Mgt300 - Nike Strategic Analysis

MGT300: Group Project Ashleigh Robinson, Nana Yaa Dankwah, Thomas Avery and Nick Jowers

21783, 20691, 1013999, 1018899

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We are aware of ICMS’s policy on plagiarism. This assignment does not breach those requirements nor has it been previously submitted for evaluation contributing to any other subject or any other course at ICMS or any other educational institution. The ideas and information that are not those of the writer have been referenced accordingly, including personal communication. We have read the information available from the ICMS Academic Handbook (www.icms.edu.au/images/stories/pdf/ Student/handbooks/ icmshandbookjuly2012.pdf) and www.student.mq.edu.au/plagiarism. We also agree to have our assessment retained by ICMS electronically on file so future checks can be made for plagiarism.

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Executive Summary Current Situation : Nike in the Athletic and Leisure Footwear/Apparel and Athletic Equipment Industry The External Environment: General Environment and Industry Structure The External Environment: Competitor Analysis The Internal Environment: Key Competencies and Sustainable Competitive Advantage Strategic SWOT Analysis Nike’s Current Business-Level Strategy Nike’s Main Functional Strategies Contributing to Overall Success Nike’s Corporate Strategy: Overview Recommended Strategies: Overview The New Nike Strategy 2014-2016 Management Control and Governance References

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-­‐        The Current Situation: a strong brand operating in a highly competitive market and generating over US$24.1 billion in revenue (+16% 2012  vs.2011).  - Nike’s Main Division is Nike Brand Footwear comprising 53% of stock price, and has shown consistent growth within the global market share  over the over the last few years. - The External Environment is characterised by a recovering domestic retail market, with increasing global competitive forces and 3 major  competitors - The Competitive Forces in the industry are High, Bargaining Power is Strong, especially across Buyers Power, Barriers to Entry and Rivalry.  - Nike’s Key Competitors are Adidas, Puma and Asics. - The Internal Environment highlighted key competencies around efficiency, quality, innovation and customer responsiveness, resulting in  value creation and superior profitability.  - Nike has two Sustainable Competitive Advantages of brand recognition and product innovation as well as some temporary competitive  advantages of product quality and efficient operations. - The SWOT Analysis highlighted that there are big opportunities for Nike, offsetting threats and weaknesses, especially growth of production  operations overseas, strengthening of Global brand and the creation of further and improved technological innovation and advancements. - Nike employs a Differentiation Business Strategy which encompasses both product differentiation and marketing differentiation. - The main Functional Strategies are implemented by Nike within their Research and Development as well as Marketing divisions. - Nike implements a number of Corporate-Level Strategies including a multi-business strategy, mix of acquired and organic growth strategy and a  global strategy. - We recommend a Mixed Approach to strategy; including utilising some past strategies as well as a fresh and new approach. - 3 Strategic Initiatives were identified for implementation, consisting of a number of activities between 2014 and 2016, with focus on introducing a cost leadership focus as well as focusing strongly on continued differentiation from competitors. -

Management control and governance will be achieved through regular reports, check ups, target setting and performance measures. References

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Nike, Inc.  

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Nike was founded in 1964 by Bill Bowerman and Phillip Knight, and since then has evolved from its small beginnings of selling shoes out of a car trunk to the “…largest seller of athletic footwear and apparel in the world”. (1) Nike designs, markets and sells athletic and leisure footwear, apparel, equipment, accessories and services worldwide through Nike-owner retail stores, various distributors and online sales in over 190 countries. Phillip Knight, Chairman of Nike’s Board of Directors and Co-founder is the majority shareholder, owning over 74.8% of the company’s Class A Common Stock (1). Mark Parker is the President, CEO and Director. The Nike Brand is considered the strongest asset within the companies portfolio, accounting for approximately 85% of total revenue. In 2012, Nike generated over UA$24.1 billion in revenue, which is a 16% increase from the previous year. (1) Nike has created a long-term vision which relates to integrating sustainability into everything the company does. With core values relating to environmental impact, renewable resources, sustainability and innovation. (2) Nike’s mission is to “bring inspiration and innovation to every athlete* in the world.” (* If you have a body you are an athlete) (3) A number of factors represent a significant risk to Nike’s operations, which include; strong competition within the market, as well as rapid changes in consumer preferences and technology. (1)

