Nike, Inc. Strategic Case Study
Table of Contents Executive Summary4 1.
Introduction5 2. Strategic analysis6 2. 1 External analysis6 2. 1. 1 PESTEL analysis6 2. 1.
2 Porter’s Five 5 Forces and Government model analysis8 2. 1. 3 Turbulence Model9 2. 2 Internal Analysis9 3. Strategic directions and strategic objectives10 3. 1 Mission10 3.
2 Strategic objective11 3. 2. 1 The financial objective of Nike11 3. 2.
2 The non-financial objective of Nike11 4. Key broad business-level and international strategies12 4. 1 Ansoff’s product and market business level strategies12 4. 2 Miles and Snow’s adaptive strategies13 4. 3 Porter’s competitive business level strategies14 . 4 International strategies15 5.
Strategic implementation: General perspective17 5. 1 Environment Turbulence17 5. 2 BCG Matrix17 6. Key strategic implementation issues19 6. 1 Outsourcing issue19 6.
2 Sweat factory19 6. 3 Labor shortage19 7. Strategic evaluation20 7. 1Financial. 20 7.
2 Employee21 7. 3 Customer21 7. 4 Environment21 8. Conclusions and Recommendations23 9. Reference List24 10. Appendix 1 Stakeholder theory tables of Nike28 11.
Appendix 2 Business ethics four broad levels of ethical stance of Nike……….. 29 12. Appendix 3 Triple bottom line of Nike…………………………………………. 29 13.
Appendix 4 SWOT Analysis of Nike……………………………………………30 Executive summary Nike, Inc.
is a leading organization in the sportswear industry. It has successfully outsourcing its manufactures in the low cost countries all over the world. This report has analysed Nike’s strategies and identified the major issues which influenced its strategies’ implementation. The report begins with Nike’s strategic analysis which included external factors and internal factors. Then, the report has discussed Nike’s mission and its strategic objectives, which included financial objective and non-financial objectives.
Moreover, Ansoff’s Metrics, Miles ;amp; Snow’s adaptive strategies and Porter’s competitive business level strategies has been applied to discuss Nike’s business level strategies. Meanwhile, the report has examined Nike’s corporate level strategies as well. Furthermore, the report has identified the general problems and the key issues during Nike’s strategic implementation. Additionally, the report has evaluated Nike’s overall strategies implementation. There are two general issues that influenced Nike’s implementation, which are the environment turbulence and the bad investment.
Meanwhile, there also has the outsourcing, sweat factory and labor shortage issues which hindered Nike’s strategic implementation.
The recommendations for solving the issues were made as firstly to consolidate the distribution, make it less scattering and assign the regional delegates to monitor the process; secondly, to plan to move its factories to the countries or places with more young labor forces and relatively low labor costs. 1. Introduction Established in 1972, Nike is now the leading brand in sportswear industry. Its origin was Blue Ribbon Sports initiated in 1964.
Nike was started as a sports shoe company, but it is now making a variety of products.
Nike is not only the leading company in the US, but also has a big share in sport markets in Europe and Asia. As a major player of the highly competitive sport market, Nike has many competitors which including Adidas, Reebok, New Balance and Puma etc. , yet it is able to keep its position in the market. To stay competitive, Nike has adopted a series of different strategies, including labor outsourcing, knowledge share network, regional marketing schemes, and the adjustments on organizational structure.
In this report, the strategies and objectives of Nike will be examined and discussed with the support of relevant frameworks and theories. The strategies and their implementations will also be evaluated and relevant issues will be identified. 2. Strategic Analysis 3. 1 External analysis 2.
1. 1 PESTEL analysis Political Nike is an international business, and has factories in many countries. Therefore it is essential for the company to gain the support from local government to ensure its manufacture, import, and export.
Many developing countries, for example, China, Thailand, and Vietnam, welcome the investment from foreign companies since it will promote local economy and create new jobs (Nike, 2011). Other countries, in the current time of recession, are generally welcome foreign investments. However, protectionism shall still be alarmed in the future.
