Nike's Marketing and Ethical Responsibility: A Case Study Report

This report analyzes the ethical implications of Nike's marketing strategies, specifically focusing on the controversy surrounding the Nike x MMW balaclava. The report begins with an introduction to business ethics and its relevance, followed by an overview of the issue, key stakeholders affected (customers, shareholders, employees, communities, competitors, and owners), and the impact on each. It then provides recommendations for Nike to improve its ethical conduct, emphasizing the importance of considering the consequences of advertising and investing in CSR activities. The report further applies ethical theories, such as utilitarianism and rights-based ethics, to the case study to analyze the company's actions and suggest alternative solutions. The report concludes by highlighting the qualities of ethical leadership within an organization, emphasizing the importance of ethical decision-making in business operations. The report is a comprehensive analysis of Nike's ethical responsibilities and provides valuable insights into responsible business practices.

Ethics and responsible
Management

Table of Contents
PART 1............................................................................................................................................1
INTRODUCTION...........................................................................................................................1
a) Key Stakeholders involved and the impact of this issue on them......................................2
Advice and Recommendation for the company.....................................................................3
b) Ethical Theories and its application on the issue...............................................................4
Recommendation....................................................................................................................5
PART 2............................................................................................................................................6
Qualities for ethical leadership in an organization.................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

PART 1
INTRODUCTION
Ethics refers to identifying what is wrong and what is right and them opting towards
doing right thing (Boda and Zsolnai, 2016). Ethics in business is necessary as the business is a
part of society and its survival depends on how it reflects its activities to the societies and
communities. This report is based on the case study if Nike company, an American multinational
company that deals in designing and manufacturing the footwear, apparels, equipment,
accessories and other sports accessories worldwide.
Issue: The issue is regarding the marketing done by Nike for its product- Nike x MMW
balaclava. The company went to market the product displaying the images of a model wearing
balaclava and military apparels. This has created wrong message in UK and people claimed that
Nike has been encouraging the youngsters and criminal gang by marketing this product and
selling it at £70. This activity by the company has given wrong message to the society. The role
of business in the society is to reflect good things and provide good message to the society that
not only benefits the company but also impacts on the well being of the society and communities
of people.
Role of business in society: Businesses must be aware that their role is not only to earn
huge profits but also focus on what it sells, what contribution it does to society and what are the
ethics it should follow and how it reflects its image to the society in terms of contribution, trust,
benefit and other elements for the social cause (Provis, 2017). Nike has done its marketing of
Balaclava which would be beneficial for the company as the product will be sold and make the
business earn revenues but on the flip side the product marketing is presenting the wrong
message and encouraging wrong things to youngsters which is affecting the social interest and
well being of the people.
This report will highlight the key stakeholders and the impact of this issue on them and
how their interest will be affected. It will also include the benefits of ethical choices to the
organization. The report will also include the recommendation for the changes to be done for
overcoming the issue. Further the report will include the application of ethical theories to this
case study and how it could lead the company to the ethics. The report will include the qualities
of ethical leadership in an organization (Shane et al., 2003).
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a) Key Stakeholders involved and the impact of this issue on them.
The following are the stakeholders been affected by the issue created by Nike Company-
Customers- Customers will highly affected by this issue. This issue will build up wrong
image in the minds of customers while they won't prefer Nike brand due to its unethical
behaviour. The issue may turn them to switch to its competitor brands which will cause a great
loss for Nike company.
Shareholders- Shareholders of the company are the ones who have their stake and
ownership in Nike in the form of shares. The issue being created will result in lowering down its
market value of shares and which will make lose the interest of the shareholders and they will be
affected as they will have lower value for their investment in the company (Brenkert, 2019).
Also, this issue might affect the sales revenue for the company that may turn up in lower
dividends on the shares being earned by the shareholders and in this way their income will be
affected by all these circumstances.
Employees- The employees will be also affected by this issue of the company as they
will be the one to be considered as a part of this unethical behaviour being accomplished by the
company. The fall in market price of shares, fall in sales revenue will affect the company in
earning less profits which will in turn affect the employees for their job security and the income
earned through their service to Nike.
