Nike Inc.

Operations Management: 10
Decisions, Productivity
UPDATED ONUPDATED ON FEBRUARY 7, 2017 BY EDWARD FERGUSON

A pair of Nike Zoom

Elite 2 shoes. Nike Inc. operations management includes standards and policies to
support optimal productivity in all strategic decision areas of the global business.
(Photo: Public Domain)
Nike Inc. is a leading global manufacturer and seller of sports shoes, apparel and
equipment. This market position is partly a result of effective and efficient operations
management (OM). To ensure success, Nike’s managers must continually examine and
improve strategies and approaches used in the 10 strategic decision areas of
operations management. These areas pertain to the main decisions in managing
streamlined operations and productivity that effectively address business goals and
objectives. Nike’s operations management considers talent management, product
development, and total quality management as some of the most important variables in
these 10 strategic decision areas.

The 10 strategic decisions of operations management (OM) at Nike Inc. cover a wide
variety of issues, considering the company’s global market for sports shoes, apparel
and equipment. Nike effectively addresses these decision areas through standards
consistently applied in operations management throughout the global organization.

Nike’s Operations Management, 10 Decision Areas

1. Design of Goods and Services. This strategic decision area deals with the design
of Nike’s athletic footwear and other products. The operations management objective is
to ensure that product design aligns with organizational capabilities and business goals.
In this case, Nike Inc. focuses on designs based on advanced technology and current
market preferences.

2. Quality Management. Nike emphasizes quality in its processes and products. The
objective in this strategic decision area is to satisfy consumers’ expectations about
product quality. The company’s operations management addresses this concern
through high quality standards and the application of total quality management (TQM) in
the production of sports shoes, equipment and apparel.

3. Process and Capacity Design. This strategic decision area requires that Nike’s
operations management must prioritize streamlining and efficiency of production. The
objective is to ensure adequate, effective, and efficient production. At Nike, operations
managers apply continuous improvement strategies to support the company’s
production goals and needs based on market dynamics.

4. Location Strategy. Physical location is the typical concern in this strategic decision
area of operations management. The objective is to optimize costs and efficiency
through proximity to employees, suppliers and the target market. In the case of Nike
Inc., the operations managers apply a corporate strategy that chooses production
facility locations based on costs and nearness to the most significant markets. For
example, Nike Inc. has sports shoe suppliers in Southeast Asia because of the cost
advantage based on cheaper labor in the region.

5. Layout Design and Strategy. Nike’s operations management deals with the layout
design of its facilities. The objective in this strategic decision area is to optimize
workflow based on human resources, capacity requirements, technology, and inventory
requirements. Nike’s operations managers apply corporate layout design and strategy
to company-owned facilities only. For example, the firm uses office layouts where
employees can move easily. The factories that produce the athletic shoes, apparel and
equipment are not under Nike’s control in terms of layout design and strategy.

6. Job Design and Human Resources. Human resource adequacy and maintenance
are the objective in this strategic decision area of operations management. Nike Inc.
satisfies this concern through internal leadership development, along with coaching and
mentoring. The company also has regular evaluations of job assignments to ensure
person-job fit.

7. Supply Chain Management. Nike has excellent supply chain management, which
facilitates efficient production to support the global sports shoes, apparel and equipment
business. The objective in this strategic decision area of operations management is to
align the supply chain with the company’s overall strategic aims. Nike Inc. satisfies this
objective through supply chain automation and optimization of transport distances
among suppliers, production facilities, distributors and retailers.

8. Inventory Management. The objective in this strategic decision area is to maintain

operations management that minimizes inventory costs while maximizing its
effectiveness and efficiency. Nike’s operations managers apply the perpetual method of
inventory management, which involves continuous monitoring and movement of
inventory from the supply chain to the distributors and retailers.
 9. Scheduling. Nike’s scheduling approach is primarily concerned with corporate
operations and the coordination of the supply chain with distribution and retail
operations. In this strategic decision area of operations management, the aim is to
maximize resource utilization. Nike Inc. managers satisfy this aim through automation.
Corporate office schedules are standardized, while supply chain schedules are adjusted
according to the conditions of the market. Nike applies changes to the supply chain
based on market demand for its athletic footwear, equipment and apparel.

10. Maintenance. Nike’s maintenance strategy considers adequacy of all resources.

Adequacy of human resources, facilities and capacity is the objective in this strategic
decision area. Nike’s operations management implements continuous recruitment
programs to support HR needs, as well as reward programs and career development
strategies for maximum retention of employees. For facilities, the company has
dedicated teams to regularly evaluate facility and equipment integrity and requirements.
The companies that manufacture Nike shoes, apparel and equipment are responsible
for their own maintenance.

Productivity at Nike Inc.

Nike Inc. operations management supports maximum productivity of corporate offices,
the supply chain, distribution network, and company-owned retail facilities. There are a
variety of measures applied to determine actual productivity levels. In this case, Nike
uses the following criteria to measure productivity in some business areas:

1. Revenue per square foot (Productivity of Nike’s retail stores)

2. Pair of shoes per hour (Productivity of Nike suppliers)
3. Items per day (Productivity of inventory personnel)
4. Documents per day (Productivity of Nike’s corporate offices)

Nike Inc. Stakeholders: A CSR Analysis

UPDATED ONUPDATED ON FEBRUARY 7, 2017 BY DANIEL KISSINGER
 A pair of Nike
basketball shoes. Nike Inc. stakeholders’ interests are satisfied through the company’s
corporate social responsibility (CSR) strategy that prioritizes consumers and
communities. (Photo: Public Domain)
Nike Inc. maintains corporate social responsibility (CSR) programs to address the
interests of its major stakeholder groups. According to Archie Carroll, stakeholders are
individuals or groups that have a significant stake in what the business does. The
company influences them, and they influence the company in return. The brand image
and sales performance of Nike sports shoes, apparel, and equipment are significantly
subject to the effects of stakeholders’ interests and corresponding actions. Nike
addresses these stakeholders’ interests through a number of corporate social
responsibility programs. However, the Nike Foundation is the main arm of the
company’s corporate social responsibility strategy.

Nike Inc. stakeholders’ interests are satisfied through the company’s corporate social
responsibility (CSR) programs. The corresponding CSR policy and strategy are based
on Nike’s consideration for communities and customers, whose interests significantly
influence the company’s design and production of its athletic footwear, equipment and
apparel.

Nike’s Stakeholder Groups & CSR Initiatives

As a global business, Nike Inc. has a wide variety of stakeholders with significant
influence on the sales of the firm’s sports shoes and other products. However, the
company’s corporate social responsibility programs target only a number of major
stakeholder groups. Nike has the following stakeholders, arranged according to the
firm’s prioritization:

1. Customers (top priority)

2. Communities
3. Employees
4. Governments
5. Interest Groups

Customers. Nike’s corporate social responsibility strategy gives top priority to

customers as a stakeholder group. Customers are significant because they affect the
company’s revenues from the sports shoes, apparel and equipment market. In the case
of Nike Inc., these stakeholders’ interests include high quality products and reasonable
prices. The company addresses these interests through significant R&D investments.
For example, Nike continues to provide products with high quality and advanced
technology. Considering high profitability and growing sales revenues, Nike’s corporate
social responsibility effectively satisfies the interests of customers as a top-priority
stakeholder group.

