Strategic Management

CASE STUDY ON “NIKE”

Post Graduate Diploma in Management

(Term IV; Batch 2021-2023)

Under the Supervision of

Prof. Tarun Dhingra

Submitted by: Group 4

Ananya Nidhi PGFA2104
Sonakshi Rawat PGFA2152
Shwetank Singh PGFA2151
Kajal Goyal PGFA2125
Shourya Jain PGFA21
Satyaki Tomar PGFA2146
 1)

Mission- “Nike’s mission is to bring inspiration and innovation to every athlete in the world (and if
you have a body, you are an athlete).”

Vision- “Nike’s vision is to remain the most authentic, connected, and distinctive brand globally”

Values- “Nike’s core values are performance, authenticity, innovation, and sustainability.”

Nike's long-term goal is for its brand to be acknowledged for both its innovative clothes and
footwear. In order to do so, it evaluates its position in light of pertinent compliance standards,
such as embracing ethical practises and preserving a beneficial impact on society and the
environment. Nike strives to be a brand that stands for something through its beliefs and
goods. Since Nike is known for its premium footwear, it was logical that they would select
well-known athletes to represent the company. The unusual success stories of their brand
ambassadors are embodied in the stories they tell, giving customers hope.

Pros

• Attracts talent
Nike has aided in luring talent by supporting some of the major sporting events. They
have expanded their customer base and business as a result of this. Additionally, it is a
morally righteous approach for Nike to get to know its clients better and it
also upholds athletes' ability to pursue their dreams
• A reputable source
Nike as a business has a good track record. As a result, they have been able to draw in
a sizable customer base, increasing their earnings. Nike is able to demonstrate through
this that they are a business that is engaged in more than just generating money; they
are interested in changing the world. This relationship with customers may result in
increases sales and brand loyalty.

Cons

 The likelihood of negative publicity is Nike's major drawback or problem

Nike might receive a lot of negative news and have its reputation damaged in the eyes
of its customers if it is discovered that manufacturing facilities in other nations have
workplace conditions that seem abusive to western people.
 Diversifying the workforce
Nike wants to foster skill and creativity in its workers without favouring one gender
over another. The business also emphasised the benefits of the chosen course of
action, asserting that a diverse workforce fosters innovation and creativity, although
Nike's female employees voiced concerns about lack of promotion possibilities,
disparities in compensation based on gender, and inappropriate workplace behaviour.
2) PESTEL Analysis –
POLITICAL: Includes tax policies, stability of government, changes in trade restrictions &
tariffs. In the case, as Nike focuses on its growth through geographic expansion so it focuses
not only on North America but also on the countries like Japan & China. So, the stability of
the government of these countries plays a vital role.
There is plenty of room for Nike to grow given the stability of the American economy and its
favourable international tax arrangements.
Laws governing taxes and production are subject to change. Thus, it will undoubtedly have
an effect on Nike's expansion.
The international business operations of Nike include the import and export of goods. The
customs procedure can be impacted by the political unrest in other countries, which could
impede efficient operation.
ECONOMIC: Includes factors related to the broader economy and are financial in nature.
This directly relates to the sales & profit margin of a business.
This case suggests that Nike is less vulnerable to financial problems because it sells popular
medium-range products. Nike is able to pursue minor emerging markets because of its solid
financial position. The cheap labour in Far Eastern nations contributes to some of Nike's
financial success. Though things are changing for the better, it's likely that as economically
underdeveloped nations progress, more expensive Nike products will eventually be available
everywhere.
SOCIAL: In comparison to more tangible factors like interest rates or corporation taxation,
social issues may appear like a minor factor. However, they can still have a huge impact on
all parts of the industry.
For instance, as we saw in the case that China’s population & growth rate are phenomenal as
compared to that of America’s, the target market for the country could be ten times the size.
People often seek out leisure activities as a result of workplace stress. Nike can take use of
this chance to further their plans for creating products that support leisure activities.
TECHNOLOGICAL: As the technology is changing rapidly, keeping up with the trends
and understanding how technological factors impact the organization becomes necessary .
Today's organisations have a range of opportunities to develop thanks to the evolving
technologies. Social media has made it easier than ever for things to explode or disappear.
Nike is using social media well to build its brand, but misusing it could have unintended
repercussions.
Nike can now adopt practical information-based strategies thanks to technological
improvements, which enables them to maximise revenue by streamlining production and
targeting.
ENVIRONMENTAL: There is no doubt that Nike's factories for mass production are bad
for the environment. Nike's manufacturing facilities occasionally go as far as to directly
pollute waterways in addition to releasing a lot of atmospheric pollution like most
manufacturers.
Nike does, however, offer a serious commitment to changing their current methods in order
to become more "green."
LEGAL: A legal matter involving Nike's misleading discounts is also harming the
company's relationship with its devoted customers.
Another crucial legal matter that the corporation needs to address right away is tax avoidance.

