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Nike's History

Question:

Discuss about the Strategic Management Nike Inc.

Nike International Company is an American based multinational company that deals with designing, management, production, and global marketing. The Corporate headquarter is located in Beaverton, in the Portland metropolitan area, Washington County, United States. Nike Company is the best biggest suppliers of athletic wears as well as the best manufacturer of sports wears (Correspondence, 2013). Nike was founded around the mid-60s as blue ribbon Sports. The core founders were Bill Bowerman and Phil Knight. Later in the mid of 70s, the company changed to the famous Nike. In the beginning, the company was acting as the primary distributor for Japanese shoe Company that enabled the Nike to make most sales (C?adez?, 2009).

The Company has outstanding sales of footwear, clothing, sports equipment, garnish, and services. The company markets their goods under their brand. As if that is not enough, the company has developed and registered other brands such as Nike Golf, Pro, Nike +, Blazers, Air Force 1, Air Max, Nike skateboarding among others. In additional, the company not only manufacture sportswear, but it also operates retail warehouses under the brand name of Niketown.

The company has market breakthrough globally. The Nike Inc. customers and sponsors range from the athlete and sports teams with famous trademarks such as Just Do It and Swoosh symbol. Nike gave future business contract partners- distributors and suppliers.

Nike Inc.’s initial market segmentation regards to geography. The company has central segmentation that includes North America, Europe, Republic of China, and Japan.

External environment refers to the activities that arise outside the company and which has attributed to alter and influence the environment of the firm.  Nike is one of the best and largest sport apparel companies; it has to maintain its standards particularly on production to remain relevant in the competitive market. Nike has been using several sets of priorities for analyzing its external environment (C?adez?, 2012). The priorities enhance the relationship of the company with the consumers. The elements constitute the business’s brand strength, which is building a fit and healthy customer relationship.

The first attribute refers to the presence, Nike sponsors a large number of athletes by providing them with their wears like shorts, sports shoes, clothes among others (Perovic?, et al., 2008). The company, for instance, has sponsored all famous soccer players to wear the Nike products to attract customers. Those who sees their favorite’s athletes wearing and football teams having the company logo ‘Nike’ might make the decision to purchase them. The customers consider these products due to durability, good quality, and their performance.

The company must convince customers that the items are relevant and useful in the day in day out activities. Were it not for the relevance of the products; the consumers may not use them hence losing interest in their products. The other element includes the performance of the Nike Company. The business must deliver all their promises to their partners as well as their customers to bold the relationship with them. Additionally, the performance will enable the company’s goods and services are reinforced by design, product improvement, and supplying the athletes latest products in the market (Anon., 2010).

Nike's Products

Nike Company must give consumers what is likely to attract by showing all the benefit to the different items like high quality products, high performance, and the durability of their products. Similarly, the company should portray closeness to their clients. Nike bonding should be made to iron the customers’ relationship by meeting their expectations. The company must make the use of customers’ feedback to link with their regular customers. For the enterprise to maintain the brand strength, they need to keep on reflecting about the above features to win the client's trustworthiness iron out the great mutual relationship (Larson, 2011).

The following underline the scorecards of the Nike Company in future whereby the company uses the two most important environment analysis: macro-environment and competitive analysis.

The Nike uses the PESTEL analysis to postulate the important notable opportunities for global growth and development of the brand image. The Company growth partly relies on macro environment conditions. The external situations are well outlined in the PESTEL model whereby it entails the external factors that present opportunities and threats in the macro-environment (M Murphey., 2012). The company as the one in the international sports wears, it must address these factors critically to mark out company dominance in the market as well as outdoing the aggressive competitors such Adidas, Reebok, and Puma. The model will analyze the primary issues that the Nike Inc. need to mobilize in its strategic formulation. Opportunities and threats that emerge in the company need to be analyzed to help the company to shape its conditions of its macro-environment. The factors therefore include:

i) Political factors are affecting Nike Inc.

The company’s business is subjected to the impact of the political background. The political factors only concern with political influence on the external environment of businesses. The political factors affect the company on how it produces their products and or how the company makes the turnovers. Nike Inc., for instance, depend on political influences to determine the company’s condition of surviving. For Nike particularly, has great policies for growth which are of great importance for the growth of the enterprise. The plans include low-interest rates as well as cooperative international tax agreements. The policies hence create an opportunity for the company to expand in all dimensions. The Nike Inc. is always flexible to match the taxes and manufacturing regulations. However, political conflicts make the customs attached to the processes to be more complex by controlling the imports and exports hence posing threats to the company.

