BUS 733 Transformation Plan, Stages 1–4 Global Setting Updates

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Summative Assessment: Transformation Plan, Stage 3: Environmental Analysis

Gabrielle A. Miliner

College of Doctoral Studies, University of Phoenix

BUS/733: Transforming The Business

Dr. Joyce Boyd

November 27, 2023

Evaluation of Nike Organizational Ecosystem

Globalization and technological advancement have led to a highly dynamistic corporate environment, requiring businesses to develop novel business models to stay competitive and meet customer demands (Porath, 2023). Nike is a company that focuses on producing and distributing sportswear, encompassing a wide range of products such as footwear, clothes, sporting equipment, and accessories. The primary objective of Nike is to provide athletes with high-quality items and wearable technology that enhances their athletic performance. Companies are encouraged to participate in collaborative processes to enhance agility and resilience, a trend closely linked to the development of novel organizational structures and technological advancements that facilitate business collaboration (Albats et al., 2023). The business ecosystem concept refers to the social and environmental context where a firm engages with other entities to generate value (Demil et al., 2018). In today's economic landscape, an organization's effectiveness depends on its internal capabilities and external engagement. Modern leaders recognize the importance of business partnerships and incorporate a business ecosystem approach into their business models (Schlüter et al., 2023). This analysis examines Nike's existing ecosystem and potential avenues for redefining its digital prospects.

Nike Business Model and Ecosystem Competitive Analysis Within the Industry.

Nike's business model is founded around a direct-to-consumer strategy. The corporation designs, develops, markets, and directly sells its merchandise to consumers via various channels, including physical retail establishments, online platforms, mobile applications, and third-party vendors. The company's emphasis on direct-to-consumer sales enables it to exert greater control over the customer experience, achieve more favorable profit margins, and acquire essential customer data (Huges, 2023). Information and communication technology has enabled organizations to adapt business models to generate value, attract customers, and gain a

Strengths

Weaknesses

Strong Brand Awareness and Brand Value

Poor Labor Conditions in Foreign Countries

Huge Customer base/ Aimed for Sustainability

Retailers Have a Stronger Hold

Iconic Relationships/ Side Brands

Pending Debts/ Lawsuits

Low Manufacturing Cost/ In-house Professionals

Lack of Diversification/Contradicting Strategies

Superior Marketing Capabilities/ High Market Share

Dependency on North America especially US Market

competitive edge. This involves tailoring value offers, targeting specific consumers, and

capturing value through revenue models. This holistic perspective enhances efficiency, reduces duplication, and promotes co-evolution.

Nike’s Strengths and Weaknesses Internal Strategic Factors

Nike’s Strengths and Threats External Strategic Factors

Strengths

Threats

Innovative Products

Counterfeit Products

Emerging Markets

Nike Sues Lululemon Over Patent Infringement Patent

Acquired Artificial Intelligence Start-up

Conflict towards Adidas Primeknit Shoes

Merges with the Metaverse

Increased Competitive Pressure

Efficient Integration

Market Budget Pressure

Cutting ties with big retailers

Economic Uncertainty

Exiting From Wholesale Distribution

Trade Tensions

Consumer Direct Strategy

Nike Faces A Wave Of Retail And Warehouse Thefts

Currency Foreign Exchange Risks

1. Adidas

11. Vans

Most of its products are sourced from China, Vietnam, Indonesia, and Thailand (Carpenter et al., 2022).

2. New Balance

12. Gymshark

Carpenter et al. (2022) identified Pou Chen, PT Pan Brothers, Fulgent Sun International, Delta Galil, and Eagle Nice as major suppliers.

3. Puma

13. Brooks

Major suppliers collaborate with other shoe and apparel brands like Adidas, Under Armour, and The North Face (Carpenter et al., 2022).

4. Reebok

14. Champion

5. Converse

15. Columbia Sportswear Co.

6. Fila

16. Skechers

7. Under Armour

17. Alo Yoga

8. Lululemon

18. Li Ning

9. Asics

19. Xtep International Holdings

10. Anta Sports

20. K-Swiss

NIKE Competitors P rimary Suppliers Nike’s Customers

Nike Target Consumer

Nike's target market includes individuals between the ages of 11 and 45, focusing on teenagers to foster enduring client relationships. The psychographic section includes active and trendy persons who view physical activity as an integral component of their lifestyle (Wells, 2023).

Nike’s Internal Strengths & Weaknesses Summary

Nike, valued at $50.2 billion, is a global brand with a unique swoosh symbol. The company promotes sustainability through eco-friendly practices and energy-efficient manufacturing. Nike's partnership with basketball star Michael Jordan has increased revenue, leading to the creation of "Air Jordan 1 Shoes." The company also maintains subsidiary brands like Converse and Hurley. Vietnam, Indonesia, and China will contribute to footwear production in 2022. Nike dominates the global athletic footwear and apparel markets (Gupta, 2023).