3) Five force analysis

 Competitive Rivalry (Strong Force):

This component of the Five Forces Analysis illustrates how competition affects the
business environment and the effectiveness of specific enterprises. How Nike Inc.
keeps its market share in sports footwear is influenced by competition. In the case of
Nike, external conditions like High company aggression, Low market growth rate,
and Moderate Number of businesses form the Strong Force of Competitive Rivalry.
 Bargaining Power of Nike’s Customers/Buyers (Moderate Force)
The competitiveness of businesses and the environment of the industry are determined
by customers. Customers of Nike have a direct impact on how well the company
performs. Due to the minimal switching costs, customers may easily purchase sports
shoes from other brands than Nike in this instance. Customers can purchase other
items in addition to Nike's offerings because to the minimal availability of
alternatives. However, given the relative smallness of each consumer, the corporation
is less affected by each customer's particular pressures. These external factors lead to
the moderate bargaining power of customers.
 Bargaining Power of Nike's Suppliers (Weak Force)
The availability of raw materials from suppliers has an impact on Nike's company. In
the case of Nike, the huge supply reduces the impact of individual suppliers' activities
on Nike's company. Similar to how a huge population of suppliers lessens the
influence of individual suppliers' demands on big businesses like Nike Inc. A
moderate level of supplier impact is supported by the size of individual suppliers,
which is moderate. However, these factors simply demonstrates that the supplier
negotiating power is a weak force at play for Nike.
 Threat of Substitutes or Substitution (Moderate Force)
The performance of Nike as a dominant force in the global sports shoe industry is
seriously threatened by substitutes. Customers have a wide range of options other than
Nike's products, which exerts a modest push against Nike. The moderate performance
of substitutes in comparison to Nike's sports shoes, gear, and equipment means that
buyers are only moderately likely to consider them. Further increasing that possibility
are the low switching costs. But this aspect of the Five Forces Analysis reveals that
substitutes are just a moderate force against Nike.
 Threat of New Entrants or New Entry (Weak Force)
Nike's competitive landscape may be impacted by new entrants or businesses. New
entrants find it challenging to compete successfully against established companies like
Nike Inc. due to the high expense of brand building. Considering Nike's global
production and distribution network for its sporting shoes, gear, and equipment, the
large economies of scale also provide the business a competitive edge over new
 comers. The low cost of doing business further restricts the capacity of new entrants
to alter the competitive landscape. The threat of new entry is a weak force for Nike.
4)
Core competency of Nike are its marketing strategy and innovation in product design. Nike’s
consumer value and benefit the most out of them. They leverage out of it because these are
not easily imitable.
To describe them further. Core competency is capabilities which differentiates a company
from another and helps it gain competitive advantage. Some of them defined further are-
1. Technology – Mobile technology has created a new world of connectivity for phones,
tablets, and wearables like fitness trackers and smart watches. IOT sensors will transform the
shoe and apparel industries. Fuel band and Apple watch Nike plus helped users track physical
activity. They also introduced NBA jerseys with a chip that connects to athletes' phones.
2. Innovation – Nike uses athletes, coaches, trainers, and equipment managers to review
product design, material, and manufacturing. Converse and hurley, Nike's subsidiaries,
diversified into swimming and fashion.
3. Endorsement – Michael Jordan's multimillion-dollar endorsement deal for Nike Air Jordan
basketball shoes. Jordan Brand drives company revenue. NIKE also signed a five-year deal to
be the NFL's exclusive on-field apparel provider. The company's endorsements helped it
gradually outperform its rivals.
4. Geographical expansion - Nike has developed enormous strategies to grow geographically.
Nike was aware of sneaker culture in Japan and soccer culture in Europe, so it promoted
fashion through sneaker culture and aggressively entered international soccer culture.
5. Outsourcing activities – Nike outsources to reduce production costs due to cheap labour
and makes a profit. Nike also uses sustainable materials, a smart move.

