Nike's Ethical Dilemma: Using Image of Black Man in Campaign - Essay Sample

Introduction

This report focuses on the ethical dimensions of marketing the Nike x MMW balaclava by using an image depicting a black man wearing what seems to be military Special Forces webbing. The report concerns Nike's position as an ethical company concerning widespread issues of racism and gang-related violence and a push for ethical conduct among multinational companies. Nike has been accused of using an image inspired by black gang violence in its advertising campaign which creates the perception of condoning the serious atrocity facing the society. While the company maintains that the image had no such intentions, the ethical dilemma is important to reinstate the company's reputation to its stakeholders and its position in upholding acceptable business practices. The report is written from the perspective of a middle manager and outlines the ethical dimensions of advertising using the image.

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Nowadays, companies play an essential role as a catalyst for a better society through their actions and their commitment to the community. Therefore, the ethical behaviour they must assume is important, since they teach to work, provide values, promote and create a culture, being a social entity that acts as a factor of change. The ethics of the company consists of the discovery and application of the values and norms shared by a pluralist society to the particular field of the company, which requires understanding it according to a community model ". From the business point of view, ethics seeks the right way to live as well as the right way to develop the life of the company. When a company intends to be ethical, it tries to apply ethical principles when making decisions or taking concrete actions (Chell et al., 2016: 621).

From the moment a company acquires relevance within its sector, be it industrial, commercial or services, there are numerous key factors and events of vital importance that can condition its future functioning, both in the short and long term, for a future in the development of provoking an anomalous situation beyond their control that becomes a crisis. These risks may be attributed to: unforeseen or accidental circumstances or foreseeable events derivable in short-term crises, due to abrupt changes in economic trends, capable of affecting both the social, labour and business sectors and in turn transforming them into a conjunctural crisis (Regester & Larkin 2008). Also, and depending on the degree of importance of the event and how the company acts with it, these crises could seriously affect the same company and even its environment or the society in which it operates.

The balaclava marketing scenario presents a significant business ethics issue which demands proper handling before the damage is irreparable. As Regester and Larkin (p.18), posited, a business's success or failure is determined by its ability to establish and maintain mutually beneficial relations between the organisation and the public that determines its success or failure. The business-customer relationships can affirm the position of an organisation but, on the other hand, also has the power to ruin and significantly detract from the image and status of the organisation (Perry et al.: 208).

Stakeholders Affected by Balaclava Marketing

The relationship of large organisations with their stakeholders is essential for maintaining the good reputation of the brand. A good communication based on trust and understanding makes it possible for the image that the stakeholders have of the brand not only to be positive but to become an authentic experience. A successful organisation requires the coordination of all stakeholder needs. The primary stakeholders include Nike's customers and the company shareholders who have direct interaction with the company. If the customers buy into the allegations of Nike condoning gang violence and racial insensitivity, they are likely to stop buying the company's merchandise. The result would be a major loss of income by Nike's shareholders. The media can spread the misunderstanding and competitors may take advantage to tap into the customers fleeing Nike. (Hickman and Silva 2018: 14; Balmer 2017: 186)

Business success depends on the ability to generate intelligent communication strategies which are directly linked to the participation of their stakeholders, this requires knowledge of their expectations and needs (Noe et al. 2017: 36). Errors in communication strategies translate to miss-understandings between companies and interest groups. In the case of Nike, for instance, there is a gap between the advertising strategies and the advertising perception concerning what stakeholders expect the company to do in terms of managing impacts, behaviours or results. This has direct consequences on the brand image, both positively and negatively. Since the intangible values of the company; such as brand value and everything related to it, including the image that interest groups; currently represent 80% of the value of the company, it is essential to ensure that the effect of the organisation on stakeholders is only positive. (Davies 2016). This reinforces the need for effective communication strategies that consider stakeholder commitment as an essential tool for developing sustainable growth.

