Nike Business Essay

Analyse their strategic choices with their options- why they do the choices that they did and recommendations. Has their strategic focus changed? Look for critical success factors, matches and mismatches. Identify distributively key beas that pass affected Nike. Look at tools of analysis e. g. uprise analysis, pestle, value stove, porters 5 forces, sh atomic number 18holder matrix, resource view, 4 ps, BCG matrix. etc and others to come to your answer. Introduction Nike moves within the sports footgear and appargonl market. primarily designing and producing running shoes, their portfolio has broadened to include a encompassing site of sports and untenanted wear. This is tout ensemble endorsed by top sporting personalities. This environment is fairly horse barn although terrorism and Sars has affected consumer confidence and run networks. Mission education In its mission statement Nike expresses that it requires doing declination of crossings in a responsible way, leading to sustainable financial ingathering. With the advances in technology, HR practices, the well sensible and trained work force, in that location is very little left to ramify makeups.Being seen to go further than the minimum required on amicable issues keister attract 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 through its supply chain accused the organisation of being involved in poor operative(a) conditions, violations of labour rights, low yield and harassment of its work force. Nike takes these reports seriously. On the basis of the research findings the company has intensified the observe of its suppliers (Hummels, H and Timmer, D. 004) historic options To build its business with each(prenominal) of its partners based on trust, teamwork, h one and only(a)sty and mutual respect this is expected to be returned , expecting business partners to operate on the same principles. principle Nike does non want to only do what is required by law, but also do what is expected of a leader upcoming Options Review and monitor closer the actions of business partners rationale To prevent bad publicity, which can damage the organisation Critical success Factor To demonstrate to consumers the high gear value within the organisation to CSR. ad exactlyment of tenseness TheoristHummels, H and Timmer, D. 2004 agreed that these reports were needed, Although Mullin, L. 2005 stated that it could be just green washing Nikes Function Past options the company focus on design and development rule This reduces long term debt has the benefit of not tying capital up in plant and equipment approaching Options principle Critical Success Factor Reduced size of premises hence reduced costs. Vital to have sophisticated employees. Products are viewed as innovative exchange of nidus Theorist Johnson, G & Scholes J 2004 agreed that this was a cost effective method of productionionProduction Within several(prenominal) of these countries there have been problems with production, distribution and political problems. With the change in affinity between the regular army and Vietnam and China, these are new production venues that Nike could explore. Past options aim goods in the Far east precept Keeps costs d protest Future Options Vietnam and China rule radical trade agreements, present sites are teddy manufacturing to electrical goods Critical Success Factor Maintaining current standards, closer working relationravishs, retaining customer faithfulness by guaranteed standard of product modify of FocusA shift to a more managed production Theorist altogether organisation need to watch changes in political and economical factors in their outsourcing. Johnson, G & Scholes J 2004, Shareholder Matrix Surrounding all in all organisations are stakeholders, all with varied aims of authority, power 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 forget hold on 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, because 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 placed Corporate Social business high on their agenda. The organisation has to demonstrate transparency in all actions and account. This can cause conflict with the shareholders.Common in stakeholder theory is compromises on both sides that can obviously haze anyplace differences this primary feature article 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 temper of the company. Nikes headquarters are in America however, virtually all of its production takes place outside 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 specialized materials have to be imported to the manufacturing company. Past options Outsourcing of all production Rationale Reduced costs Future Options Outsource with stronger overtop Rationale travel up reporting of any problems in production, the supply chain, the greater the exceed the slower the reporting of problems Critical Success Factor Reduce p roblems associated with distance, i. e. uality, consistency and value Change of Focus Although still outsourcing, they would gain more control over production. Theorist Johnson, G & Scholes J 2004, agreed that Nike can be too far from the site of production Past options Target USA Rationale Demand and emergence for footwear in the US was rapid. Future Options Future option is to enter EU markets Rationale To expand into emergence markets as US is near saturation. Critical Success Factor total growth as well as by acquisition, also crack name, goodwill- therefore there is a match is CSF to succeed Change of Focus Maybe have to buns marketing in a antithetic wayTheorist When markets are attain saturation, new markets need to be identified to prevent decline in sales. Johnson, G & Scholes J 2004, diffusion And Retailers Nike has a strong network of retail merchants in 200 coutries world wide through distributors, licensees and sudsiduaries. Within the USA there are 18000 stor es that retail nike products. These are well established channels. Nike made itself heavily dependant on one retailer Footlocker, representing 10% of their revenue. When Footlocker reduced their buying form Nike, it created a reduction in turnover in the short term.Organisations that are over dependant on one retailer are open to coin flow problems, if the retailer switches suppliers, reduces purchasing or ceases trading (Johnson, G & Scholes J 2004). Past options Although they have many retailers, they were heavily dependant on one out let chain Rationale To sell top of the range products Future Options To negotiate partnerships deals that allow for the choice of product for the retailer Rationale To prevent sudden withdrawal of products Critical Success Factor client being able to rely on source of product. If withdrawn they whitethorn find an alternative 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 & 