Nike - Path to CSR (Ver 3) (2)

8/3/2019 Nike - Path to CSR (Ver 3) (2)

1/13

By :

Kuntal Das(10P025)

Manali Subramanian(10P026)

Manish Adukia(10P027)

Manu Suresh Kulkarni (10P028)

Arjun Mehra(10P029)Milind Agarwal(10P030)


2/13

Keeping touch with Societal Expectations

Alignment between industrys judgment regarding its

responsibilities and the concomitant judgment of society

Alignment between industrys judgment regarding its

responsibilities and the concomitant judgment of society

Societies conceptualize CSR differently depending on the socio-

economic context

Societies conceptualize CSR differently depending on the socio-

economic context

Predict and credibly respond to societys changing awareness

of particular issues

Predict and credibly respond to societys changing awareness

of particular issues

Triple Bottom Line Approach to CSR(Elkington,1997)- Economic,

Social and Environmental responsibilities

Triple Bottom Line Approach to CSR(Elkington,1997)- Economic,

Social and Environmental responsibilities


3/13

Stages of Issue Maturity

A Scale to measure the maturity of societal issues and public expectations around the issues

Activist and

NGO aware

Weak hard,

scientifichardevidence

Issue

ignored by

businesscommunity

LATENT

LATENT

Political mediaawareness

Emergingresearch,

evidence weak

Businessesexperiment

with dealing of

issue

EMERGING

EMERGING Sector wide

voluntaryinitiatives

Increasing view ofneed for litigation

Voluntarystandards

developed,Collective Action

CONSOLIDATE

CONSOLIDATE

Legislation andbusiness normsestablished

Embedded

practices becomepart of business

model

INSTITUTIONALIZED

INSTITUTIONALIZED


4/13

Stages of Organizational Behavior towards CSR

DEFENSIVE

DEFENSIVE

COMPLIANCE

COMPLIANCE

MANAGERIAL

MANAGERIAL

STRATEGIC

STRATEGIC

CIVIL

CIVIL

Deny practices, outcomes, or responsibilities

Promote broad industry participation in corporate

responsibility

Integrate the societal issue into their core business

strategies

Embed the societal issue in their core management

process

Adopt a policy based compliance as a cost of doing

business


5/13

NIKE

Easy target for activists

High Profile Brand

Questionable Working Conditions in supply chains

(though standard industry practice)

Forced to look at CSR much before any of itscompetitors


6/13

Nikes Response

Denial to Compliance in 3 steps

Professional Approach

a. CSR department established to manage supply chain

compliance with labour standards

b. Responsibility Management

Managements Retort

Weve the best corporate values, why target us??

Giving in to protest

a. Labor codes established

b. Audits conducted more as lip service

c. Failed to build credibility showed insincerity


7/13

Now its a Managerial Problem

End of 2000 : 80 dedicated CSR department employees Hired expensive auditors for 900 suppliers

CAME TO NAUGHT

Senior Management asked to handle the problem Root of the problem Nikes approach to business

Improper incentive structure

Tight Inventory policy caused overtime for workers

Decision CSR to be integrated as core part

Reengineer procurement incentives

Grade factories based on labor conditions


8/13

JUST DO IT h But How?

Challenges Faced

Constraining procurement teams involved real costs and

commercial risks

Improving worker conditions dont add to bottom line

Commercial

Entrepreneurial culture was being challenged

Considered as affront to the 30 yr old successful business

model

Cultural

Need

Marry responsible practices without compromising

shareholders interests


9/13

A ROCKY PATH TO TRAVERSE

Launch of FLA,

SA8000 standard,

ETI

Launch of FLA,

SA8000 standard,

ETI

Addressed the need

to develop and

comply UN

standards of labor

Addressed the need

to develop and

comply UN

standards of labor

MFA ensured

procurement quotas

and prevented long

term commitments

MFA ensured

procurement quotas

and prevented long

term commitments

Expired in 2005,leading to supplier

consolidation

Expired in 2005,leading to supplier

consolidation


10/13

POST MFA Scenario

Consolidation of supply chain

long term procurement commitments

investments in technological progress

Intense competition Leading to shorter time to market

Move towards lean manufacturing

NIKE - Integrating CSR with business strategy

Nike strategy changed in tandem with societys changing expectations

Staying competitive while promoting best labor practices

Reduction in number of workers employed

Skill enhancement leading to better wages, better working conditionswhile improving production and saving 25% manufacturing costs


11/13

FINAL SHIFT TO CIVIL ACTION

Competitors in value segment (like Walmart) squeezing margins

Nike commitment for labor standards putting it at a first moverdisadvantage

Nikes challenge

Bring all players onto the same labor standard

Regulated international labor standards Long term success needed shift of practice to entire sector

Civil Action Standards would allow sharing financial burden between suppliers and

competitors

Companies divided those favoring support for countries at disadvantage

after MFA expiration (Nike among them) and those that dont Nike exploring use of alliances to address challenges of post MFA world ( also

improving brand reputation in the process)

Implication of societal learning - Steps taken by Nike shifts it from being aobject of activism to a participant in civil initiatives and processes


12/13

KEY ISSUES

Leadership issues CSR a hard won battle

Role of societal learning in making CSR a

successive strategic tool Long drawn process

Little results in the short run

Hard to delve deeper into the issue and thinklong term


13/13

Thank You

Documents

Nike - Path to CSR (Ver 3) (2)