Founded in the early 1960’s, Nike formerly known as Blue Ribbon Sport grew into one of the world’s most recognised brand. A leader in the field of sport clothing and footwear, Nike has always been one that encouraged innovation, creativity and growth. Outsourcing of its manufacturing processes, created an opportunity for Nike to realign itself and focus on its core competencies, doing what they do best research, development and advertise. By mid 1990’s the company began fighting attacks on its manufacturing practices in Asia, human rights and employee’s exploitation. The media sensationalised its overseas labor practices and their commitments to being socially responsible were questioned. In the wake of such challenges Nike has employed several strategies to managing the negative publicity and as such policies were developed to monitoring and ensure exploitation was not occurring on Nike watch. For Nike, to ensure survival, a constant review of its external and internal environment must be done as this will ensure that measures are taken to safeguard markets, profitability and leadership, Nike cannot be caught sleeping. Nike’s value chain gave management the opportunity to understand internally competencies and how cost can be managed. Porter’s five force analysis (1985) gave an external view of the market and the reaction of the environment they operated within. Strategies can affected by the culture, environment and practices that has been proven, however strategy may differ as the company is faced with the challenges of the market and changes in the social context of its existence. Nike’s management team must carefully analysis its environment in terms of developing a strategy that would allow the company to grow, evolve and continue to maintain leadership in its field. Table of Contents
Page Executive Summary 2
1.0 (a)Porter’s model to strategy- value chain analysis5 1.0 (b)Porter’s five forces7
1.0 (c)International Trade9
2.0 (a)Whittington Systematic and Processual school of thought10 2.0 (b) Systematic and Processual school of thought application to Nike11 3.0 (a) Mintzberg’s Cultural and Environmental school of thought15 3.0 (b) Cultural and Environmental school of thought application to Nike16 Conclusion 19
•Porter’s Five Forces Analysis25
In 1963 Blue Ribbon Sport began distributing low cost high, quality Japanese shoes to American consumers. The company took the name Nike in 1963 and ever since has broken boundaries in terms of profitability and growth. The company outsourced it production line to manufacturers of Asia. This allowed the company to enjoy cheaper sources of labour, available raw material and lower tariffs, the large scale production allowed the company economies of scale. By mid 1990’s Nike was faced with growing criticism in terms of their labor practices and the inhumane treatment of their employee abroad. The question of whose responsibility has been on the minds of the management, as negativity publicity plagued the company’s good nature, corporate responsibility come to the forefront for attention. This report will attempt to look at the strategies that Nike has implemented over the period 1996 to 2000 and to see what perspectives Nike have applied to make them a success. Nike’s practices will be analysis internally and externally, assessing it strategies and the reason behind such decisions.
Consistent with its strategy for a high quality product at a lower cost of manufacturing, Nike Inc. outsourced its manufacturing activities. The company partnered with hundreds of vendors that delivered...