Nike Balaclava Controversy

Scenario

This report purposes to explore the significance of individual and organisational ethical thinking, as well as practice, using the application of ethical decision-making. In this regard, it will aid in understanding how theory reflects on how ethical issues are viewed. As such, this reports is concerned with Nike, Inc, and its position on creative advertising, owing to the fact that it is an ethical company. Basing a reference to Nike’s release of the NikeLab NRG Beryllium Balaclava x MMW on 12th July 2018, the product attracted criticism, based on how it was marketed. Notably, Balaclava received press attention, primarily because of its marketing, which included the product being worn by a black model (The Guardian, 2018). Owing to the fact that the model was as well wearing another garment, which is similar to that of a military wear, critics said that Nike was marketing their product to youngsters, thereby, aiming at marketing for a gang-inspired look. On the other hand, Nike claims that balaclava was intended for keeping their wearers warm during cold seasons and that the company uses various models for their multiple markets. It is significant to note that most of the company’s products have been sold out, yet balaclava is noted to be completely withdrawn from its sale (The Guardian, 2018). In this regard, the dilemma brought forth is significant, owing to the fact that it practices unethical marketing of its products to consumers, which then hinders the purchase of the products, as it seems to lose value to consumers. It is then evident that Nike stands a chance of losing some of its loyal customers, as balaclava marketing went viral to various social media handles, thus, tarnishing the reputation of the firm, as it is regarded as a respectable company, which handles its business activities ethically.

The middle manager has written this report and it is addressed to the senior managers in Nike Inc, with an objective of informing them of the marketing failures of the company, which is affecting the reputation of the organisation. It is notable that the ethical dilemma is “should Nike change its ways of marketing its products, in way that suits the public opinion, and thus secure the reputation of the company? This dilemma makes it clear that Nike is engaging in unethical marketing in its product advertisement, and this compromises the expectation of the stakeholders (Weiss, 2016). As such, this report aims at providing a guide for the senior managers of the company, in order to prevent the prevalence of this practice in the organisation and consequently preventing unethical business practice.

Presently, companies consider Corporate Social Responsibility (CSR) as a way in which they put into consideration, the societal interests by taking responsibility of the organisational’s impact of their various activities on employees, consumers, shareholders, as well as communities, in all their operational aspects (Freeman, 1984). It is also worth noting that CSR provides a mutual way, in which companies stand to benefit the society whilst they also stand to benefit in their process. Freeman & Gilbert (1988) point out that when a company adopts CSR, the society should be obligated to know about it, owing to the fact that the initiatives of the CSR often become pointless, when society acknowledgement is not guaranteed. According to Friedman (1970), the function of business is conducting an operation that contributes to the society, as well as the economy and this function should not be confused with any other social functions, which are performed by non-profit organisations, and the government. Otherwise, Schwartz (2017) state that it would not be regarded as the most effective way of allocating significant resources to a free market. Agency theorists such as Ni & Van Wart (2015) propose that company owners serve the roles of managers, and on the other hand, stakeholders as agents. In this regard, they have the duty to serve the interests of shareholders.

Arguments for CSR are that it is regarded as the right thing to do. According to Grayson & Hodges (2017), this is majorly because there are some societal problems, caused by companies such as environmental pollution. As such, it becomes an ethical responsibility for a business purpose on correcting such wrongs. Moreover, CSR is noted to be profitable to a business, owing to the fact that it provides an opportunity for a business to establish a shareholder value through work, in a bid to solving societal problems. Freeman (1984) stresses that this, in turn, assists a business to establish positive public relations whilst attracting top talents that are present in the industry. On the other hand, other scholars are critical of CSR and as such, they have the belief that their harm to the society outweighs the good. The arguments against CSR are that as provided by Friedman (1970), who states that a business should purpose on maximising its returns and focus on enhancing a shareholder value. In this regard, a business should not be obligated to have responsibilities to the society wholly. Moreover, according to Freeman & Gilbert (1988), they pose another argument, which states that CSR damages a business in its global marketplace. This is owing to the idea that cleaning the environment, ensuring product safety, as well as donating money for various welfare issue raise a business costs, and in turn, this cost is passed on to the consumers through the prices of products or services. Other consumers may willingly purchase these products with high prices, thus supporting the social responsibility of the business, whilst others may not and this may make the business to face an economic disadvantage (Grayson & Hodges, 2017).

This report will purpose to identify the stakeholders of Nike Inc., who are involved in this scenario of unethical advertisement of balaclava product. Accompanied by this, their impact will be discussed.