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Nike announces Strategic leadership changes At the beginning of the year Nike announced that they would be restructuring their senior management team with the overall aim of aligning their long-term strategy with the companies organisational strategy. This will also result in the re-evaluation of Nike’s supply chain, manufacturing processes and capabilities, the sustainability of Nike products and the Nike brand itself. (4) - The company was originally called ‘Blue Ribbon Sports’ and  became Nike in 1978. - Phil Knight is a track runner, Bill Bowerman was his coach. - The name ‘Nike’ comes from the Greek Goddess of Victory and  came from one of the company’s very first employees. - A graphic art student designed the ‘Swoosh’ logo and was paid  $35.00 for it. - The first athlete signed by Nike was tennis ‘bad boy’ John McEnroe

in 1978. - Michael Jordan is Nike’s highest paid endorser, earning $40 million  annually from the ‘Jordan’ brand! - The most expensive shoe released by Nike is the  ‘LeBron X’ at $315 a pair  Did you

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Nike Percentage of Stock Price This shows the percentage contribution of Nike’s different divisions to the estimated stock price and is calculated using forecasts such as pricing, market share and profits margins. - Nike Brand footwear constitutes 53% of the price estimate for Nike’s stock - Nike Brand apparel makes up 26% of the price estimate for Nike’s stock (5) Nike Footwear Global Market Share - This graph refers to the dollar market share of Nike’s main division (Nike Footwear) within the international market for sporting footwear. - As can be seen, Nike footwear has shown consistent growth within the global market share over the past few years, reaching 18.6% at the end of 2012. (6)     31/07/13  

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Key Environmental Drivers in the industry are:

3 Major Competitors…

- Demographic- Population Size 313,847,465 0-54yrs 74.4% (7), Age: 6 months-late 50’s ,Industries: Clothing, footwear and sporting apparel. Targeting men, women and children - Economic -Recover of US retail market resulting in a 17% revenue increase for Nike (1). Leading global athletic footwear manufacturer holding around 20% market share (8). Equating to 44% of Nike’s North American revenue in 2012 (3). Raising levels of income in developing markets. - Political/legal – Copyright issues, past public relations issues with off-sore product manufacturing. - Socio-cultural - Continuing strong brand recognition, ongoing innovation (i.e Nike Fuel Band), Successful endorsement campaigns continue to increase sales (e.g FIFA World Cup, NFL league and individual team sponsorship), Growing sales to Female shoe market, corporate responsibility is effecting consumer choices. - Technological - Top of the range innovation (won the innovation award), constantly innovating - Global - Continuing growth of global scales (Asia specifically, China) 31/07/13  

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Competitive Forces

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- Rivalry - Nike’s threat of rivalry is Medium. Nike’s annual report states “Nike is the Largest seller of athletic footwear and apparel apparel in the world”(1). This statement found in Nike’s annual report highlights Nike’s global position. Nike’s global footwear market accounts for 20% of the market share with Adidas and Asics making a further 10% of the market totaling a grand total of 30% market share within the industry (8). Although Nike has a substantial market lead however it is experiencing higher levels of competition as the surrounding companies compete more aggressively with endorsement marketing (9). - Threat of substitutes- Nike’s threat of substitutes is low/medium. Nike’s brand power has been developed over the last 50 years and now gives Nike a comprehensive competitive advantage within it’s markets . Nike’s extensive marketing and endorsement strategies such as the “Hero endorsement” and International Team sponsorship has continued to link the Nike brand with success on the highest levels of sporting prowess (10). However Nike’s main competitors Adidas are gaining market share as they continue to compete with Nike for Sport endorsement and event sponsorship (8). To counter this rise in competition Nike needs to focus on continually innovation. Through monitoring technologic advances and continuing to work with leading technologic companies such as Apple to hold on to their competitive advantage. - Bargaining Power of Buyers- Low due to lack of substitute product. This is created through extensive marketing campaigns involving endorsements and brand recognition (Nike Swoosh, sponsorship of all major sporting teams and events both national and domestic e.g. Football world Cup , Jordan Shoe’s) - Bargaining power or Suppliers- Nike’s power of suppliers is currently low due to Nike’s economies of scales, existing relationships and developed distribution networks. However this is shifting from low to low/medium as more companies enter into off-sore production. An example of this is Nike’s main competitors Adidas have over 69% of their manufacturing facilities with in Asia (11). This is leading to a stretch of resources and capabilities for existing manufactures as companies demand for products increase due to continuing success and more and more western companies enter Asia and Africa. This can lead to a shift in bargaining power if Nike is to remain within it’s existing manufacturing regions. - Threat of New Entrants - Low due to high cost of set-up, require extensive marketing budgets and skills, Existing competitors such as Adidas, Puma and Asics already compete within an extremely competitive market with Nike holding 20% of the market share (8). New companies would lack the initial market power to compete on a competitive level, further more knowledge of out-sourcing and working in foreign cultures is required to compete in manufacturing adding to the difficulty.

