Nike Inc. is a global company activating in the sports apparel, ranking as the first player in this industry, as a result of its business strategy. The company incorporates a complex mix of organizational, operational or marketing strategies for assuring its leadership position on its market, succeeding with this integrated business approach to become one of the world’s most recognized and valued brands.
Organizational Analysis
Part of the integrated business approach to the international sports apparel market in which it activates is the organizational strategy. The organizational strategy comprises the Nike Inc.’s ethos and business philosophy centered on diversity, celebrating the differences between people through a diverse work environment developed through inclusion programs and a cultural diversity internal and external business approach. Through a diverse structure the company approaches international markets, having internal shareholders (employees and managers) who can relate with the cultural specificities of the markets wherein Nike activates, for distributing customized products. Nike’s global business strategy includes both the downward and the upward suppliers. This signifies that the company’s organizational strategy is based on supplying its manufactories from the third world or developing countries’ and distributing to the developing and developed countries. Besides cultural diversity and international focus that complement each other, Nike’s organizational strategy also includes a high focus on innovation, which is defining for Nike’s success (Nikebiz, n.d.). The organizational strategy within Nike is also characterized by the intensity of its marketing and advertising communication, as the company is aggressively promoting the Nike brand. The Nike swoosh or its slogan “Just Do It” are legendary in both the athletic sportswear and the advertising world, being representative and immediately associated with the number 1 brand in the sport apparel industry. Finally, in the context of the increasingly tensed disputes regarding the workers’ rights in the sweatshops that produce for Western fashion brands, including for Nike, its organizational strategy is focused on sustainability of work, environment and economy (Nikebiz, n.d.).
Detailed Value Chain Analysis
The concept of value chain defines the activities such as production and product development, marketing, service, information system, human resources, through which organizations add value to their products or services (Hill, Jones & Schilling, 2014).
Nike Inc.’s value chain starts with its raw materials, based on rubber, fabric and various other materials, which pass through a production phase in the manufacturing process, wherein Nike incorporates advanced, cutting edge technology (Nikebiz, n.d.). The innovations represent one of major assets within Nike, as the company owns multiple patents and trademarks that improved the athletic performances across time and continues to do so, through the introduced technologies, silhouettes, fabrics and manufacturing methods (“5 Game – Changing Nike”, 2014).
The organization is recognized for its aggressive marketing communication, enhancing its brand value and brand awareness through the Nike swoosh and its “Let’s Do It” slogan (Armstrong & Kotler, 2000). Nike’s marketing activities represent an important component for its value chain, as it communicates Nike’s values, innovation and legacy through a mix of repetitive messages across all communication channels (classic and social media), famous athletes and Nike Inc. brand that makes the company unique. The organization spends impressive budgets on marketing, but the effects are worthy of the expenses. Through celebrity endorsement, Public Relations hunts or catchy advertisements and promotional, but also through customer service activities meant to generate customer satisfaction and loyalty, the company masters its marketing activities better than any of its competitors (Armstrong & Kotler, 2000).
Within Nike, the information system allows the global communication, in a modern and effective manner, permitting the coordination of its manufacturing, distribution and sales activities. Regarding the human resources, which also contributes to the value chain creation, the diverse working environment enriches the Nike experience through various cultural and internationally customized social perceptions that helps Nike to better respond to global markets.
Internal Environment
Strengths
As the leading player in its industry, Nike is a trend setter, acclaimed by its clients and followed by its rivals. The technology that it incorporates in its product development creates differentiation. Its strategic global operations allows Nike to produce its high quality sport products for low prices, selling them for the market’s worth in developed and developing countries. Along with its customer – driven service and marketing activities and its legacy, Nike is the world’s number 1 choice in terms of sportswear.
Weaknesses
The fact that it collaborates with multiple suppliers that employ third world Asian countries workers associated Nike with a sweatshop. This association is the most severe hit to Nike’s brand, risking a shift in the collective mental association from the top innovative sports brand to the top exploitation sports brand. Another weakness is the fact that the value of its products are not compatible with the global recognition. As a mainstream brand, Nike practices upper end prices, which discourages mainstream customers to become loyal customers.
Opportunities
With its internal resources and capabilities, Nike has the opportunity of diversifying in the accessory submarket, creating sunglasses or sports bracelets, entering in the general fashion market, creating casual wear, or the niche fashion market, such as hiking or surfing. The company could also sponsor a healthy lifestyle program in the developing or even third world countries, through sport activities, which will eventually lead to transforming these markets into loyal customers.
Threats
The sportswear market is very fierce and dynamic this is why, its rivals such as Nike, Reebok, Puma or the new entry UnderArmour could represent a threat to Nike’s leading position, through their product innovation and marketing strategies. The pressure groups militating against sweatshops and the unsustainable manufacturing activities also represent significant threats that affect Nike’s business. Commercializing its products across the world implies facing the currency insecurity and the devaluation of specific currencies, including the euro, in the context of the recent European crisis, which is likely to threat Nike’s financial performances.
Action Plan Analysis
One year milestone
Promoting Nike as a sustainable company, working at reducing its global impact while sustaining economies in which it activates. For measuring the success of the implementation of this action, there should be calculated the reduction of primary materials and resources.
Three Years Milestones:
For improving its image, Nike will need to increase the salaries of the workers in the third world countries and improve working conditions through a more careful selection of its local suppliers, in charge with coordinating the workers activities. The successful implementation of the plan will be measured through annual reports and verifications of the manufacturing locations, promoting the change across media. Likewise, mass media will be the performance measurement tool used for assessing if Nike’s brand image has changed, being dissociated from its previous sweatshop image.
Five Years Milestone
In five years, Nike should be a reputable name in the niche hiking and surfing markets by developing collaboration with suppliers specialized in these markets and incorporating the Nike innovation for breaking the entry barriers and gaining a competitive market share. The performance measurement tool used for assessing the successful implementation of this plan will be its financial reports compared with the total worth of these markets and the value added that Nike gains from these markets.
References
5 Game - Changing Nike innovations of 2015 (2014) Nike News. Retrieved from http://news.nike.com/news/5-game-changing-nike-innovations-of-2014. Accessed 24 July 2015.
Armstrong, G. & Kotler, P. (2000) Marketing in a changing world: Creating customer value and satisfaction. Marketing: An Introduction, 5th edition, Chapter 1. Prentice Hall.
Hill, C., Jones, G. & Schilling, M. (2014) Strategic management: Theory: An integrated approach. Stamford: Cengage Learning.
Nikebiz (n.d.) Strategy. Innovation in the offense. Retrieved from http://www.nikebiz.com/crreport/content/strategy/2-1-4-a-new-model-and-shift-to-sustainable-business-and-innovation.php?cat=cr-strategy. Accessed 24 July 2015.
