2
Graduation Capstone IV
2
Graduation Capstone IV
Scanning the Environment – Nike Inc
Introduction
Nike has been the most innovative and leading company in athlete footwear, accessories, and apparel across the globe. The company operates in various parts of the world, such as America, Africa, Europe, the Middle East, and Asia, with headquarters in the Oregon United States(Aloulou, Riahi, and Mhadhbi 1). The company was established by Bill Bowerman and Phil Knight, where it was originally calledBlue Ribbon Sports (BRS) before changing the name toNike in 1971(A Loulou et al. 3).Nike has progressed through the sale of its products, becoming the leading company that deals with the athlete wear in the United States with more than half of the market share. This paper scrutinises the strategic audit of NikeInc.
Current Situation
Current Performance
In today’s world, athletes have become recognised by variouscompanies through the production of footwear and apparel. Nike has gained popularity following the production of the athlete’sfooterwears,apparel, and accessories. This has foreseen Nike having a global market share of 27.4 percentand revenue of $10.4 billion in the fourth quarter in 2019, which is a growth of 4 percent compared to the previous year (Yuonis). The return on investment for Nike in 2019 was 26.89 percent, which was an indicator of profitability.
Strategic Posture
Mission
Nike’s mission statement is ‘To bring inspiration and innovation to every athlete in the world’ if you have a body,you’re an athlete (A Loulou et al. 4). The mission is inspiring to the athletes by providing them with the mindset of winners.
Objective
Nike’s missionstatement defines the aim of the company based onthe role it playsin society. The mission statementsportray the mainfunctional goal of Nike company is to supportathletes by providing them with the right attire for sports events, which has been endorsed by the branddevelopment and strengths (Smithson). Following these objectives, the company has supplied the athletes with sportswear and equipment that make them comparable during the events.
Strategies
Nike utilises the generic strategy of maintaining its competitive advantage through the product mix approach (Gregory). The company has also focused on growth strategies by being innovative in the market, which has foreseen the company grow and become one of the leading firms in the athletic wear to maintain its competitive advantage (Gregory). This supports the mission statement of the company. For consistency, Nike ensures that the product mix diversity and the growth strategies rhyme with the conditions of the business at that particular time.
Policies
Various policies contribute to the productivity of the company. Nike has embarked on diversification to provide a wide range of products in sports that meet the needs of the athletes.Also, the firm has been innovative throughthe acquisition of companies such as Cole Haan and Bauer Hockey, Celect, among others (Nike). The current mission, objective, and strategies of the organizationreflect Nike’sinternationaloperations of supplying the athletes and other players with the rights attire for their sports.
Corporate Governance
Board of Directors
The board of directors of NikeCompany is made up of the President, and the CEO, Mark Parker, and other delegates who are responsible for foreseen the smooth running of different operations in the company (Nike 1). They own differentshares of the company, with the CEO,Mark Parkerbeing the third-largest shareholder (Nike 2). The CEO focuses on the growthof the company, with the entire board being actively focused on the visionof the company to achieve the intended goals and objectivesand ensure that Nikemaintains its competitive advantage in the businessenvironment. The CEO has served for 14 years, while the rest of the boardmembers at a varying number of years (Nike 5).These board members actively participate in makingdecisions for the well-being of the company and impacting on environmentalsustainability.
Top Management
The president and CEO of NikeInc.Mark Parker constitute the senior management. The executives who form the board of directors contribute to some of the decisions executed by the senior managementportraying the systematic approach. The senior management has been responsible for the productivity of their company over the years, which has foreseen the firm to maintain its competitiveadvantage in the businessenvironment. The strategic decisions are conducted ethically in-accordance-with the code of conduct as well as in an environmentally sustainable manner. The top management is efficiently skilled since they have driven the corporation to greater heights to become a renowned sportswear company in the United States. Further, Mark Parker owns significant stock in the company.