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Capabilities

Nike has a strong team of staff who implement, control and manage the quality, efficiency and effectiveness of the outsourced manufacturing plants. This in turn creates a product which is sort after by consumers within the industry. (1) -  - Brand Management - Business Analysis Financial Planning - Product Design and Innovation - Strong R&D - Strategic Planning - Good Reputation - Marketing and advertising capabilities - Understanding needs of consumers

Core Competencies Nike builds and extends upon their core competencies to help provide value creation for customers. Nike’s resources, both tangible and intangible and Nike’s capabilities make up the core competencies - Brand Management - Financial Management - Resource Efficiency - Market Knowledge (16)  

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Tangible  Resources  

Resources: Nikes production plants are located all around the world, and the capacity to which Nike can effectively deploy its resources is met through the innovative and strategic measures. Nike Management states that intangible resources are difficult for competitors to imitate and/or understand (1). This allows them to gain an advantage immediately over competitors.   MGT300:  Group  Project  -­‐  Nike  Inc.    

Intangible  Resources    

Competitive Advantage Nike’s core competencies play an important role in the company’s success giving the company a competitive advantage, and differentiates Nike from its competitors. To develop and maintain its competitive advantages, Nike uses its tangible and intangible resources and develops their capabilities and competencies to their maximum potential. - Brand Recognition and Brand Loyalty - Product Quality = sustainable competitive advantage - Product Innovation - Efficient Operations  

= temporary competitive advantage

Value Chain Analysis Value chain analysis is a “..process where a firm identifies its primary and support activities that add value to its final product and then analyze these activities to reduce costs or increase differentiation.” (19). Nike competes on a differentiation advantage. The source of Nike’s differentiation comes from their ability to create superior products over their competitors and satisfy different customer needs, resulting in increased profits. •  Primary Activities: Inbound Logistics (use of raw and specialised material, inventory control), Operations (outsourcing manufacturing, research and development to achieve technological innovation, quality control), Outbound Logistics (global distribution channel, strong supplier relation), Marketing (strong brand recognition, hero-athlete endorsement, variety of products offered, aggressive marketing) and Services (customer responsiveness, added value, use of IT, product quality) (1) •  Support Activities: Technology Development (research and product development, product and design improvement, leading edge within market) Human Resource Management (strong management, staff training, good employee relations), Firm Infrastructure (IT systems, online infrastructure, financial management and corporate social responsibility) and Procurement (good and long-term relationship with suppliers). (1)

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Competitive   Advantage  

Valuable  

Non-­‐ substitute  

Non-­‐ inimitable  

Rare  

Brand   recognition  

Y  

Y  

N  

Y  

Product   Quality  

Y  

N  

N  

N  

Product   Innovation  

Y  

Y  

Y  

Y  

Efficient   Operations  

Y  

N  

N  

N  

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(20)

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Strengths - Nike has benefited from its prominent brand and is easily recognizable throughout the world as a sports apparel and footwear brand. - Brand equity i.e. The Nike logo is very distinctive and The Nike Slogan “just do it” - Global Presence - Diverse range of products - Nike has a strong research and development process, which strives to add value to its products, and in doing so Nike is highly perceived as a high quality brand. As the product is highly perceived people are more willing to spend more money on the products. - Repeat customers, generally people who buy Nike products are doing so because they are content with quality and brand image of the product and therefore are more likely to purchase Nike products again - Nike products are highly fashionable in the sports industry.