Communities. The stakeholder group of communities has a significant influence on

Nike’s corporate social responsibility standing. Consumers tend to buy more of a
product that has a positive impact on communities. The interests of these stakeholders
include support for the development of communities. Nike Inc. addresses these
interests through the Nike Foundation, which serves as the company’s primary means
of supporting community development initiatives. For example, in 2005, the Nike
Foundation started its community development programs in developing countries, with
focus on supporting the empowerment of girls. The company also has a variety of
“Community Impact” corporate social responsibility programs, such as the Active
Schools & Youth Sports program, which donates funds and sports shoes, apparel and
equipment to promote physical activity among students. These Community Impact
programs align with Nike’s mission and vision statements in considering everyone an
athlete. Nike allocates 1.5% of its pre-tax income to support these community
development initiatives.

Employees. Nike Inc. recognizes the significance of employees as a stakeholder group

that influences organizational effectiveness. For instance, employees’ performance
directly translates to business performance. The interests of these stakeholders include
fair compensation, career development opportunities, and a sense of purpose. Nike
addresses these interests through corporate social responsibility policies and programs
that focus on internal leadership development, talent management through coaching
and mentoring, and team building. These CSR efforts are expected to maximize Nike’s
ability to produce more popular and advanced athletic footwear, apparel and equipment.

Governments. As part of its corporate social responsibility strategy, Nike Inc. identifies
governments as a stakeholder group. These stakeholders are important because they
affect how Nike operates in terms of its permits, limits and legal actions in certain
markets for its sports shoes, equipment and apparel. Governments are interested in
legal and regulatory compliance, as well as business contributions to tax revenues and
community development. Understandably, the community development interest is
addressed through Nike’s corporate social responsibility programs for community
development. In addressing the other interests of this stakeholder group, Nike Inc.
maintains a number of policies and standards to ensure compliance in all of its business
areas. Thus, the firm’s corporate social responsibility strategy satisfies the interests of
governments as stakeholders.

Interest Groups. Nike’s corporate social responsibility policies also address the
interests of some interest groups. These stakeholders have significant effect on Nike in
terms of potential government intervention and in terms of consumer perception
regarding the company and its sports shoes, apparel and equipment. The interests of
these stakeholders are varied, including fair labor practices, business sustainability, and
environmental conservation. Nike Inc. addresses these interests through the Nike
Foundation’s initiatives, as well as sponsorships of a variety of related programs. The
company also has corporate social responsibility policies for improving labor
management and environmental impact. These considerations indicate that Nike Inc.
satisfies the concerns of interest groups as stakeholders.

Nike Inc.’s CSR Performance in Addressing

Stakeholders’ Interests
Nike’s prioritization of customers reflects the importance of this stakeholder group. The
satisfaction of customers directly affects revenues. The company’s corporate social
responsibility strategy is also satisfactory in terms of giving second priority to
communities, considering the variety of policies and programs to support these
stakeholders. While it is understandable that employees determine organizational
performance, Nike’s corporate social responsibility support for communities is congruent
to its support for customers as a top-priority stakeholder group. Communities also
determine consumers’ buying behaviors. Overall, Nike Inc. is effective in ensuring that
its corporate social responsibility programs support the business aim of optimizing
revenues from the sale of sports shoes, apparel and equipment worldwide.

Nike Inc.’s Marketing Mix (4Ps/Product,

Place, Promotion, Price) – An Analysis
UPDATED ONUPDATED ON SEPTEMBER 10, 2018 BY LAWRENCE GREGORY
 Nike shoes on display at a shoe store. Nike
Inc.’s marketing mix or 4P facilitates the company’s global growth based on high quality
products, numerous places for distribution, advertising-focused promotion, and relatively
high prices in the global market for athletic footwear, apparel, and equipment. (Photo:
Public Domain)
Nike Inc.’s marketing mix (4Ps) determines the profitability and growth of the athletic
footwear, apparel, and equipment business. A company’s marketing mix refers to the
strategies and tactics applied to execute the marketing plan, with focus on products,
place, promotion, and price (the 4Ps). In this business case, Nike has a marketing mix
that involves athletic products. For example, the company specializes in shoes that are
designed to satisfy the needs of professional basketball and football athletes. However,
these products are marketed to all consumers around the world, for athletic and leisure
activities, based on the specifics of Nike’s corporate mission and vision statements.
Established in 1964, the company’s 4Ps evolve according to the dynamics of the global
sporting goods industry. Such evolution is a critical success factor that enables the
business to use its marketing mix to respond to market trends and changes that
influence local, regional, and international market demand for its products.

Through its marketing mix, Nike Inc. strengthens its capabilities to protect its business
from the strong force of competition. The company competes against various firms
involved in the footwear, apparel, and athletic equipment markets. For example, the
business operates in the same markets as Adidas, Puma, Under Armour, ASICS, and
VF Corporation. The Porter’s Five Forces analysis of Nike Inc. shows that these firms
exert a strong competitive force in the industry environment.

Nike’s Products (Product Mix)

This element of the marketing mix enumerates the organizational outputs offered to
target consumers. These outputs are known as the product mix. Nike Inc.’s growth
comes with changes in its product mix. For example, the business continues its
investment in research and development to produce new products and enhanced
versions of its current products. Originally a distributor of shoes, the company now
manufactures various shoes, apparel, and equipment for different sports. Based on Nike
Inc.’s generic strategy and intensive growth strategies, the business integrates new
technologies into its product lines to improve product effectiveness and customer
satisfaction. The following broad categories represent Nike’s product mix:
1. Shoes
2. Apparel
3. Equipment and accessories

Shoes are the most popular products from Nike Inc. The business gradually adds more
product lines in this category. For example, the company now offers running shoes,
tennis shoes, and shoes for a variety of other sports, including cricket. Nike also sells
apparel, such as jerseys, shorts, and related products. In addition, the company’s
product lines include accessories and equipment, such as golf clubs. These products
are available under a number of the company’s brands, including Air Jordan, Hurley,
and Converse. Based on this element of the marketing mix, Nike expands its product
mix to address the needs of its target markets and market segments.

Place/Distribution in Nike’s Marketing Mix

This element of the marketing mix outlines the venues where the company’s products
are sold, accessed or distributed. Nike Inc. sells its sports shoes, apparel, and
equipment through a large number of outlets worldwide. For example, these products
are available at major retail stores. The following places/venues form Nike’s distribution
strategy, arranged according to significance:

1. Retail stores
2. Nike Online Store
3. Niketown retail outlets (company-owned)

Retail stores are the most significant places where Nike products are sold because
these venues are strategically located and easily accessible in various markets around
the world. These retailers include large firms like Walmart (see Walmart’s Marketing Mix
or 4P), as well as small local and regional stores. This 4P element also shows that
customers can purchase Nike’s sports shoes, apparel, and equipment through the
company’s online store. In addition, the business operates its Niketown retail outlets.
These outlets are company-owned and allow access to business and market
information that supports corporate strategic management with regard to marketing
strategies and tactics for current, new, and emerging products. Based on this element of
the marketing mix, Nike Inc. controls the distribution and sale of its products, especially
through its online store and Niketown retail outlets. However, the company has limited
control on the distribution and sale of its products via other retail outlets.

