| Business Ethics: Worth a thought?The
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| | prioritizes its stakeholders in terms of
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| corporate world today faces rising
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| | their importance to the firm, and quite
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| ethical dilemmas in every day operations.
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| | clearly the workers in Asia, do not seem
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| Ethical issues, often confused with
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| | to be anywhere near top of this priority
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| corporate scandals, are not necessarily
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| | list. As a consequence, all the efforts
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| as dramatic as that. Every department of
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| | of the firm are directed towards the
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| every organization face moral and ethical
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| | consumers, who typically are in developed
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| dilemmas in their day to day functioning,
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| | countries, with more money, and who can
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| and often enough corporations get away
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| | not care less about what might be
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| with unethical or immoral behaviour. Of
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| | happening in a Nike factory miles away
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| course, reasons vary. Arguably,
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| | from home.So has Nike done anything about
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| organizations cannot afford the risk of
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| | it?Since the controversy first broke out
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| not investing their time or resources in
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| | in 1998, Nike has claimed to taken
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| developing a comprehensive approach to
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| | several steps to correct the mistakes. Or
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| corporate ethics. This report looks at
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| | so is what the organisation claims. This
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| two multinational organizations, Unilever
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| | section of the article focuses on Nike's
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| and Nike Inc. and draws a comparison on
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| | efforts, the truth, the lies and the
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| their discriminatory practices in the
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| | myths about it.
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| various countries or culture they operate
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| | After the controversy broke out in the
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| in. Both the firms are identified with
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| | international media, Nike's founder and
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| unethical behaviour, and although the
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| | CEO Mr. Philip Knight made six
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| circumstances and the firm's ways of
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| | commitments:- All Nike shoe factories
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| handling these issues are different,
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| | will meet the U.S. Occupational Safety
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| little seems to have changed.Unilever
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| | and Health Administration's (OSHA)
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| Issue: Fair is Lovely!!An Anglo-Dutch
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| | standards in indoor air quality.- The
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| company, Unilever owns many of the
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| | minimum age for Nike factory workers will
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| world's consumer product brands in foods,
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| | be raised to 18 for footwear factories
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| beverages, cleaning agents and personal
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| | and 16 for apparel factories- Nike will
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| care products. Unilever employs more than
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| | include non-government organizations in
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| 247,000 people and had a worldwide
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| | its factory monitoring, with summaries of
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| revenue of US$51.4 billion in 2004.
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| | that monitoring released to the
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| (Unilever 2006). In India however the
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| | public.- Nike will expand its worker
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| firm runs under its operations under the
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| | education program, making free high
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| name of Hindustan lever. The company has
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| | school equivalency courses available to
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| a range of 'home and personal care'
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| | all workers in Nike footwear
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| products in the Indian market. One of the
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| | factories.- Nike will expand its
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| most successful brands of the company is
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| | micro-enterprise loan program to benefit
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| 'Fair & Lovely'. The company websites
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| | four thousand families in Vietnam,
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| claims to be using a patented technology
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| | Indonesia, Pakistan, and
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| for this fariness cream. The website
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| | Thailand.- Funding university research
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| claims 'Fair & Lovely' to be formulated
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| | and open forums on responsible business
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| with optimum levels of UV sunscreens and
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| | practices, including programs at four
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| Niacinamide, which acts safely and gently
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| | universities in the 1998-99 academic
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| with the natural renewal process of the
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| | year. (Connor 2001)However there was
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| skin, making complexion fairer over a
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| | still no mention of the human rights of
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| period of six weeks.A number of ethical
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| | workers, higher wages, more reasonable
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| concerns are however related to the
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| | working hours, safer and healthier work
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| product. Apart from the ill effects on
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| | places and respect for Workers' Right to
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| the skin, as claimed by some doctors, the
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| | Freedom of Association. Later consumer
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| advertising and marketing of the product
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| | activist Marc Kasky filed a lawsuit in
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| has been doing more harm than good for
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| | California regarding newspaper
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| the society. Its frequently-aired ads
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| | advertisements and letters Nike
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| typically show a depressed woman with few
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| | distributed in response to criticisms of
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| prospects, gaining a brighter future by
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| | labour conditions in its factories. Kasky
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| having a boyfriend or attaining a job
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| | claimed that the company made
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| after becoming markedly fairer
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| | representations that constituted false
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| (emphasized by several silhouettes of her
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| | advertising. Nike responded the false
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| face lined up dark to light). On its Web
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| | advertising laws did not cover the
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| site the company calls its product, "the
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| | company's expression of its views on a
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| miracle worker," which is "proven to
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| | public issue, and that these were
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| deliver one to three shades of change."
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| | entitled to First Amendment protection.
