Report: Ethical Analysis of Nike's Marketing and Business Practices

This report delves into the ethical considerations surrounding Nike's marketing strategies, particularly focusing on the controversy surrounding the NikeLAB NRG Beryllium Balaclava. It examines the ethical dimensions of the product launch, analyzing the factors that led to the criticism and subsequent withdrawal of the product. The report explores the role of businesses in society, identifies key stakeholders affected by the issue, and assesses the ethical implications of Nike's choices on other companies. It also provides recommendations for ethical marketing practices. Furthermore, the report explains different ethical theories, such as utilitarianism, and applies them to the Nike case study. It concludes by discussing the characteristics of an ethical leader and how ethical standards can be managed within a business context. The analysis covers the impact of ethical choices on brand image, employee morale, and shareholder value, offering insights into how companies can navigate ethical dilemmas and maintain a positive reputation.

Ethics

Table of Contents
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
(a) Case ..................................................................................................................................1
Why should issue be explored as an ethical dimension along with determination of the factors
that results in deliverance of such issues ...............................................................................2
Role of business in the society...............................................................................................3
Key stakeholders and how they are affected..........................................................................3
Ethical choices impact on other companies............................................................................4
Recommendations..................................................................................................................5
(b) Explanation of different types of ethical theories by taking functional examples............5
PART 2............................................................................................................................................6
What makes an ethical leader and how they can manage their business standards ..............6
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11
.......................................................................................................................................................11

INTRODUCTION
Ethics is a perpetual process of analysing and assessing the concepts on the basis of right
or wrong. In other words, it is a combination of different rules which help to ascertain right
conduct from the large number of alternatives (Biesta, 2015). Nike is taken for consideration
which provides various types of products like apparels, sports equipment and accessories. It is
headquartered in Oregon, United States Of America. Apart from this, Microsoft is also taken for
consideration in latter part. The main purpose of this report analysed in part one is about
withdrawn of sales of NikeLAB NRG Beryllium Balaclava after its criticism.
This report is further divided into two parts. First Part is further bifurcated into two terms
in which first one includes about issues and the ethical dimensions, different number of factors
along with their exploration as ethical question, role of business towards society and
determination of the stakeholders along with the impact they ascertained from the issues.
Second term, provides focus on deliverance and application of two different ethical theories.
Final part, of this report focuses on providence of the steps regarding an ethical leader and how
business is managed perfectly with ethical standards.
PART 1
(a) Case
Nike is one of the oldest and largest sports company in the world due to large number of
customer and market share in more than 120 countries. Main reason behind getting the success is
high quality of products which makes the customer loyal for their different offerings. But
recently, Nike has been indulge in criticism due to marketing activities they have used to
promote their product named balaclava. Nike has tie up with the MMW to launch their segment
of balaclava and presents the product at global level represents gang look which is criticised
thoroughly. This has adverse impact upon the image of an organisation and negatively influence
the consumer behaviour. This results in removal of the their adds and images from their website.
Why should issue be explored as an ethical dimension along with determination of the factors
that results in deliverance of such issues
Company like Nike which has global presence in the market should analyse and monitor
the marketing activities they are going to conduct because customers and competitors are
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watching their every move as they are the market leader in the sports segment which is having
evaluation of more than 20 billion dollars. Caution behind consideration of issues as an unethical
practices are explained below:
 First issue is about adoption of wrong marketing tactics that goes unethical from the
organisation perspective. Nike has used black men as a model for their balaclava product
due to which people are criticising them for spreading racism and stereotype in the
market. There is always a stereotype in the market that mostly black people are the one
who commits crime in the country (Black Neighbours, Higher Crime? The Role of Racial
Stereotypes in Evaluations of Neighbourhood Crime, 2017). The product main motto is to
keep the person warmer in colder conditions by wearing the mask, but the photo is
inspired by gang culture look. So critics are criticising that why company have chosen
black model for this look, does this says that black people are the one who works in a
gang. But from a different perspective, if Nike has used white model in the photograph
then it will depicts that white people commits more crime than black people. So it can be
said that Nike has opted wrong marketing activity to market their product by using racial
and stereotype as a hype carrier (Nike under fire for marketing of 'menacing' balaclava,
2019). The factor behind failure of advertisement is market research as they did not
intrepretate the consequences of it which latter becomes the unethical practices for Nike.