External Environment: Opportunities and Threats (EFAS)
Natural Physical Environment: Sustainability Issues
Some various threats and opportunities disrupt the operations of the company in its business environment. These factors may include the diversification of the products, profitability, and the presence of other saleschannelsin emerging markets. However,Nikecontinues to various threats emanating from inflation of the economy, competition from rival firms such as Adidas, shortage of workforce, inconsistency in the sales (Gregory).These factors vary from one geographical location to the others since the costumers in different areas will responddifferentlyto the products, with some opting for cheaper products. Thus, it relied on the customers’ loyalty towards the brand and quality of the products.
Societal Environment
Nike has its headquarters in theUnited States but runs its operations in various parts of the world that have a stable economy. Further, the company is renowned for sportswear; thus, these countries have a high purchasing power that favorsNikeInc.economically; Nikehas been receivingsponsorshipfrom other companies which have supported its growth (Ahmed et al. 8). Technologically, the company is innovative, whichprovides windows for opportunities to produce new products and diversify to attract new customers.However, new technologies have a significantimpact on the company as it incorporatesthe aspect of their products (Ahmed et al. 8). With technological advancements, the company can create a mobile app for the customers to conduct their online shopping. The employees and worker laws have affected the internaloperationsof the company, which foresaw the company being sued for child labor(Ahmed et al. 8). The socioculturaltrend of a healthy lifestyle has provided the opportunity for most of the customers to be loyal to the brand. Further, the increasing market share of women can create an opportunity for Nike in the future (Ahmed et al. 9).WithNike operating in various parts of the world, the forces are different from one country to another in the world since countries have varying policies.
Task Environment
The athletic footwear industry is at the maturity stage since most of the competitors are well established.
The threat of new entrants: high since much capital is required to start Sportswear Company
Bargaining powers buyer: it is low following the presence of an online platform that allows its consumers to place their orders at the comfort of their home. Moreover, the company targetsconsumers who have high income as they can afford topurchase high-quality products.The threat of substitutes: it is high following thepresence of other firms offering the same products in the industry.
Bargaining power-suppliers: it is low following both mutual trust between Nike and its suppliers
Rivalry: It is high following the competition emanating from other firms such as Adidasthat operates in various parts of the world.
The relative power of unions, governments: It is low as the agreements between different nations benefit the company.
Summary of the External Factors
Introduction
Nike has been the most innovative and leading company in athlete footwear, accessories, and apparel across the globe. The company operates in various parts of the world, such as America, Africa, Europe, the Middle East, and Asia, with headquarters in the Oregon United States(Aloulou, Riahi, and Mhadhbi 1). The company was established by Bill Bowerman and Phil Knight, where it was originally calledBlue Ribbon Sports (BRS) before changing the name toNike in 1971(A Loulou et al. 3).Nike has progressed through the sale of its products, becoming the leading company that deals with the athlete wear in the United States with more than half of the market share. This paper scrutinises the strategic audit of NikeInc.
Current Situation
Current Performance
In today’s world, athletes have become recognised by variouscompanies through the production of footwear and apparel. Nike has gained popularity following the production of the athlete’sfooterwears,apparel, and accessories. This has foreseen Nike having a global market share of 27.4 percentand revenue of $10.4 billion in the fourth quarter in 2019, which is a growth of 4 percent compared to the previous year (Yuonis). The return on investment for Nike in 2019 was 26.89 percent, which was an indicator of profitability.
Strategic Posture
Mission
Nike’s mission statement is ‘To bring inspiration and innovation to every athlete in the world’ if you have a body,you’re an athlete (A Loulou et al. 4). The mission is inspiring to the athletes by providing them with the mindset of winners.
Objective
Nike’s missionstatement defines the aim of the company based onthe role it playsin society. The mission statementsportray the mainfunctional goal of Nike company is to supportathletes by providing them with the right attire for sports events, which has been endorsed by the branddevelopment and strengths (Smithson). Following these objectives, the company has supplied the athletes with sportswear and equipment that make them comparable during the events.
Strategies
Nike utilises the generic strategy of maintaining its competitive advantage through the product mix approach (Gregory). The company has also focused on growth strategies by being innovative in the market, which has foreseen the company grow and become one of the leading firms in the athletic wear to maintain its competitive advantage (Gregory). This supports the mission statement of the company. For consistency, Nike ensures that the product mix diversity and the growth strategies rhyme with the conditions of the business at that particular time.
