Nike Company Market Position and Strategies

Nike has always attracted me by its colorful merchandise and commanding position on the market. There are several reasons for choosing Nike, one of them its popularity in the world, as it has continued growing revenue currently of around $30,601 million (U.S. Securities and Exchange Commission, 2015). Moreover, it has positive international publicity, as it participates in various events and supports sportsmen. Additionally, it provides not only sports shoes, but also other necessary sports merchandise such as clothing, gear, and accessorize (Nike: Men’s products, 2015). Another pivotal aspect, which encouraged me to choose Nike, is its Code of Conduct, as Nike provides equal opportunities for workers and focuses on the reduction of waste to decrease a negative impact on the environment (Nike, Inc. Code of Conduct, 2015). All these reasons were the principal drivers, which determined my choice. The primary goal of this paper is to evaluate Nike’s current position on the market and propose different strategies, which will be applicable in this case. In the end, the conclusions are drawn to understand and evaluate a full image of Nike’s strategical approaches.

Evaluation of the Impact of Its Mission, Vision, and Stakeholders on Its Overall Success

Nike’s mission could be stated as “Bring inspiration and innovation to every athlete in the world” (Our mission, 2015). It could be said that the company’s mission explains the fundamental values and intentions of the enterprise. Consequently, it could be considered having a strong effect on the company’s success, as the company’s purposes correspond with the presence of the products.

As for Nike’s vision, it is clear that Nike cherishes relationships with its customers by making them the center of its operations. It could be said that the view of the company also influenced its success, as Nike acts in agreement with its principles and goals. Speaking of the stakeholders, it could be said that Nike’s stakeholders also had an essential impact on the company’s success, as Nike was also responsive to the suggestions of its stakeholders.

In conclusion, it could be said that all of the aspects determined the company’s success, as the interdependence of these objects cannot be unnoticed. Nike was acting in agreement with its principles, and a majority of its decisions did not have an adverse impact on society or the environment. It could be mentioned that sticking to the initial values and mission is a crucial determinant of success and financial prosperity in the future.

Five Forces of Competition

Porter’s five forces are the analysis, which is used to determine a level of competition and evaluate the company’s current position on the market (Hill & Jones, 2013). Firstly, the competitive rivalry has to be evaluated. It is medium to high, as the competition in the sports clothing is intense. Global giants such as Puma, Reebok, and Adidas could be considered as an external threat to Nike. For example, Adidas provides similar products and operates in the global arena (Adidas, 2015). Additionally, local companies could be considered as potential competitors of Nike. It has to be mentioned that small businesses have benefited from their size as their focus on a small geographical segment. This strategy allows them to differentiate themselves from global competitors by being unique and local. In this case, Nike has to be able to adapt quickly to rapidly changing technological advancements. Otherwise, Nike might lose its market share.

The bargaining power of suppliers is limited, as Nike would not experience any difficulties to switch from one producer to another. As for the bargaining power of customers, it is small to medium, as Nike also uses wholesalers who receive benefits from selling Nike’s products. As for the bargaining power of the final consumer, it is low, as Nike has a strong reputation and brand identity. The threat of new entrants is also low, as fundamental and high capital investments are necessary to enter the market and develop economies of scale. Speaking of the threat of substitute products, it could be said that sportswear could not be replaced with other clothing. However, some people have a tendency to use regular clothing for sports. Moreover, it could be said that a primary substitute for high-quality sports shoes is its fake copy, and Nike has faced this problem already (Brown, 2003). However, the quality of these products remains insufficient.

It could be said that Nike has a strong position on the market, as it was able to create a vehement reputation in the world. However, it has to pay attention to its competitors and focus on research in development. Additionally, the company should concentrate on counterfeit products, as they are gaining popularity in society.

Nike’s SWOT Analysis

As for the strength, Nike has a high reputation and strong brand recognition, as it was able to remain competitive on the market for several years. Additionally, as it implements the economies of scale, it saves a lot of financial resources on manufacturing. Furthermore, Nike has a strong management team, which has expertise in the sports clothing industry. One of them is Philip Knight, who was able to follow a company’s success since its foundation (Executives, 2015).

