Social Responsibility for Nike
Nike is one of the largest and most known shoes and apparel companies globally. Besides, Nike, which was initially referred to as Blue Ribbon Sports, was formed in 1964 by Bill Bowerman and Phil Knight. Since the company was initially founded in Beaverton, Oregon, it established its headquarters in the same location. Nike changed the name from Blue Ribbon Sports before it went public and due to its initial approach to the target market, by the start of the 21st century, the company had gone international with distributors and outlets in over 150 countries around the world (NIKE, 2020). Currently, Nike is a global company with the financial ability to sponsor various events and activities around the world.
Most importantly, based on the reports for its 2019 fiscal year, the company registered an increment in its yearly revenue to about $39 billion, equivalent to a 7% increase. Nike plays a vast responsibility socially due to its diverse ability in the sector of sportswear (NIKE, 2020). More so, Nike has participated in various initiatives that significantly contribute to the well being of the community. For instance, since Nike is based on sportswear, it operates a children’s initiative known as Made to Play. The named action creates an environment that encourages children to participate in sports and lead to healthier and active lives. Based on the statistics, the Made to Play initiative has reached over 15 million children worldwide. Therefore, Nike also plays a huge part in society through its established policies and actions.
Social responsibility is a concept mainly used in the business environment. Consequently, social responsibility states that a business should contribute and act towards things that generally benefit society (Ferrell et al., 2016). Therefore, amid the strategies of a company to achieve its set goals, it should also aim to benefit society. Additionally, social responsibility is associated with a company’s ethical pillars since it has to ensure as it strives to be profitable in the community, it positively benefits society. Once involved in a business, social responsibility is referred to as corporate social responsibility (CSR). Thus, to ensure that the different companies employ social responsibility, the main focus is put on the formulation and establishment of policies in the company (Carroll et al., 2016). The formulated strategies may involve commissions whereby a company may donate resources such as money or time to society. Additionally, these policies may include the establishment of initiatives that may focus on the environment, for example, in reducing pollution.
Besides, there are various benefits associated with CSR, for example, efficiency in the operating costs of the company, organizational growth, and good publicity of the company. Furthermore, CSR greatly affects the company’s image to the society and its clients as a whole (Carroll et al., 2016). Therefore, the more a company gets involved in molding ethical pillars to benefit society as part of its purpose, then it gets to enjoy the named benefits associated with CSR. Specifically, a good relationship with society results in good publicity, which then influences the sales, and later leads to organizational growth.
As indicated earlier, the social responsibility of a company is evident in the formulated policies and established initiatives; this is associated with the nonmarket environment of business (Ferrell et al., 2016). A nonmarket environment refers to a framework that focuses on the social and political interactions between the firm and its stakeholders, including the government, the civil society, and the advocacy groups (Kim, 2018). Consequently, the main focus is on four major components of the nonmarket environment, including issues, information, institutions, and interests.
One of the components to be addressed is issues which, according to Voinea and Van Kranenburg (2017), refer to situations that have the probability of becoming problematic to a company or society. These issues are usually identified by either the stakeholders or a specific group in the company. In Nike, one of the significant issues that the company has faced while in operation is allegations related to its supply chain, such as child labor. Such issues have a considerable effect on its operation, especially in the company’s image to society. Over time, the company has developed mitigation measures to solve similar issues that influence its normal processes. Additionally, another component of a company’s nonmarket environment is the company’s interests. Interest as a component of the nonmarket environment is defined as a situation that gains the attention of the company’s and its stakeholders to be involved in (Voinea & Van Kranenburg, 2017). Besides, an interest may bring about an advantage to the company, or generally affect it. Therefore, when referring to Nike, it has ventured into many of its interests, including a focus on its environmental impact while it conducts its production activities. As a result, the company has resolved to adopt sustainable innovation whereby it uses sustainable raw materials for the production of its products. This interest benefits both the company and the society at large since the company gains good public relations. On the other hand, the environment is not polluted, which positively benefits the community.
The third component of a company’s nonmarket environment to be addressed is institutions such as both government and non-governmental entities. According to Voinea and Van Kranenburg (2017), institutions in the nonmarket environment refer to the constraints that define and govern the business, that is, economic, social, and political interactions. Besides, these institutions are involved in the formulation of laws and monitoring to ensure their adoption. Therefore, Nike operates based on various influences from these institutions. For example, the company operates in the US, whereby there are federal and state laws that govern the operation of businesses, failure to which businesses are closed. Lastly, the fourth component of a company’s nonmarket environment is information, which refers to the method through which interested individuals in an organization such as the stakeholders understand their interests on issues and how they can influence them in the company (Voinea & Van Kranenburg, 2017). Furthermore, information is an essential component since it guides the decision-making process in an organization. In this case, Nike employs transparency with its stakeholders for better decision making, which is evident in its performance and global ranking since its establishment.
Moreover, the impact of nonmarket action on Nike is noticeable. For example, the company has faced various issues associated with its ethical pillars; however, the company has developed mitigation measures that have ensured its prosperity through efficient decision-making (NIKE, 2020). Besides, through the implementation of the company’s various interests, such as the use of sustainable innovation in its production, Nike has developed increased customer loyalty, which has reflected on the company’s increased sales. Besides, Nike has explored its interests in community-based organizations through initiatives such as Made to Play, advocating for children’s welfare through sports, and its contribution to the society by donating funds (NIKE, 2020). As a result, it has created a good and strong rapport with society and its customers in general. Consequently, this has led to increased good publicity, evident in the sales of the company. Based on that evaluation, nonmarket action has positively impacted Nike.
In conclusion, social responsibility is a viable strategy for an organization to grow and develop at large. Specifically, based on the analysis conducted on Nike Inc., which an international organization. More so, based on the four analyzed components of the nonmarket environment concerning Nike, various benefits have resulted from the adoption of the nonmarket action. Moreover, all the identified benefits contribute to the overall growth of the organization.
References
Carroll, R. J., Primo, D. M., & Richter, B. K. (2016). Using item response theory to improve measurement in strategic management research: An application to corporate social responsibility. Strategic Management Journal, 37(1), 66-85.
Ferrell, O. C., Thorne, D., & Ferrell, L. (2016). Business and society: A strategic approach to social responsibility & ethics (5th ed.). Chicago, IL: Chicago Business Press.
Kim, H. (2018). Assessing The Global Nonmarket Environment: The Political And Social Environment In The Global Business Environment. International Journal of Business and Management Invention, 7(7), 33.
NIKE. (2020). NIKE, Inc. Reports Fiscal, 2019 Fourth Quarter and Full Year Results. NIKE, Inc. Retrieved 2 June 2020, from https://news.nike.com/news/nike-inc-reports-fiscal-2019-fourth-quarter-and-full-year-results
Voinea, C. L., & Van Kranenburg, H. (2017). Advancing the nonmarket environment: Expanding institutions, issues, interests, and information. In Nonmarket Strategic Management (pp. 12-28). Routledge.