Opportunities   - Demographics- Increased sales to women and children ,Growing middle class within Asia. - Economic- Continue growth of production operations to new Asian regions to decrease competition. (Vietnam, Indonesia). Global footwear market forecasted to grow 1.8% by 2018 due to growing population (8). - Socio-Cultural- Entice high level endorsers due to brand image/reputation(hero campaign) ,Changing social importance of healthy living. Products represent superior performance and social prestige. - Technological - Highly developed research and design team (NSRL, APE), Reputation for technologic superiority, Create trends through endorsements and strong marketing - Global-Economies of Scale, Established distribution networks and existing relationships with producers, Strengthening of Global brand.

Weaknesses   - In the past Nike has faced and been accused of unethical business practices and in particular that of labor violations, which has created bad publicity for the company. - The majority of products are outsourced and in doing so the company creates a bad image for itself, particularly in the USA. - Internally it is difficult to manage the quality of the production processes in offshore manufacturing plants and therefore as the company’s success lies entirely on the production of its footwear and if there was a slight decline in the quality of some of the footwear the entire company could collapse. - Nike products are very price sensitive, people who buy the products expect to get what they pay for, in other terms as the products are generally of a high quality customers are inclined to pay a higher price for them. (21) - Currency exposure due to global presences

Threats

- Economics- Recession, Incorrect forecasting can effect manufacturing levels, Increase of Interest rates. - Political/Legal-Increased tariffs to offshore manufacturing, Failure to protect intellectual products. - Socio-Cultural- Changing design trends, Failure to maintain reputation/brand image ,Lack of continuing corporate responsibility increases can damage reputation. - Technological-Failure to anticipate customer preferences and popular technologic advances, Rapid technology advancements leads to loss of market share. - Global- High levels of Global competition, Decreased production capacity of independent producers as more companies go off-sore, Counterfeit product production due to differing copy write law enforcement globally (8).

 

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 Business Strategies:  

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Nike’s current market development strategy encompasses both product differentiation and marketing differentiation. Nike differentiates its products from its rivals based on perceived superior quality (product differentiation). Nike conducts marketing differentiation by using diverse advertising and marketing campaigns to provide a unique and exclusive image. Unique Value Proposition: Nike define innovation to create value and increase consumer demand by creating a need (1) Nike offers customers reasons to keep preferring the brand over competition from rivals through differentiating their products by offering superior quality products and creating innovative ‘must have’ products as well as delivering exceptional consumer experiences in retail and online Nike has the opportunity to build deep personal connections between the consumer and brands by promoting fundamental elements of the brand which help consumers notice, recognise and recall the brand name. For example, Nike’s tagline “just do it” and celebrity endorsements such as Tiger Woods. Nike caters to three demographic market segments: men, women and children. Research and Development is conducted frequently to analyse the market in terms of new emerging trends in sports wear, physical capabilities of individuals, scientific and technological advancements in sporting equipment, athlete attire/accessories as well as design preference. Evidence of Nike’s differentiation strategy can be seen within their decision to employ professional athletes to promote their products. For example, Tiger Wood’s endorsement of Nike led to the introduction of Nike into the golf industry and eventual creation of golf products. (22) Further evidence can be seen in Nike’s international marketing. Nike associates its brand with the most respected and well-known world sporting events i.e. Olympic Games and Soccer World Cup. (23).

