BA 11 – FUNCTIONAL AREAS OF BUSINESS OF OPERATION

NAME: Pacumbaba Jonalyn DATE SUBMITTED: DECEMBER 21,2023

COURSE/YEAR: BSA1_A2 TIME/DAYS: 8AM/MONDAY

NIKE CASE STUDY

Nike- A Case Study

Just Do It.

GROUP:

JONALYN PACUMBABA

KIMBERLY SINANGOTE

SUNSHINE NEPOMUCENO

RUSSEL PETRONILO

JB PRUDENTE

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Executive Summary

Introduction

Nike was created in 1964 by Bill Bowerman, a nationally known University of Oregon
track coach, and Phil Knight, a former track athlete. Originally known as Blue Ribbon
Sports, the two began by distributing Netsuke Tiger sneakers to players around Oregon.
After track and sporting events, Phil Knight would frequently sell sneakers from the trunk
of his car. Their primary motivation for entering the athletic shoe industry was to equip
athletes with higher-quality footwear. In 1978, Blue Ribbon Sports officially became
Nike, Inc., after immediately terminating its affiliation with Onitsuka Tiger. The company
was named after Nike, the Greek goddess of triumph, and it created the world-famous
"swoosh" emblem as well as a new creative athletic shoe design. Nike went public in
1980 after only two years, with a 50% market share of the US athletic shoe market.
Nike is now the world's largest provider of athletic footwear and apparel. Globally, the
company employs around 30,000 employees. More than 6,000 people work at the Nike
World Headquarters, which is located near Beaverton, Oregon. Nike's continued success
can be attributed to the company's unique designs, development, and marketing tactics
for high-quality footwear, apparel, accessories, and equipment. Nike reported record
revenues of $18.6 billion for the fiscal year ended May 31, 2008.

Nike has gone 35% digital and is planning to reach 50% by 2025. It has shown
immense growth and is expected to close year 2022 with over 50-billion-dollar revenue.
Strategically Nike is also prioritising its DTC (directly to consumer) sales. Covid 19 has
just showed an increase in its sales across all segments and brands. Nike also recently
hit its first 5-billion-dollar quarter. All these took place with recession in a lot of sectors
and segments all across the world which makes us think about Nike with a fresh
perspective. “Our goal isn’t merely to take market share. Our goal is also to grow the
entire market,” CEO John Donahoe said. To stay current, Nike continuously works on its
trends, marketing and communications. It has always been extremely competitive and
up to date with the latest trends in the distribution network, growing its DTC channels,
setting trends on digital media like Tik-Tok or Instagram reels.

Nike’s continuous pursuit of innovation, excellence and hunger to be connected to the

customers has always led it to keep itself ahead of the curve in Marketing and
Communication trends. Digital is one such strategy where it has continuously innovated
and Covid has only pushed this further. With connectivity infrastructure getting cheaper
than ever, 5G technology already in execution and every customer now interacting more
than ever on a screen Digital is the way forward and Nike has been only a leader in this

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space and hence not a surprise to see that Nike has gone Digital and is large part of its
strategy.

Statement of the Problem

 What programs has your company put in place to expand diversity and
inclusion in the workplace? List three programs that you believe may cultivate
diversity and acceptance.
 How does diversity spawn innovation in the work- place?
 Discuss culture as a form of diversity

S.W.O.T Analysis

Strengths (Internal Strategic Factors)

Nike’s strengths are the internal factors that reinforce or empower the business. These
strengths are considered positive indicators of athletic goods business potential and
success in this internal analysis component of the SWOT analysis model. Nike uses the
following strengths for business growth and development:

1. World’s strongest sporting goods brand

2. Effective product innovation for competitive designs

3. Strong control on a global product distribution network

Nike has the strongest and most valuable sporting goods brand in the international
market. In the SWOT analysis model, this internal factor functions as a strength that the
company can use to improve its industry position against other athletic and leisure goods
businesses. Nike also has the strength of product innovation, which is a factor that
makes its footwear products competitive. Product innovation contributes to product
quality and attractiveness, and influences business profitability despite aggressive
competition in the sporting goods market. The organizational culture of Nike Inc. affects
human resource support for such a strength noted in this SWOT analysis. On the other
hand, strong control on product distribution is an internal factor that strengthens the
athletic shoes company by optimizing its ability to reach customers. This strength in the
SWOT analysis of Nike Inc. points to the importance of retailers and sales channels in
the growth of the business. For example, the company’s basketball and tennis shoes are
sold through various retailers and platforms, such as Amazon, Costco, eBay, and

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Walmart. In addition, company-owned NikeTown stores contribute to this business
strength by supporting internal control on product distribution and sales.

