Nike’s competitive position is shown through Porter’s Five Force’s (Figure 4), analysing their present competition. Looking at this model Nike has a strong strategic position due to them creating modern and technology focused products in the market, putting them at an advantage in the sector. However, they are at a slight disadvantage as their products are higher in price than most of their competitors like Adidas, Puma and New Balance. Another competitor Under Armour has very similar prices to Nike. Nonetheless, Nike has a competitive position as they have a global reach, leaving them at a low threat of new entrants due to their high position. From this model, Nike’s largest threat is from their competitors.
In Porter’s generic strategy analysis (Figure 5), showing the external factors. The cost leadership in the generic strategy is a strategic objective, based on growing the company’s competitive advantage through new technologies to reduce production costs. The product differentiation is a financial objective, to increase Nike’s profit margins, for example creating new shoes. The cost and differentiation focus in a niche market, Nike uses this to focus on their customers’ needs in this market. Focusing on their customers ranging from ages 15 to 40 (Statista, 2019), in a large demographic sector. Nike has a specific strategy and has high levels of organisational performance within each generic strategy (Allen and Helms, 2006).
Bartlett and Ghoshal’s model (Figure 6) represent the strategic options for Nike and the standardization around the world. To strengthen their global strategy Nike are working on investing millions to build capabilities worldwide to support retail performance (Nike News, 2010). However, leaders in retail are being overtaken by media and digital marketing now and in the future. The global and multi-national strategy link, as it explains that Nike wants to expand markets throughout many countries. At this point Nike operates in 120 countries, and their current marketing strategy is to invest in many product promotions like commercials and having sponsorships. For example, Nike has created a basketball, athletic and casual shoe range for former basketball player Michael Jordan (Nike Air Jordan, 2019). However, Nike could expand their global strategy by improving their working conditions in oversea factories, which is used for outsourcing production where the costs are lower (Mallen Baker, 2016).
The changing culture of the shifting paradigm shows the management of change and the way we are thinking about the world, by shaping and changing the culture of business (Schein, 1985). For example, being more flexible with organisational cultures. Johnson’s cultural web (Figure 7) demonstrates how Nike’s strategy can be improved. Due to how culture can provide an increase in position for Nike in the sports shoes and apparel sector. Nike was founded in 1964, by Bill Bowerman and Phil Knight (About Nike, 2019), they have culture, as they value diversity, collaboration and creativity (Jobs Nike, 2019). They also hold strong routines and rituals, as they believe their employees should be rewarded and compensated for performing well. Improvements can be made from looking at figure 7, as Nike holds a matrix organisational structure, which can hold disadvantages. For example, a disadvantage from this structure as there is more than one boss in this large organisation, which can lead to confusions in the organisation. Secondly, as Nike has a global corporate leadership structure, they hold hierarchies within the organisation, which may make it harder for other employees to succeed further up the company, affecting retention rates of employees leaving Nike, following to an effect in employee morale. This suggests that Nike, will need to change this strategic direction to be at a competitive advantage and maintain their lead in the market.
Furthermore, Nike can improve their strategy with a renewal of their lifecycle. Renewal is inevitability in the lifecycle of an old organisation, for example, Nike bringing out a new line of shoes. Starting out with the introduction (Miller and Friesen, 1984), where new shoes are released in the market with advertisement for customers to recognise. Then, growth of the new product where customers willing to pay the price and sales are slowly increasing. Next, is the maturity where sales from the shoes are at their highest and stock is low. Lastly, in the lifecycle there’s a decline period of the shoe range decreasing in popularity. The drivers of change in this sector from looking at the lifecycle are the growth in emerging markets, especially in China where markets are developing from the customers with a desire in sport (Forbes, 2015).
The Ansoff matrix (Figure 8) portrays Nike’s growth in their existing market and also shows the direction set for Nike’s organisation strategy. Nike’s market penetration is increasing due to them opening new retail stores in the global market, this would show that Nike’s strategic direction is to increase their market presence globally. Product development is Nike’s most intense growth strategy because of their ability to create products using technology and other factors to enhance sales and make competition in the market. The market development allows Nike to enter new markets like China with the product development, as total sales in China increased to 20% (Jiang, 2018). Diversification is Nike’s least growth strategy as it can be seen as a financial risk, if the product doesn’t sell in the new markets. However, to improve they could sell a wider range in products.
In Nike’s Corporate Social Responsibility statement, they have shown their reduction in waste to be environmentally beneficial. Footwear and apparel have decreased by 2.5% in their carbon footprint per unit in 2017 (Sustainable Business Report, 2017). This shows that Nike have been influenced by the environment and are willing to change, by adapting to the needs of the environment and being sustainable. Also, 96% of finished goods from Nike footwear manufacturing waste was recycled and converted into energy (Sustainable Business Report, 2017). Nike will need to continue to focus on minimising their environmental footprint in the future so that their business strategy is to succeed. This links to Carroll’s CSR pyramid (Carroll, 1991) as it shows ethical and philanthropic responsibility of giving back to the society and the environment by acting morally.
For Nike to continue to be successful, they will need to be more responsive to the market and demand of their competitors. This will be possible for Nike to do if they carry out research projects, so they compete with other brands in the market, making sure they sustain their strategy of maintaining leader in sports footwear and apparel.
2019-4-30-1556624612
...(download the rest of the essay above)