Nike: Company Culture and External Environment

Introduction

Nike Company faces stiff competition for market share from its rivals and therefore it has to redesign its objectives in order to remain successful and international in scope. Businesses has evolved and therefore different organizations are embarking on strategies to attract and retain there customers in order to survive in the ever changing business environment. With the help of SWOT and Porter’s five forces such problems can be easily solved if and only the management of the Nike Company formulate viable strategies that will result in attaining the set objectives. The main objective of this study is therefore to analyze the business environment in order to design action plans that will ensure the success of the corporation.

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Nike is an international company dealing with a range of sports equipment such as shoes, shirts, t-shirts and Jerseys for various sporting activities including, football, athletics, basketball, cricket, tennis, skateboarding and golf. Nike is a premium company that sells well branded and expensive products that are known for their superior quality. Nike is well known for the trademark ‘just does it’ and it relates to the sporting spirit. This company has more than 500 factories in over 45 countries that are contracted to manufacture these products. With this extended production capacity, we find that the company has an elaborate organizational culture; management and leadership that has enabled it realize its goals and objectives. (Nike, 2009)

Organization culture

The tradition of an organization can be describes as its culture, Hatch (1993) describes organizational culture as shared basic assumption in the organization that have been developed over a long time which are used in guiding the internal relationship of employees in an organization. Research conducted points out three main aspects of organization culture that Nike applies in its management which are:

  • Artifacts: visible organizational structures and methods
  • Espoused values: strategic goals and objective of the organization
  • Underlying assumptions: assumed beliefs and perceptions

Culture of an organization such as Nike has a deeper influence with the employees and affects how they feel and perceive the organization in which they are working in. organizational culture is dynamic and keeps on evolving with time. Organizational structure and mission or vision and values of an organization highly influence the culture of an organization.

The type of organizational structure of Nike

Nikes organizational structure is a hierarchical type; this type of structure allows dividing the organization in smaller divisions that are managed by various managers who have a number of employees reporting directly to the specific managers. This kind of organizational structure is more effective and well defined in terms of leadership ladder within the Nike organization. The roles and duties of each manager are well set and the structure gives its employees a great chance of developing professionalism in as one of the key missions of the organization and also ensures better service delivery to the consumers.

Environmental Analysis

By use of SWOT analysis, situation analysis is very decisive to the Nike organization and can be analyzed in two aspects; analysis of external environment and analysis of internal environment. Usually external environment analysis discloses the firms’ opportunities and threats that are either present or potential, whereas the internal environment analysis discloses the firms’ strengths and weaknesses that are inherent in its business settings.

Internal Factors

The major endeavor of any company is to make best use of profits so as to give the best probable returns to owners for the capital they have devoted in the firm. In order to realize this objective, firms must be effective and efficient in its production purposes. For that reason, any firm including Nike relies on its internal features for resourceful and successful operations. Research indicates that the main internal fundamentals comprises; physical resources and equipment, financial strength, competent personnel, production and operations, and market competence. Such features results to either strengths or weaknesses of a firm.

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Nikes Strengths

Strength in this context can be described as distinguishing competence that a business can do comparatively better than its rivals and which the firm has and enhance the accomplishments of the set objectives. The Nike organization has a strong brand name that aids the corporation to have a competitive advantage when compared to its rivals. The company’s drinks are well known and therefore it is best placed than its rivals.

The other strength is that of best marketing network that have made the corporation in the past to do well in its operations. Nike has opened numerous branches and thus it has distributed its sporting products without any distribution problem. The corporation has the most excellent distribution channels that have been a strength that has appreciably assisted the corporation to control the sporting equipment market for a long time over the past. (Nike, 2009)

Another strength associated with the Nike organization is the capability to spot the market segments and hence an excellent competitive position of the corporation. Nike has a lot of customers that it has been serving over the past when compared to its rivals which have not been able to secure large market share. Also the corporation has a strong financial base thus it has embarked in the future in developing core operating units that have aided the corporation to achieve firm structure.

External Factors

External factors are usually divided into micro and macro environment. Micro environment is about actual and political transactions used in a firm and its environment in day to day activities of a company that include; customers, suppliers, intermediaries among others. On the other hand macro environment is about external higher order forces which do not affect an organization dealing as yet or directly but may do so in the future. External factors may include; economic, technological, competition, political/legal, and social-cultural factors. However, external environment of a company may be explicitly explained when opportunities and threats of the firm are considered.

Opportunities of the Nike organization

An opportunity in this aspect can be defined as any event, development, or a feature of the external environment which creates conditions that are favorable or advantageous to the business in relation to a particular objective or set of goals to be attained. It is an attractive venture for a corporation’s operations which if exploited will lead to a significant upward change with desired results such as increase in profits margins and growth.

There are many opportunities that exist for the Nike organization in relation to emerging markets all over the world. There are great emerging markets in Africa, Asia, and Australia among other countries. There is great investment demand in these places that Nike can maximize on it. There is significant increase in the consumption of drinks which creates a great opportunity for Nike to expand their investments.

