Nike is a multinational company which is based in the United States of America and majors in the production, development, designing and marketing of sports gears. In addition, the company has recently diversified its line of production by manufacturing sports accessories that include watches and equipment. Given that Nike is undoubtedly the world’s largest supplier of sports shoes and sports clothes, the company boasts of being able to employ over 40,000 people worldwide and this means that they have huge turnovers that amount to billions of dollars every financial year. Additionally, the company was formed in 1964 by Bill Bowerman and Phil Knight who named it Blue Ribbon Sports before changing this name to Nike in 1970.The mission statement of Nike states that the company’s mission is “To bring inspiration and innovation to every athlete in the world.” On the other hand, the company’s vision is help the company and its customers to be able to thrive in an economy that is sustainable and in a world where everybody gets to enjoy the profits that Nike makes. This vision, however, is more bent on corporate social responsibility and it shows that Nike recognizes its customers as its major partners in their brand sustainability. In the essay below, the impact of Nike’s mission and vision statement, the company’s strengths and weakness and the factors that have allowed the organization remain relevant will be analyzed in a bid to understand the reasons behind the prosperity of the corporation.
Firstly, Nike’s mission statement spells out the commitment they have towards supporting sports talents. Also, the mission statement shows that the company is ready to venture into the world of sorts to ensure that they keep delivering quality products throughout the world. With this kind of consistency, and their zeal to inspire athletes, the company’s mission statement has had an impact on their success since most athletes have found Nike products to be reliable. For example, successful athletes like Lebron James and Cristiano Ronaldo have continued to shine while using Nike products. Despite being talented, upcoming athletes and the world at large at times attributes their success to the gear in which they play in. This makes Nike’s brand reliable and they owe this to their mission statement which is based on inspiration and innovation. Equally, the vision statement of the corporation has had an impact on the company’s success. Despite the vision lacking a business look, it has an image that portrays that Nike cares for its customers, employees and anybody else who enjoys their products. This is because their vision statement clearly states that their aim is to ensure that their activities will foster equal distribution of resources within the world and at the same time creating a sustainable economy. Consequently, the vision statement brings out the image of the company as a company that takes into consideration the role of the athletes and employees in the world and the impact that they can create in the world. Nike’s primary stakeholders stand to be the customers and athletes that it serves. Out rightly, they have a say in the brand image since their level of satisfaction is what determines if they will make return purchases. In order to ensure that their primary stakeholders are satisfied, Nike has engaged in corporate social responsibilities which they have allowed their customers to spearhead so that their interests can be satisfied. In return, this creates customer satisfaction and gives Nike the world’s approval and goodwill that any business requires to flourish.
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According to Porter’s Five forces analysis that focuses on how a business should handle competition, Nike has been able to compete and handle threats in the sports industry effectively. Firstly, the corporation has been able to handle the threat of new entrants into the market effectively. This has been facilitated by Nike being able to concentrate in itself as a brand and offering unique services to its customers and the world at large. Their product differentiation and customer loyalty are factors that have enabled them stay afloat in a business that has other giants such as Adidas. Luckily for Nike and the products that they produce, there are a limited number of substitutes since their products are unique to the tastes of their customers. This is a factor that has helped them survive the ease of substitution for other products since they have a whole range of products which a customer can enjoy for a long time since they make long lasting products. The third force of competition that has influenced how Nike conducts its business is the bargaining power of its customers. This is because customers are able to say how they feel about some of the new products that the company produces. For example, when Nike introduced their sports accessories that are retailing at relatively high prices, their customers worldwide almost boycotted their new product due to how expensive they were. However, after talks with their clients worldwide and vast distribution channel, they agreed to offer their products at affordable prices. The efforts made by Nike to listen to the plight of their customers worldwide is something that has demystified them from other companies who rarely engage their customers especially during product differentiation and when launching new products. The small size of their buyer, however, is a challenge that threatens Nike’s force in the market and when they cannot acquire what they require from Nike, they easily purchase other products which are available as substitutes. Also, the bargaining power of suppliers is a force that has influenced the success of Nike since it is the suppliers who determine how much resources a company will put into the purchase of a raw material. This, in turn, determines the prices of inputs which have a ripple effect on the price of the final product. However, Nike has been able to overcome this y having a strong distribution channel across the world and this has made them maintain the loyalty of their suppliers throughout the years. The most significant force that has influenced Nike’s operations is the industry rivalry that they happen to have with companies like Under Armour which have also majored in sports gear. However, Nike has been able to wade through this being able to establish innovative methods of sustaining their competitive advantage. Such ways include minimizing their online adverts and instead choosing to interact with clients during sports tournaments and other Corporate Social Responsibility actvitues whichare carried out by athletes with the support of the company. However, Nike should work on a strategy that aims at being able to attract new clients as well as retain the old ones. Finally, the threat of new entrants may not be perceived as a force for Nike’s existence since they have been able to create a lasting brand name and they have the necessary competitive advantage as well as the right strategy for business and it is why they have been able to remain relevant since 1964.New entrants are relatively weak forces since joining the industry requires a huge amount of resources as and high economies of scale.