Communities- These are the people who are directly affected by the unethical behaviour
of Nike in terms of this issue. The company has led to the spread of wrong message in the
society about encouraging the gang members and crimes as well as youngsters to commit crime
through the use of balaclava (Flanagan and et.al., 2017). And hence this will increase the number
of crime rates in the society and affect the people as well as their mindset through this act being
done by Nike.
Competitors- Competitors are the other competing firms who serve the substitutes of
Nike products. They will be affected as the customers of Nike as well as new customers will turn
up to them due to drowning image of Nike brand after this issue (Weiss,2016). The sales revenue
of the competitors will be higher and also the profitability as well and this will also increase the
dominance of these firms along with their market share. Thus the competitors will be affected in
a positive way through this issue by Nike.
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Owners- Owners of the company will highly affected through this issues as his will
result in down sizing the company's image that will further result in decline in sales and
profitability of the company. This will provide less returns on investment for the owners and lead
to loss of their resources.
Examples of some ethical Behaviour by the companies-
Starbucks- Starbucks that deals in variety of Coffee and mostly known for its coffee shop had
introduced the use of the recycled paper cups to serve the coffee to its customers. The reason
behind this was to reduce the sue of plastic and show concern regarding the environment by
using these recycled cups. This not only led to the building up of social image of Starbucks but
also resulted in the increase in sales revenue and the customer appreciation for the company.
Zara- It is a fashion clothing and accessories brand that uses the recycled paper bags for its
product servings and in order to contribute to the sustainable activities of the environment. This
unique concept and ethical behaviour by Zara makes it good brand image and attracts the
customers and enhance the sales revenue.
Non Ethical Behaviour by companies-
Toyota- Toyota a car manufacturing company had incurred a ethical failure in considering the
safety of the consumers who buy the cars. The company in the view of making low priced
vehicles failed to include the safety measures and concerns in the cars manufactured and this led
to many of the accidents of the users. This created a drowning image of the company and the
company had to spent millions of its financial resources to replace the cars and include the safety
dimensions in it.
Thus it can be observed that number of stakeholders of the company are affected by the
issues being caused by Nike for its marketing of Balaclava. The company have to understand the
ethics for business and focus on what things are to be done ethically to build up good image as
well as initiate the marketing activities to influence the customers.
Advice and Recommendation for the company
The following steps and measures are recommended for Nike in relation to following
ethical standards and respecting the interest of communities and society-
 Nike must consider the pros and cons of its advertisement strategies or forecast its
positive and negative impacts of the activities it undertakes to promote the company
products (Pearson,2017).
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 Instead of working more and more on business growth and profits the company shall
invest its time and resources in CSR activities and include the ethical principles that
creates a good conduct and culture of Nike in the competitive market (Kaptein, 2017).
 Nike must focus on creativity in the marketing activities and encourage new techniques
of marketing its products that are beneficial not only for the company's profitability but
also for the social cause and values in the society.
 As being mentioned in the above discussion Nike should implement the use of
Utilitarianism Theory in its business operations that will help the company in knowing
the outcomes of its activities implemented related to marketing and promotion of its
brand.
 The company must initiate training program with an agenda of importance of society and
people for the company's survival and state the importance of various stakeholders and
their role in growth of business of Nike (Fryer, 2016). This will guide its employees to
perform their tasks ethically and apply relevant strategies for the organization.
b) Ethical Theories and its application on the issue.
Business ethics deals with the principles of morality and defined standards of wrong and
right as well as describe the company character and conduct in terms of rules, benefits to society,
fair treatment of employees and other responsibilities(Strobel and et.al., 2015). The following
ethical theories can be applied in relation with the current scenario as per the case study of Nike-
Utilitarianism- This theory is based on the ability of an individual to predict the
consequences of an action oriented. As per this theory the choice of action that benefits the
people greatest is turn out to be ethically correct. There are two types of Utilitarianism- Act
Utilitarianism and Rule Utilitarianism. Act Utilitarianism involves one's ability to make the
actions that benefits the people irrespective of the law and order. On the other side Rule
Utilitarianism means to act for the benefits of the people along with consideration of law and
rules abide by the government (Painter and et.al., 2018). It includes the actions that are been
taken by considering the government regulations and the rules and up to the most benefits of the
society. So the basic element that this theory is trying to explain is that the company must
find out the the positive and negative consequences and modify its practices that benefits most to
the people as per the ethics and accordingly implement the same for its business operations to be
successful in the market.
