Nike - Bringing Innovation and Inspiration to Every Athlete in the World

Business Profile 

Nike's Mission Statement:  To create groundbreaking sports progression by making our products sustainable through formulating a creative and diverse global team and creating a positive impact within the communities we work and live in. 

Nike's Vision Statement: Bringing innovation and inspiration to every athlete across the world. We believe that if you have a body, you are an athlete. 

Nike is an apparel and shoe firm that has its origin in the U.S. The company designs, advances, and sells several products that aid in sporting activities such as basketball, soccer, and athletics, among many other events (Hoffman et al., 2019). Nike deals with products such as sporting gadgets, jerseys, and shoes. Being a global brand, Nike also partners with athletes in marketing sports-inspired products for several recreational and competitive events. Nike headquarters are situated in Beaverton, Oregon. The company also markets and sells various merchandized products of Converse, and Jordan, among others. 

Nike offers quality sports product to ensure it fits its client's taste and preferences. This is why the company is not only prominent in the U.S but across the world. Nike's 60% of its sales originate outside the U.S (Boldt et al., 2016). The organization is proud to own more than a thousand retail stores globally, with an established e-commerce platform. Subsequently, Nike has several retail accounts, sales representatives, and independent distributors, who are well versed with the sport's industry trends. Nike has a workforce of over 50,000 individuals who work for the firm either directly or indirectly. This workforce is well diversified, with its employees originating from various social backgrounds across the world. 

Nike products account for over 80% of its total revenue. According to Liu (2021), in 2020, Nike sales went up to 37.4 billion dollars, making Nike the highest earner in the sports apparel manufacturer. However, the company has been affected by the influx of the Covid-19 pandemic. This has affected its target market, leading to a decline in sales. For instance, Nike was hit by a drop of 5% in its Asian market, especially in China. This was due to the closure of several stores due to the increase in Covid-19 cases. As a result, the firm had witnessed its first decrease in sales for the first time in six years. However, Nike was boosted by online deals, which were at 36% during the first quarter of the 2020/2021 financial year. In addition, Nike's training mobile applications grew to over70% in China. 

Nike's organizational culture is based on innovation. Therefore, the organization tends to offer creative designs and design thinking in all its involvements. Design thinking can be described as an iterative practice that seeks to understand the client, thought-provoking assumptions, and reengineering the issues (Beligatamulla, 2018). Nike's design thinking aids in redefining the problems of its customers in an attempt to identify alternative approaches and elucidations that might not be instantly apparent with the initial level of its customers' understanding. The firm's innovative designs are made possible by its employees to achieve the set goals and objectives. Some of the vital categories that Nike is highly involved in include short and long races, football, and training. 

In addition to its sales and marketing strategies, Nike has acquired various footwear and apparel firms throughout its operation over the years. The acquisitions have been paramount to the firm success since they increase its market segmentation and penetration. An example was its first acquisition was Cole Haan, a footwear firm, back in 1988. Nike would later acquire Bauer Hockey, which mainly focused on hockey merchandise, with the acquisition finalizing in 1994 (Araujo et al., 2018). This would increase its market share and have a strategic advantage over its competitors. In 2003, Nike Company would pay three hundred and nine million dollars for the acquisition of Converse. The acquisition would be followed suit by acquiring both Starter and Umbro in 2004 and 2007 consecutively. With the acquisition of such major brands, Nike would refocus its business strategy due to increased competition. It would later sell Starter and Bauer Hockey in 2007 and 2008. It would later sell Umbro in 2012 and Cole Haan in the following year. Nike would only be left with one subsidiary, Converse, and later partner with Jordan brands, to increase its market share. 

Nike has been presented with various opportunities with which it can utilize to grow its revenue and global market penetration. The opportunities exist through efficient integration, state-of-the-art products, and embracing digital business to capture more clients (Zeewy, 021). Nike has developed its contemporary marketing strategies to ensure it achieves worldwide dominance. However, the firm has faced competition from similar firms such as Adidas, Reebok, and Puma. Subsequently, developing sportswear manufacturers, foreign currency instability, counterfeiting, and patent disputes have presented Nike with challenges in its operation. Furthermore, with an increase in globalization, Nike products continue to face competition from competitor products, leading to defects in its business operations. 

