Nike company research report PDF

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Research report about Nike, group work...

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Nike is the world’s largest footwear supplier of athletic shoes and sports equipment, it is also the most worn shoe brand in the world. The popular shoe brand is a multinational cooporation that is involved with a lot of different fields in design, development, manufacturing, and worldwide marketing and sales of footwear, apparel, equipment, accessories, and services. The brand has built itself a reputation through high-quality endorsement with famous celebrities, smooth and unique designs, and promotion campaigns that are successful with trendy popculture collaboration. The Nike swoosh logo seems to be appeared largely all over the footwear industry, overwhelm its industry rivals Adidas and ASICS, which is the reason why Nike is still the reigning king of the footwear industry. With advanced technologies and a well-founded sales network plus promotion campaigns, Nike is expected to continue to hold the largest market share and keep thriving for years to come. Since Nike started doing their own business independently, they have achieved several successes. In the year of 1988, the birth of the slogan "Just Do It" campaign allowed Nike to further increase its share from $877 million to $9.2 billion in worldwide sales from 1988 to 1998 (Peters, 2009). Throughout the Nike company history, due to the growth of the brand and their need for expansion, they were able to buy and own other smaller companies with these following acquisitions: Cole Hann in 1988 (NY Times), Bauer Hockey in 1994 (Nike News,2008), Hurley International in 2002 (Connnely, 2013), Converse in 2003 (Partlow, 2013), Starter in 2004 (Portland Business Journal, 2007), and finally Umbro in 2008 (Nike News, 2007). Nike has undoubtedly become the force of the footwear industry with the annual revenue growth increases significantly. By the end of 2009, the sales revenue of Nike was $19.176 billion, which was already significantly higher than the sales revenue for the year 2007 of $2,850 million. However, at the end of 2010, the number experienced a slight decline in the sales revenue which about $162 thousand compared to the last year. Since 2010, sales every year had been increased gradually making Nike slowly become one of the top companies globally. Eventually, in 2015, the figure had reached a decent sale which took it to $30.6 billion from $27.79 billion reported at the end of the year 2014. Nike is an American multinational company that specializes in manufacturing shoes, equipment, clothing, and fashion accessories. It is the largest supplier of sports shoes and apparel in the world. Therefore, it can be seen that Nike has done a good job of organizing its structure so that it can operate a global organization in a very successful way until now. The organizational structure of Nike reflects the ability and limitations of the business in its operations. Nike's organizational structure emphasizes changing to adapt and evolve to become the trend of each different market. Nike has applied the global matrix structure model to its organizational structure and specifically focuses on the horizontal differentiation - functional division and geographical division. The characteristics of the company structure provide Nike with the flexibility to address consumer preferences for sports shoes, apparel, and equipment in regional markets. Geographic divisions are a major organizational structure characteristic of Nike, Inc. According to Nike News, the company’s operations are divided into segments based on regional markets. Each regional division’s managers optimize operations in the regional sports shoes, apparel, and equipment market. Before 2009, Nike was organized by four regions: the US, Asia Pacific, the Americas, and EMEA (Europe, Middle East, and Africa). In March 2009, Nike announced its plan today to reorganize its Nike Brand into a new model consisting of six geographies: North America, Western Europe, Central & Eastern Europe, Greater China, Japan,

and Emerging Markets. This structure is claimed to reduce management layers and increase focus on core category business areas, driving greater efficiency and stronger consumer connections. Charlie Denson, President of the Nike Brand has said that this structure helps the company to make a faster and more accurate decision but cost fewer management resources. Before 2009, the USA is always the main market of Nike but Nike had recognized the development of this market in other countries. According to Cheng (2009), China and Eastern Europe have been among the faster-growing markets of the sneaker giant, which generates more than half of Nike’s sales outside of the US. By the new structure, emerging new and full of potential markets include Korea, South East Asian countries, Australia, Brazil and India, China, Taiwan, Hong Kong can gain huge profit to this company. All the departments of a functional structure come under the president. Functional division involves grouping work and workers into separate units, responsible for particular business functions or areas of expertise. This structure can bring Nike some advantages such as work is done by highly skilled specialists; lower costs are incurred due to reduced duplication. On the other hand, in each region, its Nike organizational structure follows the product divisional structure. This is to ensure that any development and innovation of the product will be appearing all around the world. And to manage a huge business around the world, Nike operates global corporate leadership, which involves corporate managers. According to Andrew (2019), the managers have offices at the company's headquarters in Oregon, USA. They decided on Nike's global corporate structure. For example, the Global Sports Marketing team releases new marketing campaigns for sports shoes around the world. Through this feature of the Nike organizational structure, decisions are made easily throughout the company. The following are the major global leadership groups headed by the President, Executive Vice President or CEO: Office of the President & CEO, Nike, Inc., Nike Brand, Finance, Global Human Resources, Product & merchandising, Administration & Legal, Global Sports Marketing, Operations. Moreover, Nike also has Global parts for brand and trademark licensing. Nike's matrix organizational structure gain Nike many advantages such as the regional division structure allows Nike to deliver different goods in different areas related to the interests of people in those areas sign, the company is aware of the culture of the people who live there and they market their products according to their culture. The matrix structure, in general, uses the company's scarce human resources very effectively by using one person for more than one job. But, Nike's matrix structure also accumulates the disadvantages of all the different types of organizational structure. The functional structure leads to overlapping tasks within the company. This leads to wasting money and other resources of the company. Moreover, a lack of coordination can prove to be fatal to the organization. As the company began to grow, Nike Inc. has successfully made its presence by more than 930 retail stores across 190 countries all over the world. The company generally operates as autonomous distributors and licensees. Now the company is all set to increase its sales ratio through new store rollouts and continual digital enhancements and innovation. Same as the majority of the consumer-facing firms, Nike faced difficulties due to challenging trading conditions since the financial crises of 2008-2009 and contingent economic slowdown. This situation has applied in both the Asia Pacific region and Western markets. However, the company bears the accountability of being the prominent manufacturer of sports apparel and footwear and generated revenue by rising 5 percent to $7.8 billion up 13 percent in the year of 2015 (Nike.com, 2016). However, the global market would be able to help Nike in times of

