Nike business strategy
Introduction
In Greek mythology, Nike is the Winged Goddess of Victory. The logo derived from the goddess' wing,' swoosh,' symbolizes the sound of speed, movement, power, and motivation.
Nike is an organization working towards developing products that help athletes of every level of ability reach their potential. In its mission statement, Nike expresses that it wants to bring inspiration and innovation to every athlete in the world. Nike is a formal organization with a clear beginning and a specific goal to develop products that athletes reach their potential. A legal organization has been defined by Schein as the planned coordination of the activities of several people for the achievement of some common, explicit purpose or goal, through a division of labor and function, and through a hierarchy of authority and responsibility (Mullins 2002: 98). The business Nike used to be heavily engaged in is footwear products. Still, it grew and diversified from a footwear distributor to a global marketer of athletic footwear, apparel, and equipment. Along the way, Nike has established a strong Brand Portfolio with several wholly-owned subsidiaries including Cole Haan, Converse Inc., Hurley Internati1onal LLC, NIKE Golf, and Umbro Ltd. Nike is a very competitive organization, Phil Knight (Founder and CEO) often quoted as saying that 'Business is war without bullets.' Nike has a healthy dislike for its competitors. About Nike Retail Services, Inc. NIKE, named for the Greek goddess of victory, is the world's #1 shoe and apparel company. It designs, develops, and sells various products to help in playing basketball and soccer (football), as well as in running, men's and women's training, and other action sports.
Internal strategy & External Strategy
The Nike business strategy is clear: it invests in building your brand through emotional marketing and sports celebrity endorsements, developing products with high-quality, market-leading technology, and buying out competing sports brands.
COMPANY ANALYSIS
Strengths and Weaknesses of the Corporate/Business Level
Strategic Managers
Board of Directors - Strength
Nike's board of directors consists of both managing directors and independent directors. The combination of these two types of directors benefits Nike in that there is a presence of those directly involved with Nike as well as others indirectly suggested who bring outside experience, provide another frame of reference and can assist the overall board in thinking "outside the box." Nike's board would be classified as an oversight board, playing an active role with regards to management's decisions in the area of strategy formulation.
Board of Directors - Weakness
The average age of Nike's board is 62, the youngest member being 49, and the oldest being 79. constitutes a possible weakness in that there is a lack of younger members of the board who could serve to bring a new perspective to the company and assist in achieving Nike's goals. Environmental Analysis
Internal – Strength
Nike's management analyzes its internal environment and makes decisions based on that analysis. Because of Nike's marketing research, the company has decided to revamp its apparel division to be fashion savvy. As a result of product and pricing research, Nike has decided to continue to focus on the high-end market while increasing its market share in the middle and low price ranges in an attempt to broaden Nike's product spectrum.
External - Weakness
Nike's failure to foresee problems about labor and factory conditions at production locations has resulted in adverse publicity, and declining sales as a society and consumers call for more "socially responsible" companies.
Strategy Formulation
Mission - Weakness
Nike's Corporate Mission Statement:
"To be the world's leading sports and fitness company."
Nike's mission statement resembles a vision statement and is, therefore, a weakness. While the mission does broadly identify the business we are in, namely the sports and fitness industry, it is not specific as to what products and services we provide. The mission statement also omits any mention of distribution channels and customers. However, it does portray management's beliefs and values of our desire to be number one and maintain the leading position in the sports and fitness shoe and apparel industry.
Corporate Objectives – Weakness
Nike has no published corporate objectives about the overall company. This lack of organizational goals represents a weakness. Stakeholders should be well aware of and informed of a company's corporate objectives to better understand its nature and direction.
Nike has established corporate objectives about our perceived corporate responsibility. We aim to "lead in corporate citizenship through programs that reflect caring for the world family of Nike, our teammates, our consumers, and those who provide services to Nike." This corporate objective represents a weakness as it does not meet the two requirements of being measurable and having a time frame in which to complete or accomplish said objective. Nike's aim is immeasurable and broad, lacking any time specifications for implementing programs to meet this objective.
Grand Strategies - Strength
For our grand strategy, Nike utilizes innovation to produce top-quality athletic footwear and apparel. As a result of devoting vast resources to the research and development of its products, Nike has captured the largest market share in the athletic footwear and apparel industry and continues to be the leader of quality products.
Competitive Strategies - Strength
The competitive strategy that Nike introduced at the end of the 1990's concentrates on honing the focus of our marketing strategies and product offerings through product differentiation. We realize that a sense of individualism has replaced the team-mentality that captured the spirit of athletics in the late 1980s and early 1990s. Younger consumers, especially, look to extreme sports and retail outlets such as Ambercrombie & Fitch and Old Navy to find a sense of individual style. We are responding to this movement in several ways. While retaining our company's long-standing tradition of placing performance through new-product development as a top priority, a never-before-seen element of fashion will receive a second-place priority built into our products and image. For the 1999 back-to-school season, we conducted fashion shows in twelve U.S. cities. Also, an element of individualism is most evident in our Web site. Customers can select the color and design a monogrammed heel-insignia for our made-to-order athletic shoes.
