Business Ethics and Stakeholder Analysis: Nike Case Study Report

This report provides a comprehensive analysis of Nike's business ethics, focusing on the controversies surrounding the Balaclava product and its marketing strategies. The report begins with an introduction to business ethics and its application to the Nike case, followed by an examination of the ethical concerns related to the product's marketing and the identification of key stakeholders, including investors, employees, customers, and the public. The study then delves into relevant ethical theories, specifically utilitarianism and Kantian ethics, to evaluate the ethical implications of Nike's actions. Part 2 explores the qualities of ethical leadership and how to create an ethical organization. The report concludes with recommendations for Nike to improve its ethical practices, including the development of effective community structures for decision-making and the implementation of marketing strategies that align with ethical norms and stakeholder interests. The report highlights the importance of ethical considerations in business to ensure long-term sustainability and positive brand image. The report is contributed by a student to be published on the website Desklib, a platform which provides all the necessary AI based study tools for students.

Business Ethics

Table of Contents
INTRODUCTION...........................................................................................................................3
PART 1............................................................................................................................................3
a) Explanation of ethical concern and identification of key stakeholder...............................3
b) Ethical Theories.................................................................................................................8
PART 2..........................................................................................................................................11
Qualities for ethical leadership and creation of ethical organisation...................................11
CONCLUSION..............................................................................................................................14

INTRODUCTION
Business ethics can be referred to as that branch of philosophy that is concerned with
stipulation of decisions taking into account moral and immoral corporate practices. This consists
of the moral dilemma of determining if a particular business practice is ethical or unethical
(Burchell, Kennedy and Murray, 2015). Such ethics also guides managers and other business
associated people to ensure that they do not get engaged in any unethical behavioural conduct.
By adhering to ethical and legal norms, a firm can ensure sustainability at market place for a long
period of time. The current project is based upon the case study of Nike. The company has faced
various controversies related to the their promotional advertisement which have been perceived
by viewers in wrong manner. The report tends to explore the dimensions of ethics in the light of
organisational activities and practices. This paper comprises of discussion done over the
implementation of Utilitarian and Kant theory. Also, it contains what makes an individual an
ethical manager or leader. Further, it will include assessment of some qualities which are
regarded as essential to be present within an ethical leader.
PART 1
a) Explanation of ethical concern and identification of key stakeholder
The current study is associated to Nike, a popular sports brand which offers sports
products as well as clothing products to its customers. The company has introduced one of its
best product named as Balaclava in July. The product became centre of attraction across the
society but this popularity was not associated with quality of product but in actuality it was
related to its marketing (Crane and Matten, 2016). Marketing team has been analysed that
company has represented this product looks alike a military outfit. According to the company
this advertisement will influence interest of customers as it is presented in the military look but
in actuality, several people perceived this advertisement in a wrong manner. They had took it as
the advertisement which supported or promoted terrorist activity as the overall look reflected like
the attire of gangster (Nike accused of 'targeting the current gang culture for profit' with £70
balaclava, 2019). This perception of people placed this product into the category of criticism.
The overall scenario has developed negative image of Nike in front of its customers as they are
taking company as the one does not perform their activities under the parameters of ethics. The
media presented a negative image of Nike as soon as the advertisement went viral as it promoted

an unethical illustration of an individual in gangster look. The press stressed upon the fact that
even if the intention of company was not to influence the young generation in a negative manner,
it somehow affected the youngsters adversely. As Nike ignored or neglected the negative
publicity that was done of the company, effects were seen on its sales performance. In order to
protect themselves the company has also placed many claims such as they developed this product
for protecting individuals from the cold in winter season. But, for gaining customers positive
influence, the company has said that they will ensure that marketing team will further emphasize
on pursuing ethical norms and also consider society at the time of promoting product among
customer. Here, it is essential for marketing department to focus on choosing right intention
about the product so that they present same intention and values of product in front of customers
at the time of presenting it to them in advertisements. As the company was accused by the press
of promoting gang culture, it is of key importance for Nike to concentrate on using ethical and
societal aspect at the finalising any advertisement for the company. This will help them in
developing positive image of the company in front of customers as slowly slowly they will
accept Nike again. As a result, it will contribute in the enhancement of organisations sales
performance effectively.
Stakeholders concepts
With reference to the Nike, Key stakeholder for this company are investors, employees,
suppliers and customers who placed influence over the power utilisation as well as decision
making of the Nike at extent level. As per current situation, it has been analysed that Nike
requires support of its stakeholder in overcoming criticism faced for the Balaclava. It can be said
that support of stakeholders will help company in gaining its positive image back among society.
In this regard, for enhancing relationship of stakeholders with Nike, top management of the
company is required to follow stakeholder theory as it will guide them in taking effective
decisions which will ensure welfare of stakeholders (Dierksmeier, 2011). This theory can be well
understood by deeply analysing influence/ interest matrix which states actual status that is
influence or interest of its stakeholders within the company.

