NIKE CASE STUDY
International struggles
.understand cultureak political and legal environemnts Think about economy of the country (rising or falling) What works in US doesnt work for every country (being adaptable) Every part of nke has to adhere to their principles (labor practices) Organization structure:must be more flexible (allow decisions to be made in the host country) challenge : become the top spot in the market More paperwork and aparting Exposing themseklves to differrent marketts rtun the risk of dsownturns in thr other masrketes Double irish sandwhich: way to get around taxes
How were they successful?
Adhering to its mission. To bring inspiration and innovation to eveyr athelete in the world Staying focused on being an authentic sports and fitness company serving the athlete Establishing a strong brand name through product innovatioj adn excuting advertising campaigns linking Nike with sports and fitness and with highlyu visible celebrity athletes Maintaining technological supremacy in the production of hgih quality, innovative products designed to enhance atheltic performance Becoming a global company that not only outsources is producgts from aroudn the world bnut also sells them in more then 160 countries
challenges
As rapid growth, phil knight had to learn how to manage a large public company Conducting business in foreign coutnries is complicated Adapt to hangiong landscape of its distribution network Respond to criticism about mal practices in the manufacturing facilities Phil knight stepped down
Nikes response to sweatshop scandal
At first nike under critisism for labor practices in Asian factories. How change? Defensive stage: nike explained they cant control the factories bcuz dont own them Nike managers in factories every day to ensure owneers were complying with labor standars and code of conduct Recruited independent insoectors to check compliance Nike products made in better conditions then competitors DID NOT address problems in the factories Compliant Stage Admitted unacceptable incidents and room for improvement "Anybody who makes a nike product is considered a nike employee" Suggested new initiatives in speech 1998 National press club `minimum age raised to 19, air quality improvements, monitoring programs expanded, educational programs expanded and vocational training Labor practices department established to oversee changes Cultural diversity training in Indonesia However public was not buying Nikes story Managerial stage: Knight put together a team to figure out problems Found out the companys pay-incentive system for procurement managers worked against Nikes Labor-conditions policies (pressure to meet unrealistic production quotas) Learned 1) labor issues cant be addrsed in a vaccum and 2) managers and workers at all levels must be held accountable For futute, instittued intensive program for monitoring working conditions in its factories (25-33 percent each year) Fair labor association-promotes international labor standards (provides with external perspective)
How does a diverse workforce help Nike create and market its products:
Better work environemnt: customers feel the inclusive environment More diverse opinions, different experiences Makes it an international product: not tailored to certain groups Asian women products cant be decided by white man (products need to be practical)
What propelled the growth of the athletic leiusure market?
Booming for athleisure market--growing athletics in the 1970s Variety of distrubitiuon, sporting goods, athletic shoe storesm webbsites, outlets retail stores Advancement of Equipment-started out as shoes but expanded to clothign, equipmment,sportsware innovation: pressurized shoes and
How were companies liek Nike, who were selling athletic shoes able to move in to the athletic apparel and sports equipmenbt markets***
Brand awareness, big team, advertising, diversity of team, Being able to stay specifc..not stray from industry Know how to target the audience Built reputation first...used reputation to infleucne the costomers Dont go into specialized sport Relate it to social justice Endorcemenrs from celebrities Nike a movement
Nike principles
Break the rules: fight the law, against their culture and innovation Ironic: says play on offense but Very defensive when it comes to opposition Danger: personal, (different then athelete mentality) YOur job isnt done unitkl the job is done (not about yourself, work as a team) BUsiness is change: Adaptability to changes in tech and supply chains New mission: to bring inspiratio nand innovation to every athlete in the world Have to make sure there is no way people can find your mission statement offensive
benefits of working on campus
Can take off an hour for daily exercize: access to all types of athletic courts and fields Toddler pool and child development centers Cafes restaurants and stores
Key factors in Nike's early success
Clear mission-well involved-self drive-commitment Passionate employees (worked without paycheck) Lucky: right place, right time, right product (very important) Good management-stayed on track-took calculated risks Athletic employers
NIKE ID
Consymers feel more individualized and personalized Less returns on products-saves money Not paying for deisngers Can charge a higher price Aggregate data on what customers liek to design shoes Reduces the risk of innovation Market of 1 but can be scaled around the world
Nike in French
Difference of perspective: America for the athletes, North korea for the style Gender neutral section in the french neutral...not in american website America: more shapes and sizes....french uniform foot sizes Military discount only in america Problem with international platform..people can look at prices from other countries to see if theyc are being cheated Only offer customize for America, but internationally only sell whats successful in US Other countries have reccomended items No basketball in Korea for girls Asking for Profile much more consistent then other countries US page does not have trending
what are the biggest challenges Nike faces when managing their supply chain?