5) This is an Opportunity for Nike to adapt to the changes that are happening in the
environment We will understand this with the following things:
Technology Advancement – With the advancement in mobile phones Athletes can now
track their health through connecting Fuel Band with Mobile. This Fuel Band was launched
by Nike and it was a great success. This helps in tracking their fitness whole day. After
sometime Fuel Band was disbanded by Nike as it was able to compete with other Products.
Then Nike launched Nike+ In collaboration with Apple. Which is another great success story
of Nike. Nike and apple worked together for so long that Tim cook CEO of Apple was given
a seat in the board of Directors.
Then After sometime Nike launched NBA connected Jerseys Specific to basketball players. It
was a success because it helped the user who wore that jersey to search for music and play it
when they are warmups. And also they could search for shoes as well as apparel for their
team.
6) Some of the challenges in external environment for Nike were-

1. Competition: Nike has more competition than ever, gone are the days when nike and
adidas dominated the scene; today it faces competition from brands in the U.S. and
abroad that can make similar or better products for the same or less money. It's important
for Nike to keep up with the competition on every front, including pricing, technology,
location, and promotion.
2. AI and technology: As we move into the age of technology, nike or any other brand who
succeeds on their tech can be thrown off their position when someone comes up with
better tech and uses it to their advantage. For example, nike has been a forerunner in
many things, but technological brands are competing for the same niche of customers and
once they have better tech, they can easily win this war.

Some of the challenges in internal environment for Nike were-

1. Controversies: Nike has been involved in a number of controversies as of late , like that
of colin Kaepernick, where this athlete “took the knee” and ultimately this led to the black
lives matter moment and an everlasting debate some saw him right while others saw him
unjustified in taking the knee, it also resulted in setback for colin which resulted in a
lawsuit and brought a lot of limelight for Nike.
2. Brand image and reputations: Nike has been accused of supporting and not taking action
against athletes involved in scandals and controversies like Michael. At the same time,
nike has been accused of conducting unethical practises to get favourable outcomes, such
as bribing FIFA officials. Top management's tolerant attitude has not helped nike.
3. Gender discrimination: nike is facing a tough situation with inappropriate behaviour by
top employees and clear gender discrimination among male and female employees in the
form of unequal treatment in promotions, unequal pay, and not enough opportunity to
grow equally. This has been such a big issue that many senior female employees have
started leaving nike and it made its way to top management when it was exposed using an
anonymous survey. Top employees' inappropriate behaviour.
4. Drug scandals (doping): One of the most famous training facilities at Oregon under the
supervision of a coach named Alberto Salazar was recently exposed by USADA (US anti-
doping agency), which led to the facility's closure and caused huge damage to nike's
brand image and current leadership. It was also detrimental to the morale of athletes who
were part of that training facility.

Steps taken by CEO John Danahoe-

Nike faces stiff competition from brands, but it has managed to capture more market than
them due to its innovation, technology, and outsourcing of manufacturing in 3rd world
countries.
Nike can still compete with its current technology and efforts, but it must avoid becoming
stale. Innovation has been the key to its success, and the company should continue to
focus on it.

Endorsements are another way nike competes with other brands. The company would not
be the same without Michael Jordan's deal, but it must continue to link with newer fans
and athletes. When it comes to AI and tech, nike's R&D department must stay up to date
and adapt new technology. They should not be rigid in trying newer stuff because once a
brand has first mover advantage in a product, it's hard to catch up.

The current CEO and leadership should ensure that nike serves justice to all, including
employees, athletes, customers, partners, and endorsers. Gender discrimination is not
unique to nike; it affects the entire world and all MNCs.

When it comes to having deals/relationships with certain athletes and people in

controversies, it should be remembered that a person is innocent until proven guilty, so
Nike should take more action based on facts rather than sentiments and public outcry
(which can also be done in certain cases). By following such practises, Nike may be able
to counter the above-mentioned troubles, if not totally overcome them.