Strategic Management and Competitiveness
The company I have chosen for analysis is Nike Corporation. Nike is a global Corporation that manufactures, designs, and sells sports apparel. It was founded in 1964 by two sports people, Bill Bowerman and Phil Knight. Bowerman was an esteemed track and field coach of the University of Oregon in the 1950’s. His searching for ways to increase the competitive advantage of his athletes over opponents led him to test different running shoes and track surfaces. Phil Knight, in turn, was a middle-distance runner student at the same univeristy during the same period. Finally, the two men met at the University of Oregon and pioneered a revolution in sports footwear industry. In 1964, they founded the Blue Ribbon Sports Company with a capital of $1000. Furthermore, later it was renamed as Nike and developed into a strong brand. Nike started making shoes in the United States and has expanded to have contract manufacturers in Eastern, Central, and Western Europe, Japan, China, North America as well as Emerging Markets. Currently, Nike is the world’s leading sports apparel supplier. Moreover, it also supplies equipment for sports and fitness activities. Thus, this paper aims at analyzing the impact of globalization and technology changes on Nike Corporation. In addition, with the help of industrial organization model and the resource-based model the possible ways of earning above-average returns will be determined. Lastly, the influence of the vision statement and mission statement of the corporation as well as each category of stakeholder on its overall success will be assessed.
Impact of Globalization and Technology Changes on Nike Corporation
Globalization creates a wider market for the goods and services of the companies that sell goods in the global market. Nike has built a strong brand throughout the world and its products are in high demand in many countries. Moreover, the core product of Nike is footwear as well as a wide range of sports and fitness products. Besides, Nike has factories manufacturing these products in over 46 countries around the globe. Though Nike does not own the manufacturing factories that produce its products, it designs the goods and contracts the manufacturing to licensed manufacturers. Therefore, these factories which are called “Nike Factories” produce exclusively Nike products. The greatest bulk of Nike’s products is manufactured in the United States, Asia, Vietnam, and China.
Nike optimally utilizes changes in technology to enhance communication and unveil new products. The company has its headquarters in the United States at the State of Oregon. However, it communicates efficiently with the worldwide factories manufacturing its products through teleconferencing technology and remote meetings. Using of this modern technology minimizes the amount of travel and enables expansion to far-flung parts of the world. Additionally, Nike utilizes the research and technology to unveil innovations such as manufacturing of the lighter, stronger, and faster sports apparel. The corporation adopts a cutting-edge technology to design products that enhance performance and offer protection from the impact through the use of foam and measure speed. In fact, the newest product is the ultra-light weight and high-tech NFL official apparel known as the Elite 51. Moreover, the uniforms are light in weight and provide a fully integrated system of athletes’ dress, whereas the air shoes use the technology of pressurized gas and other cushioning technologies to reduce shock, offer comfort, and increase protection from the impact. Undoubtedly, the adoption of unmatched technology has increased the market share of Nike in the global market and made it the largest sports apparel company in the world.
The Possible Ways of Earning Above-Average Returns by Nike Corporation
The industrial model is a field of economics that deals with the strategic behavior of the firms, market competition, and regulatory policy. The model provides resourceful information that can help companies to improve their operational methods and contribute to economic welfare. In addition, it has five components known as five forces of competition such as the industry, external environment, industry, strategy, assets, and skills. The company can use these components to implement their business strategy. In fact, Nike can take several steps suggested by this model to earn above-average returns. The first step is to study the external environment of the athletics industry which includes observing its competitors such as Adidas and Reebok. Secondly, they would select a company from the list of competitors that has above-average returns. Evidently, the selection of the company would be followed with formulating an above-average strategy. After realizing their strength, Nike would acquire assets and skills needed to implement the strategy. As a matter of fact, Nike has built a strong brand in the global market as well as aligned its products with the needs of the target customers; therefore, the company earns above-average returns. The main target group of Nike is athletes and youths of pop-culture who can choose Nike apparel from a variety of colors and styles it produces. By applying the industry model, Nike could increase its market share and create barriers to entry reducing competition. The dominance of Nike in the sportswear industry in the result of applying the industry model could steer the company to generate above-average earnings.