Figuring out a price to make everyone happy....manufuturer, sell to warehouse, to retailer, to consumer Time:..Just in time production: system for reducing invenetories and costs by requiring supploers to deliver materials just in time to go into production process Keeping their retailers happy while increasing sales online with the increase in technology. Keepign wholesalers and retailers ethical Problems implementing supply chain software; forecasting demand (retailers) Currrency flunctuation: exchange rates abroad (27 different countries) counties that fluctuate prices: china, swiss, more developing countries Diverse supply chain: hard to make chnages Hard to make sure everyting is uniform Walmart: efficient supply chaihn, build around distribution centers After 9-11 filled stores with american flags Exchnage rate risk (10 percent raise in exchange rate can wipe out all profits)
3 levels of product innovation
Innovation kitchen, Testing facilities who do scientific research, product category teams What are the three groups responisbility for desiging new products and bringing them to market? Most valuabe Sport research lab: what makes the shoe actually helpful to athletes: put it through testing Asscess the ideas; figrue out which would work
Nike Product development
Innovative kitchen: center of creative activity housed in tio floor of the Mia hamm building Creating products "is a messy business" Goal: improve athletic performance The Sport Research Lab: Work with designers to bring to market products that raise athletic performance and prevent sports related injruies Category product teams Consists of designers, product debvelopersm sports research expertsm marketing speacilists, engineers) is assembked Creatdes product definiton report specifying desired product features Designer conceptualizes the idea
Knights leadership style
Laissez-faire style → employees get a lot of freedom + little direction Team mindset Hands off approach Need specific type of employee → self-disciplined, creative, independent Works in companies that need creativity + innovation Doesn't work in formal companies that are very structured or standardized
How does Nike's innovation prove successful
Maximize opportunity minimize risk 3 part system Crowdsourcing: process of getting work or funding from a large group of people in an online setting. Reaching different groups (women)
How does nike benefit from the benefits it provides from its employees
Motivation and drive, costomer loyalty, less medical insurance by providign athletic facilities, less turnover, better workplace/attitudes. How do you measure productivity: unlike coal industry (easy to pay based off work) Happy employees who are intrinsically motivated Soemtimes benefits make you less attentive to salary Child development centers Athletic facilities: contributes to facilities
Nike as good vs bad corporate citizen
Nike as a good inernational citizen Factory conditions are improved Bettr work environmemtn Strong values Planet sustainability Reduced carbon emmisiosns by 25%-ahead of schedule Stimulate economies and open up jobs by outsorucing More chouces for employment Adds comunicate who they are Push for improved product wuality and the improved performance motivates other businesses to be more competitive Nike as a bad international citizen Market expansion is at what cost Local businesses are out of business and lose potential customers\ Fear of taking responsibiltity Corporate social responsibility- past labor issues Tax avoidance Move o cheaptes country no loyalty Ofteh don't take initiative- not responsibe- struggle with PR sometimes World domination?
Nike and apple joining forces
Nike music shoe; nike and apple joined forces to colab and inovate "A system that leverages the athletic legacy of the sports brand and the technological and design mastery of the ipod to broaden both the solo and interactive experience of the sport of running Costomers look alike allowing them to pool their recourses (expand costomer base) increase costomer base, decrease cost: Leverage strewngths and pursue oportunities you cant get alone
Successes and mistakes in E-commerce
Success: Return policy Relationship with retailers Partnered with amazon: pooled customers and reduced counterfit risk Sneakers app NIKE ID, customization (US culture) Mistakes: Grocery biggets industry not on e-commerce..labor and delivery costs (automation): drones Walmart has advantage with physical stofres so amazon rfesponded by making their own stores Nike ID can be oveerwhelming to some people
Why did Nike have success in going global?
Targeted a very specific market Very specifalized Their target market was the youth Youth mattters-currnent market-players help cross the market Innovation and celebrity parnerships-trancend multiple markets and countries Very intentional in not being a world cup sponor Looking to grow the brand around the world Also looking to target women playing different sports from all over the world Looking at India Variety of sports that Nike wouldn't be originally associated with Cricket Badminton Boxing Soccer People could see themselves doing it- not a superstar its real poeple doing their things Looking to educate people - the youth Brazil Russia India CHina and growith companies
Diversity advantages
Women in asia getting into exercize and spirts Diverse workforce allows combination of talents and experiences Gives competitive advantage, sparks creativity, helsps compamy recruit individuals who value inclusive environemnt, improves ability to connecr with its culturally diverse consumers
Hannah Jones: 3 main goals
effect systemic chnage in the industry and workers conditions 2) create innovative sustainable product and business models effect sociak changbe through bringing sport to young peopel
technology in the supply chain
i2 system: helps forecast demand and generate production orders for contract manufactorers, who must know wehat needs to be produced and when SAP: helps manage ordfers from customers by collecting and processing info on orders Siebal system facilitates sales and customer relationships by managing info on order handling, product availabilibty and customer accounts
SWOT ANALYSIS
strengths : International geographies including china which grew 21 percent innovation/ success of new products Brand strength Brining sports to kids Educating them through sports - sustainability report, new innovation concepts, expanding international consumer pool, educating kids through sports SNKRS Innovation (sustainabliity), direct, and speed Weaknesses: Inconsistent behavior Not inclusive No ratio analysis Unhappy with workplace - very vauge on how they will improve the workplace environment, people unhappy with workplace, Opportunites: Growing demand for sports and demographic changes China super league: one of the fastest growing football nations in the world Expand the Nike apps including SNKRS - Growing Demand for Sports, Increasing reliability of social media (better marketing opportunity), newfound want of people to excercise Over 500 million people are active at least once a week Nature of shoppign is changing 2 billion digital natives in markets like chaina, india, and latin america will join the middle class by 2030 New platform Past weaknesses turned into opportunity Threats: Rapid change in costomers: Beat in innovation from rival companies like adidas Cover athletes getting closer to retiring]\ - Growing Demand for Sports, Increasing reliability of social media (better marketing opportunity), newfound want of people to excercise 3 areas: footwear, sportsware/ apparelequipment
