Nike Inc.
Operations Evaluation of Nike Incorporated
Marketing Mix Price
Marketing Mix Place
Market Situation
Factories Based on Region and Product
Current Situation of Footwear Industry
Marketing Mix Product
Nike Current Situation
Strengths
Marketing Mix Promotion
Weaknesses
Opportunities
Threats
Critical Evaluations
PEST Analysis
Growth Opportunities
Political Evaluation
Economic Evaluation
Social Evaluation
Technological Evaluation
Changes in Operations Workers at Factories
Code of Conduct Grade Assessment
Operations Evaluation of Nike Incorporated
Understanding how globalization affects a company will be analyzed to explore how Nike Incorporated handles the multiple risks and capitalizes on the benefits of such expansion. As Nike has faced immense growth and criticism due to the complex business model that has led to the number one position in the athletic footwear industry. It has been a challenge to balance strong organizational performance along with required corporate ethical standards expected for a global leader. A critical evaluation of Nike Inc. will be completed using marketing theories as a guide such as PEST, Marketing Mix, and SWOT analysis. Whereby an understanding of how the company strategy in operations has led the company from its current situation to recommendations for a better future position.
Introduction
Phil Knight along with his partner Bill Bowerman started Nike in 1964. They invested $1,000 in the company Blue Ribbon Sport as import distributors of athletic footwear. The first suppliers sources were premium quality athletic shoes from Japan. Today Nike is a household word throughout the world as an industry leader in marketing, design, and distribution in athletic footwear and sportswear (Nikebiz. com 2011).
Marketing Mix - Price
The business model has not changed much since its inception as the company does not generally manufacture athletic shoes. They mainly have other countries manufacture them at a low price point where labor and raw materials are less costly, and resell them after branding them at a markup price for a profit. Nike mainly expands their business by investments in research and design development, along with marketing plus sales to attract more manufacturers. These new suppliers in turn compete to build Nike product designs. The idea to import from great quality producers like Japan came to Knight when in college at Stanford (Nikebiz. com 2011). The plan was to buy lower cost yet finest quality footwear from country's like Japan, then resell in the U.S. And other high demand areas such as Europe and Australia at a premium price.
Marketing Mix - Place
While other athletic footwear companies like Adidas who were once the market leader continued to design and manufacture their own shoes in the U.S., Germany, and other places where the cost of production was high, Knight recognized the advantage of outsourcing manufacturing shoes in lower cost countries (Nikebiz. com 2011). As Blue Ribbon Sports started to reach millions of dollars in sales by the 1970s, they tried expanding into designing their own shoes. The new name of Nike came into existence in 1978 as the company started selling under their own brand.
The Nike brand was launched in 1972, and the company officially changed its name to Nike, Inc. In 1978 (Nikebiz.com 2011). There were mainly a couple of manufacturers in Japan that were the suppliers of shoes to Nike. They were Nippon Rubber and the other was Nihon Koyo, they continued to be successful in business together throughout the 1970s. However, eventually costs begin to grow due to the International crisis that affected oil prices and raised the value of the Japanese Yen in relation to the U.S. dollar (Nikebiz.com 2011). At this point it became clear to Nike that a new supplier was needed that could provide the highest quality product at lower costs. Nike decided to try manufacturing and opened a plant in the U.S. To gain more control over their product. They also pursued new foreign suppliers in Korea, China, Taiwan, and other countries where labor and other resources were still at lower prices (Nikebiz. com 2011). The U.S. plant could not compete with the foreign producers so by 1980, Nike abandoned domestic manufacturing. Opting instead to continue with the original business model of outsourcing manufacturing (Nikebiz.com 2011).
Market Situation
With both Korea and Taiwan as the chief producers of Nike products, costs once again increased to the point that Return on Investment was not as profitable as necessary to meet the costs of production. Nike begin to work with these manufacturers in a bold new initiative to promote them to move their manufacturing plants outside their own country to other less costly nations around the world in order to benefit from low cost labor and resources, see Table 1 (Nikebiz. com 2011). Other plants were eventually...
By developing and instituting a strict code of ethics for its suppliers, Nike would solve this problem. Furthermore, such a code would not necessarily increase costs. Nike could force their suppliers to institute the code and absorb the costs. Although Nike has been a valuable flashpoint for sweatshop critics, a strong code of ethics would remove much of the criticism. The critics could still target Nike, but they would
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Nike Inc. is an America multinational company with engagements in development, manufacturing, design, and global marketing of equipment, apparel, footwear, services, and accessories. The firm has its headquarters in Beaverton in Portland metropolitan region. The company remains part of the largest apparel and athletic shoes supplier in the world. The company is a notable manufacturer of different sports equipment reaching a revenue mark of U.S.$23.1 billion in 2012. The
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