The technological innovation, for example, that of e-commerce should be utilized by the corporation and in order to result to expansion of the market share of the corporation thus increasing its profits and enhancing growth. Since Nike Corporation is among the largest firms, its competitive advantage allows the corporation to penetrate to more new markets than its rivals. If the company can fully utilize this it will have the upper hand in terms of competition and explore new markets and profit margins will shoot up thus gaining more power to compete globally. The corporation can also utilize its opportunity of strong financial base and embark on acquiring new machines that will aid in producing quality sporting products.

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Threats of the Nike organization

A threat can be referred to as an environmental development or event which will present problems or challenges likely to hinder the achievement of organizational objectives, for example, competition, high interest rates, government legislations, declining real income among others. Nike is now facing stiff competition from its main rivals thus there has been a drop in the market shares thus a reduction of their profits. The marketing strategies of Nike need to be reviewed in order to cope with the increasing competition. For it to continue succeeding both locally and globally, the marketing managers have to incorporate recent technological innovations like doing business online. (Baker, 2000)

There are times when government regulations may hinder the operation of the organization. This can also be termed as a threat. Under this, Nike Corporation over the last few years in some countries have been experiencing challenging times whereby some states have passed laws that do not favor using the products of Nike as a result of low quality.

Other threats include increased barriers in trade; it has become hard for the company to operate both within and outside because of the quality of products. There have been stringent regulations regarding to imports and exportation procedures. Another threat that has hindered the success of the company of late is the ever decreasing income of the consumers of its drinks. This may have arisen because of the increase in inflation and high interest rates thus raising the standard of living and hence cannot afford to purchase the drinks of the corporation (Nike, 2009).

Porter’s five forces

It is very significant for Nike to use the porter’s five forces to ensure that they strategically position themselves in a way that they become very competitive to make sure that they remain in business and also make and maximize profits. Managers have a very important role in ensuring that they do enough analysis so that they employ strategies to make them make the best out of the business that they do. Porter’s forces can be analyzed to act as yard sticks for the supermarkets and the drug companies to position themselves so as to do a profitable business as they face a very competitive and saturated environment that is very sensitive to changes. (Baker, 2000)

The Intensity of Rivalry among Established Companies

Nike faces a very competitive environment that has a big concentration of rival competitors making it a very competitive venture in business. Nikes compete with its rivals across all levels and try all strategies to ensure that they beat their rivals and try to do extensive marketing and innovation to attract more customers every day. There are many established companies that are more organized and have better strategies than Nike and therefore have a competitive edge over it. Nike is an established corporation and therefore it has a well developed network that has a good client base and that is supported by customer loyalty and therefore can use such opportunity to lock out the new companies that try to make an impact by entering into the existing markets. Customers will always be pulled to go to the already established firms that they are used to them and will always feel that their services are the best and therefore Nikes should utilize such an opportunity. The new companies are highly challenged and have positioned themselves strategically by ensuring that they offer quality products well and also price such products fairly in order to attract customers. (Nike, 2009)

The Risk of Entry by Potential Competitors

There are new competitors that have interred into business with an intention to bring new capacities that never existed before so that they may give competition to Nike Corporation. Every new entrant into market is a big threat to Nike since they may pose a big danger when they come and take the existing customers by intimidating them with good attractive services and quality sporting equipments. The higher the entry barriers, the less it is likely for outsiders to enter the industry; however the business that Nike operates have no limits to entry and therefore the company is prone to intense rivalry. (Porter, 1985)

The Bargaining Power of Buyers

This is the marketplace of outputs. Customers of Nike put the businesses a lot of pressure since they are very sensitive to any change in drink quality and are always ready to window shop and find where quality sporting equipments are being offered. The availability of substitute sporting products has made it very challenging for the Nikes management and are therefore it has the task of learning the behavior of its customers so as not to scare them to their competitors and therefore reducing their profitability. It is very important for the Nike Corporation management to highly depend on market intelligence so as to be very strategic in its pricing since there are many companies that are ready to offer quality drinks, reduce prices by negligible amount that can attract customers from competitors. (Porter, 1985)

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Conclusion

We can therefore conclude that for firms to be successful in the market place it must therefore prepare workable marketing plans that will eventually ensure the success of the company in the long-term. Marketing strategies adopted should be those that go in line with the company’s mission and vision’s statements as well incorporating the issue of corporate social responsibility so that the strategies implemented are of benefit to the company, its employees and the surrounding society. Nike Company should also utilize the opportunities that arise in the market place particularly in the fashion industry by ensuring that it fully utilizes its strengths to accomplish those opportunities. Since modern businesses are faced with stiff competition as a result of globalization, companies including Nike must carry out marketing research in advance in order to be informed with all the marketing activities in the market thus formulating market plans that will ensure profitability in the long term.

Reference

Baker, M. (2000): Marketing Management and Strategy, 3rd edition: London. Macmillan Business.

Hill C. (2005). Global business today, 4th Edition, New York: McGraw/Irwin.

McGahan, A. (2004): How Industries Evolve: – Principles for Achieving and Sustaining Superior Performance. Harvard Business School Press.

Nike, (2009): Nike Professional Practices Committee report, Web.

Porter, M. (1985): Competitive Advantage:-Techniques for Analyzing Industries and Competitors. The Free Press, New York.

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