Nike’s Weaknesses (Internal Strategic Factors)

Business weaknesses are barriers that prevent Nike from maximizing its performance. In
this internal analysis component of the SWOT analysis, such factors limit the growth of
the sports shoes, equipment, and clothing business. The following weaknesses are
relevant to this case of Nike Inc.:

1. Limited network of company-owned retail locations

2. Limited diversification of production locations

3. Corporate image issues linked to labor practices

The limited network of company-owned retail locations makes Nike highly dependent on
other retailers. The selling prices of the company’s sporting goods are subject to the
influence of large retailers, such as Walmart. In this SWOT analysis, such an internal
factor weakens Nike’s control on its product distribution and sales. In addition, the
limited diversification of production locations is considered a weakness in this SWOT
analysis of the footwear and equipment business. This internal factor refers to the
company’s reliance on a small number of large shoes, apparel, and equipment
production facilities that are mainly located in Asia. Such a business condition subjects
the company to economic and sociopolitical trends in the region, in addition to the trends
enumerated in the PESTEL/PESTLE analysis of Nike Inc. On the other hand, the
corporate image issues linked to labor practices in footwear, equipment, and apparel
factories contracted by the company are a weakness relevant to this SWOT analysis. This
internal factor affects brand image, consumer perception, and investor confidence, but
Nike’s corporate social responsibility strategies and stakeholder management efforts
partially address such a weakness.

Opportunities (External Strategic Factors)

Opportunities pave the way for Nike Inc.’s further growth and development in the global
market. In the external analysis component of the SWOT analysis model, such
opportunities can help improve the sporting goods business. Nike has opportunities for
the following:

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1. Stronger market presence through additional company-owned retail
locations

2. Higher competitiveness of products through advanced technology

3. Healthier customer perception of the business through policies for labor and
employment practices

The opportunity for a stronger market presence involves establishing additional

company-owned retail locations, such as NikeTown stores, to attract more athletes and
non-athletes as customers. This SWOT analysis calls for brick-and-mortar locations to
support the company’s distribution and sales of athletic and leisure footwear, equipment,
and apparel. Company-owned stores can also function as a high-visibility branding
strategy that reinforces Nike’s marketing mix or 4Ps. In addition, this SWOT analysis
includes the opportunity for higher competitiveness of the company’s products, such as
sneakers. This external factor depends on Nike’s success in integrating advanced
technologies in its business processes, including product design and development. For
example, cutting-edge technologies can make production processes more efficient, and
increase the durability of the company’s running shoes and golf equipment and
accessories. In dealing with this part of the SWOT analysis, increasing product
competitiveness may require changes in Nike’s organizational structure or corporate
structure, in support of new personnel or resources for new technologies. Moreover, the
company can improve customer perception and stakeholder relations through enhanced
policies and requirements for contract manufacturers’ labor practices.

Threats against Nike Inc. (External Strategic Factors)

Threats to the business can decrease Nike’s industry position. These threats are external
factors that harm corporate image and lower the competitiveness of the company’s
shoes, equipment, and apparel. The following threats are relevant to this external
analysis component of the SWOT analysis of Nike Inc.:

1. Tough competition

2. Imitation of sporting goods

3. Rapid technological innovation among industry players

Competitors, such as Adidas and New Balance, are the biggest threat to the company,
imposing a strong force against the business, as shown in the Porter’s Five Forces
analysis of Nike Inc. In the SWOT analysis model, tough competition is an external
strategic factor that threatens the company’s market share for sporting goods. Another

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threat to Nike is the imitation or counterfeiting of its products. Small and large
competing firms can develop similar footwear and clothing designs, and sell their
products in markets that do not have adequate legal protection for patents and other
intellectual property. This external factor is considered in the SWOT analysis as a
negative influence on Nike’s revenues. For example, low-cost counterfeit shoes and
accessories can shift customers away from the company’s authentic products. On the
other hand, rapid technological innovation is another threat relevant to this SWOT
analysis of Nike Inc. This external factor refers to the potential obsolescence of the
athletic shoes company’s technological assets. Such obsolescence presents opportunities
for sporting goods competitors to increase their market shares through their own
technological advancement. The threats in this SWOT analysis point to the importance of
Nike’s generic strategy for competitive advantage, and intensive growth strategies for
supporting competitiveness despite competition, imitation, and rapid technological
change.

