Case Study Analysis on Nike Corporation

1. Introduction
History
Nike is a major US footwear, clothing and sportswear supplier
based in Beaverton, Oregon. The company operates in more than
160 countries and employs over 44000 people across six
continents. Nikes revenue total of $20.862 billion in 2011 with
total equity of $9.843 billion. Today Nike is considered the worlds
leading supplier of athletic shoes and apparel and one of the
worlds most famous and strongest brands.
The company was founded in 1964 as a footwear distributor Blue
Ribbon Sports by Bill Bowerman and Phil Knight (middle-
distance runner from Portland). Initially, the company operated as
a distributor for Onitsuka Tiger, the Japanese shoe maker. Most of
the sales were made out of Knights automobile. In 1967 the first
retail store was opened.
In 1972 the jump was made to manufacturing companys own
brand of athletic shoes and the Swoosh brand mark was created.
The first self-manufactured companys shoes used Bowermans
waffle design. They became extremely popular among the
runners: they had special waffle-type nubs for traction and at the
same time they were lighter than traditional athletic shoes. In 1979
Nike Air technology was successfully launched and by 1980 the
company already attained 50% of national athletic shoe market. In
1982 Nike started to cooperate with Portland-based advertising
agency Wieden+Kennedy. Many successful advertising campaigns
were mutually launched and agencys co-founder Dan designed
even Nikes famous slogan Just Do It


The Purpose of This analysis
The purpose of this paper is to research and analyze the theories of
management that apply to Nike Corporation. The emphasis is made
on companys strategic planning, organization peculiarities,
leadership, management, innovation and change. Among the main
tasks are: defining companys core competencies, inner strengths
and weaknesses, opportunities and threats that the companys
environment poses; identifying how the company is organized,
showing its structure and decision-making process; defining the
companys leadership style and communication environment;
analyzing managerial controls and the role of Information
Technology within the company; describing innovative
management processes and corporate responsibility issues.

2. Strategic Planning
The mission of Nike corporation is: to bring inspiration and
innovation to every athlete in the world.
Companys main goal (vision) is to carry on its founders legacy of
innovative thinking, whether to develop products that help athletes
of every level of ability reach their potential, or to create business
opportunities that set Nike apart from the competition and provide
value for its shareholders. The companys current financial goal is
to grow sales to $27-billion up to the year 2015.





