategy that could enable us to meet this problem. To remain sustainable and
lowered on manufacturing costs, Nike started outsourcing the production of shoes and other
athletic items. Nike may install and employ machines in their production instead of using
child labour to resolve this. It may initially cost more than expected, over time it will end up
saving the firm a ton of money. Not only is it quicker, but it also saves Nike money over time

12
and allays management's worries about child labour or poor working conditions. Additionally,
Nike's top level management may keep an eye on its staff. Establish goals and choose
metrics for performance evaluation. Nike will be able to improve employee abilities to enable
them to realise their potential and further the company's financial success with the use of
performance evaluation. The employer who wishes to ensure productivity levels is our last
example. Given the increase in the number of people working, this is probably one of the
main reasons businesses watch over their workers.

Following that, managers and workers should be trained on a regular basis. Create
and implement a training programme for the staff. Employees might take on broader tasks
thanks to training and development initiatives. The management must also keep in mind that
training and development initiatives do not offer a one-size-fits-all response to all business
requirements. Effective job design, selection, placement, and other HR department tasks are
also crucial. This is important because it promotes the growth of a more positive business
culture.This culture shapes the individuals who work in the organisation because it is a
combination of ideas, beliefs, conventions, traditional practises, corporate principles, and
shared meanings that help define and steer normal behaviour for everyone who works in a
firm. Permanent staff training is essential to help them develop more discipline and
accountability. They will always act in the company's best interests and will resist being
easily persuaded by outside forces that could endanger its success. Their sense of
responsibility and accountability toward the organisation will increase as a result.

In addition, Nike can control its future output by expanding the number of items it
provides on the market. As was said before, it has a significant share of the footwear market,
its pricing is not set by rivals, and it has a monopolistic competition market structure. As a
result, increased output would boost revenue in line with forecasts and historical data.
Furthermore, the business may broaden to provide additional items while focusing on
footwear, clothes, and other services thanks to a variety of suppliers in several nations.
Modern manufacturing technologies have decreased the Cost of goods sold, allowing it to
increase output and boost sales.

However, Nike states that cooperating with other brands to conduct factory audits, as
well as, perhaps more significantly, engaging with rival companies to create labour related
solutions and uniform regulations, is one possible option. Then there are the changes that
Nike by itself can do. One of the biggest causes of excessive factory overtime in the garment
industry is asking companies to produce too many styles. We have the chance to relieve this
burden by limiting the variety of clothing styles and working with the manufacturers to boost
productivity using lean manufacturing techniques.

Finally, Nike is obligated to do frequent routine checks and inspections of its

manufacturing. Another measure Nike might take to address wrongdoing that takes place in
its factories is to mandate regular spot checks and inspections of such facilities. Next, while
doing this spot-check and inspection, it's important to focus on a number of factors, including
the staff review, the safety and health inspection, and the site assessment. Furthermore, if
Nike uses internal auditors, fraud in the report they prepare may occur and they will not be
made aware of it, meaning Nike will never have the opportunity to correct the issue. Instead,
Nike should take the initiative to appoint an outside auditor to conduct this inspection
honestly.

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 We concluded that Nike leads its industry, competes in a market, and has a business
strategy that ensures both short- and long-term achievement. Nike can be encouraged to
optimise its opportunities while minimising its dangers. Nike thinks that by making its supply
chain public, it would be easier to monitor and address emerging problems only in its own
plants but also throughout the whole industry. The management of Nike should comprehend
the necessity for ethical responsibility inside the firm as it is their duty to make judgments
and conduct actions that will advance both the organisation's and society's welfare and
interests. Companies utilise CSR to show their customers that they care about the
environment and their employees, as well as to demonstrate that they are socially aware.
Meanwhile, CSR compels businesses to act more responsibly, highlights the importance of
corporate ethics, and increases customer appeal due to the company's improved moral and
ethical standards, all of which raise revenue.

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