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Rights- This ethical theory is based on the rights and the rights being framed by society
are been given highest priority(Wallace and Sheldon, 2015). It states that the rights are the
considered to be correct by the mean of ethics and are accepted by large population. The theory
suggests the individuals and the companies to focus more on the activities that does not exploit
the rights or do not conduct such activities that leads the people to violate their rights and create
disturbance in the society.
By relating this theory in the current case scenario, Nike has conducted marketing
activity that provided wrong message to the society and had resulted in number of criminal
activities in the economy. This has caused disturbance in the society and many youngsters have
violated their rights due to it. Here, Nike should consider what activities it undertake and what
impact it will create on the rights of the people in society and how it will affect the rights of these
people by creating problems and issues in the society. Nike must understand the society, the
values and rights they possess and accordingly design products or conduct its marketing
activities for avoiding such circumstances and also performing its operations without harming
the ethical nature of business (Fryer, 2016).
Thus the above stated ethical theories can be related and applied for overcoming and
dealing the current issue created by Nike of its marketing activities. These theories will lead the
company to follow the ethical principles of business, consider the interest of the people and also
determine the alternative solutions that can even enhance the customer influencing power of
company as well as maintain the well being of society.
Schumpeter Innovation theory, it is the hypothesis which is based on assumption that
business owner can gain economic benefit by facilitating successful innovation. The hypothesis
states that it is the main function of an entrepreneur to facilitate innovation and gain profit in
form of reward for his performance. According to the theory, innovation can be defined as any
new policy which is implemented by an entrepreneur for reducing overall cost of production.
Recommendation
 As Nike faces the issue of Balaclava, where the company needed to find out what all
consequences shall occurred and in what way after marketing such product like Balaclava
and could have determined the consequences and its effects on people and society and
accordingly executed its activities. For that, it is recommended that the firm should
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determine Utilitarianism theory that helps to identify the ability of an individual to
predict the consequences of an action oriented. Therefore, Nike should change the
marketing strategy and also the way of marketing the product could have been done in
different ways rather than it represented currently that exploited the people interest for
the company (McMurrianand Matulich, 2016).
 Nike should follow different ethical theory in the working place so that it will help a firm
to consider the interest of the people and also determine the alternative solutions that can
even enhance the customer influencing power of company as well as maintain the well
being of society. For that it is recommended to the company to use Right as an ethical
theory that helps the individuals and the companies to focus more on the activities that
does not exploit the rights or do not conduct such activities that leads the people to
violate their rights and create disturbance in the society.
PART 2
Qualities for ethical leadership in an organization.
Ethics are to be considered essential part of the leadership as the leader is the one who
guides and leads his subordinates in the organization and make them perform better to achieve
one common goal (Davies, 2016). Thus a leader must include the ethical principles in his
leadership so that he may be able to guide his team correctly and also make them work ethically
without any misconduct of the organizational values. In to consider and apply the ethical values
in the organization I will use following traits of ethical leadership-
Dignity and respect- I will respect my subordinates. The major quality of ethical
leadership is that as an leader I must not use my followers for the achievement of my personal
goals and I shall respect their feelings, decision and values. It will done simply by listening their
opinions and views and treating them in such a manner that respects their dignity and values.
Serving Others- As being a leader my major role will be serving and guiding others as
well as placing the interests of my subordinates further than my own interests. I shall act in such
a manner that it will be all time beneficial for my followers (Barry, 2016).
Justice- As being a leader I must be fair and just with everyone. I must treat all my
subordinates equally and consider everyone's opinion and views. I shall not be a part of personal
bias or partial with any of my subordinates (Trevino and Nelson, 2016). As the leader is the one
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who act as an inspiration for his followers in the organization and gains trust and respect in the
minds of his followers so that they can follow his guidelines and commands.
Community building- Leader develops community. As an ethical leader I shall consider
my own as well as my subordinates purpose and combine them together for achieving the
organizational goal (Bowie, 2017). In have to consider the community interests and do not
overlook my subordinates intentions and focus towards community goals as well.
Honesty- This is the important quality of a leader while initiating his duties and
responsibilities at work place. As a leader I must be Honest to my principles of work, the
company which I perform and to the subordinates whom I lead and guide (Ferrell and Fraedrich,
2015). Honesty involves focussing on the ethics and performing the work accordingly without
any sort of cheat or personal benefits and interests.