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 governing body Rationale a 6 month lead time for product orders, always knowing what is needed in production Future Options Rationale Critical Success Factor This is responsive to the market trends, but can also help retailers plan stock. Change of FocusTheorist either 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 Europe there are difficulties in entering the market, the mavin currency and the trade rules make entry difficult for large organisations. Past options Target the US Rationale Growing market, bu t is now reaching saturation Future Options Target new markets, including e-commerce Rationale To avoid a reduction in sales Critical Success Factor doorway to the markets, by advertising and targeting the audience. Ensuring accurate and quick picking of the customers order Change of Focus Shift to global marketing, selling world wide from the weave targeting Generation Y. Theorist By tailoring marketing to the customer inevitably Nike has been successful in the past and continues to be today (Johnson, G & Scholes J 2004) Nike spoting Past options global brand Rationale Consumers are unbidden to pay a premium price for as they imply credibility, high look and up-to-date global trend. Future Options When companies are bought trade on a lower floor their name RationaleMoving into a new market with a brand that is already global you can reduce cost of basic and follow-up marketing programs. Critical Success Factor Ensures customer loyalty and to widen portfolio Change of Focus Co ncentrating on core products as Nike, allowing growth in new diverse markets Theorist significant scales of thriftiness are achieved Aaker 2000, this is in terms of brand development, box and manufacturing Marketing Sports personalities have endorsed the Nike product, although with numerous different sports and countries targeted this has been costly. The amount 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 pistillate consumers. With advertising Nike has targeted segments of the market, this costly. Nike should review 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 personalities which are at the top of their sports. Future Options To chose personalities that appeal to a w ider audience Rationale To reduce advertising costsCritical Success Factor Change of Focus Theorist Groucutt, J. et al 2004 4ps The athletic shoe industry is extremely competitive as well as a demanding market where pugnacious competition, price conscience 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 precise market. However, there is evidence that a brand will widen its target market as it reaches a greater level of maturity. In the case of Nike, for example, there was a move into new sports areas outside from the running heritage.Nikes target audience has moved from more mannish towards womanish and Generation Y. Price is related to Product, through the characteristics of the brand, its packaging and overall image. People are buying into an ideal, not just the item. Consumers view that there is a link between quality of a product an d the price. Consumers question what they are getting for their money. Brand Management, customer awareness and loyalty, is straightaway linked to the price, therefore maintenance of the relationship between brand images quality and price have to be consistent (Johnson, G & Scholes J 2004). Models apply In AnalysisSwot Analysis This analysis will tot up key issues from the business environment and the strategic capacity of Nike. This can be used to judge future strategic options. Strengths Product Range competency for innovation Distribution expertise Single Brand Stars endorsement come manufacturing Large portfolio of products Weaknesses Single Brand Too many stars endorsement urge manufacturing Spread portfolio of products Reliant on retailers Reduction of target market Opportunities New Markets E commerce Research and development Increase product line Product diversification Change target market New manufacturing countriesThreats challenger Fashion Trends trim down manufa cturing and copying of product (intellectual property) Consumer lifestyle changes Competition noxious press associated with Nike Outlets cancelling orders Sars Pestle This will consider environmental influences on the organisation, both in the past and with future strategic plans. Political smasher dock workers Political unrest in the production countries Terrorism in the home country 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 peckGeneration Y prefers other types of footwear Increase in the female share of the market Corporate social responsibility Technological induce of change of product Design Ability Speed of News reporting Environmental Re use a shoe Sustainability philosophy mood impact Legal Threaten action by underage workforce Poor employment record Corporate social responsibility Contract manufacturing and copying of pro duct (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 toy customer/consumer needs Improving process, information and product quality and Providing an in effect(p) global supply chain with local implementation Porters 5 Forces This model is used to identify the sources of competition, and how to gain advantage over them. Potential Entrants Other 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 different tastes and purchasing methods. Substitutes When required for professed(prenominal) use there is no substitute goods, but as a fash ion 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 aspirationReebok, 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 exchange Cows category 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 respite meeting the challenges to commercial identity Pearson Education, London Groucutt, J. et al (2004) Marketing inherent Principals and New realities Kogan & Page, Great Britain Johnson J & Scholes K (1997)(4th Edition)Exploring Corporate Strategy prentice Hall, Hemmel Hempstead. Johnson, G & Scholes J (2004) (6th Edition) Exploring Corporate Strategy Prentice Hall, Hemmel Hempstead. Mullins, L. (2005) (7th Edition) Management and Organisational demeanour Prentice Hall, Pearson, Harlow. JournalsHummels,H and Timmer, D. (2004) Investors in Need of Social, Ethical, and Environmental Information Journal of business concern Ethics Jun 2004Vol. 52, Iss. 1 Kaler, J. (2003) Differentiating Stakeholder Theories Journal of bloodline Ethics Aug 2003. Vol. 46 Rowley, T (1998) A normative justification for stakeholder theory Business and Society. Mar 1998 Welch, J. (1997) Business ethics in theory and practice Diagnostic notes. A prescription(prenominal) for va lue Journal of Business Ethics, Feb 1997. Vol. 16, Related Nike Resources On Business teacher Nike Case Study Nike SWOT Analysis