Nike Inc.’s Promotion (Promotional Mix)

 Main article: Nike’s Promotional Mix (Marketing Communications Mix)

This element of the marketing mix is also known as the marketing communications mix,
and involves the tactics that Nike uses to communicate with its target markets. The
 company depends on the effective promotion of its products to maintain a strong brand
image, which is one of the strengths determined in the SWOT analysis of Nike Inc. The
company uses promotional tactics to communicate with target customers about its
products, and persuade these consumers to purchase the products. The following are
Nike’s promotional activities, arranged according to significance:

1. Advertising
2. Personal selling
3. Direct marketing
4. Sales promotions
5. Public relations

Advertising is one of the biggest contributors to Nike’s ability to attract customers. The
company heavily relies on advertisements, especially those that involve high-profile
celebrity endorsers, such as professional athletes and sports teams. This element of the
company’s marketing mix also includes personal selling through sales personnel who
persuade target consumers to buy the company’s products. For example, sales
personnel at Niketown retail outlets are trained to use such persuasion. The company’s
direct marketing activities involve direct communications with colleges, local sports
teams, and other organizations. In the context of the 4Ps, direct marketing refers to
direct contact with organizations for the purpose of promoting products to the members
of such organizations. In addition, Nike occasionally applies discounts and special offers
to attract more customers and generate more sales. These discounts and offers form
the company’s sales promotions tactics. Moreover, in public relations, the company
sponsors and provides financial support to other organizations, such as community-
based networks, to promote its athletic shoes, apparel, and equipment. Based on the
tactics included in this element of Nike’s marketing mix, the business depends on its
relations with high-profile endorsers to succeed in promoting its business and products
to the international sporting goods market.

Nike’s Prices and Pricing Strategies

This element of the marketing mix identifies the prices that the company applies to
maximize profits while attracting the desired share of the multinational market. Nike’s
investments in technology is linked with a strategy to offer its products at a premium.
Still, the company considers current market conditions in setting its price points and
price ranges. Based on these considerations for this 4P variable, the following pricing
strategies are applied in Nike Inc.’s business:

1. Value-based pricing strategy

2. Premium pricing strategy

In using the value-based pricing strategy, Nike Inc. considers consumer perception
about the value of its products. In the context of the marketing mix, this value is used to
determine the maximum prices that consumers are willing to pay for the company’s
sports shoes, apparel, and equipment. In relation, the premium pricing strategy involves
high prices, based on a premium branding strategy that establishes Nike products as
higher in quality and value than competing products. The company’s use of
advertisements involving high-profile celebrity endorsers is indicative of such emphasis
on premium branding. In 2014, the business successfully increased its selling prices
and generated higher sales and revenues. This trend continues, as the company enjoys
increasing sales revenues while gradually increasing its prices. Based on
the PESTEL/PESTLE analysis of Nike Inc., such trend is linked to the sociocultural and
economic changes in the industry environment. The business adjusts its price ranges
according to such changes. In this element of the marketing mix, Nike Inc. successfully
uses its pricing strategies to maximize its profits while emphasizing high value in
promoting its products and brand.

Nike Inc. PESTEL/PESTLE Analysis &

Recommendations
UPDATED ONUPDATED ON FEBRUARY 7, 2017 BY CHRISTINE ROWLAND

Nike Air Citius+ 2

running shoes. A PESTEL/PESTLE Analysis of Nike Inc. enumerates notable
opportunities for international growth and brand image improvement, considering the
firm’s remote or macro-environment. (Photo: Public Domain)
Nike Inc.’s growth partly depends on external conditions. These conditions are outlined
in this PESTEL/PESTLE Analysis of the company. The PESTEL/PESTLE Analysis
model identifies the external factors that present opportunities and threats in the remote
or macro-environment. In the case of Nike Inc., the PESTEL/PESTLE Analysis
enumerates such external factors that influence the company’s strategic decision-
making processes. As one of the major firms in the global sports shoes, apparel and
equipment market, Nike Inc. must address these external factors to ensure business
dominance in the industry, especially when considering the presence of aggressive
competitors like Adidas.

A PESTEL/PESTLE Analysis of Nike Inc. identifies key issues that the company must
include in its strategic formulation. To maintain its position in the athletic shoes market,
 Nike Inc., must address the opportunities and threats based on the external factors that
shape the conditions of its remote or macro-environment.

Political Factors Affecting Nike’s Business

Nike’s sports shoe business is subject to the effects of the political landscape. This
component of the PESTEL/PESTLE Analysis model deals with governmental influence
on the remote or macro-environment of businesses. The following political external
factors determine some of Nike’s strategies:

1. Stable political climate in most major markets (opportunity)

2. Expanding free trade policies (opportunity)
3. Improving government support for infrastructure (opportunity)

Stable political conditions in most major markets present opportunities for Nike to grow
its business in these areas. Also, expanding free trade policies facilitate better market
penetration overseas. Moreover, improving government support for infrastructure,
especially in developing countries, gives Nike more opportunities to expand its
operations in these markets. Based on the political external factors in this component of
the PESTEL/PESTLE Analysis, Nike Inc. experiences opportunities to improve its
market presence and global expansion in the sports footwear, apparel and equipment
market.

Economic Factors Important to Nike Inc.

Nike’s business performance depends on the state of economies where it sells its
athletic footwear, equipment and apparel. This component of the PESTEL/PESTLE
Analysis model identifies the economic concerns that affect the remote or macro-
environment of the business. The following economic external factors are significant in
determining Nike’s performance:

1. Economic stability of developed markets (opportunity)

2. Rapid growth of developing markets (opportunity & threat)
3. Slowdown of the Chinese economy (threat)

Developed markets like the United States are relatively stable, thereby proving Nike Inc.
with the opportunity to continue its slow but stable growth in these countries. The
company also has opportunities to rapidly grow by increasing its operations in high-
growth developing countries. However, the rapid growth of developing markets also
threatens Nike by increasing labor costs in the company’s supply chain and production
facilities. In addition, the slowdown of the Chinese economy threatens Nike’s
performance, which is now significantly dependent on the Chinese market for sports
shoes, apparel and equipment. The economic external factors in this component of the
 PESTEL/PESTLE Analysis show that Nike Inc. must emphasize global expansion
strategies while devising new ways to capture growth in developing countries.

Social/Sociocultural Factors Influencing Nike’s

Business Environment
Social issues impact the attractiveness of Nike’ athletic shoes, apparel and equipment.
This component of the PESTEL/PESTLE Analysis model deals with the effects of social
conditions on the firm’s remote or macro-environment. In Nike’s case, the following
sociocultural external factors are most significant:

1. Increasing individual wealth in developing countries (opportunity)

2. Increasing emphasis on product safety (opportunity)
3. Improving positive attitudes about leisure (opportunity)

In developing countries, Nike has opportunities to tap consumers with increasing

individual wealth. Also, the company has opportunities to develop safer products and
use marketing campaigns that highlight the safety of its sports shoes, equipment and
apparel. Nike can also adopt new product development strategies to address needs for
products for leisure activities. Based on the external factors in this component of the
PESTEL/PESTLE Analysis, Nike Inc. has considerable opportunities for product
development and business growth.

Technological Factors in Nike’s Business

Nike’s business changes according to technologies available for business processes
and athletic footwear, apparel, and equipment. This component of the PESTEL/PESTLE
Analysis model identifies the technological conditions that lead to significant change in
the remote or macro-environment of companies. The following technological external
factors affect Nike Inc.:

1. Increasing R&D investment among firms (threat)

2. Rapid technological obsolescence (opportunity & threat)
3. Widespread use of mobile technology (opportunity)

The increasing R&D investment among firms threatens Nike, as these competing firms
aim to develop more technologically advanced sports shoes, equipment and apparel.
Rapid technological obsolescence also threatens Nike by putting pressure on the
company to increase its product development efforts. Nonetheless, this external factor
provides opportunities for Nike to integrate advanced technologies in its products. In
relation, the company has opportunities to integrate mobile technologies in its products
to capture consumers who frequently use mobile technologies, such as mobile apps
and online tools. The external factors in this component of the PESTEL/PESTLE
 Analysis show that Nike faces considerable threats as well as opportunities based on
new and changing technologies.