Additionally, offshoring is another significant opportunity Nike has adopted to reduce its costs and grow its worldwide dominance. Nike's offshore approach has improved its communication patterns and improved its operations by sourcing intermediate products originating from the most suitable location across the globe (Archana & Dickson, 2017). In the recent past, global offshore outsourcing has been adopted by firms as an unconventional approach and acts as a cost-cutting strategy. It involves manufacturing products in one location and selling them in other locations rather than producing them. This strategy aligns perfectly with the global outsourcing trends. The global outsourcing strategy is one in which a firm engages in acquiring the most efficient employees or products regardless of their location across the world. 

Governmental Action 

Nike's global outsourcing and offshore activities came under threat with Trump's administration. After being elected as the U.S President, Donald Trump moved to emphasize and implement the policy of America First. The policy has its roots in America and was first initiated by Thomas Jefferson. It seeks to highlight the doctrines of non-interventionism and nationalism (Macdonald, 2018). The policy of America First was first promoted by establishing the Embargo Act, which was placed on France and Britain after the First World War. Trump's administration encouraged U.S firms to rely on their nation's market rather than outsourcing from other nations. This would affect Nike's outsourcing and offshore strategy affecting its sales and distribution approaches. 

With the introduction of tariffs against various nations, Nike's revenue and operations were affected, with the organization having to initiate a change management process. Tariffs are taxes that the government of a nation has enforced in its exports and imports of goods (Amiti et al., 2019). Besides acting as a source of revenue for a country and improving its Gross Domestic Product, tariffs on import duties are a form of regulation. Tariffs affect policies on foreign trade and act as barriers to trade in the international area. With foreign products being taxed by Trump's government, Nike's production costs increased. The firm had relocated some of its major operations in China, where it enjoyed the availability of raw materials and cheap labor. Tariffs made Nike products expensive in the American market as compared to the European markets. In addition, tariffs tend to increase domestic customers' prices, making imported products less alluring as equated to locally produced merchandise. 

Subsequently, when Trump's administration introduced tariffs, it affected Nike's business operations. Nike would no longer enjoy the cheap labor and readily available raw materials in China. The U.S market was unforgiving with the increase in competition leading to Nike's production of reduced sportswear and apparel. Tariffs made Nike redefine its goals and risk management strategy in the aspect of outsourcing. The firm's foreign competitors would later shift to producing cheaper commodities leading to a decrease in Nike's global market share. This resulted in a decline in the number of customers, especially with the emergence of the Covis-19 Pandemic. 

International trade tends to increase the number of products that domestic customers can choose from and enjoy. It also leads to a decrease in the cost of goods through ethical competition. This allows local businesses to ship their merchandizes abroad. Although these effects seem positive, free trade has been criticized and widely disregarded as a substantial tactic of international trade (Bowie, 2019). Implementation of tariffs leads to other countries retaliating with counter-opposing measures. Nike was affected by the Chinese retaliation against Trump's billions of dollars tariffs in America. The tariffs reduced the profit margin of Nike, leading to a slow growth rate and a decrease in sales revenue. The company had to implement cost-cutting strategies such as retrenchment, decreasing its production rate, and reducing its employees' wage bill. This has affected its operations and increased competition from Nike's rival firms such as Puma and Adidas. 

Following the tariffs, Nike's management would negotiate the restrictions that were damaging its operations and revenue. However, the negotiations would later lead to court cases which further hurt Nike's revenue. In addition, Nike argued that the tariffs had led to retaliation tactics by foreign countries such as China and Italy and had damaged its brand through a decrease in the company's profit margins (Valero et al., 2017). However, Nike would later unite with foreign companies in the sportswear manufacturing industry to revive its effectiveness and efficiency. This strategy would see Nike reduce its shipping costs and trade constraints by the foreign nations. 