Economic Ever since the global financial crisis in 2008, the world economy is in turbulence. Many developed countries, including the US, the European countries, Southeast Asian countries and Japan, are still suffering from its influences.
Besides the shadow of recession, the exchange rate of US dollar has been going down for years. On the other hand, the currencies of some developing countries, notably Chinese RMB, are raising rapidly in exchange rates. Since Nike mainly manufactures its products in the developing countries, and a large part of its manufacture (33% of its factories and 32% of its workers) are conducted in China (Nike, 2012), it is facing the pressure of increasing manufacturing costs. Social Populations are growing older in many countries in the world, which brings the issue of aging population.
It is expected that by 2050, there will be 1. 5 billion people aged over 65 and near 80% of these aged people will live in developing countries (Kinsella ;amp; Phillips, 2005). Since young people are major consumers of sports shoes and other sports facilities, the aging population will make the competition for youth market even fiercer. On the other hand, the aging of the population in developing countries will also bring challenges to labor recruitment of the manufacturing factories. The situation will be even serious in China, which is now the largest manufacturing base of Nike products.
Technological Nike is the leading company in sportswear industry. It holds many innovations and leading technologies, for example, Nike Air, Hyperfuse and Lunarlite foam etc (Nike, n. d. ). Nike needs to pay more attention to the protection of its patents and technology, thus prevent the competitors from making using of the expired patents. Environmental The 2011 flood in Thailand shut down the factories of many multinational corporations that including Nike as well.
The supply chain of some big companies was severely influenced and great losses were caused.
Fortunately Thailand factories was only a very small part of Nike’s global manufacture network, thus little influences was caused. However this incident is alarming. Many developing countries do not have very good infrastructures, and when striking by nature disasters, the factories, assets and inventories in these countries can be vulnerable. Also, the concerning of global environment protection request Nike to control pollution and produce environment friendly products. Thus Nike launched sustainable business scheme which aims to minimize the risks (Nike, n.
d. ). Legal
Legal issues arise from Nike’s oversea labors. Nike faces the accusation of being “sweat factory”. Reports claimed that the working conditions and payment standards of Nike’s oversea factories in developing countries failed to meet the minimal standards (Associated Press, 2008). In fact, the issues about work place rights and working conditions in developing countries has troubled Nike since 1990s (Wilsey & Lichtig, n.
d. ) 2. 1. 2 Porter’s Five Forces and Government Model Analysis Threat of New Competition As the global leading shoemaker, new companies can hardly imposing threats to Nike in global wide.
However, Nike still faces the competition from the new comers in regional markets. These new comers sometimes can be described as imitators which familiar with the local market and have a more competitive price.
Although their brand personality might not strong as Nike’s, they are still threats. Threat of Substitute Products or Service The usage of shoes and sportswear are basically the same. If the product lacks of features, it can be replaced easily. To stay competitive, Nike should continually focuses on innovation, creating more advanced technologies and achieving better designs.
Bargain Power of Customers Business is continuously facing the pressure of lowering the price from the customers (Marn, Roegner & Zawada, 2004). In order to deal with this pressure, Nike needs to continuously create new products and new technologies.
In this way, the customers will always feel that the company is always working to let them have something new; therefore the pressure on the same product will be released. Bargain Power of Suppliers Sportswear is mainly made from chemical fiber and rubber, and chemical fiber comes from petroleum.
The price of rubber and petroleum has a trend of increasing since 2008 (World Bank, n. d. ). The increasing in the price of materials and the cost of labor in developing countries are placing pressure on Nike.
Intensity of Competitive Rivalry Nike has a well-functioned mechanism for innovation. Its innovation does not only come from inward, but also from its customers. Nike allows customer to participate in the value creating process by sharing their experiences of the products (Ramaswamy, 2008). Since 1980s, Nike started the “Just do it” advertising campaign. The slogan is now as famous as Nike’s logo, and brings
Nike billions of income.