Ecological/Environmental Factors that Impact Nike

Inc.
Ecological issues influence Nike’s remote or macro-environment. This component of the
PESTEL/PESTLE Analysis model deals with the impact of ecological concerns on
business performance. In the case of Nike and its sports shoes, apparel and equipment,
the following ecological external factors are notable:

1. Expanding environmental law (opportunity)

2. Climate change (opportunity)
3. Increasing sustainability strategies among firms (threat & opportunity)

Expanding environmental law creates opportunities for Nike to improve its

environmental and sustainability programs, which are currently recognized as among
the best in the industry. The company also has the opportunity to use these programs to
address climate change, which affects supply chains and the appropriateness of Nike
sports shoes and apparel in certain regions. The increasing sustainability strategies of
firms threaten Nike by imposing more pressure for increased sustainability efforts
throughout the industry. Nonetheless, this external factor provides the opportunity for
Nike to further improve its sustainability standing. This component of the
PESTEL/PESTLE Analysis indicates Nike’s opportunities to improve the environmental
impact of its business.

Legal Factors in Nike’s Business

Legal terms influence businesses like Nike. This component of the PESTEL/PESTLE
Analysis model considers the effects of laws or regulations on the remote or macro-
environment of businesses. In Nike’s case, the following legal external factors are
important in the sports shoes, apparel and equipment business:

1. Improving employment law in developing countries (threat & opportunity)

2. Expanding consumer law in developing countries (opportunity)
3. Expanding health and safety regulations (opportunity)

Improving employment law in developing countries is a threat because it leads to an

increase in labor costs in areas where many of Nike’s production facilities are located.
However, this external factor also provides an opportunity for the company to apply
higher standards for labor and employment. In addition, Nike has the opportunity to
improve its brand image by highlighting customer satisfaction in marketing its sports
shoes, apparel and equipment. Similarly, the company has opportunities to improve its
health and safety measures to address expanding health and safety regulations. Based
on this component of the PESTEL/PESTLE Analysis, Nike Inc. has major opportunities
to improve its brand image and corporate reputation.

Nike’s PESTEL/PESTLE Analysis – Recommendations

Nike Inc. must address a variety of opportunities shown in this PESTEL/PESTLE
Analysis. It is recommended that Nike must pursue a more aggressive approach to
international expansion based on free trade policies, with focus on high-growth
developing countries. This action can help address the potential decline of Nike’s
performance in the Chinese market. Another recommendation is for the company to
invest more in research and development (R&D) to tap potential demand for sports
shoes, apparel and equipment integrated with advanced computing technologies. The
external factors in this PESTEL/PESTLE Analysis also highlight the importance of
improving Nike’s sustainability and employment practices. These actions address
regulatory and sociocultural concerns and, consequently, improve Nike’s brand image
and corporate image.

Nike Inc. Five Forces Analysis (Porter’s

Model)
UPDATED ONUPDATED ON FEBRUARY 7, 2017 BY CHRISTINE ROWLAND

A pair of Nike Air

Max Classic shoes. Nike Inc.’s Five Forces Analysis shows that the external factors in
the industry environment highlight the significance of competition, customers, and
substitutes. (Photo: Public Domain)
Nike Inc. continues in its growth path as a leading player in the global sports shoes,
apparel and equipment market. A Five Forces Analysis of Nike Inc. reveals the most
significant forces shaping the company’s strategies. Michael Porter developed the Five
Forces Analysis model to understand the effects of external factors on businesses. In
 Nike’s case, these five forces point to competition as one of the most significant external
factors. Founded in 1964, the company manages to retain its leading position in the
international industry environment. However, the forces and corresponding external
factors enumerated in this Five Forces Analysis must remain among the strategic
considerations of Nike Inc.

Nike Inc. enjoys a top position in the global athletic shoes, equipment and apparel
market. A Five Forces Analysis, based on Michael Porter’s model, points out that
competition, customers and substitutes are the most important external forces in Nike’s
industry environment.

Overview: Nike’s Five Forces Analysis

There are a wide variety of external factors that determine the strengths or intensities of
forces impacting Nike Inc. However, based on this Five Forces Analysis, the following
are the intensities of these forces currently influencing Nike’s performance and industry
environment in the athletic footwear, equipment and apparel market:

1. Competitive rivalry or competition (Strong Force)

2. Bargaining power of buyers or customers (Moderate Force)
3. Bargaining power of suppliers (Weak Force)
4. Threat of substitutes or substitution (Moderate Force)
5. Threat of new entrants or new entry (Weak Force)

Recommendations. Nike Inc. must prioritize strategies that address competition, which
is highlighted as the strongest force in this Five Forces Analysis. Nonetheless, the
bargaining power of customers and the threat of substitutes are also significant. A
recommendation is for Nike Inc. to prioritize investment in product development to
ensure competitive advantage. Based on this Five Forces Analysis, it is also
recommended that Nike Inc. must implement strategies to attract and retain more
customers, so as to minimize the effects of substitution in the sports footwear industry
environment.

Competitive Rivalry or Competition with Nike Inc.

(Strong Force)
Competition determines how Nike Inc. maintains its share of the sports footwear market.
This element of the Five Forces Analysis shows how competition influences the industry
environment and the performance of individual firms. The following external factors
create the strong force of competitive rivalry in Nike’s case:

 Low market growth rate (strong force)

 High aggressiveness of firms (strong force)
 Moderate number of firms (moderate force)

The low market growth rate is partly due to firms’ high market penetration and market
saturation. This condition creates a strong force, as Nike and other companies compete
for a market that grows slowly. In relation, firms are highly aggressive in competing for
bigger market shares. Also, there are only a moderate number of firms that significantly
impact Nike. Based on this element of the Five Forces Analysis, the external factors that
lead to strong competition requires Nike Inc. to focus on market development and
product development to ensure competitive advantage and a growing share in the
global athletic shoes, apparel and equipment market.

Bargaining Power of Nike’s Customers/Buyers

(Moderate Force)
Nike’s customers directly affect business performance. This element of the Five Forces
Analysis shows how consumers determine business competitiveness and the industry
environment. In Nike’s case, the following external factors contribute to the moderate
bargaining power of customers:

 Low switching costs (strong force)

 Moderate substitute availability (moderate force)
 Small size of individual buyers (weak force)

The low switching costs make it easy for customers to buy sports shoes other than
those from Nike. The moderate availability of substitutes also enables customers to buy
other products instead of always buying from Nike. However, the small size of individual
customers minimizes their individual forces on the company. These external factors
lead to the moderate bargaining power of customers. This element of the Five Forces
Analysis shows that the force of customers is a major consideration in Nike’s strategies
for the athletic footwear, apparel and equipment market.

Bargaining Power of Nike’s Suppliers (Weak Force)

Suppliers affect Nike’s business through the availability of raw materials. This element
of the Five Forces Analysis tackles suppliers’ influence on firms and the industry
environment. In Nike’s case, the following external factors create the weak bargaining
power of suppliers:

 High overall supply (weak force)

 Large population of suppliers (weak force)
 Moderate size of individual suppliers (moderate force)

The high supply minimizes the effects of individual suppliers’ actions on Nike’s
business. Similarly, the large population of suppliers reduces the impact of individual
 suppliers’ demands on large companies like Nike Inc. The moderate size of individual
suppliers supports a moderate degree of suppliers’ influence. Nonetheless, this element
of the Five Forces Analysis shows that Nike experiences only a weak force representing
the bargaining power of suppliers. As such, suppliers are among the least significant
concerns determining Nike’s strategies in the sports shoes, equipment and apparel
industry environment.