Trump administration's policies, such as the imposition of tariffs, had affected the American economy. The U.S had caused this to exist from the Trans-Pacific Partnership. The exit had mainly concerned the trade alliance with Asian nations such as China, Japan, and the Philippines. This approach affected Nike's operations, leading to a reduction in its profit margins and financial ratios. Trump's administration had preferred bilateral deals. These deals tend to position the U.S as a superior partner in most multilateral agreements, making most nations offset the ideology. However, it resulted in broken partnerships, such as the support of the Brexit idea, which had seen the British government cut ties with the European Union countries (Larres, 2019). Nike would again be affected, leading to a decrease in its exports to foreign countries. 

Organization and Teams 

Nike Company observes a matrix structural design, which is a blend of vertical and horizontal structures. Nike has multiple responsibilities for its workforce and has several reporting lines that aid in its administration. The company boasts of its well-experienced chairman Phil Knight. He is the co-founder of Nike Company and has guided the firm since its humble beginnings of a mere handshake to being the most prominent apparel, sportswear, and equipment organization (Kim, 2020). Nike's chairman is an expert public accountant who runs the firm with top executives from the president and C.E.O. John Donahue, the C.O.O, Andy Campion, Thomas Clarke, the head of innovation, Melanie Harris, the vice president, and the head of strategy and development. 

Nike has a team of knowledgeable employees who are classified broadly under the three categories. The topmost level is the global corporate leadership, which entails the corporate managers, who have their offices in Oregon, the firm's headquarters. The other team is that of the global divisions for Converse, which also deals with brand licensing. The semi-autonomous geographic divisions make up the other team since Nike operates according to regional markets. Its regional divisions operate in North America, Western, Central, Eastern Europe, Japan, Greater China, and other emerging markets. The company has several other teams, including public relations, human resources, communications, sales and marketing, data and analytics, and planning, among many others. 

Stakeholders 

Nike tends to maintain corporate social responsibility programs that handle the interests of its major stakeholder groups. Stakeholders are the people or groups with a substantial stake in what the firm undertakes (LeRoy, 2017). Nike's corporate image and sales are critically subject to the effects of the stakeholders' interest and conforming practices. The Nike foundation forms the major arm of the firm's corporate social responsibility approach. Nike tends to target several of its stakeholders who play a central corporate duty to achieve its goals and objectives. 

The utmost stakeholder priority is in its large number of customers. Customers are essential for Nike since they tend to impact the firm's revenues ranging from the apparel, shoes, and gadgets market. The customer's stakeholder interest entails the provision of quality products and maintains a constant and reasonable price. With its high profit margin, Nike tends to satisfy the interests of its customers. Subsequently, communities are the other stakeholders that are of interest to Nike. When customers purchase more of Nike's products, they positively impact the communities in which Nike operates. This enables the company to be socially responsible by engaging in corporate social responsibilities such as the active schools and youth program, donating funds to the less fortunate, and engaging in community cleaning activities. 

Subsequently, employees are of significance as a stakeholder group that influences the firm's effectiveness. The workforce performance will directly translate into effective business performance. Nike ensures it safeguards the interest of its employees by ensuring it provides equal career development opportunities, fair compensation, and providing incentives for its workforce. The government is also a stakeholder in Nike's business since it influences how it operates in the scope of permits, licensing, and legal actions such as taxation. For instance, the U.S government is primarily interested in the legal and regulatory compliance of Nike and its contribution to community development and tax revenues (Carlini et al., 2019). Nike maintains several policies in complying with the government in all its business operations. Interest groups are other stakeholders who are of importance to its growth and success. Interest groups are concerned with the fair treatment of employees, environmental concerns, and gender equality rules. Nike ensures it has corporate social responsibility policies that ensure labor management and effective environment conservation practices. 

Current Environment 

The current business environment of Nike is ripe with opportunities. The firm has enjoyed substantial growth patterns since its establishment. The external business environment tends to provide threats and opportunities in the macro-environment. The external environment factors influence the firm in making informed and strategic decisions. With competitors such as Adidas, Nike ensures it performs exemplarily to achieve its set objectives and goals. Unwavering political situations in most significant markets present prospects for Nike to nurture its business in these areas (Joseph, 2020). Expanding free trade policies also ensures that the firm achieves a better market penetration abroad. The economic stability of developed markets is also key to its success and the rapid growth of globalization in most of its markets. The sociocultural factors are also essential, such as individual wealth in third-world nations and increased product safety. The technological environment also favors Nike with factors such as increased research and development and the widespread use of mobile technology that ensures its online sales keep on skyrocketing. Nike's current business environment tends to provide more opportunities than risks, increasing sales and profit margins. 