For Nike, the trends that are in the world of sports seem to favor al their products due to their diverse product line. One of Nike’s strengths is that it has a strong global brand that has been in existence for over 50 years. One of the strategies that the company has used to strengthen its brand is by partnering with famous athletes such as Cristiano Ronaldo and Michael Jordan and this has helped them increase their sales since most people want to be associated with the two athletes. Their ability to work with such people has enabled them maintain their relevance as well as increase their sales. However, this carries along what seems to be the brand’s weakness-high product prices. Due to Nike’s association with iconic people, the company has developed a strong brand which is focused on premium products. However, their high cost makes their footwear unaffordable to some of their customers who, in turn, opt to purchase goods from Nike’s competitors. With the growth in the world’s economies and some of the developing nations, Nike has the opportunity to increase their share in the industry. This is because most of these growing economies which include China and even India, are guaranteed of higher incomes which will lead to more needs. The corporation can take advantage of such an opportunity and broaden their operations in the Asian region. One of Nike’s significant threats is competition within the footwear industry. This comes with the emergence of brands such as Under Armour which deals with leisure wear. Due to the increased use of technology in production, Under Armour has been able to produce good sports shoes and this appeals to people of all age groups. This is a threat since leisure shoes will soon serve as sportswear and if Nike does not find ways to mitigate such a challenge, they may run of business in the footwear business or register lesser profit margins. Therefore, it is important to note that the strengths, weaknesses, opportunities and threats that Nike faces are issues related to both the internal and external environment and that they can adequately deal with.
Despite the challenges and threats that Nike is exposed to, it has managed to maintain its market share in most countries. One of the ways that the organization can capitalize on its strength as a strong global brand is by ensuring that it maintains consistency in engaging more iconic athletes who resonate with people all over the world (Maidenberg & Company, 2018) . Due to its multidimensional nature of investment in many countries across the world, Nike should keep laying investments in developing and emerging economies so that they can command a significant market portion in the countries. Nike could minimize the threat from emerging brands by ensuring that their prices are affordable depending on the market in which they are retailing. This will ensure that all their customers, regardless of their country are able to enjoy the value for their money. Additionally, Nike needs to embrace the use of technology in their activities since the world’s economy is now running on a technology platform. They can minimize the threat of competition by embracing technology since they have resources which they can invest in technology in order for them to increase their revenue and still maintain their market share. If the company can weather through its threats and weaknesses as well as maximize on its strengths and opportunities, they would keep leading in demand as well as sales and growth.
In an increasingly changing world, every business should focus on increasing competitiveness and profitability. In order to maximize on competitiveness and profitability, a business should ensure that their pricing is in line with their business plan and the business should also be able to understand the market forces that are around it. For Nike to improve its competitiveness, it is important for them to understand the market forces. This entails studying the nature of the market and also being able to price their products slightly above that of their competitors since they deal with premium products. This, therefore, means that Nike has to bring down some of its product prices so that they can be within the range of the prices of their competitors and this will increase their customer base as well as the level of competition within the market. Additionally, Nike can choose to price their products at general prices and even if they will be slightly higher than those of its competitors, the customers may not notice this variation since the prices of their goods and other goods will be within the same range. This pricing strategy will improve their profits since costs have a way of increasing each time and by the time their competitors are increasing their prices, Nike will be seen as a company that is still retailing at its original price.