Threat of Substitutes or Substitution (Moderate Force)

Substitutes pose significant threat against Nike’s performance as a leading player in the
global athletic shoes market. This element of the Five Forces Analysis identifies the
force of substitution on the business and the industry environment. The following are the
external factors that maintain the moderate threat of substitution against Nike Inc.:

 Moderate availability of substitutes (moderate force)

 Moderate performance per price of substitutes (moderate force)
 Low switching costs (strong force)

The moderate availability of substitutes imposes a moderate force against Nike, as

customers have considerable alternatives to Nike’s products. In relation, customers
have a moderate likelihood of considering substitutes because of the moderate
performance of substitutes compared to Nike’s sports shoes, apparel and equipment.
The low switching costs further add to that likelihood. Nonetheless, this element of the
Five Forces Analysis shows that substitutes exert only a moderate force against Nike
Inc.

Threat of New Entrants or New Entry (Weak Force)

New entrants or new firms can disrupt Nike’s industry environment. This element of the
Five Forces Analysis identifies the extent of new entrants’ influence on firms in the
sports shoes, apparel and equipment market. The following external factors contribute
to the weak threat of new entrants against Nike Inc.:

 High cost of brand development (weak force)

 High economies of scale (weak force)
 Moderate cost of doing business (moderate force)

The high cost of brand development makes it difficult for new entrants to succeed in
competing against large firms like Nike Inc. Also, the high economies of scale provide
Nike with a competitive edge against new entrants, considering the company’s global
production and distribution network for its athletic shoes, apparel and equipment. The
moderate cost of doing business further limits new entrants’ ability to disrupt the
industry environment. Based on this element of the Five Forces Analysis, the threat of
new entry is a minor concern for Nike Inc.
Nike Inc. SWOT Analysis &
Recommendations
UPDATED ONUPDATED ON FEBRUARY 7, 2017 BY DANIEL KISSINGER

A pair of Nike Air

Max IV (Air Classic BW). Nike Inc.’s SWOT analysis highlights capability to maintain
leadership in the sport shoes, apparel and equipment market. (Photo: Public Domain)
Nike Inc.’s leadership in the global sports shoes, equipment and apparel market shows
the significance of its strengths in competing against other giants like Adidas. A SWOT
Analysis of Nike outlines how these strengths relate with the company’s weaknesses,
opportunities and threats. Established in 1964 as Blue Ribbon Sports, Nike Inc. is now
one of the world’s biggest players in the athletic footwear market. An understanding of
the company’s strengths and weaknesses (internal strategic factors), and weaknesses
and threats (external strategic factors) yields insights on how a manufacturing and retail
business can achieve global success despite tough competition.

Nike Inc.’s SWOT Analysis emphasizes the importance of product development to

maintain a competitive edge. However, the results of this SWOT Analysis point out
some possible new strategic directions to further enhance Nike’s global performance
and leadership.

Nike’s Strengths (Internal Strategic Factors)

Nike’s strengths are the primary drivers of the company’s growth and global leadership
in the sports shoes, apparel and equipment market. This component of the SWOT
Analysis deals with the internal strategic factors that support business development and
competitiveness. The following strengths are the most notable in the case of Nike Inc.:
1. Strong brand image
2. Rapid innovation processes
3. Extensive global production and distribution network

Nike’s strong brand image evolves based on product quality. The company’s effective
marketing campaigns also contribute to this strength. Also, rapid innovation processes
are a core factor in Nike’s ability to create cutting edge designs for its athletic footwear,
equipment and apparel. The company’s extensive global production and distribution
network is a strength that enables the business to support global market dominance.
This part of the SWOT Analysis shows that Nike Inc. has capabilities to retain its global
market leadership.

Nike’s Weaknesses (Internal Strategic Factors)

Weaknesses could disrupt Nike’s growth trajectory in the sports shoes, apparel and
equipment market. This component of the SWOT Analysis addresses the internal
strategic factors that prevent or reduce business performance. In the case of Nike Inc.,
the following weaknesses are the most significant:

1. Labor controversies
2. Limitations in the product mix
3. Limited presence in developing markets

Labor controversies continue to plague Nike’s business, especially in considering

production facilities in developing countries. This weakness negatively impacts the
company’s brand image. Also, even though Nike Inc. has expanded its product mix
through the years, the resulting product lines are still limited in capturing a larger share
of the sports shoes, equipment and apparel market. Moreover, the company suffers
from limited presence in developing markets, partly because of issues with pricing,
imitation and patent protection. This weakness limits Nike’s global growth. Based on this
part of the SWOT Analysis, Nike Inc. must improve its policies and strategies in the
areas of labor and employment, product mix development, and penetration in
developing markets.

Opportunities for Nike Inc. (External Strategic Factors)

Nike Inc. has opportunities to enhance its performance in the athletic footwear market.
The external strategic factors that facilitate business growth are covered in this
component of the SWOT Analysis. The following are the major opportunities in the case
of Nike Inc.:

1. Improve labor/employment practices

2. Improve the product mix
3. Increase market presence in developing countries
 Nike has the opportunity to improve its labor practices to address controversies in this
area of the business. Proactive strategies for this concern can lead to an improved
brand image. Another opportunity is for Nike to improve its product mix to attract more
customers, especially non-athletes. The company also has the opportunity to improve
its presence in developing markets to benefit from these markets’ high growth potential.
This part of the SWOT Analysis indicates that Nike Inc. must reform some of its policies
and strategies to ensure its continued leadership in the global athletic footwear, apparel
and equipment market.

Threats Facing Nike Inc. (External Strategic Factors)

Even though Nike is one of the major players in the sports shoes, equipment and
apparel market, some threats could limit or reduce the company’s performance. This
component of the SWOT Analysis deals with the external strategic factors that
negatively impact business performance. The following threats are most notable in
Nike’s case:

1. Tough competition
2. Rapid technological innovation
3. Imitation

Nike faces tough competition, considering other major players like Adidas. Also, rapid
technological innovation could further increase competitive pressure if Nike does not
innovate as rapidly. In addition, imitation remains a threat, especially in developing
countries with poor legal protection for patents. This part of the SWOT Analysis shows
that, for Nike to maintain its leadership in the global sports shoes market, product
innovation and legal protection must be included in its major strategies.

Nike’s SWOT Analysis – Recommendations

This SWOT Analysis of Nike Inc. shows that the company has the strengths needed to
support its global leadership in the sports footwear, equipment and apparel market.
However, the company must address concerns regarding competition, labor practices,
imitation and patent protection. Thus, it is recommended that Nike Inc. must reform its
strategies in these areas. The company must also collaborate with government units to
address patent protection issues.