References 

Amiti, M., Redding, S. J., & Weinstein, D. E. (2019). The impact of the 2018 tariffs on prices and welfare.  Journal of Economic Perspectives ,  33 (4), 187-210.  https://doi.org/10.1257/jep.33.4.187 

Araujo, D., Caldwell, H., & DeFanti, M. (2018). Nike's Utilization of Brand Strategy to Increase Global Competitiveness. In  Competition Forum  (Vol. 16, No. 1, pp. 109-115). American Society for Competitiveness. https://search.proquest.com/openview/33a1bb6882ec697b39093e94b2f780ce/1?pq-origsite=gscholar&cbl=39801 

Archana, & Dickson, M. A. (2017). Social sustainability in apparel supply chains: Organizational practices for managing sub-contracted homework.  Sustainability in Fashion , 193-216.  https://doi.org/10.1007/978-3-319-51253-2_10 

Beligatamulla, G. (2018). Design thinking for business and entrepreneurship: Accelerating innovation in higher education in Sri Lanka.  International Conference on Business Research (ICBR) .  https://doi.org/10.31705/icbr.2018.5 

Boldt, L. C., Vinayagamoorthy, V., Winder, F., Schnittger, M., Ekran, M., Mukkamala, R. R., Lassen, N. B., Flesch, B., Hussain, A., & Vatrapu, R. (2016). Forecasting Nike's sales using Facebook data.  2016 IEEE International Conference on Big Data (Big Data) .  https://doi.org/10.1109/bigdata.2016.7840881 

Bowie, N. (2019). The moral obligations of multinational corporations.  Problems of International Justice , 97-113.  https://doi.org/10.4324/9780429303111-6 

Carlini, J., Grace, D., France, C., & Lo Iacono, J. (2019). The corporate social responsibility (CSR) employer brand process: Integrative review and comprehensive model.  Journal of Marketing Management ,  35 (1-2), 182-205.  https://doi.org/10.1080/0267257x.2019.1569549 

Hoffman, A., Gold, N., & Curtin, C. (2019). Nike, Inc.: Late arrival to the "athleisure-wear" trend.  https://doi.org/10.4135/9781529760170 

Joseph, L. C. (2020). An analysis on 7P's of service marketing mix.  International Journal of Psychosocial Rehabilitation ,  24 (5), 3609-3616.  https://doi.org/10.37200/ijpr/v24i5/pr202069 

Kim, M. (2020). How Phil Knight made Nike a leader in the sport industry: Examining the success factors.  Sport in Society ,  23 (9), 1512-1523.  https://doi.org/10.1080/17430437.2020.1734329 

Larres, K. (2019). Brexit diplomacy, Trump, and the UK's "Special relationship" with the United States.  Diplomatica ,  1 (1), 113-126.  https://doi.org/10.1163/25891774-00101013 

LeRoy, K. A. (2017). Connect with customers and stakeholders.  Transforming Organizations , 49-64.  https://doi.org/10.4324/9781315277165-5 

Liu, X. (2021). Nike's general company analysis based on it 2020 annual report.  Proceedings of the 6th International Conference on Financial Innovation and Economic Development (ICFIED 2021) .  https://doi.org/10.2991/aebmr.k.210319.148 

Macdonald, P. K. (2018). America first? Explaining continuity and change in Trump's foreign policy.  Political Science Quarterly ,  133 (3), 401-434.  https://doi.org/10.1002/polq.12804 

Valero, P., Gollogly, N., & Curran, M. (2017). Enhancement of ISO 14001 and the integration of sustainability into the footwear supply chain at Nike Inc.  ISO 14001 , 331-341.  https://doi.org/10.4324/9781351282765-30 

Zeewy, O. (2021). The Nike syndrome.  Ready, Launch, Brand , 9-15.  https://doi.org/10.4324/9781003030607-2