Ethical business practice is an obligation of every business within its area of operation. Ethical misconducts have caused negative impacts to business ranging from a damaged reputation to significant losses. One of the biggest impediments to business success is negative publicity (Perry, Taylor & Doerfel 2003). When the image and reputation of a person are threatened or compromised, the person's relationships or associated environment suffer significant consequences. The media is particularly responsible for spreading the accusations and further worsening the issue. If the ethical concern is not managed timely and adequately, the fear causes other bad decisions with more severe consequences, some of which once most reputable businesses never recover from. Papa John's Pizza business is an example of a company that aroused much public attention due to a racial slur used by its founder and former chairman, John Schnatter. The company faced serious backlash as it was perceived to condone racism. Even after Schnatter's resignation, the business continued to suffer a significant ethical crisis associated with substantial revenue losses and a bad reputation. After Forbes reported that Schnatter used a racist remark, Papa John's market shares fell in value by 5.9 %. Since the ethical misconduct, the company's shares have dropped to 6% in 2018 (Thomas 2018).

Recommendations for Appropriate Response

Addressing such an ethical issue requires communication strategies that create an identity and an image with an organisational structure that is well received by the market. Responding to the critic attacks demands to design a crisis management approach such as a "contingency communication strategy," with a clear and defined direction (Avery et al. 2010). For this program to be effective in critical situations, it is necessary to develop communication strategies that, without losing sight of its essence, direct the messages appropriately towards the different stakeholders, which strengthens and give certainty to the relationship that the company establishes with its customers.

In crises, it is challenging, almost impossible, to have absolute control over the news that is being published by the media (Avery et. al. 2010). Directed or manipulated intelligence, sensationalism, bad intentions, are the usual characteristics of media coverage in these conjunctures. Therefore, the relationship with media representatives must be permanent, friendly and fluid (especially if the activities of the company involve an issue of public interest. It is necessary to promote the positive news that may arise, as well as to balance the negative press, to manage, in real-time, the agenda of the public debate.

Immediately the allegations on the ethical issue are brought to the attention of Nike's management, the first action should be to issue a press release reasserting the company's point of view over the issue. To achieve this goal, the release should contain a summary of the company's ideas, written in such a way as to clarify the confusion and ambiguities, and disrupt the bad intentions that exist in crises. Everything that is published generates a perception in the public opinion. These perceptions are a weak and fragile material, especially if it is controversial news, or if they involve essential company ethics. It is the material with which the media works. It must be kept in mind, then, that with these perceptions the media can build or destroy an image.

Ethical Theories Relating to the Issue

Virtue Ethics

One of the main theories relating ethical business practice is virtual ethics which focuses on duties and consequences of an action. Virtual ethics purports the development of virtues in the subject through action and in the role of the virtue of prudence or practical wisdom to determine what it is that must be done in every situation to ensure mutual benefit. The theory denotes what is socially acceptable concerning common business practices. While the theory understands the context of business decisions such as the maximization of benefits, it considers that the maximization of benefits should not be absolute but limited to certain social concessions or by the fulfilment of norms emanating from the social environment, which are a necessary condition for the functioning of the market, to avoid risks or to obtain further economic benefits.

To reach the goal of maximizing benefits, it is necessary to promote behaviour that ensures a business is in good terms with its customers. In this sense, in the ethics of the company, it is essential to have product quality and management, service integrity, cooperation, mutual respect in the company's internal and external relations, solidarity, creativity, initiative and the spirit of risk, without which companies will not be able to survive. Ethical misconduct violates the trust between a business and its stakeholders. Fundamental business ethical issues promote integrity-based conduct that engenders trust and good relations between the business and its stakeholders.

The company, its owners and managers, depending on the society where they operate in terms of their existence and prosperity, but they also have important obligations and responsibilities regarding it. If we apply virtue ethics in Nike's situation, the company has as an obligation "the conscience of commitment and action to improve good relations with the consumers as the main drivers of business success. This enables the company to be more competitive in meeting the expectations of all participants in particular and society in general, respecting the dignity of the person, the communities in which it operates and its environment (Kalshoven & Taylor 2018).

According to the theory, everything should depend on the sensitivity of each society to various ethical aspects, those who make the consensus, and what may be the object of calculative trust. Issues, such as racial insensitivity and affiliation to violence fall outside what constitutes an ethical practice. To build trust, security, power and wisdom, values and principles must be recognised such as impartiality, humility, fairness, justice, integrity, and honesty, which serve as guidance to change the way managers approach the needs and opportunities of the organisations they lead. It is for this reason that the manager's role as responsible for the articulation and development of the activities of economic agent...