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| (Unilever 2006). To many it may seem or
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| | The local court agreed with Nike's
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| sound strange for all this to happen in a
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| | lawyers, but the California Supreme Court
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| country where the majority of the people
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| | overturned this ruling, claiming that the
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| have a dark complexion of skin colour
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| | corporation's communications were
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| with variations in brownness. Ironically
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| | commercial speech and therefore subject
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| enough though, people from all walks of
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| | to false advertising laws. (Kasky V. Nike
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| life, be it a would-be-mother in law, or
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| | 2002)The parties subsequently settled out
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| a young or an old male, everyone seems to
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| | of court before any finding on the
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| have a fascination for lighter skin.
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| | accuracy of Nike's statements, for $1.5
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| Women from all socio-economic backgrounds
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| | million. Discovery in the Kasky case had
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| go to unbelievable lengths to become just
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| | the potential to open the Nike files to
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| a little whiter.Although the advertising
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| | public scrutiny, to document the
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| done by Unilever for 'Fair & Lovely' is
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| | mistreatment of workers throughout the
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| not illegal but it certainly remains
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| | world, and the flow of money from Nike to
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| objectionable. In an era which is dawned
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| | public interest groups. However Kasky and
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| by corporate scandals, such as Enron and
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| | his lawyers settled this potential
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| the Australian Wheat Board (AWB),
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| | historic case for a $1.5 million donation
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| Unilever has been successfully running
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| | to a group controlled by the shoe and
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| this product in over 38 countries.
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| | apparel industry. There hasn't been a
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| Ironically most of these countries are
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| | word about it since.(Weissman & Mokhiber
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| under-developed/ developing country, who
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| | 2002)In 2004 Nike announced that it would
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| can do away with such practices. In
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| | be developing a balanced scorecard to
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| India, a country with a huge social and
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| | integrate corporate responsibility into
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| cultural divide, high unemployment and
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| | its business. The sports goods
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| illiteracy levels, Unilever successfully
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| | manufacturer said it would introduce
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| deceives and manipulates people through
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| | corporate responsibility as an integral
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| its exaggerated claims. Even if the
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| | part of its contract manufacturing
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| claims were to be true, and such a
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| | business. Sourcing decisions were to be
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| product was to make skin lighter, the
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| | based not just on price, quality and
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| company looks to gain market share and
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| | delivery but also a contractor's pledge
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| increase profitability by creating a
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| | towards labour management and
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| mindset where lighter skin is superior to
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| | environmental, health and safety
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| a darker complexion. In reality people
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| | programmes.In 2005, seven years from the
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| are buying products that will cause more
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| | time when the controversy was first made
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| harm than good. The demand for such
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| | public, an independent research conducted
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| "skincare" products is part of an
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| | showed that although 60% of factories
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| India-wide trend of women wanting to
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| | monitored achieved an A or B rating in
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| lighten their complexions in the belief
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| | terms of compliance with agreed
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| that lighter is better. This desire has a
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| | standards, a quarter of factories were
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| long history, a hangover from India's
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| | found to present more serious problems.
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| colonial past fuelled by contemporary
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| | These ranged from a lack of basic terms
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| global perceptions of beauty that give
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| | of employment and excessive hours of work
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| prominence to western marketing and
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| | to unauthorised sub-contracting,
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| fashion styles. The advertisements shown
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| | confirmed physical or sexual abuse and
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| fail miserably at all levels of
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| | the existence of conditions which could
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| advertising ethics.One of the concepts
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| | lead to death or serious injury. The
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| that can be used to explain the practices
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| | Guardian also reported some of the
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| of Unilever advertising is Moral myophia,
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| | conditions that existed in the Chinese
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| the failure of Unilever to see the moral
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| | factories in 2005- Between 25% and 50% of
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| dimension at all. The advertisements done
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| | the factories in the region restrict
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| by the firm have probably been
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| | access to toilets and drinking water
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| successful. How else would you explain
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| | during the workday.- In more than half of
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| the never ending promotional campaigns
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| | Nike's factories, the report said,
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| all over the media; print, display or
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| | employees worked more than 60 hours a
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| broadcast. Success in this case relates
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| | week. In up to 25%, workers refusing to
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| to the increasing profitability of the
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| | do overtime were punished.- Wages were
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| firm after a particular ad campaign. The
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| | also below the legal minimum at up to 25%
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| social implications of this to the
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| | of factories
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| society are however conveniently ignored.
