Nike Business Essay

Analyse their strategic choices with their survivals- why they made the choices that they did and recommendations. Has their strategic stress changed? Look for critical success factors, matches and mismatches. Identify any key atomic number 18as that establish affected Nike. Look at tools of analysis e. g. swot analysis, pestle, value chain, porters beers 5 forces, sh areholder matrix, resource view, 4 ps, BCG matrix. etc and others to stick to to your answer. Introduction Nike operates at bottom the sports footwear and apparel grocery.Originally designing and producing ladder shoes, their portfolio has broadened to include a wide hunt down of sports and leisure wear. This is all endorsed by nip sporting personalities. This environment is fairly st equal to(p) although terrorism and severe acute respiratory syndrome has affected consumer confidence and yield net domesticates. Mission Statement In its relegation statement Nike expresses that it requires doing dividing l ine in a responsible way, leading to sustainable financial growth. With the advances in technology, HR practices, the well informed and trained work force, in that location is very little left to differentiate organisations.Being seen to go further than the minimum required on social issues bay window realise and retain customers. This green cleansing attracts attention to the organisation they are viewed as caring and social responsible (Mullins, L. 2005). A report, on the business practices of Nike by dint of its supply chain accuse the organisation of being involved in poor working conditions, violations of labour rights, low wages and harassment of its workforce. Nike takes these reports seriously. On the basis of the research findings the company has intensified the monitoring of its suppliers (Hummels, H and Timmer, D. 004) medieval options To build its business with all of its partners based on trust, teamwork, honesty and vernacular respect this is expected to be retur ned, expecting business partners to operate on the same principles. rule Nike does not want to only do what is required by law, but also do what is expected of a leader future tense Options Review and monitor closer the actions of business partners precept To anticipate badly publicity, which can damage the organisation faultfinding success Factor To render to consumers the high value within the organisation to CSR. substitute of centralise idealogueHummels, H and Timmer, D. 2004 agreed that these reports were hireed, Although Mullin, L. 2005 express that it could be just green washout Nikes Function past(a) options the company focus on design and victimisation rationale This reduces long term debt has the benefit of not tying metropolis of the United States up in plant and equipment in store(predicate) Options Rationale Critical achiever Factor Reduced size of premises wherefore reduced cost. springy to entertain innovative employees. Products are viewed as innovative counterchange of Focus theorizer Johnson, G &038 Scholes J 2004 agreed that this was a cost impressive rule of resultionProduction at heart several of these countries on that point engender been problems with harvest-tideion, distribution and policy-making problems. With the change in relationship between the the States and Vietnam and China, these are newfound end product venues that Nike could explore. Past options Produce goods in the furthermost east Rationale Keeps costs down Future Options Vietnam and China Rationale novel hatful agreements, present sites are switching manufacturing to electrical goods Critical Success Factor Maintaining current standards, closer working relationships, retaining customer committal by guaranteed standard of product channel of FocusA gaffe to a much managed production theoriser All organisation need to watch changes in political and economical factors in their outsourcing. Johnson, G &038 Scholes J 2004, Shareholde r Matrix Surrounding all organisations are stakeholders, all with alter levels of authority, tycoon and interest towards the organisation Mendelow (1991) considered a matrix that classifies the level of power and interest a stakeholder has in an organisation. Although once each group of stakeholders is recognised, it cannot be assumed that their level of interest will remain the same (Mendelow (1991) cited in Scholes, K. Johnson, J 1997198). Jones (1995) argue that the stakeholder framework is practical for considering business and society issues, be energize it identifies the sources of a corporations social obligations and its set of stakeholders (Jones (1995) cited in Rowley, T. 199828). Therefore by Nike concentrating on their stakeholders it has smirchd Corporate Social responsibility high on their agenda. The organisation has to demonstrate transparency in all actions and report. This can cause conflict with the shareholders.Common in stakeholder theory is compromises on b oth sides that can obviously haze over differences this primary characteristic is accepted as contra-distinctiveness from the shareholder value. This was discussed by Friedman, (1993) that the ultimate purpose of a company should be serving the interests of its shareholders (Friedman, (1993) Value Chain Nikes supply chain provides a clear view of the extent of the global nature of the company. Nikes home base are in America however, virtually all of its production takes place outside(a) of the United States.Nikes supply chain upstream begins with the materials used in the production of its products. Many of these materials used in production are available in the locations which the manufacturing takes place, but some specialised materials afford