In 2011, Nike announced the new global “Just do it” campaign, which was named “The chosen” (Nike, 2011), aiming to sustain its brand image and gain continues advertising exposure. Government The government plays an important role in international business. Nike relies on the variety issues, such as taxation, tariffs, local laws and regulations etc to survive in international market. Nike should pay attention to solve its labor issues while remaining alert to the protectionism and other changes in government policies. 2. 1.
3 The turbulence model
There are three criteria to identify the degree of turbulence: complexity, dynamism and unpredictability (Hanson et al, 2011). The sportswear market is highly competitive and complex. Despite many international giants such as Adidas, Puma, Reebok, New Balance, etc. , there are also small regional businesses, which targets at the same market. Each brand has many different products to suit different needs of different customers.
As a result, customers have a variety of choices at any given period of time. Although new products keep emerging, however, the competition of sportswear market is relatively stable.
As a mature industry, the unpredictability of the environment of sportswear is low. However, in the short term, since the world has not recovered from the recession caused by the financial crisis in 2008 that may cause further damage to the global economy, the economy environment is highly unpredictable and requires the mangers of business to act quickly and make possible adjustments to strategies. 2. 2 Internal Analysis Nike is now the leading company in sportswear market.
Its competitive strength lies on its network of knowledge share. It has an open internal network, which allows knowledge to freely flow.
Also, Nike values the experience of the customers. It established a global customer network and co-creates values with these customers (Ramaswamy, 2008). This strategy further promotes Nike’s competitive strength and allows it to gain first hand information directly from the customers. Nike’s sales keeps rising in recent years, and the company gained $20.
9 billion sales in 2010-2011 fiscal year, achieving 10% increase compared to the previous fiscal year (Cheng, 2011). In the third quarter of fiscal 2012, Nike gained revenue of $5. 8 billion, and achieved an increase of 15% compared with the third quarter of fiscal 2011 (Nike, 2012).
In conclusion, Nike faces opportunities and threats from various aspects. To deal with these issues, Nike has already created many methods and strategies.
However, there are still things that are beyond the company’s control (e. g. political and government issues, environment issues, global economy, etc). Also Nike needs to pay attention to the legal issues and patents protection, in order to avoid unnecessary troubles. 3. Strategic directions and strategic objectives 4.
2 Mission Nike’s mission is “To bring inspiration & innovation to every athlete in the world” (Nike, 2012).
The mission was clearly stated that Nike is focus on continually innovating, designing and developing products to facilitate athletics’ performance and introduce the innovated sport products to all the people around the world. Nike’s mission statement is broadly designed and outward looking, based on the needs of athletes and the consideration of communication for the corporate responsibility work. Nike follows its mission to innovate its products based on the real needs of consumers. It has designed the light waffle sole based on the requirement of better sole of track shoes (Nike, 2012).
In addition, the launch of the Nike Air had brought the second innovation revolution to its durable and lightweight cushioning system.
Furthermore, the latest innovation of Nike is the Nike Free, which is described as the tool for foot-strengthening training. 3. 2 Strategic Objective Nike engages with a broad range of stakeholders including environment, industry and government, as well as consumers and shareholders. According to the four broad levels of ethical stance tables (appendix 2), Nike recognizes the interests of multiple stakeholders beyond legal minimum and set up the objectives based on multiple stakeholders’ demands. 3.
. 1The financial objective of Nike The financial objective is to keep profitable growth and strong cash flow to improve investment flexibility and create shareholder value (Nike, 2011). The shareholders of Nike require profitable sales growth and stable return of their investment. Also, Nike’s financial strategic objective needs to satisfy the employee’s demand. Nike has tight connection with its consumers which facilitated Nike to design perfect products and offer unique experiences to the consumers (Cendrowski, 2012).
In addition, those connections become Nike’s competitive advantages that drive the continuously sales growth. . 2. 2 The non-financial objective of Nike For the employee: To build an equitable and empowerment work force. And provide an environment which stimulates people to maximize their contribution to Nike; for the customers: To provide quality products and innovated services, building loyalty customer relationship all over the world; for the environment: To minimize the pollution of the environment for sustainable development (Nike, 2011). According to the stakeholder theory table (appendix1), the employees of Nike require nice working environment, reasonable wages and favorable welfares.