SWOT analysis
SWOT analysis is an established instrument that helps to analyze
companys internal and external environment. According to this
method, companys strategy is formulated on the basis of internal
strengths and weaknesses and external opportunities and threats.
SWOT analysis is an extremely powerful tool because it helps to
identify priorities and create a common vision of achieving the
goals set. Also, only by taking into consideration the components
of general environment: economic environment, social
environment, political environment, legislation and pressure
groups, a company will be able to adopt the particular way of
action, which will assure its performance and advantages on
present and potential competitors (Gasparotti, 2009).
Below is the SWOT analysis for Nike Corporation:
Strengths:
- Nike is a very professional and competitive company with strong
management;
- It possesses no physical factories and can move its production to
any location that is more cost effective;
- Very strong brand and generally good publicity; - It is a global
brand that sells its products worldwide; - Nike uses special
materials like LunarLight foam to make shoes of high quality and
with good characteristics for sportsmen.
Weaknesses:
- Most of the income comes from the footwear market and the
company is highly dependent on this segment. Other branded
products are not so strong;
- Spoiled publicity because of accusations of poor working
conditions and workforce exploiting in the developing and newly
industrialized countries.
Opportunities:
- Usage of waste from regular production to manufacture other
goods; - Diversification into adjacent markets like jewellery or
sunglasses production; - Further geographical
expansion; Threats: - Currency value fluctuations can seriously
influence real companys profits; - Growing competition becomes
more aggressive and alternative brands steal
Nikes market share; - Nikes products are very expensive and its
consumers often prefer cheaper brands. Growing price sensitivity
can negatively influence companys profits in future.
Strategy and Planning
Nikes core competencies are innovation, research and
development, marketing and effective exploitation of globalization
processes. Companys target audience are males and females
between 18 and 35 years old who prefer active lifestyle and goods
of high quality.
Nikes main competitors in the footwear industry are Reebok and
Adidas. These companies also use international approach to
management and business; they are very profitable and have
similar problems with publicity. At the same time Nike remains the
market leader due to its cost efficient marketing, effective
advertising and research and development. Nikes competitors are
less successful in these key factors.
Nike uses strategic planning and various planning techniques in its
activity. The main peculiarity of companys strategy is to start their
marketing and promotion with selling innovative items to
professional athletes and teams and by this means deliver the news
and fashion of new products to particular customers. Nikes
strategy also focuses on diversity in the workplace. This strategy
corresponds to companys vision and mission statement. Among
the planning techniques that Nike uses are: contingency planning,
benchmarking, scenario planning and others.
3. Organizing for Action
Nikes organizational structure is divisional but it has functional
departments. Converse and Jordan brands are examples of
divisions created around specific products while Nike design is a
functional department. Each department has subdepartments,
responsible for handling particular tasks. On the top of companys
hierarchy are CEO Mark Parker and a board of directors chaired by
Phil Knight. In Nike, employees report to divisional managers and
divisional managers report to the CEO. Operations department is
used to provide proper communication between divisions.
Nike is an innovative company and such organizational structure
helps it to handle research and development measures. Also,
because of the global competition Nike has to react to changes
quickly and make rapid decisions. Carrying most of the features of
matrix structure, Nikes organizational structure facilitates timely
and quality decision making.
4. Leadership