Stability of political factors favors the major markets present the opportunities for the company to grow. Besides, expanding frees trade and banning of tariffs policies promotes better market penetration globally. Also, when the government develops infrastructure, it gives the company more opportunity to deliver and reach many markets. Based on this analysis Nike Company gets opportunities to increase its access to marketplaces, and international expansion to in the sports wears (Schneider, et al., 2015).

ii) Economic Factors are affecting Nike Inc.

The business performance of the Nike relies mostly on the economic variations. The variables depend on areas to sell its products such as sports shoes, equipment, and other athletes wear. The model evaluates the financial concerns that influences macro-environment of Nike Inc. The company produces most of the important high range items, hence impeaching the vulnerability to economic factors than other products from competing companies. However, economic conditions may give the company opportunities to thrive in the market as well as threats that pose slow down and make market collapse. The economic factors include finance resources, market growth, revenues factor and slowdown of economic in some countries. Nike Company depends mostly on customers who determine the market conditions. A market collapse, for instance, translates threats to the company. The consumer determines the volume of sales of the Nike’s products (Roper, 2012). When they (consumers) have lower purchasing powers and turn to buy products from other competing companies, which may consider of high quality and affordable, then this poses threats to the enterprise. However, some markets are relatively stable hence, proving the Nike with more opportunity to thrive and have a steady growth in those markets. For instance, the United States is more favorable markets than in Far Eastern market. Nike Inc. has opportunities to rapidly develop and grow by improving the operations in developing countries. Similarly, the developing markets may also pose threats to Nike by hiking labor costs in the Business’s chain of supply and manufacturing services.

Nike's Market Breakthrough Globally

The slowdown of the Far East economy poses risks to the performance of the company. The main reason behind this is the fact that the firm depend mostly on Chinese and Japanese markets since they have experienced large sales volume on sports wears, clothing and equipment. The model postulate that the company needs to underscore its international expansion approaches while formulating new tactics to enhance growth in second world countries.

iii)    Socio-cultural factors

Social influences effect the attractiveness of the company’s sports shoes, equipment, and clothing. The company should consider factors to pursue opportunities for the enterprise to manage macro-environment elements. An excellent and outstanding social status translate a lot to current companies. For instance, if at the international level there is an improvement of health awareness it means that more people are living in better lifestyles. The company will benefit since individuals will buy plenty of sport wears hence making opportunity for the business to produce and supply products in bulk. The other thing is ensuring the personal wealth is increased in double digit, put more emphasize on product safety, and improving positive attitudes about leisure and sports activities.

Most of the Nike’s market is in developing countries hence have every opportunity to attract the consumers by improving their wealth. Besides, the Nike has opportunities to develop safer products and use promotions to highlight the safety of their products. The company needs to absorb the new ways of improving their products to meet the customers’ specifications, especially during the leisure and sports events (Gillespie, 2009).

Concerning to this model the Nike Inc. has golden opportunities to improve their products hence boosting the business growth.

i) Technological factors

The technical know-how provides the company with the capacity to innovate many products with aligning the customers’ specifications. The enhancement of the real interaction between the company and consumers help in designing products that will meet their needs hence technology giving credit to the enterprise. Notably, the Nike’s Business changes as per the technologies that will is available for the company to produce the athlete products such as shoes, clothing and other equipment. The model, therefore, postulates the technological circumstances that impact change in the external environment of the company. Such technical factors include increasing Research and Development investment poses threats, rapid tech advancement postulating both opportunity and threat and widespread use of social media (Kampanje, 2014).

The increasing research and development investment in Nike poses risks. The reason behind this is the fact that most of the competing firm such as Adidas, Puma, and Reebok aim to improve more technological advanced sportswear. The rapid technological obsolescence also poses a threat the company. By putting pressure on the company to double its product development efforts. However, the external factors also have a positive side in that, Nike gets opportunities to incorporate advanced tech in its products. Besides, Nike Inc. has every chance to integrate tech into its products to hold clients who apply mobile phones apps. The company has also made use of social media as a tool to market their products and make orders on sales. The social media allows new products to reach to customers fast than ever waiting for all supply chain processes to take place. Nike, particular is doing excellently to employ this tech to build their brand. Therefore the model indicates both opportunities and threats based on new and fast growing technologies (V. & I., 2012).