Nike’s employee strategic objective satisfied the employee’s demand. Nike has set up wide range of employee networks which aims to stimulate employees’ performance. Meanwhile, the employee network focuses on career planning, training mentors, recruiting talent, enhancing community relationship, encourage teamwork and strength cooperation within different departments (Locke, Qin ;amp; Brause, 2007). The consumer of Nike requires innovated products and quality customer services. Nike’s customer strategic objective has met the customers’ demand. Nike has designed wide range of sport products.
Its products primary focuses on the footwear for the athlete and Nike also provides sport equipment and apparel under the same brand. Nike has more than 400 retail stores all over the world, which offer the abundant products and friendly customer services. In addition, the customers could also shop online through Nike’s online store. Nike’s environment strategic objective represents a weakness in the real world because the environment strategic objective does not have a time frame and it is very hard to measure. Those problems increase the difficulty of the implementation to achieve the strategic objective.
In conclusion, the mission of Nike is clearly stated that Nike focuses on offer innovated products to meet the needs of consumers.
The strategic objectives of Nike matched with its stakeholder’s demand. However, there is a weakness arisen in the part of environment objective due to immeasurable and no time frame. 4. Key broad business-level and international strategies 5. 3 Ansoff’s product/market business level strategies. According to Ansoff’s matrix (1957), there are four kinds of business level strategies, which are market penetration, product development, market development and diversification.
Nike’s business level strategy could be explained as the product development strategy (Figure 1. 1). For instance, product development strategy means the organization provide modified or brand new products to the existing markets. The most important for this strategy is innovation (Johnson et al, 2008). Figure 1. 1 Ansoff’s Matrix Nike implemented this strategy quite well, which is evidenced that Nike only focuses on the sports market.
It designed running shoes for the athletic use at the beginning stage when the company established in 1972.
After that, it started to introduce a wild range of products to meet the consumers’ demand. Firstly, it developed its products into three segments that are men, women and children. Nike’s products not on designed for specific athletics’ use, but also designed for casual and leisure wear. Secondly, Nike expands with the core product running shoes for other sports in 1985, it designed Air Jordan basketball shoes series which endorsement by the famous basketball star Michael Jordan. Since then, Nike continuously designs new generation Air Jordan basketball shoes and introduced Air Jordan series footwear and apparels to the markets.
Thirdly, Nike developed its products to meet major sports needs, which are running, training, basketball, soccer, sport-inspired casual shoes etc. It also developed its products for baseball, cheerleading, football, golf, lacrosse, outdoor activities, skateboarding, tennis, volleyball, walking, wrestling, and other athletic and recreational uses (Nike, 2011). Additionally, Nike has acquired Hurley, Converse, Cole Hann and Umbro. These four wholly owned subsidiaries all focus on the products related with special athletic use, casual and leisure.
Therefore, Nike focuses on innovation, continuously designed modified and new products to the sports market.
Thus, it is using the product development strategy. 5. 4 Miles and Snow’s adaptive strategies Miles and Snow (1978) identified that there are four major business level strategy types which are defenders, prospectors, analyzers and reactors. Nike’s business level strategies could be explained as prospectors (Figure 1. 2).
The main contents of prospectors are innovation, develop new products and seek new opportunities to grow (Robbins et al, 1997).
This is because that “innovation is at the heart of Nike, Inc. ‘s business growth strategy” (Nikebiz, 2012). It is the major factor that contributes to NIKE’s commercial success of its products. Figure 1.
2 Miles and snow’s adaptive strategies Nike constantly invested money in its Research and Development (R;amp;D) department to create new technologies for producing the products. More specific, Nike has hired a huge specialist team which including exercise physiology, engineering, biomechanics and other fields that related with sports products innovation.
