Nike COVID-19 Response: Strategic Management in Action

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Strategic management is a pivotal aspect of modern business functioning since it allows organizations to incorporate tactics relevant to the available resources when making important decisions. Importantly, it is a process that involves time and decision-making based on the assessment of critical elements that determine the outcomes of a company from both long- and short-term perspectives. Given the complexity of factors pertaining to strategic decision-making, strategic management analysis allows identifying positive and negative internal and external issues.

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Case Description

Nike, a global sporting apparel manufacturing company, announced its four-step strategy as a response to the COVID-19 pandemic. This decision was made in Match of 2020; it was covered by multiple media sources and was based on Nike’s intentions to shift from physical stores to e-commerce and provision of digital services (“COVID-19 response efforts,” 2020; “Nike’s four-phase COVID-19 response strategy,” 2020). As the company’s CEO announced to investors, Nike decided to implement a strategy consisted of four steps, namely “containment, recovery, normalization, and return to growth” (“Nike’s four-phase COVID-19 response strategy,” 2020, para. 2). These steps outline financial, operations, and human resource measures that are necessary when complying with pandemic control guidelines and continuing active market participation.

The relevance of this current event to strategic management is validated by the multiple steps outlined by the organization that demonstrates its long-term vision of the company’s future during and after the pandemic. According to Segal-Horn (2004), strategy deals with decision-makers choices concerning developmental routes, resource distribution, or an overall direction of organizational growth. In the case of Nike’s response to the COVID-19 pandemic, the company leadership made a decision to close stores and concentrate on e-commerce and digital services to preserve its market presence and eliminate health risks.

SWOT Analysis

The analysis of positive and negative characteristics of such a strategic management decision might indicate arrears for possible improvements and identify advantages gained by a company under current circumstances. According to Trevor (2018), the analysis of strengths, weaknesses, opportunities, and threats allows for evaluating the appropriateness of strategic decisions within a particular context. In particular, as stated by Gurel and Tat (2017), SWOT analysis helps in “determining what story the four lists tell about the organization’s situation and thinking about what actions are needed” (p. 1001). Table 1 demonstrates the SWOT analysis results for Nike’s four-step strategy as a response to COVID-19.

Table 1. Nike’s Four-Step Strategy SWOT Analysis.

Strengths Weaknesses
  • Resilience:The company demonstrates its resilience in managing operations under the pressure of uncontrollable conditions
  • Social responsibility: Nike contributes to communities by raising funds for Nike Foundation to combat COVID-19 globally (“COVID-19 response efforts,” 2020)
  • Innovation:Using innovative solutions, the company integrates new services (such as training app, online shopping) to meet customers’ needs
  • Loss of revenue: By closing physical stores, Nike loses a vast number of buyers
  • Physical facilities’ expanses: Since brick and mortar stores are not used during the lockdown periods, renting and maintenance might be of the financial burden
  • Resource management by country: It might be challenging to sustain strategic measures depending on each countries’ characteristics due to the need for allocation of resources for strategy implementation
Opportunities Threats
  • Digital market occupation: With investment into innovation and digitalization, the company might occupy a solid place in the digital market after the pandemic
  • Customer loyalty: Due to Nike’s corporate responsibility and commitment to its mission during the pandemic, it is likely to maintain the loyalty of its customers after the pandemic and increase its revenues (“COVID-19 response efforts,” 2020).
  • Training business: With the launching of the training platform’s online version, the company might potentially use sporting activities as an option for long-term growth and diversification.
  • Increased competition: The pandemic causes unprecedented market processes which are difficult to predict; Nike might lose its competitive advantage with the emergence of new entrants into the industry after the pandemic
  • Loss of resources at a recovery stage: Since the company plans to reopen physical stores at the second recovery stage, it might lose much of the resources when revitalizing conventional retail processes.

Overall, the strategic management solution is reasonable and well-planned given the current condition of the retail market. It would be appropriate to apply these steps to other industries to ensure a smooth transition from the lockdown mode to a conventional one. The analysis shows that the strategy outlines the company’s overall route of operating during the pandemic but is not completely sufficient in resource management addressing and revenue stabilization. Therefore, it is relevant to propose several recommendations to mitigate the identified threats and weaknesses. Firstly, it might be relevant to articulate alternatives for pricing of products after reopening the physical stores to bridge the possible gap in financial resources. This might be done through supply chain simplification. Secondly, the company might engage in more active cooperation and partnership with other sporting gear manufacturers to reduce competition and ensure its continuous presence in the market.

Conclusion

In summation, the importance of the strategic management process in the lifecycle of contemporary companies is difficult to overestimate. Challenging times of crisis are illustrative of the potential of companies to address difficulties in a resilient manner. As the case of Nike’s four-step strategy demonstrates, the company is capable of shifting to an alternative market, namely digital, to ensure its market presence and mitigate possible financial and competitiveness losses.

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References

COVID-19 response efforts. (2020). Nike. Web.

Gurel, E., & Tat, M. (2017). SWOT analysis: A theoretical review. Journal of International Social Research, 10(51), 994-1006.

Nike’s four-phase COVID-19 response strategy. (2020). WARC. Web.

Segal-Horn, S. (2004). The modern roots of strategic management. European Business Journal, 16(4), 133-142. Web.

Trevor, W. (2018). Business basics: Using a SWOT analysis [Blog post]. Web.

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BusinessEssay. (2022) 'Nike COVID-19 Response: Strategic Management in Action'. 1 September.

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BusinessEssay. 2022. "Nike COVID-19 Response: Strategic Management in Action." September 1, 2022. https://business-essay.com/nike-covid-19-response-strategic-management-in-action/.

1. BusinessEssay. "Nike COVID-19 Response: Strategic Management in Action." September 1, 2022. https://business-essay.com/nike-covid-19-response-strategic-management-in-action/.


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BusinessEssay. "Nike COVID-19 Response: Strategic Management in Action." September 1, 2022. https://business-essay.com/nike-covid-19-response-strategic-management-in-action/.