Speaking of the weaknesses, high pricing is one of them. The products remain expensive, and some people are not able to afford them. Another one is its inability to follow the Code of Conduct, as some labor rights and regulations were broken. However, all giant companies face these problems, as Adidas also was accused of using child labor (Burke, 2000).

A potential chance for Nike is to operate in developing countries, as these countries are discovering different opportunities, which the global market can offer. Speaking of the threats, one of them is a competition, as other companies such as Puma and Adidas use similar strategies to remain competitive on the market. Moreover, both of these enterprises have high recognition in the world and operate in many countries. Another threat is the dependence on the currency exchange; this interdependence occurs due to the fact that Nike trades worldwide.

Possible Outline of Nike’s Strategy Based on SWOT

Based on the SWOT analysis, Nike’s strengths, weaknesses, opportunities, and threats were determined. There are several actions, which Nike has to implement to differentiate itself from the competitors and improve its reputation in the world. Firstly, Nike should focus on its brand image and support its existence with relevant actions. For example, charitable donations will distract attention from its labor issues, and make the company caring and responsible for the future of society. The company has to pay attention to the actions of the competitors and use a differentiation strategy to make its products unique and minimize its threats. As for the existence of high pricing, Nike should not lower the initial price settings. However, it should prove to the customers the price to the quality ratio is relevant; this fact can be achieved by presenting in the advertisements that sportsmen are potential clients of the company. Furthermore, durability and ergonomics have to be emphasized in the advertisements.

All of the strategical actions mentioned above will also be suitable for building the company’s image in the world and emerging countries. Nonetheless, the company has to focus on developing markets, as the competitors do not occupy them, and customers do not have brand loyalty and preferences due to the lack of brand presence.

Various Levels and Strategies Suitable for Nike

Nike can utilize different levels and strategies to increase its profitability and recognition in the world. For the business level strategy, Nike should continue implementing a differentiation strategy. It has been useful for an extended period, as Nike was able to underline the uniqueness of its products. It could be said that Nike does not apply a niche-focalization strategy anymore, as its products gained popularity in the world, and not only sportsmen but also ordinary people use it on a regular basis.

Changing to the cost-leadership will be irrelevant. Even though some people claim that Nike’s prices are too high, it is not applicable to lower them. Nike is widely known as a premium brand of sportswear. Consequently, introducing low prices will question its quality and undermine its reputation. Nevertheless, the prices have been lowered while penetrating the emerging markets.

As for the corporate level strategy, Nike uses a diversification strategy, as it has a broad range of products available on the market. Its primary focus is not only shoes, but also other clothing, and accessories (Nike: Men’s products, 2015). Moreover, it also provides different mobile applications, which supposed to enhance the health condition of an individual (Nield, 2015). However, it could not be mentioned that Nike applies the economies of scope. As for the future opportunity, Nike should consider expanding to other areas of business within the sports industry.

Outline of a Possible Communication Plan

As of the communication plan, Nike should introduce the customer’s survey, which will help the company understand, in which direction Nike should start its diversification. Nike has to promote this activity with the assistance of its television advertisement to attract customers’ attention. Moreover, possible prizes can be awarded to the users, whose ideas seem suitable for future implementation. This marketing communication tool will help increase of positive publicity of Nike. A similar strategy can be implemented regarding Nike’s application development. The plan can be applied twice a year.

Additionally, in order to emphasize the uniqueness and durability of the products, Nike should change the concept of advertisements and focus on these features. Inviting famous sportsmen will help to attract attention to the brand and create a desired publicity in the world. The athletes could promote Nike’s shoes and their experience while wearing them. This activity has to be implemented once and used in all advertisements.