to be imported to the manufacturing company. Past options Outsourcing of all production Rationale Reduced costs Future Options Outsource with upstandinger control Rationale Speed up describe of any problems in production, the supply cha in, the greater the distance the slower the reporting of problems Critical Success Factor Reduce problems associated with distance, i. e. uality, consistency and value Change of Focus Although still outsourcing, they would gain more control over production. theorizer Johnson, G &038 Scholes J 2004, agreed that Nike can be too distant from the site of production Past options Target USA Rationale penury and growth for footwear in the US was rapid. Future Options Future option is to enter EU markets Rationale To expand into growing markets as US is near saturation. Critical Success Factor organic growth as well as by acquisition, also brand name, goodwill- therefore there is a match is CSF to succeed Change of Focus Maybe wear to rear end marketing in a different way theorist When markets are reaching saturation, new markets need to be identified to prevent decline in sales. Johnson, G &038 Scholes J 2004, dispersion And Retailers Nike has a strong network of retailers in 200 co utries world wide through distributors, licensees and sudsiduaries. Within the USA there are 18000 stores that retail nike products. These are well schematic channels. Nike made itself heavily dependant on one retailer Footlocker, representing 10% of their revenue. When Footlocker reduced their purchasing form Nike, it created a reduction in turnover in the short term.Organisations that are over dependant on one retailer are fan out to cash flow problems, if the retailer switches suppliers, reduces purchasing or ceases trading (Johnson, G &038 Scholes J 2004). Past options Although they curb numerous retailers, they were heavily dependant on one out allow chain Rationale To sell top of the range products Future Options To perform partnerships deals that allow for the choice of product for the retailer Rationale To prevent fast withdrawal of products Critical Success Factor Customer being able to rely on source of product. If withdrawn they may find an choice product Change of FocusCloser working partnerships Theorist Organisations that are over dependant on one retailer are open to cash flow problems, if the retailer switches suppliers, reduces purchasing or ceases trading. Johnson, G &038 Scholes J 2004 Nike has a futures, but can also ship overnight when needed. Although the futures method is currently working for Nike, Past options Futures ordering system Rationale a 6 month lead time for product orders, always learned what is needed in production Future Options Rationale Critical Success Factor This is responsive to the market trends, but can also avail retailers plan stock. Change of FocusTheorist Any change or threats within the markets could leave them overstocked (Groucutt, J. et al 2004) Sales In addition, consumer sales outside of the United States exceeded sales in the United States in 2003 with only 43% of the companys sales coming from the US In europium there are difficulties in entering the market, the single currency and the trade rule s make entry difficult for large organisations. Past options Target the US Rationale Growing market, but is right off reaching saturation Future Options Target new markets, including e- medico Rationale To avoid a reduction in sales Critical Success FactorEntry to the markets, by advertize and targeting the audience. Ensuring accurate and quick picking of the customers order Change of Focus shift key to global marketing, selling world wide from the web targeting genesis Y. Theorist By tailoring marketing to the customer inevitably Nike has been successful in the past and continues to be today (Johnson, G &038 Scholes J 2004) Nike Branding Past options global brand Rationale Consumers are willing to pay a premium price for as they imply credibility, high quality and cutting-edge global trend. Future Options When companies are bought trade under their name RationaleMoving into a new market with a brand that is already global you can reduce cost of introductory and follow-up mark eting programs. Critical Success Factor Ensures customer loyalty and to widen portfolio Change of Focus Concentrating on core products as Nike, allowing growth in new diverse markets Theorist significant scales of economy are achieved Aaker 2000, this is in toll of brand development, packaging and manufacturing Marketing Sports personalities have endorsed the Nike product, although with numerous different sports and countries targeted this has been costly. The union each personality has received is considered high.This forces the competitors to market their products in the same way. Trends within the industry have increased the number of female consumers. With advertise Nike has targeted segments of the market, this costly. Nike should look back their advertising policies (Groucutt, J. et al 2004). Past options Sports personalities have endorsed the Nike product, although with numerous different sports and countries targeted Rationale To target all types of sport by choosing per sonalities which are at the top of their sports. Future Options To chose personalities that appeal to a wider audience Rationale To reduce advertising costsCritical Success Factor Change of Focus Theorist Groucutt, J. et al 2004 4ps The athletic shoe industry is highly competitive as well as a demanding market where fierce competition, price scruples consumers, and constant changing market trends and fads have all been attributing factors in how a manufacturer responds. Highly focused brand