Nike

 

1.  Vision, Mission and Strategic Goals; "Nike is all about marketing" (pag. 1 din studiul de caz)

The main reason for an organization's existence is to follow through on the mission, vision values, and goals taking into considerations all key stakeholders. However, every company has different set of stakeholders varying in power and significance. The Nike organization uses the collaborative process in functional areas identifying the key stakeholders to facilitate appropriate interactions. Resourcing the key stakeholders to recommend strategic action plans that support the organizational structure and facilitate the organization's success. The Nike mission is "to bring inspiration and innovation to every athlete in the world and if you have a body you are an athlete and refers to the fact that Nike exists to supply everyone in the world with the shoes, equipment, or apparel that if anyone has a body then anyone has the potential of becoming an athlete. From the start one understands that Nike intends to merchandize to the world of  athletes or people who have a body. That is a huge undertaking, which involves various set of  stakeholder groups. The mission is the catalyst that drives the organization. The stakeholders have power to influence the process of accomplishing the mission, vision, values, and goals. However the stakeholders groups have varying ideas, goals, objectives, and expectations on how to accomplish the mission. "Thus claims must be reconciled in a mission statement that resolves the competing, conflicting, and contradicting claims of stakeholders". The mission must be clear and concise with a solitary purpose that represents the firm's goal.  Nike's vision is "to help Nike, Incorporated and our consumers thrive in a sustainable economy where people, profit, and planet are in balance". By integrating information from the various stakeholders groups, rethinking pass mistakes and processes will allow Nike to continue, implementing sustainable principles. This information enables Nike to make changes in the industry and in the company. Identifying challenges, brainstorming solutions, 1

 

deciding and acting to evaluate, monitor, and reevaluate if the vision is in line with expectations. The goal  The  goal for for Nike is believing in the partnerships formed valuing the opportunity to work together with all stakeholders in the apparel industry and to share best practices. Nike has built a stronger relationship with the U.K. and European governments by considering legislation that will form the future of the clothing industry in areas such as recycling, environmental labeling, consumer awareness, and sustainability. Nike supports the goal of   partnerships that bring solutions to enhance sustainability throughout its supply chain and helping the world. 2.  Opportunities and threats, strengths and weaknesses -"footwear production is outsourced"

The Nike brand is one of the most recognizable in the billion-dollar footwear industry, and the company is commonly known for its outsourcing practices. Nike is known for their  shoes, but they have also branched out into the sports and clothing industries. Nike has hundreds of factories and various subcontractors it uses to design and manufacture its  products. Outsourcing has many possible advantages for the Nike Corp. Cuts Costs. Costs. Decreasing overhead through outsourcing is a valuable resource for Nike. Cutting costs by employing workers at a reduced rate or paying less for plant operation allows Nike to invest the additional profits into other areas of the business such as advertising, thereby increasing the potential for company growth. In addition, decreased operational costs are more likely to attract and retain company investors because more money can go into increasing business profitability.  Increases Competitiveness. Competitiveness. Because Nike is able to more efficiently produce its  product and reduce costs due to outsourcing, it can more competitively price its products. This enables Nike to price its brand at a competitive rate with other companies that sell a similar product. Decreasing competition can help Nike corner the market for its particular   products.  Finances and Risk Reduction.Outsourcing Reduction.Outsourcing allows Nike to skirt some of the financial obligations it might face with the confines of tax laws in the United States. In addition, when it outsources to subcontractors, Nike assumes less risk associated with producing its product such as insurance liability. 2

 

Strengths.

 Nike is a very competitive organization. Phil Knight (Founder and CEO) is often quoted as saying that 'Business is war without bullets.' Nike has a healthy dislike of is competitors. At the Atlanta Olympics, Reebok went to the expense of sponsoring the games.  Nike did not. However Nike sponsored sponsored the top athletes and gained valuable coverage.  Nike has no factories. factori es. It does not tie up cash in buildings and manufacturing workers. This makes a very lean organization. Nike is strong at research and development, as is evidenced by its evolving and innovative product range. They then manufacture wherever  they can produce high quality product at the lowest possible price. If prices rise, and products can be made more cheaply elsewhere (to the same or better specification), Nike will move  production.  Nike is a global brand. It is the number one sports brand in the World. Its famous 'Swoosh' is instantly recognisable, and Phil Knight even has it tattooed on his ankle. Weaknesses

The organization does have a diversified range of sports products. However, the income of the business is still heavily dependent upon its share of the footwear market. This may leave it vulnerable if for any reason its market share erodes. The retail sector is very price sensitive. Nike does have its own retailer in Nike Town. However, most of its income is derived from selling into retailers. Retailers tend to offer a very similar experience to the consumer. Can you tell one sports retailer from another? So margins tend to get squeezed as retailers try to pass some of the low price competition  pressure onto Nike.