recession and its sales haven’t suffered much. In short, the economic external environment is significant in determining the performance of Nike which includes factors like developed market’s economic stability, Emerging growth of emergent markets, and decelerated economy of China. Be that as it may, Nike does not claim footwear and attire manufacturing plant. Footwear and attire companies account for almost 96% of Nike brand income. Instep, Nike outsourcing generation to third parties. It contains a tremendous fetched advantage. Nike providers Nike supplies most of the neighborhood crude materials delivered by free temporary workers. Centering on the real request point of the deal, forms are being changed from retail racks back, to realize an adjusted item line over the complete supply chain. Request arranging forms are moreover being overhauled from a retail viewpoint, and online retail hones, consolidated in item design. Their exact conveyance guide, counting a book of need activities, with official subsidizing, counting: coordinating supply/demand, moving forward deals list precision, coordinating streamlining the operations of dispersion centers, and optimizing forms over the globe. They have too made an administration board that sets techniques, prioritizes activities, and advances corporate-wide execution based on standardized forms and stages. The Nike supply chain covers a wide extent of nations. Its items are fabricated in 42 nations in 567 free production lines utilizing over 1 million specialists. These free manufacturing plants deliver nearly all items sold and showcased by Nike. In financial 2017, as it were 5 of its contract producers accounted for almost 69% of add up to Nike Brand footwear generation. (The 2018 Upgrade Nike outsourcing most of the generation to outside providers. 124 footwear industrial facilities in 13 nations creating Nike shoes in 2018. No one accounts for more than 10% of all generations of Nike articles of clothing industrial facilities in 37 nations given Nike retail stores in 2018. No items accounted for more than 15% of the year's generation.) In expansion to the arrange of providers, Nike has a productive dissemination framework to serve the wants of person clients truly speedier. These co-ordinations and dispersion centers too serve as important points of contact for the requirements of thousands of Nike retail stores, online deals, and individual clients. Nike opened a North American coordination office in Memphis, Tennessee, which is the biggest of all the Nike dispersion centers it opened to serve more than 2000 Nike stores in North America. This present-day craftsmanship office is found on 2.8 million square feet and holds shoes, clothing, and hardware from Nike and Jordan. The office meets Nike's most noteworthy maintainability benchmarks and makes a difference meet the developing needs of personal customers and discount clients. These co-ordinations offices or territorial dissemination centers have made a difference Nike oversees supply chains and provides them with speedier and more intelligent. In this way, several things stand out around the Nike supply chain, the foremost critic of which is its adequacy, centering on morals and maintainability and a solid physical foundation. Being a globally successful shoe manufacturer, Nike has a lot of strategies up to maintain as the king of footwear suppliers. And all of the achievements of Nike cannot be completed without the unsung heroes – their dedicated employees and efficient human resources management. In 2019, the company has more than 76,000 employees (statistic, 2019) and operated in more than 190 countries (Oberoi, 2019) around the world. The human resources management of Nike has played a crucial role in Nike’s enormous success because of the distinctive characteristics of sport create a unique management environment which is

