Capstone

Running Head: NIKE INC. CORP

NIKE INC. CORP 2

Nike Inc. Corp

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Institution

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Nike Inc. Corp

Many external and internal factors influence the growth and success of an organization. Many organizations collapse due to the negative influences of these forces, while others thrive due to the establishment of strategic measures towards these forces, thus enabling them to remain competitive. Nike is one of the companies that have continued to stay competitive despite its robust competing forces in the market segment (Henderson, Locke & Lyddy, 2009). The analysis of the company's general environment and the competing forces are among the strategies that the company has adopted to remain competitive. This paper aims at discussing the general environment, competing effects associated with Nike Company. Besides, this paper has also analyzed the internal environment of Nike by identifying and addressing its strengths, weaknesses, opportunities, and threats.

General Environment

Various factors contribute to the success or unsuccessfulness of a company's brand. The Nike Company's environment includes both factors that it can readily control and others beyond its influence. The company's factors exist from the general environment. The company's general environment has a significant influence on its level of success. Therefore its executive members are mandated by tracking the trends of these factors as they evolve by trying to anticipate the implications of such trends and events (Henderson, Locke & Lyddy, 2009). The company conducts PESTEL analysis to organize elements within its global environment to identify how these factors influence firms. PESTEL is a name that recognizes all the six segments of the general environment: political, economic, socio-cultural, technological, environmental, and legal segment. The two segments that would rank highest on Nike Company that will be assessed in this section include technological and demographic segments

Demographic segment

As far as Nike is concerned, demographics are its main concern. There has been a shift in Nike products' purchasing trends as many people have shifted to other products, especially when they grow old. Nike is rarely serving the elderly population because older adults prefer other comfortable brands such as New Balance to Nike's apparel. The study conducted by N.Y. times previously revealed that a greater percentage of the elderly population in the U.S. prefer New Balance to other brands of apparel from other companies (Hitt, Ireland, & Hoskisson, 2020). The study reported that it is widespread to spot an older person wearing new balance shoes. The buying tendencies of the company's products also are based on how its customers are located geographically. There are claims that the company products are not universal, which makes them differentiated to specific groups, thereby making it difficult for the company to attract many customers like farmers. Other reports claim that it is rare to spot a farmer wearing Nike's products in the ranch. This is one of the gaps that the company needs to fill by manufacturing products that suit everyone regardless of their workplace or age (Hitt, Ireland, & Hoskisson, 2020). Although the company does not regard farmers as their target customers, this does play a significant role in where and how often the company's products are purchased.

Technological segment

Nike has made tremendous steps in giving its products natural exposure. The companies takes part in computer-aided design, computer-aided manufacturing systems, and have shown the emergence of internet technology. The company has succeeded in making its products accessible through the utilization of all social media platforms, websites, and other marketing channels (Hitt, Ireland, & Hoskisson, 2020). On the company's website, the customer can design their shoes and purchase them within a short while. The company allows its customers to choose the colors that please them through their websites, buying its products favorable among its consumers.

Five forces of competing

The five forces of competition include competition rivalry, bargaining power of buyers, bargaining power of buyers, threats of new entry, bargaining power of suppliers, and threats of substitute products. The two forces of competing which are significant to Nike include competing rivalry and threats of new entrants.

Competitive rivalry

The following are the critical company rivals: Puma, Adidas, Gucci, Under Amour, and ASICS. These companies are well established in the market, and they also control more revenue by occupying a large market share. These companies limit the company's full exploitation of the market. However, through technological innovation, Nike has managed to modify its products, which suits most of its customers, thereby making it to continue thriving alongside these competing forces (Mahdi, Abbas, Mazar & George, 2015). Nike has also made improvements to its customer services by providing excellent services by hiring skilled employees, thus making it competitive against its competitors.

Threats of new entry

Several companies are venturing into the sports and apparel industry in the U.S. however; these companies are associated with many challenges of operational costs as the business requires a high level of investment capital. This makes the industry to be unbreakable by other companies (Mahdi, Abbas, Mazar & George, 2015). The few companies, therefore, stand a better chance of enjoying good returns since there is no stiff competition as also there is less pressure by other companies in lowering prices. Apart from the high cost of entry, strict government regulations discourage other investors from venturing into this business.

Future improvements

The two competing forces have posed a significant threat to the company's success by occupying other regions that the company operates, thus leading to the sharing of the market. There are many strategies that Nike can put in place to cope up with these forces. For instance, the company should put more emphasis on attracting internet customers. Today, the internet market is one of the largest platforms that successful organizations such as Apple, Amazon, and Wall-mart obtain most of their customers (Mahdi, Abbas, Mazar & George, 2015). When the company dominates the online market, it will be able to have a competitive advantage against its rivals. Besides, the company should also focus on global expansion as a strategy to obtain customers from areas where its competitor's brand neither neither is nor recognized.

