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Nike Corporation's Responses to Critical Events

Paper Type: Free Assignment Study Level: University / Undergraduate
Wordcount: 4264 words Published: 30th Nov 2020

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Views and Goals

The Nike Corporation is a multinational corporation that’s mission and vision focused on the what, the how and the why of their brand. Just as much as other organizations do as well. The difference here is that all organizations know what they do, and they know how they do it, but most don’t know the why behind their mission (TEDxTalks, 2009). Nike knew their goal and the why behind their brand, which helps to explain how Nike has such a strong why when driving any and all necessary changes that came their way, specifically when it came to corporate social responsibility. Nike knew they needed to make a change to shift their goals and views to be focused more on corporate social responsibility due to the criticism they received. An example of one of Nike’s main goals was to commit to zero discharge of hazardous chemicals by 2020 by creating a detailed action plan to help reach that goal (Paine, Hsieh & Adamsons, 2016, p.13). That goal came about when Greenpeace launched a campaign to charge Nike with not doing enough when it came to preventing their suppliers from releasing these hazardous substances into the water supply. From that campaign, Nike new they needed to change and within that same year they acknowledged and set forth a plan to focus more on their environmental impact (Paine, Hsieh & Adamsons, 2016, p.13). Another main goal for the Nike Corporation was to focus more on corporate responsibility by holding their manufactures to higher standards in regards to wages, education, training and communication. As well as focusing on raising their standards for the manufactures when it comes to the whole work environment as a way to help raise the standards for the industry as a whole (Paine, Hsieh & Adamsons, 2016, p.5). Nike was able to take those critics concerns and make that change to view the company processes differently than they originally did.

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Nike Corporation was founded by Bill Bowerman founded back in 1964 with his first student to try his shoes, Phil Knight. The company came into full existence in 1971 (Meyer, 2019). From then on, Nike has grown into multinational corporations in the global market and become one of the most recognizable names to this day. The company started their manufacturing overseas to help to lower their costs for production. The problem here arose when Nike was publicly criticized when it came to their manufacturers due to their labor practices at those contract factories. They handled this situation poorly by addressing the critics and taking no responsibility for the labor practices and stating that the conditions are not measured against U.S standards therefore they cannot be responsible (Paine, Hsieh & Adamsons, 2016, p.5). As Sinek stated, organizations need to hire people who believe in what you believe in, but even more so the goal is to do business with people who believe what you believe (TEDxTalks, 2009). Nike as a company should be help responsible for their manufactures because as stated, the goal is to do business with people who believe what you believe and even in this case companies who share the same goals and views as Nike does. Nikes approach ended up shifting in 1998 when they hired Maria Eitel as Nike’s first vice president of corporate responsibility, which forever changed Nike’s views and goals for the better (Paine, Hsieh & Adamsons, 2016, p.5).

Through those changes, Nike executives worked diligently to create a better culture and a more sustainable business model by focusing more on productivity and quality when it came to their manufactures. Which started with Knight addressing their biggest criticism by vowing to change the equation and improve working conditions by expanding independent monitoring of their manufacturers, raising the minimum age requirements, strengthening their environment, raising health and safety standards, expanding worker education programs, increasing loan program for workers and helping to build an understanding of corporate responsibility throughout (Paine, Hsieh & Adamsons, 2016, p.5). He took on that piece of being vulnerable and addressing the critics concerns but also being authentic and understanding that yes, this may be the current situation, but we as a company are here to fix it, and this is how we will do that.  Nike executives throughout created urgency for these matters to be handed and these changes to occur. They even followed Kotter’s eight steps to doing so. Starting with creating urgency from what their critics were claiming, to addressing it out to the company on what needs to happen next. To the next step where they built the powerful coalition of leaders to help form the corporate responsibility team including Jill Conway who was the vice president of sustainable business and innovation (Paine, Hsieh & Adamsons, 2016). Throughout the company they created teams to help communicate their new vison out to others within the company and even publicly. They created their own annual corporate responsibility reports which helped to remove obstacles and continue to be transparent with consumers and their workers, but it also helped to create short term win for them as well (Kotter, 1996). Through all of this, they were able to build on that need for change and anchor it down with the help of these individual groups and executives who overall worked to create a new vision for the company to help incorporate more social and environmental responsibility throughout.

