Case Study Of Nike and Kentucky Fried Chicken †Free Samples

Question: Discuss about the Case Study Of Nike and Kentucky Fried Chicken. Answer: Introduction The global commercial scenario has experienced considerable dynamics and changes in their operational framework with time. Over the year, with events like Globalization, liberalization of industrial sectors of different countries and with more and more businesses increasing their operational domain internationally, the ways of doing businesses have also changes considerably (Wild, Wild and Han 2014). Businesses no longer only involve the demand and supply side players but also have implications on the overall economic and social conditions of the countries. With the increasing expansion of the businesses in different domains, social responsibilities of the businesses across the globe have also increased. This in turn has incorporated the notion of ethics in the operational framework of business. The demand for moral and ethical behavior to be incorporated in the aspects of business communications, domestic as well as international, in order to increase the welfare of not only those who are directly involved in these communications but also of those who are indirectly affected, has encouraged the development of the concept of business ethics (Trevino and Nelson 2016). The field of business ethics addresses the morality, responsibility and sensibility in the actions taken by the businesses in order to ensure that to achieve their primary priority of profit maximization the companies do not hamper the well being of any individual or of the society as a whole. Often in their operations and corporate decision-makings, the companies face situations of ethical dilemmas, which involve difficult choices between economic profits and social performances of the commercial companies. The economic profits involve the revenue and benefits of the company itself. However, the social performances involve the measurement of the obligations of the companies to the people and societies as a whole (Moore 2012). Considering this, the concerned essay tries to analyze two real cases of corporate ethical dilemmas and wrongdoings, involving two multinational giants, the reputed sports wears and accessories, Nike and the globally reputed food chain of Kentucky Fried Chicken, in the light of the theories existing in the domain of business ethics (Bazerman and Gino 2012). Discussing the ethical dilemmas and wrongdoings on parts of the decision makers, the implications and influences of the stakeholders and also the behaviors of the companies the essay also tries to recommend the correct behavior for the same and tries to justify the same in the light of the business ethics framework. Case Study 1- Nike As discussed above, Nike is one of the predominant multinational companies operating in the domain of design and manufacturing of apparel, sports accessories, footwear and equipments. With its origin in the United States of America and with headquarter near Oregon; the company has its sales in all the corners of the world. The company has average annual revenue of nearly 34 billion USD and employs nearly 75,000 employees across the world (Nike.com, 2018). With huge penetration in the sports accessories and apparel markets worldwide and with many high profile celebrities endorsing the brand, Nike is a known name among the global population in the contemporary period. However, in the last few years, the company has faced huge accusations and backlashes for allegedly running sweatshops in different developing countries. In other words, the company has been accused for shifting a major part of its production process in the developing and poorly developed countries, where they are accused of employing people at visibly low wages and in poor working conditions (Crane, Matten and Spence 2013). The company has also been accused of employing child labor in these countries and compelling their workers to work in environment detrimental to their health, which is considered as one of the greatest offense and breach in the corporate ethical framework. The problem, which Nike has been facing in this respect, indicates towards the emergence of ethical dilemma on part of the decision makers of the organization, which is elaborated in the following section. Problem areas The primary areas of concern in the operational framework of the company includes the presence of evidences of the company outsourcing their productions to the developing countries and not providing proper work environments to the domestic work force employed by them. Nike, in their factories provided work conditions to the workers, which were not at all as per the norms prevalent in the developed countries (Hopkins 2016). For instance, in some of the factories of the company in Korea and some other underdeveloped countries, the labors were made to work daily for seventeen hours, which is terribly above the conventional work hours. Apart from such labor hours and poor conditions, the wages provided to these labors by the company had been severely low and sometimes even lower than the amount needed for basic sustenance of their needs. These indicate towards the presence of immense exploitations of the cheap labors in the developing countries by such a reputed and multinational brand ( Zhakypova 2017). Another aspect in which the company has gained immense negative popularity is that they have always maintained steep prices of their products and has continuously engaged in promoting their products by getting high profile celebrities as the face of their company. These faces include celebrities like Tiger Woods and Michael Jordan, with the company spending millions of dollars for the promotional activities. Many on the other hand have