Mission Statement/Goals of Nike Inc
The mission statement of the company Nike Inc is;
“To bring inspiration and innovation to every athlete in the world”
The company has the point of view that if one person has a body, then he/she is an athlete (Nike Inc, 2018). The company has the purpose of using the power of sport to move the world forward. The company believes in a fair and sustainable future where everyone can thrive on the level playing field on our planet.
The future goals of the company for 2020 show the moon shot for the company to double their business and have half its impact on the environment. The company has embedded environmental sustainability in its business. The company does not believe in adapting to the future; the company believes that it can create its future by using sustainable innovation. The company has three goals to achieve by 2020. These include reducing the environmental footprint, unleashing human potential and transforming the manufacturing (Business Wire.com, 2016).
Description of the Company
The Nike Inc was founded in 1969 and from then until now it is engaged in the development, designing, marketing, and selling of athletic apparel, accessories, footwear, services, and equipment. The company operates by the segments of North America, Greater China, Central, and East Europe, West Europe, Japan, and other Asian Markets. The company has a portfolio of brands like Jordon Brand, Nike Brand, Converse, and Hurley (Reuters, 2018).
Structure/Organization
The structure of the company Nike Inc shows the limitations and abilities of its operations. The corporate structure of Nike Inc focuses on the requirement of the business to accommodate the differences in the regional markets. Nike Inc can be considered as an example of a company who knows how to incorporate regional differences in its business structure. The company has used a geographic divisional structure. The notable characteristics include global divisions for brand licensing and Converse, global corporate leadership, and semi-autonomous geographic divisions (Andrew Thompson, 2018).
Environmental Analysis
Economic
Nike Inc is not expected to be very vulnerable to economic factors because of its well-respected and medium-range portfolio of products. However, the company can be affected by some economic variables. The market collapse can affect Nike Inc like other brands. The economic stability of the developed markets, on the other hand, can act as an opportunity. The developing market’s rapid growth can act as an opportunity and a threat as well. The Chinese economy slowed growth can become a problem.
Technology
Using the value-based metrics for information can give the Nike opportunity to use it for optimizing their production, targeting of the market and maximize the revenue. Increasing Research and Development is one of the opportunities which can help the company Nike Inc in expanding its potential and strengthening its abilities. The company can use mobile technology as well for its benefit. An increase in investment in Research and Development would mean that the company can explore new innovative ideas to bring sustainability to its operations and consequently reduce its environmental impact.
Social/Cultural
Social issues are another factor which influences the athletic apparel, footwear, and equipment of Nike and its attractiveness. For Nike Inc, there are several important social factors which influence Nike. For instance, the individual wealth of the developing countries, if increasing, can become an opportunity for the company. The more the customers focus on product quality and safety; it is more beneficial for Nike. The attitude of individuals and society towards leisure and luxury activities also tend to influence Nike.
Domestic Business
The domestic business of Nike Inc is based on the segment of North America in which the company operates in USA, Canada, and Puerto Rico. The company has witnessed renewed hope in the domestic business whose revenues are projected to be flat as compared to last year and is now set up to return to growth by the year 2019 (Howland, 2018). Nike Inc Domestic business in the Footwear has always been the most revenue generating as compared to the Equipment and Apparel (Statista, 2018).
Global Business
The Global business of Nike Inc is based on the divisions of Greater China, Central, and East Europe, West Europe, Japan, and other Emerging Markets. The company has reported a revenue rise of 7% in its third quarter in 2018 which is majorly led by the global business units and the segment of Nike Direct. Regarding brand, the company revenues have increased by 4% to $8.5 million driven by the global business units, specifically in the brands of Nike direct, Nike Basketball and in Sportswear. The revenue for the converse declined of 8%.
Political-legal
Like other factors, political and legal factors influence the operations of Nike Inc as well. For example, the employment laws of the countries affect the company operations. The improvement in the developing countries’ laws would tend to be beneficial for the company and likewise vice versa. The consumer laws and health and safety regulations of the country affect the company operations and policies. Likewise, the political climate of the company influences the stability of the Nike operations as well. Improvement in the company’s political stability, political relationship with other countries and their trade policies and their infrastructure would act as an opportunity for the company Nike Inc.