complicated for a sports company. Indubitably, the effective management of employees who work for organizations is necessary and critical to achieving their goals. For years, Nike has been studying several strategies so that able to implement strong human resource policies to build an engaged workforce (Nike Purpose, 2019). Nike comprehended that strong human resources policies and qualified management is are essential for all the company’s workers to be compliant with the law of labor. Therefore, they have created guidance and instruments to develop and secure human resources management in their factories. Besides, Nike stated that: “By investing in HR professionals, systems and processes our suppliers will be able to have the right people, with the right skills, in the right roles, who are engaged, empowered and invested in driving their business success” (Nike Purpose, 2019). When operating in different regions, they will have each term dedicated to individuals in that region to work with the suppliers to measure and improve human resources management potential. In 2009, Nike had applied a new developed human resources management training plan in Vietnam and Southern China to strengthen their human resources systems, each factory will conduct and complete the survey to understand and find solutions for the problems that they are facing and to determine the level of mutual trust and respect (Efthymiou, 2015). With this Nike is genuinely trying to bring the best condition and environment for their employees, and also desire to see the best position for the workers. For each of Nike’s factories, there will be different plans with different goals, responsibilities, and structures that suit them best with each of the regions. In terms of labor relations, the purpose of Nike has had this suggestion for the last several years. According to Nike Purpose, the company wants to develop systems and processes to capture precise data and conduct data analysis on the human resources system. Secondly, they will assess supplier management strengths and weaknesses and identifying opportunities for development, then providing instruction and consultation to strengthen supplier human resources systems, with a concentration on how to attract, invest and engage their workers and finally, developing tools to evaluate worker engagement and identify areas of opportunity for investment (Nike Purpose, 2019). The footwear company knows that employee retention is the most important key for the long-term growth of the franchise. Any company can recruit as many employees as they want, but keeping their loyalty and reduce turnover are one the most difficult things to do even for Nike Thus, Nike wants to celebrate and reward productive employees through brilliant benefits and bonuses using an effective compensation system with benefits that provide them the opportunity to stay fit, ensure the wellness of their families and create a positive working environment (Nike1020). Moreover, Nike would also use intangible rewards to motivate its employees to be more devoted to the brand. Employees are encouraged through appreciation to help generate ideas. By improving excellent compensation systems, Nike will be able to attract talents, encourage loyalty, and satisfied workers’ wishes to construct a stable work environment for the company in the long term. Nevertheless, in 2018, Nike had raised the pay of nearly 10% of its staff and adjusted the method of rewarding which was based mostly on how well the company performs instead of the previous formula that focused on a combination of individual performance along with their team (Jones, 2018). Upon the changes, the company attempts to bring new fresh air to the work environment for the conversion of reward systems such as "deliver differentiated, competitive pay and benefits, and support a culture in which employees feel included and empowered.'' (Jones, 2018). Nike wants to emphasize the equality between male and female workers, and it will not be restricted by factors like geography or which

department they work in at Nike. It would be a smart strategy for Nike to keep developing human resources systems and improving policies for its employees because it will certainly guarantee Nike to achieve and expand its goals even further, and also having the right people in the right position to reach those successes in the future. From Nike's brand mission statement "Bring inspiration and innovation to every athlete* in the world (*If you have a body, you are an athlete)", along with the famous tagline "Just Do It ", all of which are indicative of Nike's ongoing efforts to develop and flexibly embrace innovations that reach a wide range of customers by offering the best value and different experiences delivered through Nike products and messages. To demonstrate this, CEO Mark Parker also said that "When we offer more tailored products and experiences, we bring more value to the consumer and it opens up more opportunities to grow our business”. Today, Nike is using a variety of global marketing strategies with different campaigns to show its brand power, compete in the global economy and expand internationally. More specifically, marketing strategies have been applied effectively by Nike, especially the pricing strategy for products that play a huge role because prices depend directly on demand and contribute to increasing profits, revenue for the company. Through the marketing mix, it can be seen that Nike is applying two main pricing strategies in the business: Value-based pricing strategy and premium pricing strategy. First of all, Nike uses a value-based pricing strategy to determine the maximum price that customers are willing to pay for the company's products, while also considering customer emotions about the value that the product brings, from which Nike focuses on continual improvement to provide consumers the best product value along with versatile designs when using state-of-the-art technology at an affordable price. In particular, a typical example of this is the classification and naming of each Nike footwear product line, such as Nike Running, Nike Basketball, Nike Football, Nike Lifestyle, Nike Gym, and Training, etc. All of this will help Nike have a close connection and meet the customers' changing interests and needs. Although not playing a role as the cheapest product compared to other competitors, the pricing that corresponds to the quality of the product can help Nike convince customers to buy its products even if it costs a little more. On the other hand, the segment pricing strategy also helps Nike to make more accurate product pricing decisions and bring the most profit possible to the company and its human resources, such as the distribution of production, distinguish lines of sneakers and clothes for children, adults, men, and women. Furthermore, with a leading position in the global market when providing customers with apparel, footwear, accessories, sports equipment, etc., Nike is applying premium pricing strategies with a customer-driven model, accompanied by branding strategies, in which the company constantly sets high prices for its products instead of lowering prices, with the criteria that consumers when using Nike products at a higher price than other competitors can feel the products are more dominant in the market. From that point, Nike has achieved success in running its business, effectively implementing a price-leading strategy that helps generate more revenue for the company, gaining more loyalty, trust, and emotional satisfaction of consumers for the brand through high-end products from quality to durability. A good example of Nike's premium brand and image assertion is the use of advertising campaigns, emotional branding strategies with deeply inspirational messages. Specifically, Nike has invested in using images of many superstars and famous sports athletes, especially are the legend of the world basketball village - Michael Jordan, Nike has built consumer emotional attachment to the superstars they admire, and also, consumers can feel more confident like a

“superstar” when using Nike products. In addition, as the Internet becomes a utility demand for consumers, Nike has focused on technology, demonstrating its professionalism by building a wide range of coverage across all social networks, such as creating a convenient shopping app for consumers, establishing each of the pro...