WITH REFERENCE TO AN ORGANISATION OF YOUR CHOICE , EXAMINE

HOW CULTURE AND ETHICS IMPACT BOTH INTERNAL AND EXTERNAL

STAKEHOLDERS . [20 MARKS ]
ORGANIZATION- NIKE

Nike, originally known as Blue Ribbon Sports (BRS) is an American multi-

national company that is involved in the design, development and manufacturing
of sports articles including footwear, apparels and accessories. Founded in 1964
in Oregon by university athletes, this organisation has grown exponentially since
then, with over 147,000 stores in over 140 countries worldwide, making it the
biggest and most well known sports brand of the world. It has gained so much
popularity and recognition, that its logo is the best known in the world. One of the
biggest reasons for Nike’s massive success is its satisfied stakeholders. A
stakeholder is any person or organisation with a direct interest in the business.
They are affected by and can affect the activities and performance of the
business. The culture and ethics of Nike provide both, advantages and
disadvantages to internal and external stakeholders of the company.

Culture is the norms of an organisation, a country, or other social grouping.

Culture shapes the values, beliefs, and customs of people. Top managers of
Nike believe that employees are the company’s biggest assets, thus having a
dynamic workforce is of utmost importance to them. Nike employs more than a
million people worldwide. It has an organisational culture that encourages its
staff and employees to behave in ways that address its business objectives. It is
focussed on creativity and innovation to match and exceed the expectations of
consumers. Nike organises training programmes for employees, specially
designed to uphold this corporate culture and reputation it has built over the
years. These training programmes and workshops also help maintain the talent
and skills of the workers and keep designers and other staff up-to-date with the
ever changing consumer choices and demands so they can design and
manufacture products according to them in order to keep customers (a key
stakeholder group) happy and satisfied with a range of high quality new products
regularly (their main objective). Nike’s corporate culture uses diversity as a key
feature to build a dynamic workforce. It promotes creativity, brand image,
innovation and also brings competitive advantage over other similar brands and
competitors. Nike maintains a diverse workforce by organising HR programmes
such as “Speak up!” an innovative way of sharing ideas with co workers and
managers. This helps maximise product development cycles and bring variety to
the products. The advantage of this type of organisational structure is the
innovation and new ideas that are brought by the staff. This also helps maintain
a competitive advantage over rival firms, thus Nike continues to be the global
leader of the sports shoes, equipment and apparel market. Diversity helps boost
employee morale and motivates them to become more efficient- mutually
benefiting multiple stakeholder groups. However, this could reduce the efficiency
of the managers as they now have increased workload and demotivate them.
Improved employ efficiency would lead to better quality, design and variety of
shoes, accessories and apparels, which boosts sales and profits- making the
managers/ directors, shareholder and also the suppliers happy as they will get a
bonuses and rewards, more dividends and timely payment respectively.

Heer Patel, Grade 11

Nike gives employees as a stakeholder group maximum priority, as the
organisation basically works because of them, the satisfaction of almost every
other stakeholder group depends on them- they talk to customers, make goods
and provide services. If they don’t do this properly then customers won’t be
happy and would choose to buys similar products from rival firms like Adidas or
Under Armour. To convey this to their employees, Nike has a decentralized
managerial structure- emphasizes trust, respect and loyalty for its employees,
motivating them to work efficiently. This approach ensures that the company
maintains its corporate culture, which partly contributes to the success of the
business. Nike is motivated by and aware of its own history- how it was founded
and gained so much popularity so quickly- and takes pride in it, making efforts to
keep the culture of Phil Knight and Bill Bowman (founders) alive. They also keep
employees conscious and aware of the inspiring story of Nike- how it started
from humble beginnings- Bill Bowman making his first shoe with a waffle iron-
and now is a multi-billion dollar company. The very waffle iron Bill used is kept at
the headquarters as a museum piece- this helps inculcate a sense of history and
pride among the employees to be part of an organisation that has grown so
immensely. Despite of being such a large company, Nike often hosts
conferences and meetings in a Winnebago/ food truck like the one in which Phil
Knight sold the first pair of shoes ever make by Nike, therefore never forgetting
where they originally came from. A deep level of corporate culture is seen in this
company- each member shares the same set of values while working.
Some employees are so devoted/ proud to be a part of the company that even
tattoo a swoosh on their body! This pride is because they get employee benefits
like no other competitors. Some benefits include gym memberships, cars for
transportation for employees who live far from stores or factories- encouraging
them to come to work every day, therefore low absenteeism, discounts on Nike
products.