Illustration 1: Shareholder Matrix
(Source: Shareholder Matrix, 2018)
On the basis of above stated image, it has been analysed that stakeholders are those who
hold high influence upon the manner in which company operates. This means that favourable
and unfavourable factors both affect the company in a negative manner. Therefore, it essential
for the management team of companies to focus on fulfilling needs and interest of stakeholders
so that they easily get their support and attain organisational objectives in quick manner
(Stakeholder Analysis, 2018). With reference to current situation of Nike, it has been analysed
that the company can develop its positive image among customers by following ethical practices
like using societal development topics in their advertisement for promoting healthy society,
support removal of child labour in the company, pollution free activities etc. (Doh and Quigley,
2014). All of these activities will help Nike in enhancing their sustainability in the society and
also develop their positive image among them all.
As a result of the unethical marketing done by Nike, several stakeholders of the company
were affected. The stakeholders of this organisation include investors, Board, management,
employees, customers, society etc. In this regard, the unethical marketing impacted adversely
upon the investors as they were the ones to invest money in the organisation and the losses hit

them badly. Secondly, the employees were disappointed as their career is linked to the company
and any malpractice done by Nike would directly impact on their professional lives (Forray and
Leigh, 2012). Board and management are affected the most as they are the ones who are directly
responsible for the actions and activities of company and any unethical act of Nike leads to
decline in sales, thereby also affecting the gains of both the stakeholder groups. The society was
disappointed by the advertisement as it was against the interest of public and thus a number of
loyal customers of Nike were lost as the ad became viral.
It is important for an organisation to make good choices while undertaking a key decision
associated with organisational code of conduct and practice. This is relevant as a company draws
its resources from the society and thus is accountable towards the public for its offerings and
conduct. Some of the most renowned examples of bad choices made by organisations across the
globe in past times have been acknowledged to be Pepsi’s Kendall Jenner Protest Ad, Dove’s
Body-positive Packaging, Sony - white vs. black PSP ad, McDonald’s tweet of trashing the
President, Walkers' Selfie Competition etc. (The 5 Worst Marketing Fails of 2017, 2019). The
unethical decisions devised by such organisations had a drastic effect on the global reputation as
well as goodwill of these entities. Further, it even defamed the respective corporate sectors to
which these entities belonged. From this discussion, it can be acknowledged that it is considered
obligatory for organisation to work in a ethical and moral way, while complying with the
legislations passed by statute. This would ensure retention of loyal base of customers for Nike
and assurance of long term sustainability of respective corporation at market place.
Recommendation: Based on the above analysis, it is recommended to Nike that they
must develop effective structure of community who will be responsible for taking right decisions
in these kind of situation related to unethical practice. Along with this, the structure will also be
responsible for taking effective course of action within the situation. Also, the company is also
required to develop new marketing strategies which are planned in such a manner that will
influence interest of customers and also attracts them to make purchase from this company. This
will improve sales performance of the company and help them executing their operational
activities effectively at marketplace.

Bibliography
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business schools: Critically examining the role of the United Nations Principles for
Responsible Management Education as a driver for change. Management Learning.
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sustainability in the age of globalization. Oxford University Press.
Dierksmeier, C., 2011. The freedom–responsibility nexus in management philosophy and
business ethics.Journal of Business Ethics. 101(2). pp.263-283.
Doh, J. P. and Quigley, N. R., 2014. Responsible leadership and stakeholder management:
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The 5 Worst Marketing Fails of 2017. 2019. [Online]. Available through:
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Nike accused of 'targeting the current gang culture for profit' with £70 balaclava. 2019.
[Online]. Available through:<https://www.itv.com/news/2018-08-20/nike-criticised-for-
selling-70-balaclava-and-accused-of-targeting-gang-culture/>.