Critical Events

Through the years, Nike has had some critical events that led them to pursuing necessary changes in their business model to become more environmentally friendly as well as socially responsible for their actions. Their sustainability journey started back in the 1990s when concerns were voiced by critics in regards to Nike’s contract factories and their labor practices. Which all stemmed from Nike outsourcing their production to other countries due to the cost and production volume. This critical event shifted Nike’s approach in 1998 by encouraging them to hire Maria Eitel who became VP of corporate reponsbility for the organization (Paine, Hsieh & Adamsons, 2016, pg.5). Taking on Corporate responsibility, Maria help to shift Nike’s views and goals by helping to create a transparent and authentic way to take responsibility for the company’s actions when it came to their suppliers and their environmental footprint. This change also brought about the corporate responsibility policy to monitor their third party manufactures to obtain real information to help create a more sustainable working environment for those employees. This event helped others understand corporate responsibility in the larger community (Paine, Hsieh & Adamsons, 2016, pg.5).

While starting their journey through corporate responsibility, another major event that occurred was the creation of the corporate responsibility committee. This committee was made up of leaders whose focus was to help align all ends of the corporation to becoming more environmentally friendly along with remaining socially responsible for all actions that occur. As one of the committee members, Maria Eitel, continuously turned to Jill Conway for counsel when it came to labor practices in Nike’s third party manufacturers. During their conversations, another major event in Nike’s history occurred. Critics were continuing to approach Nike about their working environments and labor practices especially when it came to their student protests (Paine, Hsieh & Adamsons, 2016, pg.5). Jill Conway took it upon herself to find out exactly what was going on in these factories. She traveled to Nike’s contract factories to speak with factory owners, managers and workers to gain more of an understanding on their working environment (Paine, Hsieh & Adamsons, 2016, pg.5). Through these visits she noticed a significant communication barrier between managers and workers along with concerns about their given labor practices as well. Based on those findings, Conway created a survey that would interview these factory workers to help the corporate responsibility committee better understand the necessary changes that are needed in regards to their labor practices. Based on that survey, Conway was able to help develop training programs for factory supervisors, protections for workers’ health, and courses for workers to understand financial literacy (Paine, Hsieh & Adamsons, 2016, pg.5). Although these findings helped to influence a change when it came to the corporate responsibility policy, there was still concerns that needed to be addressed.

In 2008, another major event happened to Nike where they learned that its long-time factories in Malaysia were housing workers in deplorable facilities, garnishing their wages and withholding person information preventing them from leaving (Paine, Hsieh & Adamsons, 2016, pg.9). This forced the corporate responsibility committee to respond. Leadership decided from there that they needed to build greater accountability when it came to their manufacturing and sourcing standards and input them into their core business processes. That new business process they labeled as “Project Rewire”, which would include sustainability metrics to evaluate the performance of executives responsible for the sourcing decisions (Paine, Hsieh & Adamsons, 2016, pg.9). Along with the metrics aspect, this idea also helps to focus on unethical labor practices that were taking place in the supplier sites. Nike responded to these concerns in Malaysia by demanding redress for workers and helping the workers with tranferring to new dormitories (Paine, Hsieh & Adamsons, 2016, pg.9). This event led straight to Nike’s idea to help wire sustainability into the business in a new way, which helped to create the Sustainable business and innovation committee. This new committee played a huge role in forward thinking activities such as planning, improved sustainability performance, innovation, auditing, and the control in regards to sustainability auditing. (Paine, Hsieh & Adamsons, 2016, pg.9).

Along with their labor practice concerns, another major event that occurred and affected Nike’s corporate social responsibility policy was the Greenpeace Campaign. As mentioned preciously this campaign was launched charging Nike with not doing enough in regards to preventing their suppliers from releasing hazardous substances into water supply. From that campaign, they called on brands like Nike to target zero discharge of toxic chemicals in the entire lifecycle of their supply chain process. Nike responded as a part of their sustainability and innovation committee outlining their existing efforts and offering to partner with GreenPeace and other NGO’s to promote water management in China and to help work toward chemical inputs and processes in the footwear and apparel industry. This is when Nike announced their commitment to zero discharge of hazardous chemicals by 2020 (Paine, Hsieh & Adamsons, 2016, pg.13). This move toward a more of an environmental friendly and sustainable business model affected Nike’s corporate social responsibility policy by making the company focus more on their environmental footprint and what their responsibility is when it comes to it. Nike underwent a serious of these events before becoming a more sustainable, environmentally friendly and socially responsibility organization.

