Introduction
Nike is a sportswear and Apparel Company based in Beaverton, Oregon, United States. The company is known for the Nike athletic footwear products and the Brand Jordan products. The company’ target customers are people with enthusiasm for sport, whether it is amateur, or professional level. The products are sold by retailers in Nike stores and on internet websites to customers globally. Nike is a well-recognized brand with a distinguishable tag line of ‘Just Do It’ to inspire its target market to work towards its goals.
Management Type
Nikes’ management has focused on offering quality products in line with its values. Phil Knight, one of its co-founders, who served as its CEO, had a significant impact on its strategic leadership and impeccable brand image. As any other company, Nike is concerned about its reputation. Nikes’ management has put an organizational culture that advocates for constant innovation to follow market trends.
Nike is a societally conscious company, which manifests in its attitude towards social problems. The company assures financial well-being of its employees by offering them retirement plans, paid time off, paid holidays, and summer hours (Nike, 2021). Investment into ecological well-being is represented by the reduction of the company’s use of carbon, elimination of waste, and wastewater recycling (Nike Purpose, 2021c). Nike also values social well-being by consistent investment into promotion of equality and human rights movements (Nike Purpose, 2021b). All these directions add attractiveness to the already established brand.
Competition and Strategy
Competitors
Nikes’ significant competitors are German manufacturers Puma, Adidas, New Balance, Fila, and Reebok. Naturally, Nike is similar to all these companies because all of them sell sports merchandize. It can also be argued that each of these companies produces quality products. However, Nike is different because of its manner of promoting its products. Nike has gained a massive competitive advantage by focusing on emotional marketing.
Business Strategies
The first strategy Nike constantly uses is the involvement of celebrities. Nike’s advertisements utilize the image of America’s sporting heroes to serve as inspiration to its target market. Another strategy is implementation of technological innovations to set the company apart from its competitors. Recent examples include air sustainability, FitAdapt tech for basketball shoes, and FlyEase technology for running shoes (Nike News, 2021). Finally, a global outsourcing strategy has helped it keep its manufacturing costs low and take advantage of economies of scale in production.
SWOT Analysis
Nikes’ significant strength is its efficient organizational structure and work culture that ensures that every employee has a passion and competitive energy to make Nike succeed. It has also leveraged its research and development department to produce innovative and diverse products that meet the market’s needs. Nike has also invested in creating a positive brand image that complements other marketing strategies. However, Nike’s marketing concentration on sportswear products has emerged as the greatest weakness as it prevents the company from connecting with their customers thereby leading to missed opportunities in products innovation.
Nonetheless, the company has several opportunities as it has the advantage of a thriving US economy to leverage industry development, especially the online market. Nike also has the opportunity to improve on its product development in line with consumer tastes and preferences. However, some new companies, such as New Balance, have grown and are taking part in Nike’s market share and posing a direct threat to Nikes’ domination of the market. Although Nike is still leading as the athletic apparel producer, other companies actively differentiate their products to beat Nike. Additionally, Nike has been faced with imitation issues, especially in its Asian markets. Standaert (2021) argues that Nike loses more than a million dollars every year to counterfeit products because they cannot effectively stop the products from getting into the market.
Organization Design and Control
Organizational Structure and Culture
Nike has adopted a matrix organizational structure that combines both horizontal and vertical formations. The Nike hierarchy is classified into global headquarters, regional headquarters, and its subsidiaries. Nike’s subsidiaries such as Cole Haan, Umbro, Converse, and Hurley take independent decisions most of the time and have operational autonomy separate from the global headquarters. The company promotes the culture of active sport life, by compensating the employees for their sport expenditures, giving them discounts for the company’s merchandize, and welcoming any employees’ initiatives to promote the company’s products on the Internet.
Performance Standards & Monitoring System
Nike presents itself as a socially responsible company, which necessitates the respect of several performance standards (Nike Purpose, 2021a). First, the company ensures that employees work in a safe and healthy environment. Second, Nike respects labor law and adjusts its labor policies accordingly. Third, the company is environmentally conscious and is committed to the reduction of carbon and water waste in the production. Finally, the company prides itself on the quality of its products, maintenance of which is essential for the corporate image.
Employees report to multiple supervisors within a standardized operational process that prevents breaches of protocol and enables seamless communication. All significant decisions are made in the global headquarters to ensure seamless information processing and a standardized approach to all its operations globally. The regional offices offer support to the global headquarters while ensuring that they monitor trends unique to the region. The structure allows Nike to meet both the global and regional demands with its products and marketing.
Potential Problems and Solutions
Labor Law Violations
Most Nike shoes are manufactured in developing Asian countries to ensure lower their manufacturing and labor costs. The Nike factories run by private contractors in primarily Asian countries have received negative publicity due to their poor labor conditions. Child labor, inadequate compensation, sexual harassment by supervisors, and unsafe working conditions are some of the ethical missteps that tainted Nike’s brand image. The first solution is to rewrite legal terms with contractors obligating them to follow Nike’s own policy standards. The second solution is to move factories to countries with less negative reputation for violations of human rights.
Environmental Degradation
Nike also faces environmental problems as their factories’ wastes negatively impact the environment in the countries where its factories reside. First, Nike could implement recycling programs to prevent toxic waste from ruining the environment. Second, Nike can develop standard environmental auditing tools to ensure transparency and compliance to the universal standards. Both solutions will improve the corporate image and alleviate the damage to Nike’s reputation.
Logistical Failures
High customer demand also leads to some logistical and supply chain problems within Nike as it strains to get its products from overseas factories. As the issues give other apparel manufacturers leverage, Nike should increase their factories and improve their shipping methods to ensure customer demands are met. One option is to engage more couriers services around the globe. Another solution is to set up factories closer to regions where customers experience logistical delays.
Loss of Product Uniqueness
Some of the company’s products are no longer characterized as unique. For instance, Nikes’ most popular product, Air Jordan, has become too common; giving other companies the chance to introduce new and innovative products in the market. The research and development department at Nike should develop products in line with the current market trends. Nike should also withdraw products that have been in the market for too long to ensure other designs get customers’ attention. These measures are necessary as they will help the company retain traditional and loyal clients while at the same time appealing to new and potential clients.
References
Nike. (2021). Benefits.
Nike News. (2021). Innovation News.
Nike Purpose. (2021a). Foundational Sourcing Expectations.
Nike Purpose. (2021b). How We Stand Up for Equality.
Nike Purpose. (2021c). Investing in our Planet.
Standaert, W. (2021). Product digitalization at Nike: The future is now. Journal of Information Technology Teaching Cases.
Appendix A
Name: Bradley Martin
Contact Information: Linkedin.
The interview took place on July 28, 2021 via a Skype call.
The manager was contacted via LinkedIn, after which the Skype ID was obtained.