The global community is a significant stakeholder, owing to the fact that Nike’s global consumers are active on social media, as well as other advertisement platforms and are bound to be affected by the unethical advertisement (Ferrell & Fraedrich, 2015). It is worth noting that a video had been posted on Youtube, which condemned balaclava and in addition, another commentator on Facebook also criticised the advert. Another stakeholder involved are the suppliers, as consumers will believe that their supply products should not be accepted, based on the criticism (Korschun, 2015). In this regard, consumers will believe that they are not ethical, and do not act according to rules and standards or rather, the right code of practice, which should be in line with a given profession. Another stakeholder is the model involved in the advert. It is clear that a ridicule of his appearance, as consumers described him as to be fitting a gang that can be involved in a gang crime can demoralise his personality as an individual (Herrera, 2016). Similarly, the appearance of the model also added to the discrimination of the product, as he resembled a black gang member, and that appeared awful to consumers. On the other hand, the external stakeholders are the family, as well as friends of the model. It is evident that they play a vital role in supporting and also guiding their close ones, and as such, having them involved in a criticised advert can make them heart-broken.

Cultural influence should determine the innovative products and services that businesses produce in the market. This is because globalising a brand means reaching out to a wide audience. In line with this, it as well means developing a suitable market strategy, which can cater for a wider diverse group of the business consumers (Obeidat et al., 2016). Many businesses fail in this sector, owing to the fact that they fail in realizing that globalisation of a brand requires culture sensitivity whilst making significant marketing decisions. As such, businesses are required to consider various sets of values, owing to the fact that consumers will lay their decision, based on the cultural values and needs (Wu et al., 2015). An example of an unethical advertisement, which failed to consider the cultural influence of consumers was witnessed in the case of McDonald’s latest advertisement in the UK, which was criticised for exploiting childhood bereavement. The advert featured a boy questioning his mother regarding his dead father, as he tried finding things he had in common with him. Critics said that the advert lacked cultural sensitivity, which then forced McDonald’s to withdraw the advert and apologise to the public (Independent, 2018).

Based on the discussions above, this report brings forth the following recommendations, which if taken into consideration, could assist Nike Inc. on how to adopt ethical advertisement and how to solve the scenario via ethical thinking. They are as provided below:

Nike Inc. should purpose to consider all the ethical issues involved before advertising any of their products to the public, in order to prevent public criticism, which in turn hinders the sale of their products, as consumers would not buy them. Nike should consider the interest of its consumers, by introducing platforms where they are able to provide their feedback, in order to provide vital information, which aids in their advertisement. Finally, Nike should avoid exaggerated advertisement, which may appear awful to the public. It is evident that an addition of another garment that is similar to that of military forces webbing appeared to be aimed at gangsters as it portrayed a gang-inspired look.

The primary purpose of a business is basically making profit. However, on a functional level, there are decisions on what is regarded as right or wrong. It is worth noting that marketing, as well as advertisement of a product, reflect and also shape various cultural values, as well as norms of the public (Rossouw & Van Vuuren, 2017). The idea behind advertisement is to generate customer's acceptance of a specific product being advertised. Two main ethical theories are discussed in this section, in explaining judgements regarding what should be regarded as wrong or right/ bad or good, thus providing a pathway to proper decision-making (Lucas et al., 2016). They include utilitarianism and Kantian theories.

According to Mill (2016), this theory suggests that a moral worth of an action needs to be judged, based on its utility in an attempt to provide happiness or suffering, as compared to the level of happiness or suffering that can be caused by other alternative actions. Patrick & Werkhoven (2017) note that utilitarianism is regarded as the greatest good for many people, thus implying that an action involving a moral right is likely to maximise on happiness, considering the equal interests of all individuals affected by it. There are two type of utilitarianism, which includes act utilitarianism and rule utilitarianism. In this regard, act utilitarianism is where an action benefits most people, whereas in rule utilitarianism, most people benefit from an action but through fairness (Garcia, 2017). As such, rule utilitarianism adds value to general rules, as well as justice whilst including the principles of great happiness. A benefit of this theory is that it can match up various similar predicted solutions, thereby aiding to draw a point system, which consequently assists in deciding which choice can best benefit people. As such, it compares both the good and bad consequences of an action, whilst considering the good/bad consequences of other alternative actions (Mill, 2016).

According to Bowie (2017), this theory aims at judging the morality of a specific action, based on its adherence to set rules. It holds the opinion that certain things can be performed, whereas others cannot be performed. In this regard, it mandates that rules ought not to be broken even when breaking them might lead to an improvement of an outcome. The Kantian theory has a strong approach to “right” and “good” concepts, in which case, right is concerned with actions, whereas good is concerned with outcomes. Good can bring forth pleasure, harmony, as well as happiness. Prichard (2017) stresses that this theory is also concerned with respect for humanity, and this is regarded as of moral importance. In order to check whether actions meet definite imperatives to respect humanity, Kantian theory considers two perspectives (Pogge, 2017). The first is if it can be rationally willed that this principle purposes to become a governing universal law for every individual and whether persons are treated as an end in themselves, or solely as an end means (Charlton, 2016).