highlighted these lavish expenses on the promotional activities on one hand and terribly low wages and poor working conditions for the employees and the company has earned huge criticisms around the world in the aspects of human rights (Nisen 2013). The issue of employing child labor in the countries with restrictions against employee unions was a deliberate strategy taken by the company, knowing that there would be fewer chances of agitations and strikes among the workers in those countries. The poor working conditions and lack of protections for the workers in the factories also led to many instances of breathing problems and skin problems among the workers, which is a huge violation of the basic human rights of the workers, on part of the multinational company, spending millions on advertisements and earning billions from their luxury products (James). Ethics: Theoretical Framework The actions and operations of Nike can be discussed in the light of the different theories existing in business ethics framework. Of these, the first theory is regarding the perspective of the social group. According to this concept, the decisions of someone or an organization do not solely depend on the same only but also depend on the social group in which he resides or to whom the same is answerable (Hartman, DesJardins and MacDonald 2014). In case of Nike, the social group can be considered as the employees, shareholders, consumers and different supply side contractors. These people living in different parts of the world, their perceptions of right and wrongdoing are also found to be different. For instance the wage paid by Nike to the employees in Korea may seem considerably low when measured from the perspective of the USA, but the cost of living of the former is also visibly low compared to the latter. The profit maximizing and rigorous expanding strategies of Nike can be explained with the help of the Egoism Theory in ethics, which states that the organizations or any individual have the right to place their own interests as the foremost priority in their rational decisions. Nike did the same, in order to ensure high revenues such that the money could be used for their further expansion of businesses and for venturing in other unexplored markets of the world (DesJardins and McCall 2014). This, though having negative implications on the workers to a considerable extent and on the reputation of the company in the eyes of human rights activists, however, helped the company to become one of the biggest multinational companies in the international scenario. Ethical Dilemmas The company, in its operations has faced several serious dilemmas and also have in some instances engaged in wrongdoings from the ethical perspectives which need to be highlighted. The first ethical dilemma faced by the company has been on the aspect of outsourcing their manufacturing activities to the developed countries. This has helped the company to maintain a high profit margin and also contributed positively in creating employment scopes in those labor rich but economic growth lacking countries (Reuter, Goebel and Foerstl 2012). However, in doing this, the company is held responsible for taking away considerable scopes of employment from its home countries and the company has also been accused of exploiting the cheap labors in the low developed countries by paying them sub standard wages and providing them with work environments much inferior than the conventional norms of the developed world. Another ethical dilemma faced by the company has been that of the tradeoff between huge expenses in the promotional activities and usage of the same money for the skill development of the employees and their overall welfare. While the former is expected to contribute in making the company globally popular, thereby increasing their sales and revenues, the latter is expected to create a healthy and motivated workforce for the company and in increasing the goodwill of the same in the eyes of the societies. Nike however chose to stick to the former, thereby letting go the opportunity to contribute to the humane aspects of the countries where they have established their manufacturing units (Daniel 2013). Recommendations The company has taken several steps in order to address the ethical issues cropping up in its operational framework, especially after these issues got global media attentions, which led to destruction of the goodwill and reputation of the company considerably in the international scenario. The company has already taken amending measures so as to come out of the accusations of running sweatshops in the under developed countries taking the privilege of their deprivations and less awareness in general (McMurrian and Matulich 2016). However, there are still several aspects which the company needs to emphasize upon. In this context, the theory of Utilitarianism can be referred to, which works under the notion that the greatest good is that good which is for the greatest number. Taking this aspect of ethical consideration into account, the company needs to invest more on the social and humane grounds of empowering their employees, not superficially, but in all the aspects of their life (Pullen 2016). Nike needs to concentrate more on building an inclusive corporate culture within the company itself to clarify its values; in order to bring more respect for all the cultural and ethnological diversities the company has in its workforce, in order to manage their operations efficiently and more ethically in future. Case Study 2- Kentucky Fried Chicken Like that of Nike, the Kentucky Fried Chicken is one of the leading fast food chains, having its origin in the USA and enjoying a worldwide operational domain and sales of their product, especially different varieties of