Nike Inc. Organizational Culture

Characteristics: An Analysis
UPDATED ONUPDATED ON FEBRUARY 7, 2017 BY JUSTIN YOUNG
 A pair of Nike men’s
sports shoes. Nike Inc.’s organizational culture promotes creativity and innovation,
highlighting the role of corporate culture in the company’s global success. (Photo: Public
Domain)
Nike Inc.’s organizational culture supports business resilience and capability.
Organizational culture is the combination of traditions, habits, values, and behavioral
expectations among employees. Nike’s workers are given a set of instructions, rules
and expectations on how to do their jobs, with consideration for their relations with
customers and other employees. This approach ensures that the company maintains its
corporate culture, which partly contributes to the success of the business. As one of the
giants in the global athletic shoe, apparel and equipment market, Nike Inc. continues its
policies and strategies to promote an organizational culture that reinforces business
resilience and competence.

Nike has an organizational culture that encourages human resources to behave in ways
that address business objectives. Training programs are designed to uphold such
corporate culture that aligns with the Nike brand image for sports footwear, apparel and
equipment.

Features of Nike’s Organizational Culture

Nike’s organizational culture is centered on creativity and innovation to provide products
that suit current consumer preferences. The company is known for cutting-edge sports
shoes, apparel and equipment. The following main characteristics of Nike’s corporate
culture sustain business and market competence:

1. Talented
2. Diverse
3. Inclusive
Talented. Nike Inc. understands that talent and innovation go hand-in-hand. This
feature of the organizational culture emphasizes the need to provide human resource
support for product development and internal services in the corporation. As such, Nike
uses training programs to maintain employee talent. The company also has coaching
and mentoring programs. These approaches are based on the strategy that develops
and enables leaders within the organization for Nike’s global growth. The purpose of
this characteristic of Nike’s corporate culture is to sustain talent and infrastructure
necessary for producing some of the world’s most popular athletic shoes, equipment
and apparel.

Diverse. Diversity is continually developed in Nike’s organizational culture. The

company believes that this feature of the corporate culture leads to a dynamic
workforce. Diversity promotes Nike’s creativity, innovation, brand image and,
consequently, competitive advantage. The company maintains diversity through HR
programs, such as the Speak Up! program, which facilitates sharing of ideas among
workers. This feature of the corporate culture maximizes Nike’s product development
cycles, especially in creating new designs for its sports shoes, apparel and equipment.

Inclusive. Nike Inc. emphasizes inclusiveness in its organizational culture. The purpose
of this cultural characteristic is to minimize barriers to employee performance. Nike’s
strategy uses inclusiveness as a tool for optimal performance, diversity and talent
development. The company supports this feature of the corporate culture through a
team-based approach to management. In addition, Nike employs a number of
programs, such as Bias to Breakthrough (a program for removing barriers to creativity)
and NCourage (a set of employee networks for cultural awareness and community
building). This feature of the organizational culture minimizes problems in Nike’s
workforce and supports streamlining athletic shoes, apparel and equipment design and
production processes.

Nike’s Organizational Culture: Advantages,

Disadvantages, Recommendations
An advantage of Nike’s organizational culture is its support for new product
development. The characteristics of this culture ensure that the company continues its
competitive advantage in the global sports shoes, equipment and apparel market. Also,
the diversity and inclusiveness features of Nike’s corporate culture help develop
employee morale. However, a disadvantage is the potential reduction in managerial
efficiency. The organizational culture facilitates employee involvement, although it also
increases the workload of Nike’s managers. A suitable recommendation is for Nike to
increase its investment in managerial personnel to balance the effects of its corporate
culture.
Nike Inc. Organizational Structure
Characteristics (Analysis)
UPDATED ONUPDATED ON FEBRUARY 15, 2019 BY ANDREW THOMPSON

Nike Air Zoom track shoes. Nike Inc.’s

organizational structure’s characteristics facilitate control and flexibility in the business.
(Photo: Public Domain)
Nike Inc.’s organizational structure reflects the abilities and limits of the business in its
operations. A company’s organizational or corporate structure is the composition and
system design applied on the interconnections among employees, groups, and divisions
of the business. In Nike’s case, the corporate structure highlights the need to address
differences among regional markets. These differences are linked to region-specific
demands of target customers, such as variations in the preferences for apparel based
on sports popularity and climate. As such, Nike Inc. has developed its organizational
structure to enable adjustments in dealing with market differences. As one of the
leading players in the athletic footwear, apparel and equipment industry, the company
and its corporate structure serve as an example of how regional variations must be
included in business strategies. Structural and strategic alignment that considers these
variations reinforces Nike’s competitive advantages, especially in penetrating regional
markets.

Nike Inc. has an organizational structure that facilitates regionalization of business

strategies. Such regionalization promotes value chains that specifically fulfill customers’
expectations, especially in the area of service and marketing. The characteristics of its
corporate structure provide Nike with flexibility to address consumer preferences for
athletic shoes, apparel and equipment in regional markets. This flexibility is especially
notable in how the company markets its products through company-owned NikeTown
stores. This structural support, together with Nike’s organizational culture, helps the
company in combating the financial and business developmental effects of competitors,
such as Adidas, ASICS, Puma, and Under Armour. In relation, the organizational
structure supports initiatives and strategies contained in Nike’s marketing mix or 4P.

Nike’s Organizational Structure Type and Features

Nike has a geographic divisional organizational structure. This structure is based on
the company’s needs in its global organization, as well as the uniqueness of conditions
 in regional markets. The following characteristics are notable in Nike’s organizational
structure:

1. Global corporate leadership

2. Semi-autonomous geographic divisions
3. Global divisions for Converse and brand licensing

Global Corporate Leadership. Nike’s organizational structure has global corporate

leadership, which involves corporate managers. The managers have offices in the
company’s headquarters in Oregon, USA. They decide for the global corporate structure
of Nike. For example, the Global Sports Marketing group releases new athletic shoe
marketing campaigns for worldwide marketing. Through this feature of Nike’s
organizational structure, decisions are easily implemented throughout the company.
The following are the main global leadership groups headed by a President, Executive
Vice President, or Chief Officer:

 Office of the President & CEO, Nike, Inc.

 Nike Brand
 Finance
 Global Human Resources
 Product & Merchandising
 Administration & Legal
 Global Sports Marketing
 Operations

Semi-Autonomous Geographic Divisions. Geographic divisions are a major

organizational structure characteristic of Nike, Inc. The company’s operations are
divided into segments based on regional markets. Each regional division’s managers
optimize operations in the regional sports shoes, apparel and equipment market. Nike’s
organizational structure has the following regional divisions:

 North America
 Western Europe
 Central & Eastern Europe
 Greater China
 Japan
 Emerging Markets

Global Divisions for Converse and Brand Licensing. Nike’s organizational structure
also has two global divisions: one for the Converse brand and another for brand
licensing. One global division is responsible for managing the worldwide operations of
Converse, which is another footwear brand and subsidiary of Nike Inc. Another global
division is responsible for licensing the Nike brand. This characteristic of the corporate
structure offers control for brand licensing and the operations of Converse.
Nike’s Organizational Structure Advantages &
Disadvantages
Nike Inc.’s organizational structure’s characteristics support growth and stability. Global
corporate leadership has the advantage of facilitating control on the entire organization.
The advantage of the semi-autonomous regional (geographic) divisions is flexibility in
satisfying regional market-specific consumer preferences for Nike’s athletic shoes,
apparel and equipment. However, a disadvantage of Nike’s organizational structure is
the limited approach to managing the operations of Converse.