External Environment Analysis

ii) Ecological/Environmental factors

With no doubt, the Nike’s production poses harms to the surroundings. The release of gasses and other unwanted materials pollutes soil, air, and water. Nike’s manufacturing centers direct their by-products to the rivers and other private lands. However, the PESTEL model gets concerns with business performance as far as environmental factors are concerned. The Nike Company consider the following ecological factors (Sloman, 2005).

Expanding environmental regulations provides opportunities to enhance its environmental sustainability strategies, which are embraced by many companies in the industry. The company got every chance to observe those approaches with an angle of addressing climate advancement. The conditions affect supply chains management of the Nike in a given region. By increasing the sustainability programs will pose more threats to Nike since it adds more pressure in the entire industry. However, these macro factors boost opportunities for Nike to develop its sustainability (Luck, 2008).

iii)    Legal factors

Legal and political to some extent discussed together. However, there are many legal variables which influence Nike.in our case; the following factors are to be considered in the sportswear industry.

Improving workforce law in many third-world countries indicates threat since it impacts to an upsurge in labor cost in regions where Nike’s manufacture facilities take place. Nonetheless, legal factors yield to some opportunities for Nike by applying higher standards for employment and hiring. Similarly, the company can develop its health and safety laws. Finally, the company can improve its brand image and business reputation (Luck, 2010).

Porter 5 Forces

The model evaluates the effects of external factors on businesses. In our case, Nike uses the five forces to identify the strengths and weaknesses in the overall operation of the company. The forces discusses the company as follows;

i) Competitive Rivalry

The tool indicates the company as the active force which will determine the how Nike maintains its stakes of the sportswear industry. The components of the Porters Five forces evaluation portrays ways in which competition affects the industry and the overall performance of the company. It postulates further in the below factors.

The low market growth rate is caused by firm’s high market penetration, and market saturation is leading to a strong force as the Nike, Adidas, Puma, Reebok among others enjoys market competition hence take the time to grow. Besides, the companies are aggressive in competing for market gaps. Besides, having few number of firms, suggestively impress the Nike Inc. regarding Five Forces, the company require focusing on market improvement to ascertain product development to guarantee advantage and growing sportswear market global wise (Burke, et al., 2010)

ii) Bargaining power of Buyers

The rate at which consumers purchase Nike’s products it influences company performance. Some factors attribute to this.

Low switching costs make contribute the consumers to purchase sportswear preceding Nike’s products. The moderate presence of alternative enables clients to buy other items which serve the same purpose as the Nike’ product. Nonetheless, the purchasing power of consumers especially for small sizes reduces their forces on the company since they do not buy goods on a regular basis. The factors lead moderate bargaining of clients hence attracting Nike’s approaches of considering this factor (Dobbs, 2014).

PESTEL Analysis

iii)    Bargaining power of suppliers

Suppliers influence the Nike’s business in as much as raw materials are available. The large distributors reduce the impacts of only suppliers’ actions on the company’s business. Equally, a large number of suppliers reduces the effect of individual vendors’ demand on large enterprises such as Nike Inc. the moderate size of the sole provider helps an average degree of vendors’ effect. However, Nike uses this force as a weak force since distributors are minor regarding Nike’s approaches in the Sportswear market environment (Grundy, 2009).

iv) Threat of substitutes

Alternative products pose an equally significant threat against company’s performance as leading producer of international athlete shoe industry. The reduced availability of alternative imposes a reasonable force against Nike. The clients prefer alternatives to Nike’s items. Additionally, consumers have a reasonable likelihood of preferring alternatives due to the average performance against Nike’s sports wears (Roy, 2011).

v) Threat of new entrants

New companies may disorient Nike’s business environment. The Nike as an existing firm may have a high cost of brand improvement hence make it hard for a new entry to thrive in competing for the market with a large company like Nike. Equally, significant economies of scale may scare away new firms entering into the industry. The new company may fear to compete with an already globally recognized firm such as Nike hence leading to a weak force (Dobbs, 2014).

Internal environments are activities and patterns within an organization that may effect on management, workforce, and organizational culture. The importance of the internal environment is that they influence the thinking of individuals. Its components include beliefs, and attitudes which people have in common in the company (A, 2010).

Nike offers its workers comfortable environment. The act motivates them to work hard .the company has developed its benefits program in which it gives staffs opportunity to feel free and fit to ensure the wellness of their relatives hence building real working conditions .

The company provides their employees with health insurance, fitness center membership, breaks and time off retirement savings plans, transportation allowances, and free scholarships.

Nike also should be designed to help workers perform better by ensuring comfort and simulation environment filled with full-service facilities. The company needs to make sure staffs feel as if they in cohesiveness with other workers to help boost working hard in their job. Nike has to equip the campus with all feature of gym, pitches, and courts for employees to relax themselves during leisure time (Claudiu & Gabriela, 2011).