Opportunities
The athletic footwear and apparel industries will benefit from the currently strong economic backdrop in the United States. Spending is high and expected to result in sales growth industry-wide.
Athletic shoes and apparel have become a staple in wardrobes worldwide. It is due to both the increasing numbers of people exercising and the trend towards casual attire.
Competition is fierce at all levels within the industry, especially among the leaders. It creates a sense of security for the companies that have been able to create a niche.
Cost-cutting due to the restructuring of operations will give many companies the chance to price products more competitively.
One area in the industry that is ever-changing is research and development. The strong departments will surely capitalize on the trends of tomorrow if their efforts are successful.
Increasing financial recovery in overseas markets proves to be an area of expansion for the athletic footwear and apparel industry.
E-tailing, or customer-designed internet merchandise, is threatening the traditional distribution channels, thus eliminating the "middle-man" distributors and allowing for increasing profitability.
Threats
The industry has reached a level of maturity. While style and technology in athletic apparel and footwear have reached a leveling-off point, the critical aspect now is for companies to differentiate their lines.
Inflation is looming over the U.S. economy, which may spark a cutback in consumer spending.
Consumers are becoming savvier and may lean towards discounted items.
Many key manufacturers in this industry have been around for many years in terms of market saturation. Consumers may be scanning the market for new and different footwear and apparel products.
OTHER EXTERNAL FORCES
Demographics
Opportunity
Nike's once-loyal market is currently aging. It means that our customers are not as athletic as they may have been in the past. However, this poses an opportunity for Nike because it can influence the next generation of Nike customers. The older generation of Nike brand purchasers has the power to change their children - part of the next generation of Nike loyalists. Besides, by marketing different types of shoes to this market, these existing customers will continue to be loyal to Nike.
Threat
In the current market, several other competitors are not mainly athletically oriented. Examples include manufacturer-retailers such as The Gap and Old Navy. Their clothing and shoes are competing with Nike's. Also, Nike is not keeping up with the latest trends, and styles like some of its competitors have been. For that reason, the newer generation attracted by Adidas and Tommy Hilfiger.
Pressure groups
Opportunity
An opportunity produced by pressure groups is the ability to react positively to public concerns and customers. Consumer watch groups are paying attention to Nike's use of sweatshops and child labor to produce our products. Nike's opportunity lies in being able to show the consumer force that we are indeed taking steps to reduce and eventually eliminate sweatshops and child labor through new policies and strict implementation procedures. Also, by responding to such consumer activism, we are portraying a positive image in that we are promoting ethics even while we are trying to be efficient and economical.
Threat
In the same manner, not responding to these consumer activist groups poses a threat to Nike. The negative publicity that Nike has received thus far has lowered its image to that of being an ethical company. Such advertising has the potential to ruin a company permanently. By disregarding the voice of concerned citizens, we are ignoring our customers, one of our most important stakeholders.
KEY OPPORTUNITY
The key opportunity for Nike, Inc. currently is the booming economy of the United States. Presently the company has the ability and the resources to exploit this opportunity. Nike has capitalized on the recent economic boom with higher sales and income. However, we are not using our support to the fullest degree. There are currently many areas in which Nike is not paying attention. We have not catered to a large portion of the new generation that demands the latest trends and styles. Also, Nike must take into account the changing demographics in this country. There is a much higher proportion of Hispanics, Asians, and African Americans than there was before. These groups have somewhat different tastes that Nike should be able to satisfy.
Nike needs to focus on who the next generation of loyal customers will be and cater to their needs to exploit this opportunity. Also, the world economy is recovering currently, which allows Nike to make an impression in foreign markets as well. Nike is durable in many foreign countries, but we need to focus on the younger market of consumers. Nike has been doing a great deal of research and development, but if we want to keep the lead in market share, we must look at trends while maintaining our high standards of quality.
KEY THREAT
The critical threat for Nike, Inc. is market saturation. The problem is that the athletic shoe market is already full of different brands and companies. Now, there is very little room for new companies. There is also very little room for new product innovation and growth of market share for companies like Nike, Inc. Since Nike is currently holding the lead in the market as far as market share, there is little room for them to expand. We must hold onto our market share because, if anything, it is ours to lose. Nike, Inc. is now competing with other athletic companies as well as companies that just sell clothing or different types of shoes. If all of these other companies merely gain a small percentage of the market, Nike will be one of the leading companies to start losing market share.
In response to this threat, we would focus on keeping our market share and making sure that competitors like Old Nay do not steal our market share. We will do this by focusing our efforts on a broader market. It would include the younger generation that is interested in sports as well as extreme sports. We need to make sure that we stay abreast of the athletic shoe market and are also competitive in the athletic apparel market.
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