 Another issue that results into unethical practice for Nike is about promotion and
motivation of wrongful acts through producing balaclava which provides gang look. It is
important for every company to set their target market before launching any product but
it is unethical to launch a product which somehow promotes the wrongful act in the
market just for the sake of earning more profits or any other purpose. In own this warmer
id not justifiable to present their own image in market and results in its wrong
interpretation. The factor behind failure is promoting product by using surrogating
marketing activities. Management perception of seeing the balaclava with the gang look
fails due to which it becomes issue for the Nike (Nike comes under fire for selling
‘menacing’ balaclava, 2019).
Role of business in the society
Role of company is to payback the benefits they have gained from the society in which
they are operating their business (Carroll and Buchholtz, 2014). Business should regularly donate
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some amount of profits in the society through donations, planting trees, reducing pollution by
using advanced technology etc. with the aim of increasing social welfare in the society. Apart
from this, company should pay the salary and wages according to the rules set by the local
authorities as it is unethical to exploit the employees. If employees are not getting good pay from
the company then the standard of living will decrease or remains at the same level due to which
aim of enhancing the society conditions would not be attain.
Key stakeholders and how they are affected
Stakeholders are the one who has some interest in working operations of the company as
they might have invested their money in the company or supplies raw material to them (Ciulla,
2014). Different types of stakeholders and impact of issue arose from the production of balaclava
is explained below:
 Customers: It refers to individual who buys product or services provided by company in
exchange of money so to satisfy their needs. Issue of unethical marketing by Nike has
negative impact on shopper as company's brand image in the mind of potential customers
deteriorates. Due to which buyer does not prefers to buy product from company who has
unfavourable image resulting in low sales for Nike (Why Nike deserves criticism, 2019)
 Employees: Employees are the group of individual who works for company in exchange
of salary. Positive image of company boost employees to work harder thus helps
organisation to increase overall productivity (What is Stakeholder Analysis?, 2019). Due
to issue created by Nike, it demotivate the employees as no individual wants to work with
company who has unfavourable image in the market. So employees turnover ratio might
increase in the recent future resulting in loss for Nike.
 Shareholders: Shareholders the one who invest there amount in company for the purpose
of earning money in quick period of succession. Main motto of every shareholders is to
earn profits from the money they have invested in the company. Nike is facing criticisms
from the customers and critics which leads to devaluation of shares to the certain level
which leads to monetary losses for them (Why a Great Company Reputation is Important,
2019).
Ethical choices impact on other companies
It is essential for every organisation in the world to take the business decision after
evaluating and analysing all the factors which might affect company's performance in the future
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(Coates, 2016). As mentioned above, Nike main purpose behind launching balaclava is to
protect the face from cold and pollution spreading in the city but the problem lies as how its been
marketed by the company (Nike Pulls Balaclava Following Accusations of Promoting Gang
Culture, 2019) Different impact of ethical decision by companies are given below,
 Gucci is one the respectable and luxurious apparel brand in the world but due to unethical
choice made in the recent past, their brand image has degraded to a certain level.
Recently they have made the sweater which is attached with balaclava with red lips. In
black communities, it is symbol of Sambo figure which is a way of dehumanize black
people. This unethical choice have made thousands of people offensive due to which
Gucci has to publish the apology letter to their customers.
(Source: Gucci Apologizes And Removes Sweater Following ‘Blackface’ Backlash. 2019)
 If any company does ethical practices on a regularly basis then it also benefits the
organisation through enhancement in brand equity. For instance, Microsoft and their
employees donates on an average 1 billion dollar yearly on charities and non profit
organisation due to which they have sustained in the market for longer period of time
(Good Business, 2019) Along with this, it also enhances brand image of company in the
market due to which profitability of the company also increases.
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Illustration 1: ‘Blackface’ Backlash

Recommendations
Nike should try to evaluate the marketing they are doing from every aspects so that no
caste, creed, religions, gender, race etc. would be offended. So before planning the marketing
strategies, Nike should thoroughly research the market so that needs and demands of the
customer would be identified.