The resource-based model builds upon competitive advantage and focuses on the company’s strengths, weaknesses, and internal resources. The model specifies a company’s ability to earn above-average returns due to possession of unique capabilities and resources. Nike could identify its resources and compare its strengths and weaknesses to its competitors. Besides, the corporation makes the best and the lightest running shoes among the companies in the industry. The most significant strength of Nike is that its shoes increase the speed of runners. Nike could use this strength to earn above-average earnings. Moreover, Nike has successfully differentiated itself from its competitors through the production of high quality and innovative products, only designing the goods and leaving manufacturing to the contract factories. As a result, the strategy has helped Nike to generate the higher revenue and realize superior returns.
Influence of the Vision and Mission Statements of Nike Corporation on Its Overall Success
Nike’s mission is “Bring inspiration and innovation to every athlete in the world. If you have a body you are an athlete.” The mission statement explains the firm to the stakeholders, the audience it serves, and the aims it seeks to achieve. Moreover, it affirms that Nike’s reason for existence is to supply the athletes in the world with the apparel, equipment, and shoes. Furthermore, it emphasizes that everybody has the potential to become an athlete clarifying the primary target market of Nike — people with the bodies. The mission statement sends a message to all the individuals that Nike produces goods for their sport’s needs. It, thus, expands the global market of Nike. The statement also reconciles the conflicting, diverse and competing ideas, goals and objectives of the stakeholders, and calls them to pursue a common purpose. In addition, the mission statement of Nike can also be its vision statement as it communicates what Nike seeks to attain. Finally, the mission and vision statements reaffirm the stakeholders that Nike will continue to unveil innovative products to help improve the safety, comfort, and performance of the athletes.
Impact of Each Category of Stakeholder on the Overall Success of Nike Corporation
Nike has three categories of stakeholders that include organizational stakeholders and market stakeholders. The company holds productive meetings with its stakeholders to find solutions to the challenges they face. Moreover, the capital market stakeholders provide capital to Nike. The corporation has tremendously increased its capital stakeholders since it went public in 1980. Consequently, these shareholders enable Nike to build a large capital base to finance the operations.
Product market stakeholders embrace customers, suppliers, and employees. Nike has 600 contract factories with 800,000 workers in its worldwide operations. These manufacturers make high-quality products economically to generate higher profits for Nike, whereas the consumers maintain high loyalty on Nike willingly paying high prices constantly. As a result, the consumer expenditure for Nike products in 2014 was over 20 $billion dollars. Besides, Nike’s employees are involved in designing, marketing, and monitoring the compliance.
Furthermore, Nike maintains a constant interaction with all its stakeholders who significantly impact the overall success of Nike. Through the contributions mentioned above, Nike continues to grow its operations in product development, manufacturing, and marketing. These milestones could not be possible without the invaluable contribution of stakeholders.
In conclusion, Nike continues to retain its position as the world’s largest supplier of sports apparel and equipment leading in new product development, advertising, and sound promotional activities. Evidently, globalization and technology changes substantially contributed to such a high position of Nike on the market. Moreover, the dominance of Nike in the sportswear industry due to applying the industry model could result in generating above-average earnings. Besides, the resource-based strategy has helped Nike to obtain the higher revenue and realize superior returns. The consistent stellar performance of Nike indicates that stakeholders are dedicated to the company. In addition, the growth of Nike is also an evidence of the management’s strategic alignment of the objectives with the company’s mission and vision. Undoubtedly, the combination of all these aspects will keep Nike at its industry leadership position.
Ku?ay, Y. (2014). The Social media reflections of communication applications of entities operating in sportswear sector “Examples of Nike, Puma, and Adidas”. AJIT-E, 5(14), 37-59.
Lebron, W. The best fashionable Nike shoes – Nike Air Rift. SSRN Electronic Journal. doi: http://dx.doi.org/10.2139/ssrn.1649842