Opportunities: Nike makes the business stand out by offering unique features of high quality, innovation and customer experience. Opportunity to build brand loyalty. Product and Marketing differentiation provides competitive advantage for Nike over its competitors. Focus on innovation. In order to compete on Product differentiation, Nike is continually investing resources into researching and developing new and improved products – based on product features, performance and design. Threats: The cost of implementing differentiation strategies is high. For example, ensuring constant innovation as well as large-scale marketing campaigns with international events and sports athletes is very expensive. Nike must be wary of imitation from competitors offering cheaper alternatives to the market, as well as changing consumer preferences. (24). They can help prevent this through constant innovation and product development.

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Functional Strategies: Functional Strategies are implemented by Nike within their product development, manufacturing, research and development as well as Marketing departments. Nike typically outsources the manufacturing of its products to different countries within Asia, to help focus on and improve effectiveness of the most important functional strategies of research and design aimed at increasing innovation as well as their marketing strategies.   Research and Development: - Nike runs its own Sport Research Lab that specialise in areas of biomechanics, engineering, design, exercise physiology, sensory perception and chemistry (25) - Nike has had some of the most entrepreneurial products within the market. For example: - Nike also is an expert in manufacturing high-performance fabrics that aim to enhance athletes performance – - NIKEiD: allows customers to design and customise own shoes online, personalising experience. - NIKE+ range: company made strategic alliance with Apple, allows customers to connect apple devices such as iPhone and iPod to sensors in Nike shoes to measure steps, distance, time and speed – what you could refer to as the ‘smart shoe’ in combination with the ‘smart phone’. - Nike has been listed in the number one position in “The Worlds 50 Most Innovative Companies of 2013” a list recently released by Fast Company (26)   Marketing: Basis to Nike’s winning marketing strategy, which has brought the company to be named the number one shoe and apparel company in the world (27). Three main marketing elements used include: - Nike Swoosh Logo: strategically placed on uniforms and athletic apparel of famous athletes, and becomes visually prominent as they perform in such events as the Olympic Games, which are covered by multiple mediums worldwide. - Hero Athlete Spokespersons and Celebrities: used to endorse and associate the brand with well-known celebrities. - Creating unique advertisements that become covered by the news: media promotes brand for free, and creates large social media hype, which helps the company leverage the intended message and Nike brand. For example the 2012 ‘She Runs’ campaign aimed at connecting specifically with female runners. (28)

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MGT300:  Group  Project  -­‐  Nike  Inc.    

Opportunities: Opportunity to create unique and cutting-edge products, gives the company a competitive advantage over others, once product developed can generate long-term income, ongoing research can present new opportunities for business. Can help discover opportunities that exist or will emerge in the future. Add value to the company Threats: Research and Development presents high costs, potential for competitors to copy or imitate technological developments.

Opportunities: Nike celebrity athletes created a relatively high level of brand awareness. Mass media and aggressive marketing campaigns enhance brand and image. Threats: High costs, changing market trends and consumer preferences, constant innovation means more advertising, problems associated with aligning the brand with athletes i.e. bad behaviour of ‘heroes’ i.e. Lance Armstrong and Oscar Pistorius

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Multi-Business Strategy Related diversification: Nike is an extremely diversified company, and related diversification is a major tool of the company’s corporate-level strategy. The business has expanded into activities and product lines similar to those that it currently offers. For example, Nike’s product offerings cover basically all sporting needs in footwear, apparel and equipment (29). Further, Nike use their aggressive and differentiated marketing and advertising campaigns to help achieve growth within their business. Not only is Nike’s product mix diversified, but Nike also implements diversification using their suppliers. Nike is a global business with a worldwide customer base and uses manufacturers in as many as 43 different countries (30).

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Acquired Growth Strategy Merger and Acquisition Strategies: Nike is continually seeking sources of competitive advantage, and have historically implemented a number of horizontal merges and product extensions. The company has a mixture of both organic growth through innovation and creating new products, as well as acquisitions of new businesses. - 1988: acquired Cole Haan, upmarket and fashionable footwear (Sold 2013) - 1994: acquired Bauer, hockey products (Sold 2008) - 2002: acquired Hurley International, surf apparel. - 2003: acquired Converse, former basketball shoe competitor. - 2004: acquired Stater, premium athletic apparel (Sold 2008) - 2008: acquired Umbro, soccer apparel

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(31) International Strategy: Global Strategy: Nike encompasses a global strategy in the sense that their products are standardised for different national markets – more often than not Nike’s products are the same in regards to price, quality and reputation within international markets. Further, strategic decisions regarding Nike’s business-level strategies are centralised at Nike Head Quarters, which is based in Oregon, Portland..