Also, Nike has cooperated with a wild range of athletics, coaches, orthopedists, podiatrists and trainers to develop and test the new products (Nike, 2011). For instance, Nike’s representative innovations are the Nike air, Nike zoom air, Nike air max, Nike Free and Nike sole. These technologies as can be seen as the core technologies that Nike using for its shoe products. Besides, Nike not only focuses on its product innovation, but also focuses on its internal process redesign (Daft, 2009).
Thus, Nike’s business level innovation strategy could be explained as the prospectors of the Miles and Snow’s adaptive strategies framework. . 5 Porter’s competitive business level strategies According to porter’s (1990) competitive business level strategies, there are four major strategies, which are cost leadership, differentiation, focused cost leadership and focused differentiation. Meanwhile, Porter (1994) mentioned that an organization has to evaluate two types of potential competitive advantages before it selected business level strategies. One is lower cost than the competitors and the other one is the capability to product differentiation.
Nike’s strategy could be explained as the ombination of cost leadership and differentiation (Figure 1. 3). Figure 1. 3 Porter’s Competitive Strategies It is evidenced that Nike executes various supply chain activities in the most efficient location all over the world. Nike urges its suppliers to re-locate their manufacturing plants into low-cost countries which including Indonesia, China and Vietnam.
A report illustrates that there are more than 700 factories with over 500,000 workers produce Nike’s products (Locke, 2002). Nike’s low cost strategy process is design the product in USA and outsourced the manufacture in low cost countries.
Besides, Nike’s differentiation strategy is evidenced that Nike not only produce shoes, but also provides apparels, equipments and accessories to meet different consumers’ needs. Overall, NIKE emphasizes the key differentiation strategy on its branding, customer services, product quality and innovations. Meanwhile, Nike outsources its manufacturers in the low cost countries to keep a low cost leadership advantage.
Thus, Nike’s strategy is an integrated cost leadership and differentiation. 5. 6 International strategies Nike’s international strategies could be explained as transnational strategies (Figure 1. ), which means that the organization not only focuses on the effective global operating but also seeks to achieve domestic responsiveness (Hanson et al, 2011). Nike’s head office located in USA and Nike manufactured its products all over the world. More specific, its head office controlled and managed all of its operations around the world that achieved a global efficiency and local flexibility.
Also, Nike has a decentralization structure that each of its operations could response the headquarters’ policies in a timely manner and implemented immediately.
It is evidenced that Nike’s sales revenue in US in fiscal 2011 accounted 43% of the total revenue. Nike has established 18 sale offices to support the local market and Nike also has the direct sales pattern through its website to convenience the consumers (Nike, 2011). Thus, Nike has strong local control capability responsiveness. Besides, Nike’s worldwide operations sales revenue occupied 57% of the total in fiscal 2011. It has established 16 distribution centers around the world to support its international market activities, which are Asia, Canada, Europe and Latin America etc (Nike, 2011).
The strongly global outsourcing manufactures and logistic that provides Nike an efficiency global operating. Therefore, Nike’s international strategy is a transnational strategy that achieving both global efficiency and domestic responsiveness. Figure 1. 4 Transnational Strategies To sum up, Nike’s business level strategies could be concluding as product development strategy, prospector’s strategy, integrated cost leadership and differentiation strategy, and transnational strategy. These business level strategies provided a solid foundation of Nike’s success.
5. Strategic implementation: General perspective
Nike has successfully growth base on its business level strategies, although Nike’s strategies approximately well implemented where reflected on the organization’s continuing growth, but Nike still has some general issues during the strategy implementation. 6. 7 Environment Turbulence Firstly, Nike’s cost leadership strategy aims to lower its production cost and allocated its manufactures all over the world. Asia is the biggest manufacturing area that contributes to Nike’s production.
One of Nike’s major manufacturing areas is China, which occupied 33% of the total production.