Evaluation of Nike Two Corporate Governance Mechanisms

As for corporate governance, the Corporate Responsibility and Sustainability Committee was established to monitor possible changes and provide various suggestions to the improvement of the different conditions (Governance, 2015). It could be defined as an internal corporate mechanism, and it could be considered as effective. However, a separate committee might have to be created, as it has vast responsibilities and duties. The Board of Directors is another member of the Nike internal corporate mechanism. Expression of opinions of shareholders and accordance with the law are the primary functions of the Board of Directors (Governance, 2015). It has been performing efficiently. However, it has rather narrow duties, and control of the Corporate Responsibility and Sustainability Committee is also essential. It has to be mentioned that external mechanisms also have an influence on Nike, as various external intuitions monitor the actions of Nike and evaluate whether the company acts according to the law.

Evaluate the Effectiveness of Leadership

Speaking of the evaluation of the effectiveness, it could be said that it is rather effective, as Nike was able to remain competitive on the market for an extended period. Nike’s structure of the governance is rather simple and ordinary, as a similar structure is actively used by the other companies. However, Nike has introduced the Corporate Responsibility and Sustainability Committee, which is responsible for a wide variety of duties, such as “recommendations regarding labor and other practices” and “diversity and equal opportunity” (Governance, 2015, para. 1). It is clear that the presence of this institution is vital. However, a possible suggestion for improvement might be an introduction of a separate department, which will have particular duties of monitoring research and development, as it is not possible for the Committee to pay vehement attention to each field.

Assessment of Nike’s ethical efforts

Nike operates with high transparency according to the moral principles (Birch, 2012). The company is present publically and actively posts the reports online. However, it has to be mentioned that not all information is available online, and this fact adversely affects Nike’s ethical publicity. Furthermore, some violation of the moral rights were reported to be in Asia, such issues as “abusive treatment,” “restrict access to toilets,” and “work more than 60 hours a week” (Teather, 2005). Another ethical scandal occurred in Indonesia, as the military forces were used to force employees to abandon the payment (Kavoussi, 2013). All of these events have a negative impact on Nike’s image, as these actions question the ability to control the working facilities and follow their moral principles. However, similar situations also occur among competitors. For example, Adidas was accused of violation of children’s rights (Burke, 2000). Nonetheless, Nike should avoid ethical issues as they create negative publicity for the company.

Conclusion

In conclusion, it could be said that Nike uses effective strategies, as it remains competitive on the market for a long time. However, some adjustments and advancements can be introduced to increase the company’s revenues and popularity in the world. In order to increase its popularity in the world, Nike should focus on maintaining a friendly and close relationship with its customers. Moreover, some improvements regarding leadership have to be done to improve the efficiency of the company. It seems that one Committee has vast responsibilities and duties, and it is not able to focus on each of the areas precisely. Moreover, Nike has to pay great attention to ethical issues, as ethical scandals cultivate adverse publicity. Furthermore, the question Nike’s ability to have a manufacturing process under control. Despite all the negative information, I would like to pursue a career in Nike, as it still follows its core principles and values.

References

Adidas. (2015). Web.

Birch, S. (2012). How activism forced Nike to change its ethical game. The Guardian. Web.

Brown, P. (2003). World’s poor prefer fake designer gear. The Guardian. Web.

Burke, J. (2000, Nov. 19). Child labor scandal hits Adidas. The Guardian. Web.

Executives. (2015). Web.

Governance. (2015). Web.

Hill, C., & Jones, G. (2013). Strategic management theory: An integrated approach. Boston, MA: South-Western Cengage Learning.

Kavoussi, B. (2013). Nike factory in Indonesia used military to intimidate workers into giving up pay: report. The Huffington Post. Web.

Nield, D. (2015). Boost your fitness: 21 tips for Nike+, Strava and more. The Guardian. Web.

Nike, Inc. Code of Conduct. (2015). Web.

Nike: Men’s products. (2015). Web.

Our mission. (2015). Web.

Teather, D. (2005). Nike lists abuses at Asian factories. The Guardian. Web.

U.S. Securities and Exchange Commission. (2015). NIKE INC (Filer) CIK: 0000320187. Web.