 

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MGT300:  Group  Project  -­‐  Nike  Inc.    

Opportunities: diversification of products helps provide an opportunity for Nike to increase value and create value through the use of resources and core capabilities more broadly, which in turn helps diversify risk. Flexibility to move into emerging markets. Reduce dependence on swoosh brand. Threats: too much diversification in regards to increasing number of businesses can lead to poor resource allocation and management causing coordination problems, as well as control costs and bureaucratic costs increasing. Opportunities: Create economic value and increase profits for shareholders. Increase market power within different product markets. Restructure and revitalise the company as well as the market. Build upon core competencies. Leverage resources to increase profit. Threats: integration problems between activities and corporate cultures, employees may resist. High expenses associated with purchase. Opportunities: Leverage economies of scale to help gain access to low-cost production factors and materials as well as gain access to new customers for existing products. Once developed product, can sell in all global markets. Advertisements standardised across all countries – reduced costs Threats: Global strategy may not work in all markets as some may have particular preferences or may be more sensitive to pricing. Operational risk in terms employment laws in manufacturing companies. Also unpredicted events such as natural disasters and war – company may not fulfill obligations 15  

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Business Strategies: In the past, Nike has utilised a product differentiation strategy which is used to help compete within the market. As the company’s reputation and success dictates, we would continue to place emphasis on this area. Some additional activities that could be undertaken to further differentiate the company from its competitors include introducing a Formula 1 Sponsorship team. However we also suggest that Nike consider focusing on trying to develop and make a strong effort in cost leadership strategy as well as differentiation. In the past, Nike products have been concentrated at the higher end of the pricing scale. We suggest that within the Asia Pacific market Nike make an entrance into the lower range pricing scale by developing an entire new brand, whilst still ensuring high quality products.

Opportunities: enables Nike to appeal to a larger range of customers, capturing a greater hold of the market share within Asia Pacific. Try to avoid Threats: by offering a cheaper alternative, must be sure to maintain quality as well as many customers would be disappointed if product is not durable and does not last. This could potentially turn customers off the associated Nike brand.

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Corporate Strategies Currently Nike focuses on an International Global Strategy with standardised products and marketing internationally. There is a high need for global integration, but perhaps there is also a need for local responsiveness? We suggest that Nike move more towards a Transnational Strategy, where the company can still take advantage of economies of scale and their centralised strategic decision making, but also starting to acknowledge the needs of customers in different international markets. Therefore, Nike would need to seek to achieve both global efficiency and local responsiveness. Suggest not so much developing individualised products, but more tailoring advertising and marketing of Nike products to individual markets, rather than using one global standardised approach.

Opportunities: enables Nike to appeal to a larger range of customers, capturing a greater hold of the market share within Asia Pacific. Try to avoid Threats: by offering a cheaper alternative, must be sure to maintain quality as well as many customers would be disappointed if product is not durable and does not last. This could potentially turn customers off the associated Nike brand.

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Functional Strategies (Marketing): Nike currently follows a ‘hero-athlete’ marking strategy which has and still does work extremely successfully for the company. This strategy has received some negative criticism due to the bad behaviour of some of their ‘heroes’ i.e. Tiger Woods, Lance Armstrong and Oscar Pistorius. We suggest that although they have received this they need to keep following this strategy. Currently, Nike sponsors and endorses the elite of the elite, if they were to stop this – these athletes would be picked up by competitors such as Adidas and Nike would no longer be in the number one position.

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MGT300:  Group  Project  -­‐  Nike  Inc.    