 

Opportunities

Product development offers Nike many opportunities. The brand is fiercely defended  by its owners whom truly believe that Nike is not a fashion brand. However, like it or not, consumers that wear Nike product do not always buy it to participate in sport. Some would argue that in youth culture especially, Nike is a fashion brand. This creates its own opportunities, since product could become unfashionable before it wears out i.e. consumers need to replace shoes.

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There is also the opportunity to develop products such as sport wear, sunglasses and  jewellery. Such high value items do tend to have have associated with them, high profits. The business could also be developed internationally, building upon its strong global  brand recognition. There are many markets that have the disposable income to spend on high value sports goods. For example, emerging markets such as China and India have a new richer generation of consumers. There are also global marketing events that can be utilised to support the brand such as the World Cup (soccer) and The Olympics.

 

Threats

 Nike is exposed to the international nature of trade. It buys and sells in different currencies and so costs and margins are not stable over long periods of time. Such an exposure could mean that Nike may be manufacturing and/or selling at a loss. This is an issue that faces all global brands. The market for sports shoes and garments is very competitive. The model developed  by Phil Knight in his Stamford Business School days (high value branded product manufactured at a low cost) is now commonly used and to an extent is no longer a basis for  sustainable competitive advantage. Competitors are developing alternative brands to take away Nike's market share. As discussed above in weaknesses, the retail sector is becoming price competitive. This ultimately means that consumers are shopping around for a better deal. So if one store charges a price for a pair of sports shoes, the consumer could go to the store along the street to compare prices for the exactly the same item, and buy the cheaper of the two. Such consumer price sensitivity is a potential external threat to Nike. 3. Risk factors  factors 

The risks and uncertainties are detailed from time to time in reports filed by NIKE with the Securities and Exchange Commission and include, among others, the following:  

international, national and local general economic and market conditions;

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the size and growth of the overall athletic footwear, apparel, and equipment markets;

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intense competition among designers, marketers, distributors and sellers of athletic

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footwear, apparel, and equipment for consumers and endorsers; demographic changes; 4

 

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changes in consumer preferences;

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of particular designs, categories of products, and sports;

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seasonal and geographic demand for NIKE products;

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difficulties in anticipating or forecasting changes in consumer preferences, consumer  demand for NIKE products, and the various market factors described above;

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difficulties in implementing, operating, and maintaining NIKE’s increasingly complex information systems and controls, including, without limitation, the systems related to demand and supply planning, and inventory control;

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interruptions in data and information technology systems; data security;

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fluctuations and difficulty in forecasting operating results, including, without

limitation, the fact that advance “futures” orders may not be indicative of future revenues due to changes in shipment timing, and the changing mix of futures and atonce orders and order cancellations;  

the ability of NIKE to sustain, manage or forecast its growth and inventories; the size,

timing and mix of purchases of NIKE’s products;   increases in the cost of materials and energy used to manufacture products, new  product development and introduction; the ability to secure and protect trademarks,  patents, and other intellectual property;    performance

and reliability of products;

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customer service;

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adverse publicity;

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the loss of significant customers or suppliers;

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dependence on distributors and licensees;

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disruptions;   increased costs of freight and transportation to meet delivery deadlines;  

increases in borrowing costs due to any decline in our debt ratings;

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changes in business strategy or development plans;

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general risks associated with doing business outside the United States, including, without limitation, exchange rate fluctuations, import duties, tariffs, quotas, political and economic instability, and terrorism; changes in government regulations;

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the impact of, including business and legal developments relating to, climate change; liability and other claims asserted against NIKE;

the ability to attract and retain qualified personnel;   the effects of our decision to divest of the Cole Haan and Umbro businesses;

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The risks included in this list are not exhaustive. Other sections of the report may include additional factors which could a dversely affect NIKE’s business and financial  performance. Moreover, NIKE operates in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for  management to predict all such risk factors, nor can it assess the impact of all such risk 

factors on NIKE’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

4. Global issues; US & international markets markets

 Nike’s issue iss ue on corporate social responsibility responsibilit y has highlighted one of o f the primary yet essential concerns on CSR  –   – its concept and practical applications.

