Ethics in Business: A Case Study of Olympic Sponsors

1. Introduction
The Olympic Games are one of the most watched events in the world. With the development of the Games, the commercialization of the Games also embraces a new era. Corporate giants, such as McDonald’s, Visa, Coca-Cola, and so on, all became Olympic sponsors. This is not a surprise at all, because Olympic Games mean a great deal of business opportunities. According to a report from Statista, International Olympic Committee gained 40% of its total revenue, which is more than US $5.7 billion, from the broadcasting rights of Rio 2016 itself. Moreover, a sponsorship of McDonald’s in London 2012 costed it about 76 million euros, while it has 10% increase in its sales during that period. Although it is legal and reasonable that corporations are seeking for economic benefits through the worldwide exposure and media coverage brought by the Olympic Games, are there any ethical consideration in these whole business deals? Well, the truth is, to some extent, controversies do exist. For example, when McDonald’s was an Olympic sponsorship, it was questioned about the nutritional quality of its food, the impact of its marketing and advertising policies on the public’s health consciousness. Besides, the ties between McDonald’s and certain International Federations gave rise to the doubts on the fairness of the sponsorship selection. Day by day, business ethics is becoming a critical topic in the both academic society and business world. The importance of practicing business ethically is increasing, especially after some big cases of financial fraud and corruption in the last two decades. Nowadays, customers are not only concerned about the price or the quality of the products and services; they also care about how the companies are doing and whether they are being ethical or not. Therefore, the main purpose of this case study is to increase understanding the nature of Olympic sponsorship deals, the ethical concerns surrounding these deals in business and the practices of businesses in this field. Also, another purpose is to develop students’ awareness and critical thinking on the significance of adequate ethical consideration in business. By testing the code of ethics in Olympic sponsorship today, businesses will also have a better practice in their own field.
1.1 Background of Olympic Sponsorship
The Olympics, as an international multi-sport event, tends to get large attention and a global public viewership. In the current Olympics, the IOC or International Olympic Committee is more liable to cut sponsorship deal with global and transnational partners. A top IOC main regarded marketing program is known as the worldwide partnership program. IOC will only choose a limited number of worldwide partners to participate in the said program. Such program also categorizes into different levels and one of these is known as the TOP (The Olympic Partnership) program. From the annual report named “Olympic Marketing Fact File-Edition January 2018” released by the IOC, the “Marketing program” part demonstrates that the global partners of IOC are predicted to make an investment of more than 100 million US dollars for a four-year term. Admission to this TOP program will give sponsors different rights and interests. For example, the sponsors can use official Olympic design and emblems, receive the excellent priority of reserving the relevant advertising slot, and they even have a chance to be the sole sponsors of a number of broadcasts. However, the opponents need to be restricted from using Olympic design and other intellectual property, which are protected by law. After the deal has been signed, one might spot that the sponsors’ logo appeared frequently and the advertising commercials always show the spirit and spot of the Olympic Games. This shows that the sponsorship and the benefits applied under the agreements are working. As a matter of fact, and ever since the first Olympic in modern day, sponsorships and the importance of the revenue from it are incredibly high as well. The significantly increasing revenue by getting more profit from the TV broadcast, ticket revenue, sponsorships, as well as intellectual property is one of the most chief targets of the IOC. Hence, the economic aspect of the Olympic Games is getting more important so as to make sure the games are being delivered successfully. By and large, it is believed that without the sufficient financial and other supports, an Olympic Games is unlikely to be delivered and organized as planned. Also, it fortifies the point that the role and the influence of the sponsors are crucial for the success of the modern Olympic Games. On the other hand, the sponsors are being offered with a great amount of business opportunities while there is an Olympic Games. Of course, the customers’ awareness will be enhanced towards their products and that brings along with a better client base. Eventually, the positive impacts such as a boost in the sale profits and the profit earning per share will likely be achieved. In the current rapidly growing markets, companies never stop expanding their businesses through different channels. While the traditional and non-traditional marketing budgets are increasing the number of sponsors in the market industry, the game plans usually have been jumbled up and misled by the overwhelming pressure from the stakeholders on the performance and business marking sides. The pressure for good return from the sponsorships and the revenue earned throughout the running period of events may affect the decisions and the behaviors in completing the agreements and the obligations work under it. Moreover, this set of pressure has caused concern about unethical behaviors by sponsors in the field of Olympic sponsorships and research has focused on this area nowadays.