For a strategy to be effective, the management must find an appropriate way of communicating it to the shareholders for them to approve. This is because they are the most integral part of a company and they need to be addressed on issues concerning the welfare of the company as well as decisions that may affect the profitability of a company. Arranging one on one meetings would be an effective way to communicate strategy and decisions made by the management. This gives room for the shareholders to air their views through a dialogue and it helps to avoid misinterpretation or future conflicts over lack of consultation. Another way that Nike can use to communicate with its stakeholders is by engaging them at distribution points. By doing this, Nike will have met their customers on a one on one basis to ensure that they understand what they may be feeling about certain changes. This will also give them a platform to understand which products are not moving fast in some outlets and they will have a chance to gather the reasons why there is such a slow movement of goods at that outlet. Communicating with the shareholders send the message that the right choice was made and the customers will feel secure especially if they learn that the pricing decision was not made by the management alone. Since some of the customers are also invited to stakeholder meetings, they will feel that they are an important part of the organization and this will ensure the progress of the company.
One of the corporate governance methods that can be used to control managerial actions is ensuring that the business is flexible in adapting to the global business trends affecting the world. By being able to adapt to a strategy that is sustainable ensures that the business remains relevant and it shows that the company is committed to providing the quality products to its customers. Such programs that entail flexibility to global trends should be supported by sustainability supporting structures that are under competent managers to ensure that they are implemented and that their results can be seen within the expected time. Another corporate governance mechanism that Nike can use to control its managerial actions is having external advisory councils that will keep the management in line with the company’s agenda (Epstein, Buhovac & Yuthas, 2010) . This means that the advisory councils will be able to help the management make decisions and stick to the decisions that are meant for the good of the company. Therefore, inviting advisory councils for such big companies and establishing mechanisms to ensure that the business is able to control its managerial actions.
One of the things that makes Nike’s leadership effective is that it is a participatory form of leadership. This means that the leaders within the company are able to engage the management in the day to day activities of the company and they also give their input on some of the solutions required to solve the challenges that the company maybe going through. However, one of Nike’s Chief Executive Officers, Mark Parker, believed in art as a form of product design and this meant that he could not really identify with the employees who were equipped with technical skills. However, he identified with the designers and his input was relevant and valuable to the company. One of the ways in which Nike can improve its leadership is by hiring managers who can relate well with all employees regardless of the continent that they are in and regardless of the skills that they may be having. This ensures that every Nike employee feels that they are part of the company regardless of their occupation.
Luckily for Nike, their vision statement carries a message of corporate social responsibility since it focuses on bringing stability in the world and ensuring equal distribution of resources. They have also made an effort to make its products using eco-friendly materials such as recycled cotton. It also has a mechanism of reducing waste products in its supply chain and this has made it stick to its commitment of reducing carbon emissions by half within the next decade. By doing this, Nike has stuck to the theme of the world which is going green and creating a sustainable environment for future generations.
On account of the above points, it would suffice to conclude that Nike, being a giant corporation has been able to remain relevant for over half a century due to its ability to offer customer satisfaction. It would also be worth noting that Nike has been able to remain relevant due to its branding and pricing power which have helped them stay afloat despite competition from brands like Adidas. Their manufacturing efficiency and eco-friendly products throughout the world is also something that has helped Nike prosper. However, Nike has had to withstand the claims of poor labor relations with its employees with claims that they have poor working conditions and this is something that they have to counter before it affects the credibility of their brand (Draper & Creswell, 2018) . All in all, their impressive earnings and strategy are something that other corporations should emulate especially with the growth of the global economy.
References
Draper, K., & Creswell, J. (2018). Nike’s C.E.O. Vows Changes After Claims of Workplace Harassment and Bias. Retrieved from https://www.nytimes.com/2018/05/05/business/mark-parker-nike.html
Engel, F., Holmberg, H., & Sperlich, B. (2016). Is There Evidence that Runners can Benefit from Wearing Compression Clothing?. Sports Medicine , 46 (12), 1939-1952. doi: 10.1007/s40279-016-0546-5
Epstein, M., Buhovac, A., & Yuthas, K. (2010). Why Nike kicks butt in sustainability. Organizational Dynamics , 39 (4), 353-356. doi: 10.1016/j.orgdyn.2010.07.007
Lund-Thomsen, P., & Coe, N. (2013). Corporate social responsibility and labour agency: the case of Nike in Pakistan. Journal Of Economic Geography , 15 (2), 275-296. doi: 10.1093/jeg/lbt041
Maidenberg, M., & Company, T. (2018). Nike, a Global Brand, Will Try Going Local. Retrieved from https://www.nytimes.com/2017/06/15/business/nike-layoffs.html