fried chicken for which the company is internationally known. The company, having its headquarters in Louisville, Kentucky, currently enjoys the second position in terms of food chains, just after McDonalds and has its outlets in almost 20,000 locations across more than 123 countries in the globe. It also creates employment for thousands of people in these locations and the company enjoys average revenue of nearly 23 billion USD (Online.kfc.co.in, 2018). However, in spite of its immense popularity among the global population, especially the children, the young age clusters, and its increasing sales across different countries of the world, there have been several serious ethical issues, which the company has been facing in the last few years, which have also led to considerable criticisms of the company (Trevino and Nelson 2016). The primary criticisms of the company regarding its ethical wrongdoings have been based on the accusations against the company for allegedly using unhealthy ingredients and products to make their fried chickens (Sheehan 2013). On one hand, evidences have been found against KFC, of using oil containing Trans fat and on the other hand the company has also been accused of cruel chicken farming and of using unnatural methods like injections and chemicals on the chickens to increase the cost efficiency of their production process. Problem Areas One of the primary problem areas in the ethical framework of the company is the usage of oil containing trans fat in most of the products made and sold by the company in all parts of the world. This becomes even a bigger issue in the contemporary period, with more and more people realizing the negative effects of unhealthy eating and adapting to healthier lifestyles. Apart from oil, the other ingredients used by the company to make their products tasty and more appealing in the eyes of the youth, also contains substances which are not considered to be healthy in conventional standards (Sebastiani, Montagnini and Dalli 2013). However, KFC, in none of its promotions or advertisements has mentioned about the type of oil they use or the ingredients, which they add. In addition, the calorie content of their products and the negative implications, which they can bring on the consumers, especially the children, are not mentioned by KFC in any of their promotional activities. Apart from the above-mentioned problem, the company has also been accused of unethical handling of the animal resources, which is one of the serious offenses in the business ethics framework globally. The chicken suppliers of the company have been accused multiple times of keeping chickens in poor conditions and overcrowded cages. They have also been accused of using unfair means like drugs and chemicals to make the chickens heavier in order to increase the cost efficiency (Lawless 2013). The multinational company has also supported these activities in order to increase the revenues and profits considerably. The company has also been accused of keeping this information hidden from their clientele, which indicates towards severe negligence on part of the company in terms of the health and welfare of the customers. Ethics: Theoretical Framework The unfair means adopted by KFC can be considered extremely unethical from all the perspectives of the ethical framework existing in the contemporary business scenarios in the world, as it is involved direct adverse implications on the consumers, which also includes elderly people, women, children and youth. Their actions can be to somewhat explained from the Egoism perspective only. This perspective highlights the presence of rights in the hands of individuals or the organizations to take decisions keeping in front their own benefit first. However, the Egoism theory does not validate the activities of hampering the welfare of other people in order to increase its own benefits, which have been done by the company over the years (Jenning 2014). Ethical Wrongdoing The ethical dilemma, which the company faced and which led to the wrongdoing on part of the company, has been due to the tradeoff between the economic profits, competition and social reputation, which the company has been subjected to. With other food chains like Pizza Hut, Subway and McDonalds increasingly gaining popularity in the international domains, it has been essential on part of the company to increase their competitiveness which needed cost effective production. However, the method taken by KFC to achieve that has been wrong and highly unethical. Recommendations The company, on ethical perspectives, need to focus not only on the utilitarian views of welfare maximization of the society but also needs to incorporate the notion that they are effecting the future generations in a negative way. The cultural relativism aspect of ethics has also to be considered since the company serves in different countries with different food habits and beliefs regarding the same (McMurrian and Matulich 2016). The company also needs to bring in more transparency in their framework as their advertisements still misguides the customers to a considerable extent. Conclusion From the above discussion, it can be asserted that corporate ethics has been gaining immense importance in the contemporary period with the international business structure becoming more integrated as well as complicated. In these aspects, ethical wrongdoings of companies, especially the internationally reputed large ones lead to immense negative implications not only on their clientele but also on the long-term prospects and reputations of the company themselves. Keeping this into consideration, Nike has been implementing positive changes and ethical considerations in its framework. 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