Nike Inc. Generic Strategy & Intensive

Growth Strategies
UPDATED ONUPDATED ON FEBRUARY 7, 2017 BY LAWRENCE GREGORY

A pair of Nike
Blazers shoes, Italian version. Nike Inc.’s generic strategy (Porter’s model) effectively
supports global competitive advantage, while its intensive strategies support continued
business growth. (Photo: Public Domain)
Nike Inc.’s generic strategy for competitive advantage emphasizes product mix
diversity. A generic strategy, according to Michael Porter, defines how a business
achieves and maintains its competitiveness. On the other hand, Nike’s intensive growth
strategy reflects the company’s focus on innovation to develop the business. An
intensive strategy shows how a company grows. Founded in 1964, Nike Inc. has grown
to become one of the biggest players in the global athletic shoes, apparel and
equipment market. To keep its position and competitive advantage, Nike must ensure
that its generic strategy and intensive growth strategies are always suited to current
business conditions.
 Nike Inc.’s generic strategy (based on Michael Porter’s model) is appropriate for its
diverse product lines, ensuring competitive advantage. The corresponding intensive
strategies grow Nike’s global sports shoes, apparel and equipment business.

Nike’s Generic Strategy (Porter’s Model)

Nike Inc. uses a combination strategy for its competitive advantage. This type of
strategy includes two or more of the generic strategies from Porter’s model. The
following are the generic competitive strategies implemented in Nike’s combination
strategy:

1. Cost Leadership Strategy

2. Differentiation Strategy

Nike’s cost leadership generic strategy sustains competitive advantage based on costs.
In this generic strategy, the company minimizes production costs to maximize
profitability or reduce selling prices. In the late 1990s, Nike reduced costs and the
selling prices of its athletic shoes and other products. This generic competitive strategy
helped the company regain its competitiveness, especially against Adidas. Also, Nike’s
differentiation generic strategy provides unique products. For example, the company
integrates cutting-edge designs for its shoes. The combined cost leadership and
differentiation generic strategies boost Nike’s performance in the global industry. A
strategic objective based on the cost leadership generic strategy is to grow the
company’s competitive advantage through new technologies to reduce production
costs. A financial objective based on the differentiation generic strategy is to maximize
Nike’s profit margins, such as on new sports shoes.

Nike’s Intensive Strategies (Intensive Growth

Strategies)
Product Development. Nike’s primary intensive growth strategy is product
development. This intensive strategy involves the introduction of new products to grow
sales revenues. For example, Nike’s mission statement highlights innovation applied
through new designs for shoes and related products. New technologies enhance the
products and set them apart from the competition. In product development, these
products remain attractive despite changing consumer preferences. Thus, this intensive
strategy supports Nike’s differentiation generic competitive strategy via product
innovation. A suitable strategic financial objective based on this intensive growth
strategy is to increase Nike’s market share through cutting-edge technologies integrated
in the design of sports shoes, apparel and equipment.

Market Penetration. Nike’s secondary intensive growth strategy is market penetration.

In this strategy, the company grows by increasing sales revenues in existing markets.
For example, Nike increases its stores and retailers in the United States to sell more
athletic shoes to American consumers. However, market penetration is just a secondary
intensive growth strategy because the company already has significant presence in the
global market. The cost leadership generic competitive strategy empowers Nike to
penetrate markets based on product affordability. A strategic objective linked to market
penetration is to increase Nike’s market presence by increasing the number of
authorized retailers. In addition, a financial objective related to this intensive growth
strategy is to increase Nike’s sales revenues through more sales to sports enthusiasts
in current markets.

Market Development. One of Nike’s supporting intensive growth strategies is market

development. This strategy facilitates the company’s growth by targeting new markets
or market segments. For example, Nike enters new markets in Africa and the Middle
East to increase its shoe sales revenues. Alongside product development, the company
applies the market development intensive growth strategy by investing in new
technologies to penetrate new market segments, such as segments composed of
bodybuilders. However, the saturation of Nike stores and retailers around the world
means that this intensive strategy has only a supporting role in the company’s growth.
The generic competitive strategy of differentiation helps the company enter new
markets, based on product attractiveness. A strategic financial objective under this
intensive growth strategy is to increase Nike’s profitability by entering new markets in
Africa and the Middle East.

Diversification. Diversification is the least significant in Nike’s intensive strategies for

growth. This strategy involves developing new businesses to achieve growth. Nike
implemented this intensive strategy in its early years, such as when it introduced
apparel and sports equipment to its product mix. Initially, the Nike brand was on athletic
shoes only. Diversification can support Nike’s generic competitive strategy of
differentiation through new businesses that supply materials for product innovation in
the athletic shoes, apparel and equipment business. A strategic financial objective
based on this intensive growth strategy is to improve Nike’s financial risk by entering
other industries.

Nike Inc.’s Mission Statement & Vision

Statement (An Analysis)
UPDATED ONUPDATED ON JUNE 23, 2019 BY NATHANIEL SMITHSON
 Juliano Belletti’s Nike shoes worn in the 2006
UEFA Champions League Final. Nike Inc.’s corporate mission statement and corporate
vision statement focus on top performance in the athletic and leisure footwear, apparel,
and sports equipment industries. (Photo: Public Domain).
Nike Inc.’s corporate mission and vision statements evolve to accurately represent the
company’s position as the leading athletic shoes and apparel supplier in the global
market. A company’s corporate mission statement defines the fundamental objectives of
the business, especially in terms of its purpose. In this company analysis case, Nike’s
mission statement prompts the business to support the endeavors of athletes. On the
other hand, a company’s corporate vision statement provides a picture of a target future
condition of the business. Nike’s vision statement focuses on brand strength and
development. The company applies these corporate statements as guides for the
evolution of its business, leading to the creation of business strengths like a strong
brand image, as determined in the SWOT analysis of Nike Inc. Through the evolution
and effective implementation of its corporate vision and mission statements, the
company supports its market position as a leading producer of sports footwear, apparel
and equipment.

In implementing its corporate vision and mission statements, Nike Inc. aims for
leadership in the international market, while counteracting competition. The Porter’s
Five Forces analysis of Nike Inc. shows that competitive rivalry imposes a strong force
against the company and its industry environment. The corporate mission and vision
statements compel the company’s strategic management to develop policies to ensure
competitiveness against other firms, such as Adidas, Puma, ASICS, Under Armour, and
VF Corporation. These firms make the global athletic and leisure shoes, apparel and
equipment market a challenging business environment.

Nike’s Corporate Mission Statement

Nike Inc.’s corporate mission is “to bring inspiration and innovation to every athlete
in the world.” The company further states that everybody is an athlete, based on Nike
founder Bill Bowerman’s statement, “If you have a body, you are an athlete.” This
 mission statement represents the company’s strategic goal of reaching out to the global
leisure and sports footwear, apparel and equipment market. The following main
components are in Nike’s corporate mission statement:

1. Inspiration
2. Innovation
3. Every athlete in the world

As a leading manufacturer of sports shoes, apparel and equipment, Nike Inc. inspires
people to adopt a “winner mindset”, which is covered in the “inspiration” component of
the mission statement. The company’s slogan “Just Do It” represents this inspirational
goal. Also, Nike’s corporate mission statement emphasizes innovation. This component
is applied through the company’s strategy of continuous improvement of products
through new technologies, as included in Nike Inc.’s generic competitive strategy and
intensive growth strategies. The “every athlete in the world” component indicates that
the company’s corporate mission pushes the business to target every consumer in the
world. As noted, the company considers every person an athlete. Thus, based on this
corporate mission, Nike’s products are designed to attract and satisfy a wide variety of
market segments globally.