Core Competency and Competitive Advantages
Any company’s competitive advantage is derived from its cost advantage and its differentiation advantage. The company Nike Inc can achieve higher profit by providing the identical product in lower cost (which it doesn’t) or by providing the products which are a differentiated way so that the customer may be willing to pay a premium price for it. The strategy for Nike Inc is a differentiation strategy as it focuses on the elements of advertising, branding, and design of products, quality customer service, new product development, and high product quality.
SWOT Analysis
| Strengths:
· An effective strategy for marketing · Brand Recognition · Quality products · Strong investment in Research · Distribution network · Customer Services and Satisfaction · Innovative product lines · Incorporation of Environmental Sustainability |
Weaknesses:
· Declining market share in the United States · Product Price high · Currency Exposure · Comparative high prices · Dependent on Overseas manufacturing · Medium retail presence |
| Opportunities:
· Product Innovation increased demand · Women athlete segment growth · Sports events like FIFA, Olympics · Emerging Markets |
Threats:
· High Industry competition · Economic Recession · Currency Exposure · Revenue is dependent on the Discretionary income of Consumer |
Human Resource, Types of Workers, Skills Needed and Culture
The Nike human resource and work culture have been seen as toxic as the company male executives have quietly left after allegations of sexism against the female employees. The stories revolving have found that the Human Resource of Nike is far too casual regarding the complaints of the employees. The company used weird mediums like PowerPoint to show the names of the persons who were to be fired. The company has a very uncomfortable work environment in which the men discuss strip clubs and refer to the female genitals with freedom. The company has also been sued for pay discrimination, and limited opportunities (Germano & Lublin, 2018).
Identify Markets/Products
Product:
Nike offers a full range of sports products ranging from apparel, shoes, and equipment. The company’s product line is focused on high quality and gives options to sports enthusiasts. The main company driver of revenue is sports shoes, and the company offers specialized shoes for each type of sport. The cricket shoes, for example, are 30% lighter than its competitive products. The company has also been focused on innovation by using smart technology in its products. Its products can connect to iPod and measure the performance of the person.
Price
Nike Inc is the market leader in sportswear and sports apparel and equipment. The company uses value-based pricing for facilitation of growth in the profits and sales of the company. The value is determined by the maximum premium the customer is willing to pay for it. It has largely benefited the company in maximizing its profits. The company’s product line focuses on the premium market segment. Even though it is based on a niche market, it also maintains its loyal base that pays an added premium for its innovative new products.
Promotion
Nike Inc is known for its strong branding and advertising activities. This effective promotional strategy of Nike is comprehensive as it uses the media and various tools aggressively for its marketing. Online mediums are also utilized like Instagram, Facebook, YouTube, for reaching out to and getting connected to the millions of customer base. The branding of the company plays an important role, the swoosh logo is recognized all over the world.
Place (distribution)
The company uses various channels for reaching out to its customers. These include retailers, online sales mediums, Nike online stores, and exclusive Nike offline stores. The retailers are most important with 200,000 retailers in more than 150 countries in the world. The manufacturing units of the company are based in every country to minimize the costs of logistics and enhance distribution efficiency. Flip cart and Amazon are also used for selling its products (Gregory, 2018).
Social Responsibility Actions
The company is ranked as one of the top 10 companies in the current sustainability global reporters’ program. The company is exemplified for its leadership in corporate responsibility, and sustainability reporting. The company Corporate Social responsibility actions focus on.
- Better choices for what materials to use
- Better methods for processing with less use of water, energy and chemical and less waste
- Better choices by using restricted substance lists (Riddle, 2013)
Financials (identify trends (2-3 years)
The revenue of Nike Inc has been increasing constantly from 2015. The profit of the company is shown as increasing from 2015 to 2017. However, the net income has declined significantly in 2018.
| 12 months ended | Revenues | Net income |
| May 31, 2015 | 30,601 | 3,273 |
| May 31, 2016 | 32,376 | 3,760 |
| May 31, 2017 | 34,350 | 4,240 |
| May 31, 2018 | 36,397 | 1,933 |
(Stock-Analysis, 2018)
It is also depicted in the table above. The company, even though it beat the estimates of the earnings, however the stock fell by 20%. The competition from Adidas has been causing pressure to its basketball division in North America, affecting its revenue growth. The future orders have declined year after year as well. The last year cannot be said as the best year for the company (Trefis Team, 2017).