b) Ethical Theories
Ethical theories are seen as the base or support for the decision making process in the
organisation. These theories provides assistance to the individual so that they can select right
process, policy and techniques according to the situation. It has been analysed that there are
numerous of theories which are used by individuals for converting organisational situation in
their favour. In context to the given situation of Nike Case Study, it has been analysed that the
company is facing criticism related to its newly launched product named as Balaclava in July.
Balaclava is a face covering kind of mask that is further covering neck as well as upper chest
portion. It has been observed that advertisement of this product have presented terrorist look
which have placed negative impact over the youth. Along with this, it has also been seen that
youngster have acquired this look and the society has opposed this product as they believes that
this fashion sense has increased influence of young people towards gang inspired look which was
ethically not accepted by them (Hoejmose, Brammer and Millington, 2013). Also, the overall
criticism goes viral over social media which have resulted in the decline of sales performance of
Nike as the company was facing issues related to its ethical values.
Business ethics are considered as the philosophy that is associated with the norms and
principle of company that what is right and what is wrong for the company. Business ethics
represents character of company associated with rules, ethical values, fairness, rights, obligation
and benefit to society. In order to understand the same case scenario in effective manner two
ethical theories are described as below:
Utilitarianism
This approach of ethical theory emphasises on separating right activities from the wrong
one with the support of outcomes. It simply states that in terms of morale the best action is
considered as the one which creates maximum level of happiness among individuals. Further, it
has been seen that it is not only associated with the single action but it involves overall
collaborative actions that which influences happiness for future consequences (Idowu and et. al.,
2013). In relation to Nike, it has been analysed that the newly launched product Balaclava was
not good for all as the product was giving gangster look to the one who wore it. This means
anyone who is planning to conduct any robbery or terrorist attack can easily execute their plan by
using this product as it will hide their upper portion completely. This has raised non satisfaction
level of customer because they believes that it ignores safety of individuals. As per this theory, it

can be said Balaclava product of Nike was not feasible for all. Thus, society has not accepted it
due to its unethical influence over the security of individuals.
Kantianism
This theory is based upon the ethical principle which support in talking decision related
to business environment as well as individual. Further it Kant theory is also useful to provide
training related to repents and equalisation in autonomous life (Ismaeel and Blaim, 2012). The
basic principle of this theory is that people are the end and not the source for creating the end of
process or product. The main purpose of this is to providing the rights of peoples and generate a
process for personalization of rights with resolution of conflicts. It play an important role.
It has been analysed that Nike is facing issue related to its new launch product that is
Balaclava. The advertisement of this product was not developed in the ethical manner which
have placed negative influence over the society and also developed insecurity among them as
they can face any robbery or terrorist attack because these people can wear this product of Nike
and execute their plan. According to this theory, this advertisement of Nike was unethical as it
was not providing respect to societal security (Godemann and et. al., 2014).
On the basis of both the theories, it has been identified that even though Nike has
developed an effective product by analysing winter time. But, at the same time, the society has
misinterpreted the product by perceiving its marketing activity in negative manner (Hibbert and
Cunliffe, 2015). The overall situation has realised marketing team of Nike as well as the
company that they are required to emphasize on the marketing activities before introducing its
product at marketplace. This will allow them in improving the situation at the right time without
waiting for the scenario that converts it into worse situation.

Bibliography
Godemann, J. and et. al., 2014. United Nations supported principles for responsible management
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relationship between business strategy and socially responsible supply chain
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York: Springer.
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business. Journal of Management Development. 31(10). pp.1090-1100.

PART 2
Qualities for ethical leadership and creation of ethical organisation
There are numerous of reasons at workplace which influences interest of company to
indulge into unethical business practices at the time of implementing business activities at
workplace. This situation normally generates at workplace because of many reasons such as high
pressure from shareholders side, non effective supervision of superiors, high influence over
achievement of goals and objective of company within less period of time and financial losses
(Weiss, 2014). Every business enterprise has its own code of conduct which includes processes,
cultures, values and methods of that particular company. The employees as well as superior
teams must adhere to these in order to keep their company away from various unethical issues
and also do not harm surrounding environment or society.
Leader is the one who leads or direct overall workforce in same directions so that
business objectives can be attained by them in ethical manner (Weiss, 2014). This is normally
done effectively by engaging them into a ethical and morally right practices. As being a good
leader, it is essential for me to posses some basic but effective qualities as well as characteristics
that will contribute in becoming good and effective leader. Trust and respect are regarded as the
two pillars of ethical leadership which must be present within a leader to make sure that an
organisation operates in a morally ethical manner (The Two Pillars of Leadership, 2019). Apart
from this, some of the common qualities as well as behavioural attributes which are required to
be owned by me are described as below:
Gratitude: Gratitude refers to positive behaviour of leader which states that leader values
efforts of employees which are placed by them in their work and shows thanks towards them. It
is also mandatory for me to show gratitude towards employees also appreciate their performance
in order to motivate them towards the work (Solitander and et. al., 2012). This will show that I
should remain down to earth at the time of talking to employees so that they can feel related to
the company and will also contribute in developing positive behaviour of employees towards the
company. This will lead to increase in employees commitment towards the company which
enhances productivity of employees. As a result, it will also become main reason of success for
the company as they will develop positive relationship among employer and employee.