(b) Explanation of different types of ethical theories by taking functional examples
Company in the market should opt ethical approaches and practices by conducting their
business operations as it makes the decision making process simpler and accurate which ends up
at producing better results for company (Crane, and Matten, 2016). To achieve this, there are
different types of ethical theories which are explained below,
Utilitarianism theory
This theory states that decision taken by anyone will count as a ethical decision if it
produce good or favourable consequences for greater number of people (Critchley, 2014). This
will help the differentiate the decision between moral or immoral, good or bad, positive or
negative etc. Good refers to consequences which is generated by decision would not create any
pain for anyone and enhanced pleasure of receiving it. Bad means when decision made by
anyone creates negative consequence for the bearer resulting in high pain. For instance,
Microsoft is donating billions of money for the betterment of society which means that more
number of needy people will be benefited by it. This will come under the ethical decision. So
related to Nike case study, they did not create any favourable consequences after launching their
product as mostly customers were offended due to reflection of racism and stereotype of black
people from their advertisement. Moreover, it did not create any positive impact for stakeholders
as shareholders could loose some amount of money due to decreasing in price of share. Negative
image is generated in the mind of customers of Nike as they are promoting unethical work to
promote their product. At last, employees are also not happy with the consequence as no
employees wants to work with a company which has negative image in the market. So it can be
concluded that no stakeholder is benefited from the marketing activity done by the Nike.
Deontological theory
This theory crux can be found out from the word deontology itself which means duties or
according to rules (Keown, 2016). It states that ethical action will depend on whether the actions
is morally right or morally wrong instead of waiting for consequences to come. Rules and
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regulations should be followed by individual while taking decision because if they does then
chances of getting negative consequences decreases to a certain level. According to the Nike
officials, their main motto behind publicising the balaclava products so that more customers
would be attracted to it. But customer's and critics perception were different due to which they
have taken the advertising into different directions. So it can be said from the above information
that Nike has done what they supposed to do i.e., to create a advertising which can attract lots of
customer (Deontological Ethics, 2019)
So according to me, from the viewpoint of utilitarianism theory, Nike has opted a
unethical practices to market their product as no positive consequence would be gain by any
shareholders. But on the other, deontological theory supports Nike as they have market their
product according to the rules and regulations of company as do not have to take tension
regarding the aftermath of it.
PART 2
What makes an ethical leader and how they can manage their business standards
Ethical leaders are those who takes every decisions of business according to the rules set
by the company. Various key competencies which should be there in ethical leader is explained
below,
 Justice: It means that leader should take decision in a fair manner and treats every
individual fairly (Laurie, and Porter, 2016). If all the decisions are taken fairly and
without even affecting from external sources then chances of getting right one is high in
nature. Moreover this type of behaviour motivates employees to enhance their potential
to a level. For instance, if performance appraisal is given according to the performance of
employees then hard worker will get the rewards which will leads to higher productivity
and efficiency in future. Those who could not execute well will get training so to remove
the weakness of employees which will assist them to complete their assigned task with
higher productivity.
 Trust: It is an important factor while managing many individuals at the same time.
Leader should trust the employees because pleasure of ownership given by the leader
enhances performance of the employees in every situations they faces. For instance, their
is a rule in Zappos company in which the leader offers 2000 dollars to new trainer to quit
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their job. Leader has full trust on their employees as they are one who makes climate and
culture in an organisation (10 Examples of Companies With Fantastic Cultures, 2019)
 Open communication: It is a process of flow of information from the end of sender to
receiver so that full message would be transmitted by overcoming the barriers (Lin,
2014). It plays an important role in the organisation as if there is open communication or
two way communication then it will reduce the conflict among the employees which
persuade to better productivity at work. Employees opinions are also considered by
leader before taking any business decision. For instance, CEO of Google, Mr. Sundar
Pichai has recently mailed their employees regarding open communication and assures
them that they will make a specific forum in which employees will feel comfortable by
sharing the innovative idea directly to him (10 Examples of Companies With Fantastic
Cultures, 2019).
 No tolerance: It is important for every ethical leader to analyse the working of
employees and if any employee is indulged in unethical practices then no tolerance policy
should be implement by leader. As leader have to ensures that unethical practices have
been limited from the roots of company.
Leader and manager is directly connected to each other as leader work is to direct the
managers so that activities done by the employees would align with the mission and vision of it.