Policies
Various policies contribute to the productivity of the company. Nike has embarked on diversification to provide a wide range of products in sports that meet the needs of the athletes.Also, the firm has been innovative throughthe acquisition of companies such as Cole Haan and Bauer Hockey, Celect, among others (Nike). The current mission, objective, and strategies of the organizationreflect Nike’sinternationaloperations of supplying the athletes and other players with the rights attire for their sports.
Corporate Governance
Board of Directors
The board of directors of NikeCompany is made up of the President, and the CEO, Mark Parker, and other delegates who are responsible for foreseen the smooth running of different operations in the company (Nike 1). They own differentshares of the company, with the CEO,Mark Parkerbeing the third-largest shareholder (Nike 2). The CEO focuses on the growthof the company, with the entire board being actively focused on the visionof the company to achieve the intended goals and objectivesand ensure that Nikemaintains its competitive advantage in the businessenvironment. The CEO has served for 14 years, while the rest of the boardmembers at a varying number of years (Nike 5).These board members actively participate in makingdecisions for the well-being of the company and impacting on environmentalsustainability.
Top Management
The president and CEO of NikeInc.Mark Parker constitute the senior management. The executives who form the board of directors contribute to some of the decisions executed by the senior managementportraying the systematic approach. The senior management has been responsible for the productivity of their company over the years, which has foreseen the firm to maintain its competitiveadvantage in the businessenvironment. The strategic decisions are conducted ethically in-accordance-with the code of conduct as well as in an environmentally sustainable manner. The top management is efficiently skilled since they have driven the corporation to greater heights to become a renowned sportswear company in the United States. Further, Mark Parker owns significant stock in the company.
External Environment: Opportunities and Threats (EFAS)
Natural Physical Environment: Sustainability Issues
Some various threats and opportunities disrupt the operations of the company in its business environment. These factors may include the diversification of the products, profitability, and the presence of other saleschannelsin emerging markets. However,Nikecontinues to various threats emanating from inflation of the economy, competition from rival firms such as Adidas, shortage of workforce, inconsistency in the sales (Gregory).These factors vary from one geographical location to the others since the costumers in different areas will responddifferentlyto the products, with some opting for cheaper products. Thus, it relied on the customers’ loyalty towards the brand and quality of the products.
Societal Environment
Nike has its headquarters in theUnited States but runs its operations in various parts of the world that have a stable economy. Further, the company is renowned for sportswear; thus, these countries have a high purchasing power that favorsNikeInc.economically; Nikehas been receivingsponsorshipfrom other companies which have supported its growth (Ahmed et al. 8). Technologically, the company is innovative, whichprovides windows for opportunities to produce new products and diversify to attract new customers.However, new technologies have a significantimpact on the company as it incorporatesthe aspect of their products (Ahmed et al. 8). With technological advancements, the company can create a mobile app for the customers to conduct their online shopping. The employees and worker laws have affected the internaloperationsof the company, which foresaw the company being sued for child labor(Ahmed et al. 8). The socioculturaltrend of a healthy lifestyle has provided the opportunity for most of the customers to be loyal to the brand. Further, the increasing market share of women can create an opportunity for Nike in the future (Ahmed et al. 9).WithNike operating in various parts of the world, the forces are different from one country to another in the world since countries have varying policies.
Task Environment
The athletic footwear industry is at the maturity stage since most of the competitors are well established.
The threat of new entrants: high since much capital is required to start Sportswear Company
Bargaining powers buyer: it is low following the presence of an online platform that allows its consumers to place their orders at the comfort of their home. Moreover, the company targetsconsumers who have high income as they can afford topurchase high-quality products.The threat of substitutes: it is high following thepresence of other firms offering the same products in the industry.
Bargaining power-suppliers: it is low following both mutual trust between Nike and its suppliers
Rivalry: It is high following the competition emanating from other firms such as Adidasthat operates in various parts of the world.
The relative power of unions, governments: It is low as the agreements between different nations benefit the company.
Summary of the External Factors