Greatest external threat

One of the most significant external threats that the company faces is unfavorable government regulations, especially in areas of its expansion. The company currently operates in over 40 countries, and some of the threats that it faces are the government policies in these countries. Some regions such as New York have also remained hesitant in registering company operations due to the availability of other companies such as NY&C, which operates in similar products (Paine, Hsieh & Adamsons, 2013). The company has too faced various challenges in its attempt to break into other markets despite being registered due to the availability of well-established companies operating in the same line of products. Besides, the company has also faced an economic downturn due to the current Covid 19 pandemic, which has greatly impacted its spending power.

Greatest opportunity

The greatest opportunity is that several large companies in this industry cannot provide adequate service and high-quality products that satisfy the needs of the clients. This is an opportunity that is being exploited by this organization since Nike is a standard and a well-positioned company that uses all the opportunities within its means to attract customers throughout the world (Paine, Hsieh & Adamsons, 2013). Some of the strategies that Nike deploys in exploiting this opportunity include the use of advanced technology, hiring experienced workforce, ensuring the strategic location of its stores across the world, ensuring affordable prices and accessibility of its products.

Strengths and weaknesses

Nike regularly engages other professionals in this area of specialization to seek enough critical information useful in identifying its weaknesses and strengths to allow it to compete favorably in the market. The main organizational advantages rest on the power of its workforce. The company has a team of highly qualified consultants and subordinate staff that are ready to take the company beyond the limits and make the customers obtain what they require (Schipper, & Bojé, 2008). The team is skilled and trained to listen and pay attention to customers' concerns and deliver excellent services. The company is also well-positioned, which gives the company the advantage of attracting many customers at a quicker rate. Despite these strengths, the company has also recorded some weaknesses resulting from a lack of enough funds to market the company and make it get the publicity it deserves. Despite the company being the first mover, there are other brands such as Puma, Gucci, and Adidas that have gained a lot of popularity and are today highly preferred than the company's products.

Strategy or Tactic

For the existence of many competitive organizations, the company should adopt a cost leadership strategy. Cost leadership strategy focuses on producing goods and services that are desirable to customers but at a lower cost to that of competitors. Specific factors that initiate this strategy's success include process innovation, which entails newly designed distribution and production techniques. In this case, the company's purchases and materials must contain competitive differentiation levels that create value for customers (Walker & Yemer, 2002). The effective use of this strategy will enable Nike to enjoy good returns, which are slightly above average despite operating under stiff competitive forces. Nike also considers government regulations as one of its main threats, especially in regions where it is expanding its operations. The strategy that the company should adopt in dealing with this threat should entail conducting thorough analysis regarding taxation, labor market, equal opportunity Act, sex discrimination Act, and labor Act, economic stability, and political stability before investing in any region.

Resources, Capabilities, and Core Competencies

Nike is a well-established company, and the country's previous financial years showed that it has more than 30 billion profit. The company operates in more than 50 countries. Besides, the company also has more than 1000 stores, and it also maintains five distribution centers located in the U.S and eleven manufacturing plants producing sports and apparel and other accessories. Furthermore, the company currently has over 1.5 million employees distributed globally (Walker & Yemer, 2002). The availability of these resources makes the company in a better position of being incapable of acquiring any technology, employee, or breaking into any market. Nike's core competencies include excellent customer service, advanced technology, availability of skilled workforce, and standardized products.

References

Henderson, R., Locke, R. M., & Lyddy, C. (2009). Nike considered: Getting traction on sustainability.

Hitt, Ireland, & Hoskisson. 2020. Strategic management: Concepts and cases: Competitiveness and globalization (13th ed.). Mason, OH: South-Western Cengage Learning

Mahdi, H. A. A., Abbas, M., Mazar, T. I., & George, S. (2015). A Comparative Analysis of Strategies and Business Models of Nike, Inc. and Adidas Group with special reference to Competitive Advantage in the context of a Dynamic and Competitive Environment. International Journal of Business Management and Economic Research, 6(3), 167-177.

Paine, L. S., Hsieh, N. H., & Adamsons, L. (2013). Governance and sustainability at Nike (A).

Schipper, F., & Bojé, D. M. (2008). 22 Transparency, integrity and openness: the Nike example. Handbook of research on global corporate citizenship, 501.

Walker, C., & Yemer, H. (2002) NIKE INC. BUSINESS STRATEGIES 8.