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| | (What are factory conditions in China
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| Quite clearly, Unilever seems to be
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| | 2005)Once again Nike said it would set up
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| following the belief of the only bad
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| | a taskforce to improve compliance with
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| advert is one that does not work.The
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| | its code of conduct on working hours. It
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| content of the product website makes
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| | will also work with factories to help
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| things a little more complicated. The
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| | them address the most pressing problems
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| website claims to be helping women in
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| | as well as seeking to establish a set of
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| India, often considered to be the weaker
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| | common standards across the industry.
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| sex. The Fair and Lovely Foundation, an
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| | (Nike opens up in Standards Drive
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| initiative of Hindustan Lever Limited
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| | 2005)The question of course is, would
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| seeks economic empowerment of Indian
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| | anything still be done. There is a good
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| women through information and resources
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| | chance it may never be. Nike sees
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| in the areas of education, career
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| | business ethics as "no good at all", and
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| guidance and skills training. Comprising
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| | believes acting ethically would not be in
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| of an advisory body of leading
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| | the best of interests of the business.
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| individuals, this foundation aims to
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| | Not till the time, the sales of the
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| undertake various projects and
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| | business go down alarmingly, would there
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| initiatives in keeping with its vision of
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| | be any hope for any drastic improvements
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| empowering women to a brighter future.
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| | in these conditions. Nike has always had
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| Prominent women organizations and
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| | its share of controversies, and the firm
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| achievers partner initiative to promote
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| | seems to be thriving on it. The firm
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| economic empowerment of women. (Grace &
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| | manages to use the controversies as a
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| Cohen 2005)Noble thought?It sure is, but
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| | publicity tool. Thus far, Nike has
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| at what expense. Isn't it strange and
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| | treated allegations as an issue of public
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| ironic that this company, and others in
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| | relations rather than human rights. Every
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| the business, continue to sell fairness
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| | allegation is followed by the release of
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| as a desirable quality, be it for success
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| | public statements across various
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| in marriage or career, and equate dark
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| | magazines and newspapers stating the
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| complexions with failure and
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| | efforts made by the firm to make the
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| undesirability? Where does a company draw
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| | difference, but seven years down the
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| the line between selling a product and
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| | road, the differences are yet to be seen.
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| being socially sensitive? What is even
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| | Meanwhile the efforts of Nike to
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| more disturbing is the fact that there is
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| | manipulate and win even more customers go
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| a constant attempt to disguise these
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| | on. The corporate website of the firm
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| socially unacceptable practices. As noble
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| | talks heavily about their shifting
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| as the idea behind the Fair and Lovely
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| | approach to labour compliance.(Evolution:
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| Foundation might be, it still does not
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| | Shifting Approach to labor compliance
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| solve the root problem. Addressing one
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| | 2006)Unlike Nike, Unilever has not quite
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| problem in the society can not come at
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| | been indulging itself in illegal
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| the expense of exaggerating the other
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| | activities, but does that make it any
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| one. Women in India need to be empowered,
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| | less harmful, or does that make Unilever
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| and be told that they are no less than
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| | any bit more ethical than Nike?According
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| their male counterparts, however the
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| | to this writer, the answer to both the
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| people of India also need to be told that
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| | questions is NO. In fact what makes
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| the mere colour of skin does not make one
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| | Unilever's practices even scarier than
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| superior. The society needs to get over
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| | those of Nike is the fact that they cause
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| the colonial hangover, and the least that
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| | as much harm, but still there seems to be
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| companies like Unilever can do is not
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| | little concern over it. The firm has been
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| spend millions of dollars on campaigns
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| | in operation since 1978, and even 28
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| which do more social harm than good.Nike
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| | years after there seems to be little or
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| Dilemma: Still waiting for them to "do
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| | no concern. There is little media
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| it"!Another corporate giant having its
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| | coverage over the menace, possibly
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| fare share of controversies over the
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| | because of the advertising revenues being
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| years is Nike. Nike employs approximately
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| | paid, or just the ignorant nature of the
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| 26,000 people worldwide. In addition,
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| | present day media, which seems to be more
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| approximately 650,000 workers are
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| | interested in scandals rather than some
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| employed in Nike contracted factories
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| | social concerns in a third world
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| around the globe. More than 75% of these
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| | country.The double standards practised by
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| work in Asia, predominantly in China,
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| | both Nike Inc, and Unilever are quite
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| Thailand, Indonesia, Vietnam, Korea and
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| | apparent as well. The majority of Nike
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| Malaysia (Nike 2006). In 1998 Nike came
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| | clothing is produced in countries it
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| under fire for the sweatshop conditions
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| | hardly has any sales, but of course the
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| of the workers in the Nike factories in
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| | factory conditions of a worker based in
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| China and other third world countries.
