Case Study: Chapter 2
Case study: Nike's CSR Challenge
1. Discuss the challenges regarding corporate social responsibility that companies in the apparel industry face in its supply chains around the world?
A corporation's supply chain may be defined as the series of companies including suppliers, customers and logistics providers that work together to deliver a value package of goods and services to the end customer (Simchi-Levi et al., 2002). Corporate social responsibility (CSR) is the initiative of a corporation to take responsibility for the company's effect on the environment and their impact on social welfare (investopedia). CSR has become the hot topic in the MNCs environment because companies have to think about not only their home country but the all the host countries and all the stakeholders involved in the supply chain. CSR has relevance to many facets of a corporation's operations. Strong CSR policies can help to recruit the right people for the job, keep attrition rates low by promoting a "feel good" quotient, improve corporate image, prepare for future regulation, empower "soft" laws (Vogel, 2005, p.162). With regards to the supply chain, companies face many challenge when it comes to CSR.
There have been many report such as the one in the case of workers being abused and children being used. There are also environmental issues like water pollution, the use of chemicals to cut corners and to make cheaper clothing example the use of chemical and GMO seeds to make cotton grow faster which pollutes the earth and water. Companies face the challenge of making a profit but doing so ethically. There have been a backlash from customers when it was discovered that the apparel industry was involved in sweat shop to manufacture clothing. The problem is that many of the countries that they use to outsource their manufacturing do not see a problem with the working conditions because it is part of their culture. Companies faced the ethical dilemma of following the host country norm or setting a better standard at the risk of spending more money. It is not always an easy decision to make but as seen by the case, it can be done as Nike has taken the stance to improve the CSR in their supply chain.
The lack of support is one of the biggest challenges for suppliers, they do not receive any support from retailers and buyers so they have to bear all the CSR implementation costs. Manufacturers in developing countries also lack trained personnel, they do not have enough information on CSR and the manager's time is focused on getting a high profit so CSR is neglected. These are all challenges faced by companies.