Responses to Critical Events

Throughout these critical events, Nike’s leadership responded to each event claiming responsibility for their issues. They learned from the last time they tried to not claim responsibility back in the 1990s. Since then, their main goal was to become more transparent with their business processes such as their labor practices and environmental impacts. They became transparent by publishing public reports annually discussing conditions of their factories and information regarding their labor practices (Paine, Hsieh & Adamsons, 2016, pg.6). These reports were known as a catalyst for growth and innovation for the company which helped to motivate Nike’s new views on their processes and come up with goals that could coincide with the growth (Paine, Hsieh & Adamsons, 2016, pg.8). These reports also helped to incorporate corporate social responsibility throughout the organization.

Nike’s leadership too great strides to address each criticism they received over the years. Starting with their first critical event when Conway traveled to the separate factories to address their labor practice issue. From there, Conway found out that the labor practices were unethical and decided to create that survey as we mentioned before. Once those results were in, Nike’s leadership and Conway decided to disclose the projects results to the public in hopes of being transparent enough to effect change (Paine, Hsieh & Adamsons, 2016, pg.5). That is when Phil spoke up and stated “we’re going to raise the standards for the whole industry” (Paine, Hsieh & Adamsons, 2016, pg.5).

Even after they continued to monitor their suppliers, more labor issues arose. This brings us to another critical event for Nike, which was the Malaysia concerns. Nike’s leadership responded almost immediately to these concerns by meeting with management at these factories and getting redress for workers and helping them to transfer to new dormitories (Paine, Hsieh & Adamsons, 2016, pg.9). Even further than just that response, they aimed to be more authentic with their approach and really take a better look into the root causes for this issue which included all 34 factories to be reviewed in Malaysia. Which led leadership to discovering project rewire. The project rewire event led to adding sustainability factors to their metrics when it came to evaluating the performance of executives responsible for decision making (Paine, Hsieh & Adamsons, 2016, pg.9). This way, there is more responsibility to be taken and more accountability on Nike’s leadership to follow through with making sure labor practices are held to the same standard. Which helped to change Nike’s views on their contract factories and their current processes. 

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Not only was Nike under pressure when it came to their responses for labor practices, but also when it came to their environmentally sustainable business practices.  The Greenpeace campaign was another critical event in Nike’s history. They stated that Nike is not doing enough to present their contract factories from releasing hazardous substances into the water supply. Nike leadership responded to this at first by stating that they are already working with their China factories to address water and toxicity issues in the supply chain. Going further, they released another report outlining their efforts and even offering to partner with Greenpeace and other NGO’S to promote water management and work toward improving their chemical inputs and processes with their production (Paine, Hsieh & Adamsons, 2016, pg.13). This is why due to this critical event their response helped to motivate them toward a new goal of zero discharge of hazardous chemicals by 2020 (Paine, Hsieh & Adamsons, 2016, pg.13). Along with this, Nike’s leadership was able to push their goals to respond to their environmental impact by aiming and achieving 13% reduction in carbon emissions per unity and 20% reduction by 2015 (Cheeseman, 2014). They also were able to achieve 26% energy use reduction per unit in their distribution centers from 2011-2013 and 16% energy use per square foot in corporate offices in the same years (Cheeseman, 2014).

Along with the Greenpeace campaign, another critical event that would benefit their environmental impact was their signing with DyCoo. DyeCoo systems was a startup company that developed a waterless process for dyeing polyester (Paine, Hsieh & Adamsons, 2016, pg.11). This was to help reduce Nike’s energy usage and utilize less water and hazardous chemicals. Their signing with DyCoo affected Nike’s corporate responsibility policy by focusing on moving toward that end goal of zero hazardous waste by 2020 (Paine, Hsieh & Adamsons, 2016, pg.11). Which was just another stepping stone for the company to improve its environmental impacts along with their labor practices overall. Throughout the years, Nike’s goals and views changes significantly from their beginning business models. They’re leadership even stated their goals are to work toward minimizing their environmental footprint, transforming their manufacturing practices and ultimately unleashing human potential (Top Things to Know About Sustainable Innovation at Nike, 2016). Nike leadership knew they needed to change in order to work toward those future goals.