On the other hand, manager role is to help the employees to achieve their assigned goals. So if
leader is ethical in nature then it would also motivate the manager to be ethical.
According to me, it is important for Microsoft to maintain their ethical standards as all
the activities done by my company is evaluated by critics. So there are various ways through
which I maintain the workplace which is given below,
 Main problem which employees faced according to me is that they does not have any
knowledge about the code of conducts of the organisation. To fulfil this, proper seminars,
workshops etc. of ethics is given to the employees so that they will know their working
limits. Main aim of this activity is to address the ethical dilemmas faces by employees
while working (Critchley, 2014).
 Reinforcement technique is used by me to implement and maintain the ethical standards
in the company. For instance, if any employee is promoting ethics or following the
standards set by me and Microsoft then he/she should be awarded with positive
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reinforcement which includes awards, gifts, hikes etc. so that employee will be motivated
enough to do the same in future. On the other hand, if employees are not following the
rules then negative enforcement should be use by me so that employees will not commit
the same mistakes again (REINFORCEMENT THEORY, 2019).
There are various conditions which attract unethical practices in the Microsoft which is
explained below,
 Misuse of power and authority is one of the problem which every company is facing.
Individual who has higher authority in the company uses their power to conduct
unethical practices so that more monetary benefits would be achieved. For instance,
marketing manager can sell the idea of new product they are developing to the other
organisation in exchange of money. The only person which is benefited from this deal is
the other organisation as they does not have do anything to perform better in the market.
On the other side, loser party is the company whose ideas has been stolen and sell to
other company ).
 Discrimination is also the factor which affects company performance and attract
unethical practices as many organisation promotes employees on the basis of gender,
biasses, favouritism etc. It only demotivate the hard worker which could result into less
employee retention as no one wants to work with the company which does not care their
capabilities and competencies. So it can be said that if there is no discrimination in the
company then ethical standards of it will be maintains resulting in improveement overall
productivity.
Microsoft is one of the most favourable company for employees as they have values
which maintains ethical conditions in the company and motivates people to do their work with
innovation. Different values of Microsoft is given below,
 Diversity: Microsoft thinks that they can only attain success in the competitive market if
they have diversified workforces which comes from various religions, cast, countries etc.
As different people have different perceptions due to which company can easily innovate
products by amalgamating the opinions of employees (What we value, 2019). This will
help to build effective team and creates beliefs in each others working (Matten and
Crane, 2005).
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 CSR: Microsoft states that it is important for them to pay back the society as the real
reason behind the success is society. To achieve this, company is regularly donating in to
society so to increase the standards of living (What we value, 2019). This will help in
attainment of focus of the valuable candidates in organisational working (Matten and
Crane, 2005)
CONCLUSION
From the above mentioned information, it can be concluded that every company should
focuses on ethics before taking any business decisions as it directly affects the brand image and
sales of company in a positive or negative way. Moreover, it also affects the shareholders as they
are directly connected with the working operations of an organisation. Every decision should be
first analyse by using different ethical theories as it helps company to identify the consequences
of it. It can be said after following all the qualities that are posses by ethical leader assist
company to attain competitive advantage over other in a shorter period of time. Also, this will
help ethical manager of an organisation bring ethical standards within an organisation.
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REFERENCES
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Biesta, G.J., 2015.Good education in an age of measurement: Ethics, politics, democracy.
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Carroll, A. and Buchholtz, A., 2014.Business and society: Ethics, sustainability, and stakeholder
management. Nelson Education.
Ciulla, J.B. ed., 2014.Ethics, the heart of leadership. ABC-CLIO.
Coates, A.J., 2016. The ethics of war.
Crane, A. and Matten, D., 2016.Business ethics: Managing corporate citizenship and
sustainability in the age of globalization. Oxford University Press.
Critchley, S., 2014.Ethics of deconstruction. Edinburgh University Press.
Keown, D., 2016.The nature of Buddhist ethics. Springer.
Laurie, G.T. and Porter, G., 2016.Mason and McCall Smith's law and medical ethics. Oxford
University Press.
Lin and et. al., 2014.Robot ethics: the ethical and social implications of robotics. The MIT Press.
Matten, D. and Crane, A., 2005. Corporate citizenship: Toward an extended theoretical
conceptualization. Academy of Management review. 30(1). pp.166-179.
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