includes Nike, Adidas, and Reebok, they target a detailed market. However, there is evidence that a brand will widen its target market as it reaches a greater level of maturity. In the gaffe of Nike, for example, there was a move into new sports areas away from the running heritage.Nikes target audience has moved from more masculine towards female and Generation Y. Price is related to Product, through the characteristics of the brand, its packaging and overall image. mess are buying into an i deal, not just the particular. Consumers believe that there is a link between quality of a product and the price. Consumers question what they are getting for their money. Brand Management, customer awareness and loyalty, is directly linked to the price, therefore maintenance of the relationship between brand images quality and price have to be consistent (Johnson, G &038 Scholes J 2004). Models Used In digestSwot Analysis This analysis will summarise key issues from the business environment and the strategic capacity of Nike. This can be used to arbiter future strategic options. Strengths Product Range Capacity for innovation Distribution expertise oneness Brand Stars endorsement buzz off manufacturing Large portfolio of products Weaknesses Single Brand Too many stars endorsement Contract manufacturing Spread portfolio of products dependent on retailers Reduction of target market Opportunities New Markets E commerce Research and development Increase product line Product varie gation Change target market New manufacturing countriesThreats Competition Fashion Trends Contract manufacturing and copying of product (intellectual property) Consumer lifestyle changes Competition Bad press associated with Nike Outlets cancelling orders severe acute respiratory syndrome Pestle This will consider environmental influences on the organisation, both in the past and with future strategic plans. political Striking dock workers Political unrest in the production countries Terrorism in the home field Economic Slow down in the economy Reduction in consumer confidence Barriers of entry to the EU Contract manufacturing Socio-cultural Brand conscious consumers Change in buying habits in younger peopleGeneration Y prefers other types of footwear Increase in the female share of the market Corporate social responsibility Technological Speed of change of product Design Ability Speed of News reporting Environmental Re use a shoe Sustainability philosophy Climate impact heavy Thr eaten action by underage workforce Poor trading record Corporate social responsibility Contract manufacturing and copying of product (intellectual property) Trade agreements Supply Chain Like every large IT undertaking, the team responsible for the implementation of Nike Supply Chain (NSC) began with a set of specific, stated goalsEnhancing Nikes ability to respond to changing conditions Reducing inventory and capital investment risk Improving service to meet customer/consumer needs Improving process, information and product quality and Providing an efficient global supply chain with local implementation Porters 5 Forces This ride is used to identify the sources of competition, and how to gain advantage over them. Potential Entrants new(prenominal) sportswear manufacturers expanding their portfolio Cheap copies from the Far East Buyers The buyers of sports footwear have changed in the past decade.There has been and increase in women purchasing the shoes, Generation Y has a differ ent tastes and purchasing methods. Substitutes When required for professional use there is no substitute goods, but as a fashion item there are many other goods that could be purchased. Suppliers Using production facilities in the Far East has give Nike economies of scale. Although there are now problems arising from these factories, they are switching to making there own goods, labour and political unrest causes delays in manufacturing and shipping of the goods, Competitive RivalryReebok, offering more choice of shoe, introducing endorsement by sports personalities, sponsoring sporting leagues Adidas have recovered from the problems that plagued them, and have a good product mix, covering a wide range of sports. BCG Matrix Nike is established within its markets, benefiting from economies of scale. This places them in the Cash Cows family on the Matrix. Cash cows market growth has slowed, and the products hold a fairly stable market share. Bibliography Books Aaker, D. (2000) Brand leadership Free Press, New York Doyle, P. (1998) Innovation in marketingButterworth-Heinemann, Oxford Drawbaugh, K. (2001) Brands in the balance meeting the challenges to mercenary identity Pearson Education, London Groucutt, J. et al (2004) Marketing Essential Principals and New realities Kogan &038 Page, nifty Britain Johnson J &038 Scholes K (1997)(4th Edition)Exploring Corporate Strategy Prentice Hall, Hemmel Hempstead. Johnson, G &038 Scholes J (2004) (6th Edition) Exploring Corporate Strategy Prentice Hall, Hemmel Hempstead. Mullins, L. (2005) (7th Edition) Management and Organisational Behaviour Prentice Hall, Pearson, Harlow. daybooksHummels,H and Timmer, D. (2004) Investors in Need of Social, Ethical, and Environmental Information Journal of Business Ethics Jun 2004Vol. 52, Iss. 1 Kaler, J. (2003) Differentiating Stakeholder Theories Journal of Business Ethics Aug 2003. Vol. 46 Rowley, T (1998) A normative justification for stakeholder theory Business and Society. Mar 1 998 Welch, J. (1997) Business ethics in theory and practice Diagnostic notes. A prescription for value Journal of Business Ethics, Feb 1997. Vol. 16, Related Nike Resources On Business Teacher Nike Case knowledge Nike SWOT Analysis