Capstone
1
Nike Inc. Business Strategy
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Strayer University
BUS499 Business Administration Capstone
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Date
Nike Inc. Business Strategy
Nike is one of the largest companies in the United States dealing with design, development, manufacturing, marketing, and sales of accessories, footwear, equipment, apparel, and services. Nike is an American multinational corporation whose headquarter is in Oregon, Portland. According to a report issued by Forbes news in 2015, Nike is the top leading supplier and manufacturer of sports apparel with over 50 billion dollars in revenue (Walker & Yemer). The company has more than 1.5 million employees worldwide. The company’s brand is worth 30 billion dollars, making it one of the most valuable brands in sports in sports business. The company was ranked position 89 in the 2018 Fortune 500 list (Walker & Yemer). The company’s success is linked to its mission and vision, as well as its strategic approach to globalization and technology in its operations. This paper aims at investigating essential aspects behind the success of Nike Company.
Globalization
Nike is the pioneer in outsourcing to the developing world. Currently, it has more than 1.5 employees distributed across its 42 countries of operation. More than 29 percent of the company’s products are made in China, while 44 percent are manufactured in Vietnam. Global expansion is one of the competitive advantages that Nike has over its competitors. Besides, the company’s success in globalization is faced with challenges of new policies imposed on taxation by the current U.S administration (Dadzie, Winston & Dadzie, 2012). The company now faces an average of 11 percent tariffs on shoes imported into the U.S with another threat of increasing the tax to 45 percent for goods exported from China.
The company’s global expansion has effects on the political system, environment, economic development, culture, and the physical well-being of human beings in society around the globe. Through globalization, the company has managed to connect to its customers through the internet and even increase its customer base. The company can quickly sell its products to its customers from another country successfully. Besides, the company has also enhanced its operations by improving its transportation and telecommunication systems. The company can make goods and distribute them all over the world to all its customers. The company’s transition from regional to global organizations has forced its leaders to manage people from diverse backgrounds, values, and work ethics.
Technology
Adopting the use of new technological innovations is essential in coordinating operational activities in Nike Company. The company uses advanced technology for various reasons, including increment in product complexity and heightening customer demands. The company also engages in the adoption of technological changes to transform its supply chain from a pure operations hub to an epicenter of business innovations (Dadzie, Winston & Dadzie, 2012). The company uses new technology in the management of its supply chain. Some of the latest technological changes that the company has introduced in its supply chain include the use of sensors and advanced internet connectivity, which are used in gathering information by the forward-thinking organizations at every checkpoint.
Through the use of advanced technology in operational activities, the company can check the status of its raw materials and the status of the finished products' location.
For instance, the company uses artificial intelligence in machine learning and other advanced analytics to drive automation and deliver insights that enhance efficiencies that accelerate product delivery. The use of artificial intelligence is applied by the company be by swapping out materials for the advantage of better availability and pricing. The use of 3D printing technology enables the company to localize goods nearer to consumers, allowing for quicker turnaround, greater personalization, and low transport costs.
Apart from using new technology in supply chain management, the company also uses technology in workforce communication. In Nike Company, technology and communication play a vital role. The use of new technology determines how employees behave in the company. The use of technology ensures that there is a more efficient way to disseminate information in the organization. Nike Company provides workforce diversity, and there have been concerns over the use of technology in nearly all the company's daily operations.
Industrial organization model
There are various ways in which Nike Company can use an industrial-organizational model approach to maintain a significant stake in the highly segmented market. Through this approach, Nike Company will be able to peg its products against its competitors using advertising information, production and transaction costs, and government alliances (Dadzie, Winston & Dadzie, 2012). The advantage of this approach is that it keeps a pool of competition small, creates entry barriers, and at the same time, will enable the company to assess the next step of its few rivals. Given that Nike is a multinational corporation with over 30 billion dollars revenue, it will dominate the industry and become more potent than its key competitors such as Adidas, Puma, and Gucci. Nike Company will be able to increase its revenue in that few firms operate in this model so the company will be able to control the market. The company will have control over research, information, price, and development.
Resource-based model
Apart from using the industrial organization model, Nike Company can also use a resource-based model to make its business unique. Resource-based model (RBV) is a model that views resources as key to superior firm performance. In other words, this model enables a company to see a competitive advantage over looking for a competitive advantage for the resource.