1.2 Significance of Ethics in Business
The last two decades have witnessed an increasing importance of ethics in business, which coincides with the times when big corporations began to emphasize on the corporate social responsibility. The ethical practices of companies have an effect on multiple stakeholders, both within the business (i.e. employees and shareholders) and outside the business (i.e. the government, the customers, the suppliers and the society as a whole). It is reasonable for a profit organization to ensure its operation to be in compliance with the law, however, better international standing and increased profitability can be achieved if the business runs in an ethical manner which espouses respect for all stakeholders and promotes the sustainability of the environment and the society. This has been well recognized by the industries. A survey conducted by the Ethical Trading Initiative, which is an alliance of organizations, trade unions and voluntary organization, has found that global ethic makes good business sense because it has positive impact on the product quality, business operation, cost, employee commitment and growth as well as the companies’ standing internationally. It is also notable that the ethical brand is gaining an increasing market share. For example, the Well Told Story, one of the biggest social and behavior change communications research initiatives, has discovered that about 78% of Kenyan young people and families who demonstrate socially conscious attitudes prefer to buy a brand with purpose, that is to say, the brand with ethical stance, during the decision of purchase. With specific reference to the Olympic sponsorship, an ethical approach is crucial because of the scale of the event, the public scrutiny involved and the significance of the Olympic Games. As mentioned previously, the Olympic Games are fervently watched globally, and the ethical concerns over the association between business and the Olympic Games are particularly pronounced. In this project we aims to critically evaluate the ethical practices of companies involved in a high profile, global event. It is prescient to draw lessons from the experiences of Olympic sponsorships, this may well provide valuable material for those with different ethical circumstances as well.
1.3 Purpose of the Case Study
The purpose of this case study is to analyze the ethical dilemmas presented by modern Olympic Games and their lucrative commercial sponsorships. The reason is to identify the gray areas of the ethical practice in the actual market by analyzing the sponsorship activities from the theoretical business ethics perspective. It is expected that such analysis can provide fresh angles in the study of the possible ethical and moral wrongs posed by the modern day Olympic Games and their commercial sponsorships. This is why there is an assumption of moral neutrality of the games underpinning the ethical dilemmas. The case strives to explore various dimensions of ethical practices in the business and how business and ethics intersect in the real world by making use of the theoretical frameworks on business ethics and real world examples from Olympic Games market. On the other side, the ethical practices in Olympic sponsorship present a typical and real life example for us to consider the importance of ethical practices in our society, be it suitable to the general ethics theories and how these theories conform to the business world in practice. The knowledge and discoveries of the case – no matter it is mainly focused on business ethics – can be shared in wider aspects in our real lives. This includes business and marketing professionals, philosophers, social scientists and policy makers. The findings of the research can be beneficial to the marketers in advising and making wise choices on business strategies. Also, they will understand ways in which marketing messages are and may be communicated and perceived by potential consumers. Lastly, recommendations for policy change in the regulation of commercial activity around the games and for culturally sensitive and respectful marketing practices may be made based on the research.
2. Ethical Considerations in Olympic Sponsorship
2.1 Transparency and Disclosure
2.2 Fairness in Sponsorship Selection
2.3 Avoidance of Controversial Sponsorship Deals
2.4 Ethical Marketing Practices
2.5 Social Responsibility of Sponsors
3. Case Study: Analysis of Olympic Sponsors’ Ethical Practices
3.1 Sponsor A: Ethical Actions and Initiatives
3.1.1 Point 1
3.1.2 Point 2
3.1.3 Point 3
3.2 Sponsor B: Ethical Actions and Initiatives
3.2.1 Point 1
3.2.2 Point 2
3.3 Sponsor C: Ethical Actions and Initiatives
3.3.1 Point 1
3.3.2 Point 2
3.3.3 Point 3
4. Ethical Challenges Faced by Olympic Sponsors
4.1 Balancing Profitability and Ethical Responsibility
4.2 Addressing Human Rights Concerns
4.3 Dealing with Corruption and Bribery Allegations
5. Impact of Ethical Sponsorship on Brand Reputation
5.1 Positive Effects of Ethical Sponsorship
5.2 Negative Effects of Unethical Sponsorship
5.3 Building Trust and Loyalty through Ethical Practices
6. Recommendations for Ethical Olympic Sponsorship
6.1 Strengthening Ethical Guidelines for Sponsors
6.2 Enhanced Due Diligence in Sponsorship Selection
6.3 Collaboration with Ethical Organizations
6.4 Regular Ethical Audits and Reporting
7. Conclusion
7.1 Summary of Findings
7.2 Importance of Ethics in Business
7.3 Future Implications and Recommendations