In Nike’s response to the criticisms over the sweatshops and the Honduras workers, it was apparent that the interests of its stakeholders are not the primary concern of the company. The dispute between the Nike’s retraction of the $ 30 million contribution to the University

of Oregon provided an insight to the corporation’s view of social responsibility. It was evident that CSR is a mere philanthropic approach to ensure profits, thus neglecting the most crucial issue posed by its stakeholders  –  the recognition and protection of worker’s rights. 

 Nike’s philanthropic phil anthropic treatment of a number of its stakeholders is not an isolated case. The Swiss Consulting Group has conducted a study on the practice of CSR. The results of  the study show that US-based companies prefer a more rules-oriented framework on transparency and social responsibility. The CSR concept in the US has been defined in terms of a philanthropic model. Such model illustrates the unhindered generation of profits of the companies and the donation of a  particular percentage of the profit to charitable causes. While the philanthropic approach to CSR is an important measure to increase the capacity of its stakeholders, it is not considered as a positive contribution to the society. US Market

In fiscal 2012, sales in the United States including U.S. sales of NIKE’s other businesses accounted for approximately 42% of total revenues, compared to 43% in fiscal 2011 and 42% in fiscal 2010. Other Businesses were primarily comprised of their affiliate brands:

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Cole Haan   Converse   Hurley   Umbro    NIKE Golf. The company sells to thousands of retail accounts in the United States, including a

mix of footwear stores, sporting goods stores, athletic specialty stores, department stores, skate, tennis and golf shops, and other retail accounts. During fiscal 2012, our three largest customers accounted for approximately 24% of sales in the United States. Stat es.  NIKE makes substantial use of their  “futures” ordering program, which allows   retailers to order five to six months in advance of delivery with the commitment that their  orders will be delivered within a set time period at a fixed price. In fiscal 2012, 86% of U.S. wholesale footwear shipments were made under the futures program, compared to 87% in fiscal 2011 and 89% in fiscal 2010. In fiscal 2012, 64% of their U.S. wholesale apparel shipments were made under the futures program, compared to 60% in fiscal 2011 and 62% in fiscal 2010. The company utilizes NIKE sales offices to solicit sales in the Un United ited States as well as independent sales representatives to sell specialty products for golf, skateboarding and snowboarding products.

 NIKE’s three significant distribution centers in the United States for NIKE Brand  products, including NIKE including  NIKE Golf , are located in Memphis, Tennessee.NIKE also operates and leases one facility in Memphis, Tennessee for NIKE Brand product returns. NIKE Brand apparel and equipment products are also shipped from our Foothill Ranch, California distribution center. Cole Haan products are distributed primarily from Greenland, New Hampshire, and Converse and Hurley products are shipped primarily from Ontario, California. International markets

In fiscal 2012, non-U.S. sales accounted for 58% of total revenues, compared to 57% in fiscal 2011 and 58% in fiscal 2010. The The company sells their products to retail accounts, accounts, through their own Direct to Consumer operations, and through a mix of independent distributors, licensees and sales representatives around the world.

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They sell to thousands of of retail accounts and operate 16 distribution centers outside of the United States. In many countries and regions, including Canada, Asia, some Latin American countries, and Europe, we have a futures ordering program for retailers similar to the United States futures program described above. During fiscal 2012, NIKE’s three largest customers outside of the U.S.accounted for approximately 11% of total non-U.S. sales.  International branch offices and  subsidiaries of NIKE are located in Argentina, Australia, Austria, Belgium, Bermuda, Brazil, Canada, Chile, China, Croatia, Cyprus, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hong Kong, Hungary, Indonesia, India, Ireland, Israel, Italy, Japan, Korea, Lebanon, Macau, Malaysia, Mexico,  New Zealand, the Netherlands, Norway, the Philippines, Poland, Portugal, Russia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Taiwan, Thailand, Turkey, the United Arab Emirates, the United Kingdom, Uruguay and Vietnam.

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