Income Statement-Profit/Loss
The income statement of the company shows that the company operating expenses have increased substantially. The company’s earnings have declined in 2018 because of the lower provisions for income tax.
Balance Sheet
The Balance Sheet of the company shows that the company total current assets have increased in 2015, which declined in 2016 then increased in 2017 and then again declined in 2018 influenced by the total cash amount. The total assets value has been increasing steadily in the last five years.
Cash Flow Statements
The cash flow statement of the company shows its operating Excellency as it generated cash flow from operations and invested in its financial and investment activities. The Free Cash Flow amount has increased significantly in the last five years.
Liquidity Ratios
The current ratio of the company is 251% while its quick ratio is 163% and its cash ratio is 87%. It shows that the company has more than enough liquidity to pay off its current liabilities (NASDAQ, 2018).
ROI (Return on Investments)
The Return on Investment of the company has declined in 2018 to 12.96% from 27.78% because of the decline in earnings of the company. The company ROI had increased in 2017 from 26.59% (Morningstar, 2018).
Conclusion
The company Nike Inc is the market leader which is depicted in its operational Excellency. The company’s Financials tell the story of its strong, innovative capability, and its effective marketing strategy. However, the human resource practices of the company are troublesome. The CSR activities and the SWOT have shown the company’s ability to manage its HR as well effectively.
References
Andrew Thompson. (2018, September 8). Nike Inc. Organizational Structure Characteristics (Analysis) http://panmore.com/nike-inc-organizational-structure-characteristics-analysis
Business Wire.com. (2016, May 11). NIKE, Inc. Sets Bold Vision and Targets for 2020. Business Wire: https://www.businesswire.com/news/home/
20160511005885/en/NIKE-Sets-Bold-Vision-Targets-2020
Germano, S., & Lublin, J. S. (2018, March 31). Inside Nike, a Boys-Club Culture and Flawed HR. https://www.wsj.com/articles/inside-nike-a-boys-club-culture-and-flawed-hr-1522509975
Gregory, L. (2018, September 10). Nike Inc.’s Marketing Mix (4Ps/Product, Place, Promotion, Price) – An Analysis. http://panmore.com/nike-inc-marketing-mix-4ps-product-place-promotion-price-analysis
Howland, D. (2018, March 23). Nike sees opening for domestic sales growth in 2019. https://www.retaildive.com/news/nike-sees-opening-for-domestic-sales-growth-in-2019/519863/
Morningstar. (2018). Nike Inc. https://www.morningstar.com/stocks/xnys/
nke/quote.html
NASDAQ. (2018). Nike. https://www.nasdaq.com/symbol/nke/
financials?query=ratios
Nike Inc. (2018). What is Nikes’s Mission? https://www.nike.com/help/a/nikeinc-mission
Reuters. (2018). Nike Inc | FULL DESCRIPTION. https://www.reuters.com/finance/stocks/
company-profile/NKE.N
Riddle, J. W. (2013, January). A Review and Analysis of Nike, Inc.’s Corporate Social Responsibility Program. https://www.researchgate.net/publication/
307856792_A_Review_and_Analysis_of_Nike
_Inc’s_Corporate_Social_Responsibility_Program
Statista. (2018). Nike’s North American revenue from 2009 to 2018, by segment (in million U.S. dollars). https://www.statista.com/statistics/241706/
nikes-us-sales-by-product-category-since-2007/
Stock-Analysis. (2018). Nike Inc. (NKE). https://www.stock-analysis-on.net/NYSE/Company/Nike-Inc/Long-Term-Trends/Selected-Financial-Data
Trefis Team. (2017, January 5). Nike: The Past Year In Review. https://www.forbes.com/sites/
greatspeculations/2017/01/05/nike-the-calendar-year-in-review/#7a5c13a6114d
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