Opportunities: high level of brand awareness Threats: bad behaviour of athletes could result in negative perception of Nike brand. Could be detrimental to companies image as highlighted by media

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Key  recommendations  

When  

Cost Leadership: New Affordable Shoe Line

2014 – 2016

Nike has been saturated within the athletic and apparel market and could focus on introducing a new brand which targets a younger demographic and also focuses on maintaining high quality but also offering a lower price. Research has found that amongst athletic-shoe brands, Nike ranks 5th among consumers aged 18-24 (32). Nike’s main competitor within this footwear market is Vans. We suggest that Nike develops new product to directly compete with Vans, and heavily promote this product to the younger demographic within the US market through specific advertising and marketing campaigns. The cost-leadership focus making this new shoe range an affordable product appealing to the younger demographic.

Differentiation: Formula1 Sponsorship

2015 Onwards

We suggest that Nike should continue to compete on a differentiation basis by introducing a Formula1 sponsorship, by creating a ‘Nike’ racing team. This new sporting alliance will aim to increase access to a wider range of market segments by penetrating the racing market. The Formula 1 currently has no sporting sponsor – so this is an opportunity for Nike and will allow Nike to further differentiate itself from main competitors. They would establish themselves as the first sportswear and footwear brand to sponsor this sporting segment. Nike could even look into designing a racing suit, helmet, gloves to broaden their athletic wear and have racing team members wearing this to promote their brand.

Marketing: Hero-Athlete Strategy

2014-2016

Expanding and building upon the Nike ‘hero-athlete’ marketing due to its current and previous success will strive to help prevent bad behaviour of athletes. Nike could potentially issue a clause within the contracts by clearly outlining that if their actions reflects badly on the Nike brand they will be dropped from Nike advertisement, campaigns and pullout on sponsorship. Introducing mandatory screening such as drug testing. Nike currently sponsors the elite of the elite, and if they were to drop this strategy – these athletes would be taken by Nike’s main competitors. It has been suggested that perhaps Nike should limit the athletes that they sponsor – however, if this was to happen the odds of an athlete making a bad decision would be higher. Furthermore, although the media is quick to highlight the wrong doings of these athletes – the public is becoming more aware and understanding that they are only human and do make mistakes. Nike needs to stand by there athletes and take action to help support them within their sporting careers to help prevent career and reputation destroying decisions.

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Procedures  and  Policies  

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Management control and governance are very important aspects of achieving the identified strategic initiatives and can be achieved through a number of methods including:   Ensuring that Nike is publishing regular reports to make progress readily available to the public, such as quarterly reports.   Holding community meetings to help involve the public and help gain and understand community and customer feedback, allowing the company to know where they are going well and where improvements could be considered.   Regular assessment by senior management of company processes and policies   Upstream reporting where weekly updates are presented by middle management.   Nike can set targets and identify performance measure standards to help achieve strategic goals and objectives   Performance and Compliance monitoring of the company, as well annual performance reviews of individual employees.   Establishing high standards in relation to ethical behaviour. This can be achieved through management leading by example as well as establishing codes of conduct.   Setting KPI’s (key performance indicators) that are aligned with the overall strategic direction of the company

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http://www.youtube.com/watch?v=JfFd1uOkFEo

   

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1.  2. 

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10. 

Nike, Inc. (2012). Annual Report on Form 10-K. Retrieved July 10, 2013 from http://investors.nikeinc.com/files/doc_financials/AnnualReports/2012/docs/nike-2012-form-10K.pdf Nike, Inc. (2012). Sustainable Business Report. Retrieved July 2, 2013 from http://www.nikeresponsibility.com/report/content/chapter/targets-and-performance Nike, Inc. (2013). Mission Statement. Retrieved July 15, 2013 from http://help-en-us.nike.com/app/answers/detail/a_id/113/p/3897 Nike, Inc. (2013). NIKE Announces Strategic Leadership Changes. Retrieved July 5, 2013 from http://nikeinc.com/news/nike-announces-strategic-leadership-changes Trefis. (2013). NIKE: Overview. Retrieved July 17, 2013 from http://www.trefis.com/company?hm=NKE.trefis&#/NKE/n-2235?from=sankey Trefis. (2013). ANALYSIS for NYSE: NKE. Retrieved July 17, 2013 from http://pdfs.trefis.com/16742-s1jy4WmxJalmNacO/NIKE_2013-07-23.pdf

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