Thus above were the desired qualities that a leader must possess to be ethical in his
leadership and those qualities will also lead to generate ethical culture in the organization and
spread the importance of behaving ethically in the company.
Activities to be undertaken by the manager for making the organization ethical-
 Initiate the rules and code of conduct in the organization that relates to the ethics of work
culture and implement the same in the organizational policy.
 Th leaders and managers must build up trust and relationship with the stakeholders and
employees (Schwartz,2017).
 Manager must be concerned with the employees rights and ensure the fair payment and
benefits to the employees at workplace (Hooker and et.al., 2017).
 Ensure the pros and cons of each strategy before implementing it in the organization.
This may include the strategies related to marketing, production or any other business
activities of the company.
 Manager shall ensure the benefits of various stakeholders of the company like customers,
society, employees and shareholders rather than just focussing on the profitability and
revenues for the company.
 Thy shall consider a preventive action for the breach of the ethical principles to maintain
the same culture and practice in the organization (Kolk, 2016).
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CONCLUSION
From the above report it is summarized regarding the understanding the importance of
ethics in the organizational practice. The report stated the overview of the case study in which
the organization failed to perform ethically and the consequences and impacts on its stakeholders
as well. The report supported the importance of ethics in organization by stating the examples of
positive ethical behaviour as well as negative ethical behaviour by companies and their
consequences for the same. Further the report stated the application of ethical theories to the
chosen case study and how those theories can improve the ethical behaviour of the organization
through its practices. Additionally the report stated the effective measures and recommended
some actions that the company must undertake to overcome the ethical issue in case study.
Further the report stated the qualities of ethical leadership and the actions that manager must
undertake for creating ethical organization.
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REFERENCES
Books and Journals
Ferrell, O.C. and Fraedrich, J., 2015. Business ethics: Ethical decision making & cases.
Nelson Education.
Trevino, L.K. and Nelson, K.A., 2016. Managing business ethics: Straight talk about how to
do it right. John Wiley & Sons.
Bowie, N.E., 2017. Business ethics: A Kantian perspective. Cambridge University Press.
Barry, N., 2016. Business ethics. Springer.
Davies, P.W., 2016. Current issues in business ethics. Routledge.
Wallace, M. and Sheldon, N., 2015. Business research ethics: Participant observer
perspectives. Journal of Business Ethics. 128(2). pp.267-277.
Fryer, M., 2016. A role for ethics theory in speculative business ethics teaching. Journal of
business ethics, 138(1), pp.79-90.
McMurrian, R.C. and Matulich, E., 2016. Building customer value and profitability with
business ethics. Journal of Business & Economics Research (JBER). 14(3). pp.83-90.
Painter and et.al., 2018. The development of responsible and sustainable business practice:
Value, mind-sets, business-models.
Strobel and et.al., 2015. Do business ethics pay off?. Zeitschrift für Psychologie/Journal of
Psychology.
Weiss, J.W., 2016. Business Ethics: A Stakeholder & Issues Management Approach,
2014. Cyrus Chronicle Journal. 1(1). pp.66-69.
Flanagan and et.al., 2017. Special Issue on the Impact of Business Ethics on Public Life.
Brenkert, G.G., 2019. Mind the Gap! The Challenges and Limits of Business Ethics.
Boda, Z. and Zsolnai, L., 2016. The failure of business ethics. Society and Business
Review. 11(1). pp.93-104.
Provis, C., 2017. Intuition, analysis and reflection in business ethics. Journal of business
ethics. 140(1). pp.5-15.
Hooker and et.al., 2017. Journal of Business Ethics Education. Journal of Business Ethics. 14.
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Kolk, A., 2016. The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business. 51(1).
pp.23-34.
Schwartz, M.S., 2017. Business ethics: an ethical decision-making approach (Vol. 10). John
Wiley & Sons.
Pearson, R., 2017. Business ethics as communication ethics: Public relations practice and the
idea of dialogue. In Public relations theory (pp. 111-131). Routledge.
Fryer, M., 2016. A role for ethics theory in speculative business ethics teaching. Journal of
business ethics. 138(1). pp.79-90.
Kaptein, M., 2017. The battle for business ethics: A struggle theory. Journal of Business
Ethics. 144(2). pp.343-361.
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