Labor problems continue to disturb the Nike’s company particularly in prioritizing manufacturing facilities in third-world countries. The weakness negatively impacts the business brand image.

Moreover, the limited in holding the large market share continue to a headache. The problem leads to a limitation of Nike’s growth to the entire world.

Another issue is that fact that Nike has suffered from the limited presence in developing markets, simply due to the issues with prices, the similarity of products, and patent protection.

Political Factors Affecting Nike Inc.

However, the company has numerous opportunities to improve performance in sports wears market. The approach facilitate the growth of the company

Nike can develop more competent labor practices to reduce controversies in the business processes. The company has laid proactive measures which can improve the brand image.

The company has also improved the product mix to attract more consumers particularly those outside the athletic field.

Nike needs to front its strategies that address competition, the bargaining power of customers as well as addressing threats of alternatives products.

Nike must address problems of labor force, patent protection Nike must reform its approaches on collaboration with partners and to impeach these problems

The company must work closely with other stakes to implement approaches to attract and holds more consumers so that the company can impeach the effect of substitution.

For internal problems, Nike must ensure all employees are comfortable with working condition that is put in place for enhancement of production.

Conclusion

In a nut shell, Nike is famous company based in competition. Ranging from equipping all sportsmen and women across the globe to continuously supplying other apparel to non-athletes. No doubt that Nike dominate its competitors. Nike has maintained to its philosophy by enabling supply the athlete products and guaranteed financial greatness. Despite the company changing its marketplace for athletic sports wears, they still continue expanding the products line reaching many consumers hence becoming a more powerful international brand.

References

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Anon., 2010. The Economy and its Physical Surroundings. Policy Challenges and Possible Solutions 1995-2020.. WORKING PAPER, 22(1), pp. 22-28.

Burke, A., A, v. S. & Thurik, R., 2010. Five Forces. Havard Business Review, 34(4), pp. 28-29.

C?adez?, S., 2009. The application of strategic management accounting techniques in Slovenian manufacturing companies. Zagreb international review of economics & business, 9(1), pp. 61-75.

C?adez?, S., 2012. Strategic management accounting : conceptual framework and empirical evidence from Slovenian companies. Economic and business review, 4(2), pp. 129-157.

Claudiu, C. & Gabriela, P. A. &. P. M., 2011. Internal Environment Analysis Techniques. Economic Science Series, 20(2), pp. 731-736.

Correspondence, A., 2013. Nike, a great name in-ca,eras?. MCB Business Strategy Publications, 20 (8), pp. 20-22.

Dobbs, M., 2014. Guidelines for Applying POrters' Five Forces Framework. Competitiveness Review, 24(1), pp. 32-45.

Gillespie, A., 2009. PESTEL Analysis of the Macro-environment. Washington USA: Foundation of Economics.

Grundy, T., 2009. rethinking and Reinventing Michael Porter's Five ForcesModel. Strategic Change, 15(5), pp. 213-228.

Kampanje, B., 2014. PESTEL analysis of Malawi's non-life insurance industry. African Journal of Economic and Management Studies, 5(1), pp. 34-48.

Larson, d., 2011. Global Brand mangement- Ni8ke Global Brand. ISM. Journal Of International Business, 1(3), pp. 1-14.

Luck, D., 2008. Assessing the marketing environment, 2008-2009. Amsterdam ; Boston: Elsevier/Butterworth-Heinemann.

Luck, D., 2010. Assessing the Marketing Environment.. Burlington : Elsevier Science.

M Murphey., &. R. G., 2012. Research Guides. Industry Analysis: PESTEL Analysis. Business Horizons, 17(5), pp. 27-38.

Perovic?, M., Selan, B. & Zabukovec, I., 2008. Analysis of environmental impacts of energy systems for heat and power production. West European Politic, 31(3), pp. 491-512.

Roper, K., 2012. PESTEL DRivers & Barriers. London: In World Workplace.

Roy, D., 2011. Strategic Foresight And Porter's Five Forces. New york: GRIN Verlag.

Schneider, M., Lengar, I. & Snoj, L., 2015. European companies link up for strategic growth.. INTERNATIONAL MANAGEMENT, 40(6), pp. 20-26.

Sloman, J., 2005. The economic environment of business. Harlow: 2005.

V., A. & I., P., 2012. Business Environment. Oxford: Elsevier Science & Technology.

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