Nike implemented its cost leadership strategy to using Chinese cheap labors. However, the environment volatility influenced Nike’s strategy implementation. It is evidence that the global economic recession caused the huge decline in international trade and many countries has introduced various policies to protect local business. For instance, Argentina and Brazil has implemented anti-dumping investigations against all the footwear made in China, which strongly influenced Nike’s low cost leadership strategy (Nike, 2011).
Additionally, Turkey has introduced addition duties on all imported footwear, which aims to protect its local business.
Although Nike manufactured its footwear in Asia with low cost, but each pair need to add $3 duties when imported (Nike, 2011). Thus, the turbulence environment generated negative factors that mismatch with Nike’s business level strategies. 5. 2 BCG Matrix Secondly, Nike’s product differentiation strategy aims to provide different products that satisfy different consumers’ need. Nike has acquired four companies as its wholly owned subsidiaries for its development.
More specific, Nike has acquired the upscale footwear company Cole Haan in 1988, and Nike acquired Hurley, which is a surfing products company in 2002.
After that, Nike acquired Converse and Umbro in 2003 and 2007, respectively. These four wholly owned subsidiaries as can be seen as the differentiation business level strategy that Nike implemented. However, according to the BCG Matrix (Figure 1. 5), the sales revenue and market share of Cole Haan and Umbro are sitting at the Dog position.
The data of Nike 2011 annual report illustrated that Cole Haan sales revenue is $518 million in fiscal 2011 and Umbro sales revenue is $224 million in the same year (Nike, 2011).
Base on the historical performance of these two brands, comparing with other subsidiaries that both of them have low market share and low revenue. A recently news by Fox (2012) noted that Nike is going to sell Cole Haan and Umbro to divesting money which could focus on its highest-potential opportunities to sustainable growth. Therefore, Cole Haan and Umbro’s performance is the evidence that Nike’s business level strategies implementation does not totally well matched with its objectives. Figure 1. 5 BCG Matrix 6.
Key strategic implementation issues 7. 8 Outsourcing Issue
The first major issue of the strategy implementation is the managing of outsourcing manufacturers. Through outsourcing the manufacture process to developed countries, Nike has successfully lowered its cost which allows the company to pursue the maximum of profit. More specific, Nike has manufactures in many countries around the world, and in each country, there are many factories in different cities and regions. For example, there are 303 factories in 12 provinces in China.
World-widely, there are a total of 912 Nike factories in 42 countries. The scattering of those factories leads to difficulties in management.
As a result, Nike is not able to ensure that the environment and conducts of every factory are in compliance with its standards and the local laws and regulation. In fact, Nike has confessed in some occasions that they found the environments of some factories in developing countries are lower than the standards (Associated Press, 2008). 6. 2 Sweat Factory Nike has a long history of being accused as “sweat factory”.
Worker’s rights groups claimed that the payment in Nike’s manufacturing factories are lower than the minimum rate set by local laws, and even said that they would bring the matter to the court (Wilsey ;amp; Lichtig, n. . ). This issue has negatively influenced Nike’s brand personality. Although Nike has developed solutions to against this issue, but Nike needs to continually pay attention to this issue to avoid legal problems.
6. 3 Labor Shortage The potential labor shortage is another major issue for Nike. The population aging is a global trend, which creates shortages of young labor force. Nike mainly chooses developing countries as its major manufacturing bases, yet the major portion of the aged people lives in developing countries.
This means that it would become difficult for Nike to employ enough number of young workers in these countries to keep its factories running at maximum performance levels. Among all the countries, China is the largest manufacture base for Nike (Nike, 2012), yet it is also experiencing population aging.
Also, after adopting the one child policy for almost twenty years, this policy has effectively reduced the number of young labors. Labor-intensive factories in China are already having difficulties in hiring employees; as a result, the salary of labor-intensive workers is rising (Chen, 2011).
The shortage of labor does not only affect the efficiency of factories, but also pushes the cost of labor up. While cost is a crucial factor in labor-intensive industries, Nike needs to find other ways to maintain its low cost to stay competitive in the market. To resolve this issue, Nike can choose to move the factories to the places or countries with more young labors and lower salary requirements. 7.