Gender equality is also deeply enrooted in Nike’s corporate culture, including

equal pay and recognition to both male and female employees alike. This also
shows the ethics of the organisation. Ethics are the socially accepted moral
principles that guide decision making, based on the collective belief of what is
right and what is wrong. Nike uses inclusiveness as a tool to minimize barriers to
employee performance and maximise performance, diversity and talent
development. It promotes gender equality by organizing marathons for women
for good cause, eg to raise awareness about diseases. Additionally, it also
employs a number of programs such as Bias to Breakthrough, a program for
removing barriers to creativity and NCourage- a set of employee networks for
cultural awareness and community building.

However, Nike is not this ethical in all aspects. In 1991, activist Jeff Ballinger
published a report enumerating the low wages and poor working conditions in
Nike's Indonesian industrial facilities. Before long, the brand became the subject
of a forceful battle supported by United Students Against Sweatshops (pressure
group). It highlighted the workers who worked for a Nike subcontractor for 15
cents per hour, which is less than Indonesia’s minimum wage and documented
their abuse. In spite of the fact that Nike has concentrated on female
strengthening and comprehensiveness in their ongoing ad campaigns, the
women who work in Nike's industrial factories are apparently let alone for this
image. The recent Foul Play report by the Clean Clothes Campaign highlights
the difference between the ever increasing amount of money paid on
sponsorships to sports stars and other marketing expenses compared to the
reduction of the share of the final price of your sports gear paid to workers in the

Heer Patel, Grade 11

supply chain. This upsets and demotivates the factory workers greatly, also
upsetting the pressure groups, forcing them to take action against Nike. Coming
back to gender equality; recently, sexual harassment claims at Nike Inc. pursued
a natural direction in the #MeToo era. Women who worked at the organization
shared data about the abuse they looked at work. Presently four former female
Nike workers are suing the company, not for sexual harassment, but for pay
discrimination and limited opportunities for women to win promotions. The
plaintiffs are seeking damages and an end to Nike’s alleged discriminatory
policies. Nike needs to change its policies to make them more ethical and fair for
all, in order to keep its key stakeholders happy. Nike was being shamed in public
for its labor practices to the point where it badly tarnished the company’s image
and hurt its sales; under increasing pressure it eventually made some changes
by improving its monitoring efforts, raising the minimum age of workers, and
increasing factory audits. They improvised a lot in other aspects as well. The
brand has since earned plaudits far and wide for its efforts.

As far as environmental impact is concerned, Nike goes by the idea of MAXIMUM

PERFORMANCE MINIMUM IMPACT; it has been quite ethical in this aspect, and
continues to try to help the environment by several policies and objectives set by
managers. It has been making positive changes to its environmental practices
and is a member of the Sustainable Apparel Coalition. Nike focuses on materials
because according to the firm, materials have the greatest environmental impact
in the entire product lifecycle. It currently uses sustainable cotton, grind (recycled
materials) to make products also promoting ethical behaviour through “8 recycled
bottles for 1 football shirt” scheme- they recycle 8 plastic bottles for every shirt
they make. They also use recycled polyester and dye fabrics without using water.
This satisfies pressure groups, the local community and the government. In the
future, Nike aims to achieve certain sustainable goals, including 100%
sustainable contract factories using 100% renewable energy, 0% waste and
therefore half the environmental impact.

In conclusion, some of Nike’s stakeholders like customers and shareholders are

happy and satisfied with the variety and quality of products and the high profits
and dividends they receive. Other stakeholders like the employees, managers,
local communities and government wouldn’t all be very satisfied with Nike’s
policies as mentioned before. But it is working upon those policies and plans to
achieve objectives for mutual stakeholder satisfaction.

Sources:
http://panmore.com/nike-inc-organizational-culture-characteristics-analysis
https://www.bartleby.com/essay/Ethical-and-Social-Responsibility-Issues-at-Nike-
FK6SACPFBYRPS
https://www.slideshare.net/thaidavid1/full-report-of-nike
https://www.mindcoral.com/questionlibrary/view/1526
https://sustainablebrands.com/read/supply-chain/swoosh-and-sustainability-nike-s-
emergence-as-a-global-sustainable-brand
https://s1.q4cdn.com/806093406/files/doc_downloads/2018/SBR-Final-FY16-17.pdf
-Nike’s own sustainability report for financial year 2016-17
https://goodonyou.eco/how-ethical-is-nike/

Heer Patel, Grade 11

https://web.stanford.edu/class/e297c/trade_environment/wheeling/hnike.html
https://www.bloomberg.com/news/articles/2018-08-30/nike-gets-tripped-up-while-
trying-to-change-its-culture

Heer Patel, Grade 11