Nike External Environment & Threats Summary

Nike, a global sports apparel company, faces challenges due to counterfeit products and competition from new brands. In fiscal year 2022, Nike allocated $3.8 billion for marketing and demand development initiatives. The company faces patent disputes with Adidas over Primeknit and Flyknit footwear technologies (Carpenter et al., 2022). Nike has filed a lawsuit accusing Adidas of patent infringement, citing Flyknit technology in 49 shoe designs. Nike has also faced allegations of endangering the Australian kangaroo population and causing supply chain theft, resulting in a $95 billion financial burden. Nike has also filed a lawsuit against Canadian sports equipment company Lululemon, alleging patent infringement on four footwear products (Gupta, 2023).

Nike Competitive Analysis Within the Industry.

Adidas, established in 1949, is a global brand and Nike's top competitor. Its brand value has increased for five consecutive years, reaching $12.07 billion in 2020. Adidas has partnered with celebrities like Kanye West, Pharell Williams, Run DMC, and Beyonce, resulting in 10% growth in North America and record earnings in 2019. New Balance, founded in 1906, is a top footwear brand with $4 billion in revenue in 2019. Puma, a British sports brand, has a long history with Adidas and has been putting pressure on Nike for decades. Reebok, a British sports brand, has experienced a 42% decline in sales in Q2 2020. Converse, an iconic brand, generated around $2 billion in revenue in FY 2020 (Gupta, 2023). Fila, a popular brand among urban youths and casual basketball players, has recovered from its decline in the late 1990s and is now preferred by influential trendsetters like Rihanna. Under Armour, with a $4 billion valuation, has been in the industry for less than 25 years but has claimed its position in the footwear sector. However, its restructuring has deepened its net loss to $773 million, which could either increase competitiveness or sink the company deeper into losses (Gupta, 2023).

Organizational Approach in Restructuring and Rethinking a New Modern Business Model.

Digitalization has created an economy characterized by uncertainty, volatility, complexity, and ambiguity for enterprises. As a result, organizations must develop proactive strategies and demonstrate agility to navigate this challenging landscape (Pieroni et al., 2019). It is recommended that Nike take into account the concept of sustainability, redefine their value propositions, and actively pursue the acquisition of societal and environmental advantages. According to Ferreira and Teixeira (2019), the successful redesign of a more innovative business model necessitates implementing a comprehensive change management plan, providing leadership support, and establishing effective communication channels. According to Moon (2023), it is imperative for Nike to persistently enhance and expand its emotional branding efforts in marketing, as well as its influencer marketing approach. This entails fostering collaborations with prominent public personalities, leveraging social media marketing, and prioritizing customer-centric endorsements.

References

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Bouwman, H., De Reuver, M., Heikkilä, M., & Fielt, E. (2020). Business model tooling: where research and practice meet.  Electronic Markets,  30(3), 413-419.

Carpenter, W., Kelly, R., & Rohrs-Schmitt, K. (2022). Nike Stock: Analyzing 5 Key Suppliers (NKE). https://www.investopedia.com/articles/markets/051416/nike-stock-analyzing-5-key-suppliers-nke.asp

Choudhury, A., Behl, A., Sheorey, P. A., & Pal, A. (2021). Digital supply chain to unlock new agility: a TISM approach.  Benchmarking: An International Journal,  28(6), 2075-2109.

Demil, B., Lecocq, X., & Warnier, V. (2018). Business model thinking, business ecosystems and platforms: The new perspective on the environment of the organization. M@N@Gement, 21(4), 1213 - 1228. https://doi.org/10.3917/mana.214.1213

Ferreira, J., & Teixeira, A. (2019). Open innovation and knowledge for fostering business ecosystems. Journal of Innovation & Knowledge, 4(4), 253-255. https://doi.org/10.1016/j.jik.2018.10.002

Gupta, S.K. (2023). Top 20 Nike Competitors & Alternatives. https://bstrategyhub.com/top-nike-competitors-alternatives/

Gupta, S.K. (2023). Nike SWOT 2023 | SWOT Analysis of Nike. https://bstrategyhub.com/swot-analysis-of-nike-nike-swot-analysis/

Huges, J. (2023). Nike Competitors Analysis. https://businesschronicler.com/competitors/nike-competitors-analysis/

Kennedy, S., & Linnenluecke, M. K. (2022). Circular economy and resilience: A research agenda.  Business Strategy and the Environment,  31(6), 2754-2765.

Pereira, D. (2023). Nike PESTLE Analysis. https://businessmodelanalyst.com/nike-pestle-analysis/

Pieroni, M. P., McAloone, T., & Pigosso, D. A. C. (2019). Business model innovation for circular economy and sustainability: A review of approaches. Journal of Cleaner Production, 215, 198-216. https://doi.org/10.1016/j.jclepro.2019.01.036

Porath, U. (2023). Advancing Managerial Evolution and Resource Management in Contemporary Business Landscapes.  Modern Economy,  14(10), 1404-1420.

Schlüter, L., Kørnøv, L., Mortensen, L., Løkke, S., Storrs, K., Lyhne, I., & Nors, B. (2023). Sustainable business model innovation: Design guidelines for integrating systems thinking principles in tools for early-stage sustainability assessment. Journal of Cleaner Production, 387, 135776.