This model will allow Nike Company to exploit its external opportunities with the available resources in a new way instead of acquiring new skills for different occasions. With this model, the company will give its resources a significant role in achieving its organizational performance. The two resources that the company will focus on in this case include tangible assets and intangible assets (Dadzie, Winston & Dadzie, 2012). The company will be able to bring its physical assets to the market as soon as possible before its rivals duplicate it. Besides, the company can improve its brand to gain more customers because when the company brand becomes more popular, it will increase its customer segment and thereby increasing its sales volume.
Vision
Nike Inc. The corporate vision statement represents the company's position as the leading supplier of sports apparel globally. The company objectives and purpose in business are well explained through its vision statement. The company's corporate vision is to provide a picture of the future target conditions of the business. The company's vision mainly focuses on strengthening the company's brand. The company strengthens its brand by advocating for leadership in the international market while counteracting competition (Dadzie, Winston & Dadzie, 2012). The company's vision also propels the company's strategic management to develop policies to ensure competitiveness against its rivals, such as Gucci, Adidas, Puma, Under Amour, and ASICS. The company's vision is built on three pillars: authentic, connected, and distinctive. The company's vision is to remain the most unique, connected, and trustworthy brand. The vision statement's genuine components show that the company focuses on making its products deliver high performance to its consumers. The second pillar, "connected," indicates that the company is focused on connecting its customers to its products. The last component, "distinct," shows that the company is focused on delivering high-quality products.
Mission
The company's mission statement prompts the business in meeting and exceeding the expectations of athletes. The mission statement of Nike Inc. guides it for the evolution of its business. The implementation of the company's mission helps it to support its market position as the leading producer of athletic apparel. The company's mission is to bring inspiration and innovation to every athlete in the world. The company claims in its mission statement that everyone is an athlete provided that they have a body. The main components of the company's mission include "inspiration, innovation, and every athlete in the world." the company is focused on informing its customers to develop the mindset of a winner through its inspiration component. The company's slogan is straightforward. It states, "Just do it." Besides, the company is also focusing on using technology and innovation in its products to ensure that they are of high quality and affordable (Walker & Yemer). Finally, the company targets every customer in the world through its mission of "every athlete in the world."
Stakeholders
The stakeholders of Nike Inc influence its stakeholders through maintaining a corporate social responsibility program. The stakeholders of Nike Inc. include employees, community, customers, and government agencies. Each of the company's stakeholders has a significant stake in what the company does (Hitt, Ireland & Hoskisson, 2016). In Nike Inc, there are mutual benefits in the company's influence on its stakeholders and vice versa. The company works towards ensuring its stakeholders' well-being while the stakeholders of the company are also working towards developing the company's brand.
Customers: Nike's CSR program gives priority to its customers as the stakeholder's group. Nike values its customers because customers are affected by the company's revenue directly from its products. The company ensures that it provides high-quality products to its customers at reasonable prices (Walker & Yemer). For instance, the company utilizes technology in producing high-quality products to its customers. In return, the company obtains high sales volumes from its customers.
Communities: since many consumers tend to buy products that have a positive impact on the town, Nike ensures that it provides interest to the community by supporting development programs in the city. The company supports the community through its foundation known as Nike Foundation. For instance, in 2015, the company started an initiative in its program that focuses on empowering girls. Besides, the company has other CSR programs such as Active Schools and Youth Sports Program, which donate sportswear and funds to promote physical activity among students (Walker & Yemer).
Employees: Nike recognizes employees' importance as members of the stakeholder group who are entitled to organizational effectiveness. The employee performance in Nike Company directly translates to organization performance. The interest that Nike gives its employees includes fair compensation, career development opportunities, and a sense of purpose.
Conclusion
This paper has addressed and recommended various aspects behind the success of Nike Inc and has suggested other models that the company can adopt to ensure an increase in its revenue, such as the use of industrial organization model and resource-based model. This paper has also found that the company follows its mission and vision statements in designing its products and in approaching the market and competition challenges.
Sources
Dadzie, C. A., Winston, E. M., & Dadzie, K. Q. (2012). Organizational culture, competitive strategy, and performance in Ghana. Journal of African Business, 13(3), 172-182.
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2016). Strategic management: Concepts and cases: Competitiveness and globalization. Cengage Learning.
Walker, C., & Yemer, H. NIKE INC. BUSINESS STRATEGIES 8.