Strategic evaluation 7. 1 Financial Nike’s financial strategic objective is to keep profitable growth and a strong cash flow to improve investment flexibility and create shareholder alue. As Nike’s financial result from Aug 2011 to Nov 2011, Nike’s revenue traded down by $350 million. Furthermore, the expected Earnings per Share (EPS) have dropped from $1. 36 to $1. 0.
The dropped net income and lower EPS are most likely caused by Nike’s low gross margins and high selling, general and administrative (SG & A) cost (Fontevecchia, 2011). Based on these statistics, Nike failed to keep a stable profit growth and the investors of Nike have to make the investment decision carefully and take into consideration of Nike’s historical performance if necessary.
Nike’s revenue has increased by 15% in the 3rd quarter of fiscal 2012. The revenue reached $5. 8 billion. The EPS has increased to 1.
2. Based on these statistics, it looks like the higher revenue and SG&A cost leverage could cover the low gross margin problems. 7. 2 Employee Nike’s employee strategic objective is to build an equitable and empowerment work force, and provide an environment which could stimulate people to maximize their contribution to Nike. Nike set up factories all over the world and offer millions job opportunities to the local people.
In Indonesia, the employee could get accommodations and necessities for free.
However, there also some employee issue arisen in Nike’s worldwide factories. In some factories especially in the developing countries, the employees of Nike get very low income and unfairly remuneration. A report by BBC (2000) revealed the child labor and sweat-factory working condition in Nike’s factories in Cambodia. All the employees in that factory have to work seven days a week and often up to 16 hours a day. Those issues reflect to the mismatch of Nike’s treatment of employees with its strategic objective.
. 3 Customer Nike’s customer strategic objective is to provide quality products and innovated services, building loyalty customer relationship all over the world. Nike started a new way to loyal their customers. Nike built up a website named NikePlus. com to record runner’s personal detail and training data to help the runners to improve their performance.
As the result, in 2010, 48% of the running shoes in the U. S. market are sold by Nike. By 2011, Nike’s market share grew up to 61% (Nike, 2011). In addition, Nike has never stopped innovation.
Nike divided the innovation into three parts, which are provided information to customers, reduce the resource used and enrich customer experience (Nike, 2011).
As a result, the innovation assisted Nike to stay an invincible position in the market and keep the competitive advantages. 7. 4 Environment Nike’s environment strategic objective is to minimize the pollution of the environment for sustainable development with the sustainable innovation. Forced by the pressure from its stakeholders and other interest party, Nike has changed from traditional business metrics to the new sustainable model (Holmes, 2006).
According to the new model, Nike shifted the focus of compete for market shares to contribute to environmental protection, social and labor change. Furthermore, with the aim of take competitive advantages of sustainable economy, Nike changed the office name “corporate social responsibility” to the “Sustainable Business and Innovation (SB;amp;I)”.
As a result, Nike would complete sustainable innovation sooner than its competitors and keep the competitive advantages of sustainable model (Costa, 2010). 8. Conclusion and Recommendation Nike has successfully built up a high brand value image and stable global manufacturing networks.
It has taken the opportunities of the growing market in the developing countries and the technology innovations to keep a strong growth trend. However, there are some issues arisen during Nike’s development process such as the outsourcing issue, “sweat factory” issue and the labor shortage issue. The outsourcing issue leads to the difficulties in management; the “sweat factory” issue has a negative impact on Nike’s reputation and brought the legal problems; the labor shortage issue makes it hard for Nike to get enough labor force to achieve the maximum performance level.
There are some recommendations for Nike’s future development. Firstly, for the outsourcing issue and the “sweat factory” issue, a possible way to solve this issue is to consolidate the distribution, make it less scattering and assign the regional delegates to monitor both the quality of products and quality of the working conditions, which would ensure everything is meet the standard (Herath & Kishore, 2009). Secondly, for the potential labor shortage issue, Nike needs to plan to move its factories to the countries or places with more young labor forces and relatively low labor costs.
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