Nike’s Corporate Vision Statement

Nike Inc.’s corporate vision is “to remain the most authentic, connected, and
distinctive brand.” The business continues to apply this vision statement, which was
emphasized in the corporation’s global growth strategy for 2015. The company focuses
on developing its brand. The following are the notable components of Nike’s corporate
vision statement:

1. Authentic
2. Connected
3. Distinctive

Nike’s vision statement uses the word “remain,” which indicates that the company
already considers its brand as the most authentic, connected, and distinctive in the
global market for sporting goods and related products. The “authentic” component of the
corporate vision statement shows that the company aims to make its products deliver
high performance to consumers. On the other hand, the “connected” component is
about ensuring consumers’ personal connection with the brand. Nike’s marketing mix or
4P supports the creation and maintenance of such connection with customers. The
company also maintains distinctiveness by delivering the best possible products to the
market. This corporate vision regards Nike Inc. as a leader in the industry, while
pushing the business to further separate itself from competitors. A notable point about
the company is it also develops connections with consumers through its vision for
corporate social responsibility: “to help NIKE, Inc. and our consumers thrive in a
sustainable economy where people, profit and planet are in balance.” This vision serves
as basis for Nike Inc.’s corporate social responsibility strategy and stakeholder
management approaches.

Nike Inc.’s Corporate Vision and Corporate Mission –

Recommendations
Nike’s mission statement outlines the general strategic direction of the business. The
statement includes such information as the company’s customers (everybody), the
target market (global), and part of the philosophy of the business. These are strong
points, based on conventions in writing ideal mission statements. However, Nike’s
corporate mission is philosophical and does not include specifics about the kind of
products offered to consumers and the nature of business processes. In this regard, it is
appropriate to recommend that the company specify the nature of its products. For
example, Nike can improve its corporate mission statement by illustrating that its
products are in the athletic and leisure footwear, apparel, and equipment industry. Also,
stating that business processes are within the scope of the design and manufacture of
such products can make the corporate mission statement more accurate and suited to
Nike’s operations.

Nike’s vision statement is about keeping the leading brand in the global industry. The
company considers its brand as one of the major strengths of the business, and points
out that it has already achieved the top brand position. In this regard, Nike’s corporate
vision statement is satisfactory in terms of having the characteristics of the ideal vision
statement. For example, the company’s corporate vision statement is concise, clear,
inspiring, and challenging in focusing on maintaining the leading brand. The statement
is also future-oriented, considering that Nike Inc. highlights keeping its brand’s leading
position as a strategic aim for future business development.

Nike’s Promotional Mix (Marketing

Communications Mix)
UPDATED ONUPDATED ON AUGUST 21, 2018 BY LAWRENCE GREGORY

A Nike store. Nike Inc.’s promotion activity in

the marketing communications mix is a balance between attracting new customers and
keeping current ones in the athletic footwear, apparel, and equipment industry. (Photo:
Public Domain)
Nike Inc. uses its promotional mix or marketing communications mix to communicate
with target customers in the global athletic footwear, apparel, and equipment industry. A
company uses marketing communications to promote its business and products,
considering the dynamics of its target markets. The marketing communications mix is
also called promotion, which corresponds to the promotion component of the marketing
mix or 4Ps (see Nike Inc.’s Marketing Mix or 4P). The company is a good example of a
business that uses different kinds of communication in its promotion activities. The
firm’s marketing communications mix is easily observable in the market, in the form of
advertisements and other activities. The company’s success puts emphasis on the
benefits of effective marketing communications. In this regard, other firms can learn
possible best practices in promotions from this business case. Nike’s marketing
communications mix is effective because of the balance it creates between attracting
new customers and keeping existing customers.

In developing and maintaining its marketing communications mix, Nike Inc. applies a
strategic combination of advertising, personal selling, direct marketing, sales
promotions, and public relations. This combination allows the company to effectively
promote its products and strengthen its brand image. Brand image is one of the major
business strengths and contributors to the company’s long-term success, as shown in
the SWOT Analysis of Nike Inc.

Advertising Nike Inc.’s Products

In advertising, Nike Inc.’s goal is to reach large populations of target customers with the
biggest possible impact. Successful advertisements promote the brand to customers.
These advertisements also improve consumers’ perception about the company and its
products. Even though advertising is an effective marketing communications tactic, it is
typically costly, especially when involving traditional media like television, radio and
print. Still, through successful implementation, Nike reaps the rewards of a stronger
brand image and higher demand for its products. Thus, despite the high cost of
advertising, the company achieves net benefits in its financial performance.

Nike Inc. uses celebrities to represent the ideal customer or consumer of its products.
The company’s advertisements present highly popular personalities, such as
professional athletes. Target customers see that their favorite celebrities use Nike’s
products. As a result, these customers become motivated to purchase and use these
products. Through celebrity figures in advertising, the company’s marketing
communications mix effectively promotes products to customers by motivating them to
mimic how these celebrities prefer the Nike brand.

Nike’s Personal Selling

Nike’s personal selling efforts typically happen in stores. Store personnel are trained to
provide assistance to customers. These personnel are expected to know more about
the company’s products, and to persuade consumers to buy these products. In some
cases, sales personnel promote the company through personalized services that help in
finding the right Nike product. Personal selling facilitates the purchasing process and,
thus, contributes to the company’s profitability.

Personal selling contributes to positive customer experience. Customer experience is

enhanced because of trained assistance and persuasion from sales personnel.
Customers feel empowered in making informed buying decisions. This tactic helps
make customers feel good about the products they buy from the company. Thus, Nike’s
marketing communications mix uses personal selling to create better customer
experience and customer relations, while promoting the company’s products.

Direct Marketing
Nike Inc. uses direct marketing to promote new products to target markets. These new
products are usually heavily advertised. However, to make a bigger impact, the
company uses salespeople to approach certain organizations or individuals in target
market segments. For example, the company approaches and promotes its products to
sports organizations in colleges and universities. Nike’s marketing communications mix
uses direct marketing to establish stronger relations with target customers and motivate
them to purchase the company’s products.

Direct marketing contributes to Nike’s competitiveness through customer loyalty. For

example, in directly communicating with target organizations, schools, colleges, and
universities, the company develops loyalty among target consumers, who become more
frequently exposed to the Nike brand. This condition helps improve the company’s
competitiveness and address the strong force of competition determined in the Porter’s
Five Forces analysis of Nike Inc. This means that strategic approaches to promotion are
directly linked to the development of the company’s competitive advantages.

Sales Promotions
Nike’s sales promotions are usually in the form of special offers given to target
customers. The company uses sales promotions to motivate new customers by giving
additional benefits, such as the savings they can make by purchasing when discounts
or special offers are applied. Sales promotions in Nike’s marketing communications mix
drive demand from new customers by motivating them to purchase the company’s
products on the basis of these perceived benefits.

Public Relations at Nike

Nike Inc. uses public relations in marketing communications. In this business case, the
company implements public relations as a way of addressing social issues linked to its
business. For example, the company experiences social pressure regarding the use of
sweatshops, as well as pressure to improve green technology integration in the
business. Many of these issues are included among the considerations in
developing Nike Inc.’s corporate social responsibility strategy and stakeholder
management approaches. This condition shows that the company also uses public
relations to deliver information to stakeholders regarding current and planned corporate
citizenship activities to improve the business and its effect on stakeholder groups.

The company applies public relations by sponsoring sports events and similar activities,
and uses these activities to communicate to target customers regarding what the
business does to address relevant social issues. In this regard, Nike’s promotional mix
involves public relations to address social issues and to promote the brand, so that
current and potential customers develop a better perception about the company and its
products.