Ramifications of Nike’s Response

Nike knew they needed to change in order to obtain a more sustainable, environmental friendly business model. Unfortunate, just responding to these concerns didn’t always mean that they were easily taken care of. As mentioned, Nike committed to having zero discharge of hazardous chemical by 2020 (Paine, Hsieh & Adamsons, 2016, pg.1). After they released that statement, they soon figured out how difficult and costly this would be. The issues with this are that they are continuing to try and be as transparent as possible but realizing that was a huge commitment to make without anything to back it up. This commitment would require innovations when it came to the chemistry, systemic changes and collaboration across the whole organization (Paine, Hsieh & Adamsons, 2016, pg.1). In this case, the ramifications of their response to Greenpeace meant that they needed to utilize more resources internally and externally in order to make this commitment fulfilled by 2020. With that being said, they instantly started to focus on creating a working stream of executive representatives from the CR committee to work together on Nike’s sustainability goal-setting process. That way they can aim to be proactive with their sustainability goals rather than reactive.

While they continued to work on their commitment to zero hazardous discharge by 2020 for their main goal of sustainability, they had to come to the realization that their new goal-setting process needs to start as soon as possible. With that being said, they responded to the critics by signing on DyeCoo Textile Systems. Nike’s newcomer Wise presented these findings and started the discussion on becoming more environmental friendly by signing with DyeCoo. Leadership responded with an action plan to address this with the committee and innovation team to look at the potential for this commitment. They landed on making a minority investment in the company in order to help commercialize the technology across the industry. As a result of this new policy and commitment, there were ramifications which led to not only saving profits but in the end reducing their energy use by 60% and quicker production since the dye is 40% faster than chemical dyes (Newell, 2015).

That was not the only time there were ramifications to Nike’s responses. Initially when they addressed their labor practices, they worked to monitor these facilities and mentioned that they knew there were problems and they would fix them. They did this by having Conway visit each of these facilities but even then, they could not monitor all manufactures like they wanted to. Their response was to fix the issue that occurred specifically when Conway went to visit those factories, but it did not solve all of their labor practices. The ramifications of not focusing on all manufactures and monitoring them came about when they were losing employees in the Malaysia factory due to lack of sustainable labor practices. (Paine, Hsieh & Adamsons, 2016, pg.9). This led them to try to figure out the root cause of these incidences and made them realize they needed to review all contract factories in Malaysia. As a result there were ramifications of increasing their innovation systems when it came to labor practices. They ended up rewiring how they were monitoring these sites and set up a more effective program to help be more proactive when it came to labor issues (Paine, Hsieh & Adamsons, 2016, pg.9). They worked to be proactive by monitoring all factories to help them meet the same standards that they set for themselves in the industry.

Along with Nike’s responses and their ramifications, they also had times where they were proactive in their creation of the new policies. One way they were proactive was when Eitel sat down with the head of Global Exchange and discussed how they can be more environmentally and socially responsible for their actions. After the sit down, Nike reported internally to stakeholders that they were going to phase out Polyvinyl chloride (Paine, Hsieh & Adamsons, 2016, pg.5). Nike was proactive when it came to this phase out and made sure internally and externally that they were as transparent as possible with this new policy. They were extremely proactive in this case because right as they announced that they were eliminating PVC, Europe’s chemical employees’ union threated to burn shoes in front of Eitel’s home due to their labor practices and environmental impact. Since they were proactive, they were able to take responsibility and eliminate the threat (Paine, Hsieh & Adamsons, 2016, pg.5).

Another event in which Nike acted proactively both internally and externally was when, Jones proposed that Nike publish the names and locations of the contract factories. This was an iffy situation for Nike because they feared their competitors would poach their relationships with these companies (Paine, Hsieh & Adamsons, 2016, pg.7). However, since Nike’s new goal was to be more transparent when it came to their labor practices they gave it a shot. Jones expressed that it would be good for the company because critics could go see for themselves what the work environment was like as well as NGOs could monitor and help to address their labor issues. This was a proactive approach to learning more about their labor practices externally as well as internally focusing on what needs to be done to fix the concerns and issues arising with their contract factories. A ramification of this event would be that Nike could collaborate with other companies to coordinate inspections, share the cost of doing so, adopt and support standards and in all speed up the process for improvement in these factories (Paine, Hsieh & Adamsons, 2016, pg.7). This was a huge turning point for Nike when it came to the transparency of their corporate responsibility policies.

Through all of their criticisms by critics and the media, they were able to come up with many other proactive responses to avoid those concerns again. Nike was able to implement a new corporate social responsibility policy that included internally stakeholders as well as external stakeholders. Their goal was to become more transparent with their approaches and changes as well as focus on re-working their business plans to accommodate a more environmentally friendly, sustainable and responsible corporation. 



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