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| | an American factory is strikingly
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| The evidence showed that the workers were
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| | different from that of a worker in a
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| regularly subject to physical punishment
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| | Chinese factory. Likewise Unilever
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| and sexual abuse and exposed to dangerous
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| | manipulates the market by introducing
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| chemicals. (Nike Accused of Lying About
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| | fairness creams in cultures where beauty
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| Asian Factories 1998). Sub standard
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| | equates fairness. To boost the sales, the
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| working facilities, bare minimum wages
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| | company goes a step further by trying to
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| and risks to health of labourers mark
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| | position the product by changing consumer
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| NIKE factories in Asia. The firm was also
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| | perception of fairness as being
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| accused of practicing child labour in
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| | successful, both socially and
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| Pakistan.So the question now is, why did
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| | emotionally.Social impacts? Did you
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| it happen, and more importantly, has
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| | ask?Of course that's hardly on the
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| anything been done since to correct it.So
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| | agenda. The interesting thing is,
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| why did it happen?Well that is quite
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| | although Unilever operates in over 40
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| clear. The reason why most firms
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| | different counties, including Australia,
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| outsource their activities to lesser
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| | the 'Fair & Lovely' product is only
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| developed countries is to exploit cheaper
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| | available in a handful of markets. The
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| labour and production costs. Nike has a
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| | company does not have any 'Dark & lovely'
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| brand reputation worldwide, and in-fact
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| | brands in their western markets, possibly
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| is a market leader in the sales of
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| | because they perceive this market to be
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| athletic shoes. The constant focus is to
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| | more educated and therefore tougher to
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| formulate ways and strategies to reduce
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| | manipulate.The firms of course have their
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| production costs, and one way of that is
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| | reasons, and one of them is us, the
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| fewer wages to the workers. The high
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| | consumers, who purchase these products.
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| unemployment levels in the third world
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| | It is the age old formula of demand and
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| countries, as well as the desperation for
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| | supply. We demand the product, and the
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| people to be employed, in any kind of
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| | firm of course goes to any lengths to
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| work, allows multinationals like Nike ,
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| | fulfil the gap. In Unilever's case, there
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| the perfect platform to indulge in
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| | is an obvious need in the mind of the
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| malpractices without getting into too
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| | consumers in India to have fair skin.
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| much trouble. A look at some of the
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| | Similarly for Nike, the worldwide demand
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| ethical issues concerned with Nike's
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| | for their apparels compels the firm to go
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| human (or inhuman!) right violations
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| | to unbelievable extent to produce lower
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| would give a better understanding of the
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| | cost products. The story unfortunately
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| concern.Ethical Dilemma:Any firm which
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| | does not end here. We the consumers, then
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| expands its operations globally needs to
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| | put the firm under even more pressure to
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| follow the basic code of international
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| | maintain their profitability, only this
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| ethics:- Not to intentionally direct harm
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| | time we take the role of investors.
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| in the host country. By providing below
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| | Investor's of course are only concerned
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| standard and unsafe working conditions,
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| | with the share return, and cannot care
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| and low wages, Nike was clearly
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| | less about how the firm maintains its
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| intentionally doing harm.- Benefit the
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| | profitability.Jennifer Abbott and Mark
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| host country. Although Nike was indeed
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| | Achbar, in their documentary 'The
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| expanding the number of jobs available in
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| | Corporation', proved that corporations in
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| China, a desirable aspect, but the
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| | the present time fit the definition of a
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| extremely low wages meant it was all
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| | 'psychopath'. The concern is that this
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| beneficial for the corporation and not
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| | psychopath is being raised and bred by
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| the people in China.- Respect the human
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| | us, the consumers, and the investors.
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| rights of employees. Reports of unsafe
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| | These are average times we are living in,
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| and hazardous working conditions proved
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| | with every day more issues, more scandals
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| that Nike did not care much about the
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| | and more controversies breaking out.
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| human rights in China.- Respect the
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| | However reading the stories is nearly not
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| values, culture and laws of the host
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| | enough. Something somehow somewhere needs
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| country- as long as they are not morally
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| | to change and change sooner rather later,
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| wrong or against human rights. (Grace &
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| | before it gets too late.End of
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| Cohen 2005)It would be a fair assumption
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| | story?Unfortunately, I don't think
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| to make, if a certain behaviour is
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| | so.Pranay Rai is a young management
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| unacceptable in the home country, it
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| | student at Melbourne Business School,
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| would most likely be morally wrong in a
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| | Australia. Through his simple yet
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| foreign environment as well. Managing
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| | unconventional style of writing, Pranay
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| stakeholder interests is also extremely
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| | hopes to touch the souls of millions
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| important for any firm. However problems
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| | across the globe, reminding them of the
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| arise when businesses fail to prioritize
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| | social issues that have been long
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| the stakeholder interests. Nike
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| | forgotten.
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