Recommendations

 Nike has implemented several programs to foster diversity and inclusion in the
workplace. Here are three programs that may cultivate diversity and acceptance:

a. Diversity and Inclusion Councils: Nike has established employee-led

councils that focus on diversity and inclusion initiatives. These councils work to
promote a culture of inclusion, provide resources and support, and address issues
related to diversity within the organization.

b. Community Connections: Nike encourages its employees to engage with

diverse communities by supporting employee resource networks. These networks
provide a platform for employees to connect, share experiences, and drive
positive change both within the company and in their communities.

c. Diverse Talent Pipeline Initiatives: Nike recognizes the importance of

building a diverse workforce at all levels of the organization. The company has
implemented initiatives to identify and develop diverse talent through programs
such as mentorship, leadership development, and recruitment strategies that
target underrepresented groups.

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 Diversity spawns’ innovation in the workplace by bringing together individuals
with different backgrounds, experiences, perspectives, and ideas. Here’s how
diversity contributes to innovation:

a. Diverse perspectives: When a team comprises members with diverse

backgrounds, they bring a wide range of perspectives to the table. This
diversity of viewpoints fosters creativity and encourages the exploration of
different solutions to problems, leading to innovative ideas.

b. Enhanced problem-solving: Diversity enables teams to tackle complex

problems from multiple angles. Different experiences and ways of thinking
allow for a more comprehensive analysis of challenges, leading to more
effective problem-solving and innovative solutions.

c. Increased adaptability: In a diverse workplace, individuals with different

cultural and educational backgrounds bring unique knowledge and skills. This
diversity of skills and perspectives enhances adaptability in the face of
changing market dynamics, technological advancements, and customer
preferences.

 Culture can be considered a form of diversity as it encompasses a set of shared

values, beliefs, traditions, and behaviors that define a particular group of people.
Here are some key points to consider when discussing culture as a form of diversity:

a. Cultures shape perspectives: Culture influences how individuals perceive

and interpret the world around them. It shapes their values, attitudes, and
behaviors. When people from different cultures come together in the
workplace, their diverse cultural perspectives contribute to a richer
understanding of problems and creative solutions.

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 b. Cultural competence fosters inclusivity: Recognizing and valuing different
cultures in the workplace is essential for creating an inclusive environment.
Embracing cultural diversity promotes acceptance, respect, and understanding
among employees, leading to a greater sense of belonging and higher levels
of employee engagement and productivity.

c. Collaboration across cultures: Cultural diversity can enhance collaboration

by bringing together individuals with different approaches to work and
problem-solving. By leveraging diverse cultural backgrounds, organizations
can tap into a broader range of ideas, creativity, and innovation.

d. Global market advantage: In today’s globalized world, having a diverse

workforce that reflects the cultural diversity of target markets can provide a
competitive advantage. Understanding and respecting diverse cultures
enables organizations to better cater to the needs and preferences of a
diverse customer base

Conclusion

In conclusion, Nike has demonstrated a strong commitment to fostering diversity and

inclusion in the workplace. The company has implemented several programs and
initiatives to promote a culture of acceptance, provide resources and support, and
address issues related to diversity. The establishment of employee-led Diversity and
Inclusion Councils has proven effective in driving positive change within the organization.
Nike also encourages employee engagement with diverse communities through
employee resource networks, allowing for the sharing of experiences and driving of
change both within the company and in society.

Diversity within Nike has proved to be a catalyst for innovation. The diverse perspectives
brought by employees with different backgrounds, experiences, and ideas enable the
company to think creatively and explore multiple solutions to complex problems. This

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diversity also enhances problem-solving and adaptability in the face of changing market
dynamics, technological advancements, and customer preferences.

Culture, as a form of diversity, plays a significant role in shaping perspectives and

contributes to a richer understanding of problems and creative solutions. Recognizing
and valuing different cultures in the workplace fosters inclusivity, generating a sense of
belonging and increasing employee engagement and productivity. Collaboration across
cultures enhances teamwork and allows organizations to tap into a broader range of
ideas, creativity, and innovation. Additionally, having a diverse workforce that reflects
the cultural diversity of target markets provides Nike with a global market advantage in
catering to the needs and preferences of diverse customers.

Overall, Nike’s efforts in embracing diversity and inclusion have had a positive impact on
the company’s culture, innovation, employee engagement, and market competitiveness.
By prioritizing diversity and inclusion, Nike sets an example for other organizations to
follow in creating a more inclusive and diverse working environment.

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