Leadership involves a social influence process whereby intentional
influence is exerted by one person or group over other people or
groups to structure the activities and relationships in a group or
organisation (Yukl, 2002,p3). Leadership and management are
different categories and not always can a single person carry two
of the roles simultaneously. A leader can be anyone on the team
who has a particular talent, who is creatively thinking out of the
box and has a great idea, who has experience in a certain aspect of
the business or project that can prove useful to the manager and the
team (Benincasa, 2012).
Leadership style is a certain manner of implementing plans,
influencing and motivating people. From 4 to 6 leadership styles
are usually differentiated by the scientists. Most widespread
classification includes: democratic, authoritarian, laissez- faire and
transactional leadership styles. On the top levels of Nike
Corporation laissez- faire leadership style is applied as separate
departments get relatively much freedom in their decision-making
process while top management motivates and transfers the vision
of the company to ensure keeping to mission and goals. At lowers
levels of the organization various leadership styles are used
depending on the cultural peculiarities of the population that lives
on a particular territory.
Nikes communication environment is very effective. All Nike
managers are required to communicate in a similar style across the
company. The company has a powerful digital intranet to provide
effective communication between Nike headquarters in Beaverton
and the international offices. To get relevant feedback from the
customers Nike actively uses social media means. To communicate
its values to the target audience Nike uses designated
spokespersons that often base their speeches on inspirational
stories and motivate the listeners.
5. Managerial Controls
Management is relatively decentralized in Nike. It means that
much freedom in decision-making is delegated to lower levels of
management. The benefits of such approach are: lower-level
managers provide relevant information concerning local
conditions, they are better motivated and strong leadership is
ensured throughout the company. Nikes managerial controls are
tightly connected with the usage of Informational technologies.
Feedforward, concurrent and feedback controls are made using the
specially designed software.
Nike has a powerful digital intranet to ensure proper
communication between headquarters and international offices. At
fist Nike had a developed ERP (Enterprise Resource Planning)
System, Supply Chain and CRM (Customer Relationship
Management) Software implemented into a single SAP Platform.
Later i2s software was implemented that helped to get control
over strategic planning, demand management, supply planning and
production. In 1998 Nike purchased SAP Apparel and Footwear
Solutions (AFS) that provided better financial management, helped
to decrease inventory level, improved decision making and
provided a holistic view on the whole business. Today Nikes AFS
and Retail modules together with other SAP applications including
Supply Chain management (SCM) and Business Information
Warehouse (B/W) are implemented globally.
For example, SAP AFS Solution provides the right tools to manage
the entire supply chain from the initial purchasing of raw material
to the final delivery of the finished product (Suren, 2007). Provided
with such software, Nikes managers can maintain coordination
with local suppliers and customers and control whether the
financial goals are met. The Funds Management / Budget Control
solution in the Business Warehouse software that Nike uses helps
to check revenues and expenditures, hold budgetary control and to
control the financial equilibrium of business.
Also Nike actively uses social media (social networks, blogs, and
media portals) to promote their marketing efforts and get feedback
from their customers.
6. Innovating and Change
Nike implements a lot of innovative approaches to handling
business. Historically, Nike shoes became successful due to
innovative design, created specially for athletes. Since then the
company continues to invent new things and surprise the world
community with non-standard approaches to business.
First of all, the company was one of the first to sell the trade mark
only, having no physical production facilities and concentrating on
marketing and promotion only. This allowed Nike to minimize
risks and maximize profits. Among other innovative ideas of the
company are: 225 Forest (storefront in California where
wakeboarders, BMX-ers, and skaters can customize Chuck Taylor
All Stars and Hurley board shorts with their favourite artwork);
Women's Nike Training Club (Possibility for women to create a
personal virtual trainer using an iPhone app); Total90 Laser III
Boot (Soccer players submit a unique user code that comes with
the boot into Nike's Soccer+ Web site to receive an online
coaching session from Italy's Juventus FC). Also Nike became
famous for its open-source approach allowing them to collaborate
with virtually everyone. For example, special Nikes R&D
laboratory provides the green technologies that can be accessed by
various social entrepreneurs and manufacturers. With Nikes
decentralized management and encouraged innovation, innovative
ideas come from various international offices. These and other
innovations allowed Fast Company journal to call Nike #13 of
most innovative companies in the world (Sacks, 2012). At the
same time, technological innovations are no more so necessary in
the case of Nike Corporation.

Nikes organizational structure and peculiarities of management
allow the company to remain sensitive to changing consumer and
social trends. Nike is always ready for change and changes the
world itself simultaneously. A good example from Nikes history
is the time when the company, feeling the shifting consumer
trends, decided to get involved into worlds most popular sports -
soccer. While soccer was not particularly popular in the USA, for
Nike it became a wonderful opportunity to go global and become a
leader in this market.
Nike is a social responsible company. In its CSR report they say:
Nike sees corporate responsibility as a catalyst for growth and
innovation, an integral part of how we can use the power of our
brand, the energy and passion of our people, and the scale of our
business to create meaningful change. The company focuses its
efforts on core impact areas tied to its long-term growth and
innovation strategies: improving conditions in contract factories,
designing for a better world, achieving climate neutrality and
unleashing potential through sport. At the same time Nike is often
accused of violating the human rights of its workforce in the
developing countries and providing unsatisfactory working
conditions. This ethical issue negatively influences companys
publicity and forces Nike to constantly look for the solutions to
this problem.













7. Summary

Nike is a good example of an innovative contemporary company
that I would really like to join. Nike provides clear career paths
and wonderful opportunity to expose your potential. Companys
management is extremely effective and because of decentralized
approach combined with encouraging all sorts of innovation,
innovative ideas come from everywhere, allowing low-level
managers to become a part of the history.
Nike is a very successful company, a true market leader.
Companys approach to marketing, advertising and getting
feedback from the customers provides an effective model on which
others can learn. Also, Nike is a very flexible company that feels
and reacts to all shifting trends in its market. Though the company
has certain ethical issues to resolve, it is still a socially responsible
company with strong image.











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