Humility: Humility is considered as the quality of human being as humble. It states that
leaders should represent positive behaviour towards the employees and also influence them to
work perform well for attaining success. Thus, it is essential for me to focus to remain modest at
workplace in order to develop familiar relationship with employees which will result in creation
of positive and healthy environment at workplace. As a result, it leads to high business success of
company that contributes in attainment of organisational goals and objectives.
Justice: The behaviour of employees which is has to be govern by leaders in effective
manner. More over conflicts affect the working environment of company and for creating
healthy working place leaders should adopt ethical leadership. Hence for handling different
circumstances of organisations I encouraged innovative cultures in my company which aid to
work in justice and fair and hard working attitude among employees. As a leader it is necessary
to act in honest and promote healthy relationship among employers and worker. For effective
justice which aid to retain employees for longer durations. Even through this company will
increase profitability and productivity in effective manner.
Mercy and Compassion: Compassion which aid to create forgiveness and mercy and
perform well in organisation. The leaders which need to function smoothly in effective manner
so that forgiveness and leniency can be created among employees and employers. In any
company if workers found guilty of their mistake then leaders should have mercy on them and
give less punishment it how professional environment is created in the organisation (Voegtlin,
Patzer and Scherer, 2012). Hence when decisions are taken by leaders they should consider
feelings of employees so that no one gets hurt at work place. More then any thing, apathy which
affect positive impact on employees so that it can help to achieve targets of company.
Magnanimity: Employees is every business enterprise performs effectively when they
take leaders as their guide. Here, it is essential for me to work in such a manner in front of my
subordinates so that they will also work in a same manner that responsible and accountable
towards their work as well as performance. It is also important to strategically align vision of
organisation so that organisational goals can be attained within the predetermined time frame as
the employees are responsible and accountable towards completion of task (Quarshie, Salmi and
Leuschner, 2016).
Integrity and Resilience: Every leaders is required to execute their business
responsibility with ethical values so that statutory requirements could be fulfilled. For this, it is

essential me to adhere all laws while performing organisational work. They are also required to
be performed in ethical manner. By observing my own work with legally adhered and ethically
valuable, my subordinates will also get motivated and perform their work in the same manner.
As a result, all organisational goals will be attained effectively with by compliance of ethical
values and associated norms.
In an unethical company, ethical leadership is regarded as the key element which
provides aid in ensuring the resolution of breach of morality by the company. Ethical leadership
guides and aligns the behavioural characteristics of employees as per the norms of society and
public interest so that the global reputation as well as goodwill of corporation never gets on
stake.
On the basis of above described various qualities of ethical values, it can be said that it is
essential for me to engage employees into the ethical practices at workplace so that effective
organisational culture can be developed and staff of company complies with every ethical as well
as legal norm in effective manner (Weiss, 2014). Along with this, positive working environment
helps employees in sharing their issues with the leaders or other superiors at the same moment so
that solution regarding the same can be found. As a result, this would make it easier for
employees to attain organisational goals and objectives in quick manner with the support of
ethical practices.
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CONCLUSION
On the basis of above mentioned report, it has been analysed that business manager and
leaders are required to take ethical decisions at workplace so that value of their decision can be
enhanced for longer period of time. Furthermore, it has been identified that if company do not
follow all ethical practices then there are probable chances that company might face issues
related decline in corporate image of company as well as low customers loyalty. Also, usage of
utilitarian theory of ethics has helped in understanding that at which level company can easily
comply all ethical as well as moral values within the company premises at the time of
implementing business activities. Along with this, various essential qualities of a leader and
managers are identified with their relation with ethical values. In addition to this, requirement of
leadership at the time of developing ethical practices at workplace has been analysed.