Overall, utilitarianism involves impartial, as well as equal consideration of interests. In which case, the greatest good should purpose to benefit all individuals affected by an action (Garcia, 2017). This is not the case with Nike, as it fails to consider the ethical means of advertisement, and this is in in the interest of the consumers, who rather, criticise its advert. Owing to the fact that utilitarianism is not bound by rules or regulations, it overlooks the legal aspects, rather it focuses on the opinion that if an action is acceptable, it maximizes on the benefits of the customers and the shareholders. Patrick & Werkhoven (2017) note that this is contrary to the present scenario, as the action of Nike was unacceptable to the public, and it intron failed to benefit consumers and the shareholders, as balaclava was not sold to consumers. On the other hand, according to Bowie (2017), the Kantian theory claims differently to the suggestions of utilitarianism theory, as it claims that actions are regarded as morally right, based on the virtue of their intentions. This theory regards people are morally important, and should not be treated as a means to an end. Considering the scenario, Nike has invented an innovative advert. However, it fails to consider its moral implications, as it fails to take into account the binding law of advertisement. In turn, the company fails to consider its consumers as morally important.

Kantian theory criticizes the utilitarianism theory as it states that utilitarianism theory is unfair to minorities, as it opts for actions, which cause suffering to the minorities, in a bid to benefit the majority (Bowie, 2017). As such, the minority are punished even though they are not guilty. On the other hand, the Kantian theory also entails drawbacks, which are noted by the utilitarianism theory. The utilitarianism theory states that the Kantian theory ignores various consequences., owing to the fact that it purposely denies the moral importance of various consequences of actions. In some instances, it aids in providing various rules and regulations that a business to follow, whilst disturbingly disregarded the important consequences (Prichard, 2017).

Ethical leadership

Being ethical refers to playing fair, putting into interest, other people’s welfare, and also thinking about the consequences of an action. However, even in an instance where someone grows up with a solid sense for either bad or good, other individual’s bad behaviours can undermine his or her ethical sense (Shapiro & Stefkovich, 2016). In this regard, ethical leaders consider the long-term consequences, drawbacks, as well as the benefits of their decisions. As an ethical manager, based on my values, as well as beliefs, I am always prepared to compete in different battles in the market, where the primary imperative is “Do what is right.” Leaders act as role models to their followers and as such, they demonstrate significant behavioural boundaries, which are set within the organisation. It is evident that followers learn about significant values through the process of socialization, and through the values of the organisation (Avolio et al., 2016). Being an ethical manager, I will ensure I translate the internalised values into appropriate action, in order to achieve a high level of respects and trust in the organisation.

It is evident that when a leader is willing to make a personal sacrifice for his or her followers or for the organisation, for the sake of acting according to the organisational values, the followers become willing to follow suit. Moreover, an ethical leader should take their ethical responsibilities seriously, in order for them to become sensitive to the needs, as well as problems of his or her followers (Walumbwa et al., 2017). This aids them to be able to discern intuitively, various emerging conflicts. As an ethical manager I have an enhanced capacity, to be able to feel obligated morally, to my followers, and this should not be considered a skill but a significant knowledge. It is worth noting that Ethical leadership brings forth favourable consequences for the organisation, as well as followers, thus resulting in the followers’ job satisfaction, problem reporting, as well as increased dedication (Demirtas & Akdogan, 2015).

The character of a leader influences his or her ethical performance. However, a poor character fails to explain various ethical lapses in an organisation. It is also significant to note that strong character purposes to play a significant role in self-leadership, as well as in the course of leading others (Chughtai et al., 2017). In this regard, as an ethical manager, I will be obligated to rely on my inner voice, as well as inner compass, to lead me to an ethical direction. The criteria, which are relevant for judging an ethical behaviour include the following: individual values, freedom of choice, types of influence, conscious intentions, use of both ethical and unethical behaviour, as well as the stage of moral development (Shapiro & Stefkovich,

Table 1:
2016). The characteristics of ethical and unethical leaders are as presented in the table below:

It is evident that ethical leaders pose as the primary influencers of the ethical conduct in their organisation. In this regard, they are responsible for the code of practice, as well as norms which guide the behaviours of their followers (Chughtai et al., 2017). As an ethical leader, I will normatively involve myself in perceiving, interpreting, as well as creating reality, whereby, I will show responsibility for the impacts of my decisions on my followers, and will as well be responsible for the implementation of the organisational goals. Ethical leaders consider CSR as an important aspect in an organisation, and I would prefer engaging it in the organisation, thus fulfilling the roles of my organisation to the society.

Overall, it is significant to note that leadership in an organisation holds the significant responsibility of developing and also sustaining conditions in which individuals are likely to adopt appropriate behaviour, in order to minimise the conditions, which could tempt them into misbehaving (Avolio et al., 2016). Seemingly, setting a top tone is a vital, however, not a sufficient condition. Leadership ought to pursue its quest for great efficiency, as well as effectiveness, and as such, it should not inadvertently lead followers into temptations, which they cannot resist. Clearly, leaders who fail to provide ethical leadership, and also fail in developing procedures, which facilitate ethical conduct often share responsibility with those conceiving, executing, and benefiting from organisational misdeeds (Chughtai et al., 2017). The table below illustrates the criteria for evaluating ethical, and unethical leadership.

Criteria for evaluating ethical, and unethical leadership

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