Nike: Strategic Operations Management

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Introduction

Business strategy is the pathway designed by an organisation or a company to accomplish its set objectives. The purpose of a strategy is to ensure that there is proper management of the company’s resources while making the products for sale. Also, it directs the process of business plan execution by defining the boundaries of operation and enhancing development in the processes involved. Thus, business strategy is well defined as plans in both short and long terms, and mechanisms employed to attain the visions by a company or an organisation. All over the world, companies exhibit diverse and distinct operation strategies to maximise efforts in satisfying customers’ demands in the market.

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The strategies can be approached in the dimension of leadership, service provision, and growth plans (Mahdi et al., 2015, p. 168). This paper discusses the strategic operations management of Nike. Deep focus is placed on the visions and missions of the company as the operation strategy, process design, planning, and control of the business outline, and innovative approaches in promoting the company’s development processes.

Operation Strategy of Nike

Nike has different strategies of operation towards being the leader in production and marketing sportswear and equipment. It banks on innovation to foster consistency of excellence in development. Nike emphasises on research as an avenue towards designing products from the resources available (Araujo et al., 2018, p. 110). The focus of Nike is to eradicate all possible chances of injury and attain the uttermost level of comfort and joy through the supply of well-designed footwear and equipment that adjusts to the mechanics of athletic activities.

Nike has positioned innovation and creativity in the process of production at the forefront as a strategy of sustaining progress in the development and marketability of their supplies (Burgelman, 2017, p. 212). It is through innovation that Nike has become competitive in the market and has achieved inspiration to the athletes who are consumers of their products.

The diversification of products is a strategy in which Nike broadly produces different kinds of athletes’ clothing to fit the interests of customers. The first approach in ensuring a broader diversity is through manufacturing sport wears for different categories of people, men, women, and children. Moreover, the products are differentiated into varieties such as shoes, bags, skates, balls, and gloves (Liu et al., 2018, p. 151). Nike has also licensed different manufacturers to sell their brands besides goods for athletic activities including, school bags and game kits, electronic devices, and stopwatches.

Market segmentation strategy is implemented by Nike in order to carry out advertisements with ease. Through the programs athletic celebrities and prominent teams are sponsored to enhance marketing. It also uses the institutions of learning such as colleges to promote their products by taking tenders and supplying their products. In 1982, Nike recorded the first instance of going live on television programs to broadcast the marathon athletics which occurred in New York. It is through that the attention of many buyers was captivated towards its brands (Mahdi et al., 2015, p. 174). It is by market segmentation that Nike reaches the furthest parts of the globe when disseminating to consumers.

Nike is also pursuing a business strategy called “Closed-Loop Model”, whereby the attention is driven towards ensuring that nothing is taken to waste. The strategy employs the techniques of reusing the worn-out materials from products that were sold (Curtis and Amanda, 2019, p. 3). Moreover, Nike manufacturers are composting their raw materials and old materials from products to form new products leading to successful recycling, hence no wastage taking place in the process of production. The strategy ensures that the lifespan of products is monitored and reclaimed for recycling to synthesise new ones (Araujo et al., 2018, p. 114). Thus, through innovation, Nike ensures maximum utility to sustain its production process.

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Clarity of Nike’s Strategy

The clarity of an organisation’s operation strategy relies on the orientation of the business plan, and mainly focuses on developing solutions to the prevailing obstacles. Nike as a corporation with a specialisation in producing and marketing sportswear has a clear vision of inspiring athletes through innovation. The process of manufacturing of designed products can be monitored easily and evaluated based on quality. It therefore implies that Nike has a quality control system to enhance its efforts towards achieving the mission of “reducing injuries and ensuring athletes comfort” (Curtis and Amanda, 2019, p. 3).

Production is also segmented into inputs and outputs to ensure accountability by monitoring raw materials utilisation and product selling. By emphasising high-quality products that fulfil customers’ demands and by designing price margins that are affordable to customers, Nike has been able to escalate its business programs (Curtis and Amanda, 2019, p. 6). Therefore, by achieving consistency in the marketing and production process, it is conceivable that Nike has a clear operational strategy.

How the Operation Strategy Supports the Business Strategy

Nike is an international organisation running the business of manufacturing and selling sportswear and equipment. Ensuring success in marketing requires capturing customers’ attention by disseminating the products of their interest. Nike is employing a strategy of premium pricing to make their goods affordable to consumers, hence ensuring the loyalty of customers and market competitiveness (Curtis and Amanda, 2019, p. 5).

Moreover, the corporation uses market segmentation and diversity of production to reach many customers. Thus, the loyalty of their buyers on a large scale helps in promoting Nike’s business strategy. Moreover, innovation and the closed-loop model strategies aid in the maximum utilisation of resources in developing products that fulfil the market demand. As a result, the production of sporting apparel and equipment is consistent, and per Nike’s business strategy. Furthermore, the cost of production is lowered by reusing and recycling materials in the process of manufacturing goods (Burgelman, 2017, p. 218). Therefore, the operation strategy of Nike supports the business by promoting its competitiveness.

How the Operation Strategy has developed in the Recent Years

Nike has established a powerful system and clear business plan through cooperation among different manufacturing sectors, which has resulted in high inventory yields from the inputs. The corporation is the determinant of prices by which their products are purchased. Consumers approach the market with prices set in their minds, however, being that quality determines the value, Nike’s products determine the price with which they go since they must have been creatively designed.

It is a contrast to the past decades when customers could prescribe the prices because the quality of the products could not make them loyal to marked prices set (Curtis and Amanda, 2019, 3, p. 6). Moreover, Nike is employing operation management in attaining high quality at a low cost in both manufacturing and marketing processes, and to ensure efficiency in product dissemination. The inventions are towards becoming the lead in sportswear business and developing its production facilities.

Defining Operation Strategy Effectively

Nike has an operation strategy that defines its moves towards accomplishing its mission and fulfilling its vision. The operation management is defined as the principles used to guide decisions made in an organisation while running its businesses, Nike’s operation strategies articulate the guidelines in production and marketing. Innovation through research defines the quality of products disseminated by Nike into the market (Burgelman, 2017, pp. 241-242). Moreover, it fosters the fulfilment of market demands, which in turn favours the process of marketing. The process of retailing or wholesaling Nike’s products is also under check through premium pricing and market segmentation. However, the efforts should also be employed in evaluating the efficiency of the product while at the selling stage as time changes to ensure all-season business consistency.

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Nike’s Process Design

Process design refers to the actions taken in implementing the vision and mission statements of an organisation by using raw materials to manufacture products and marking them for profit realisation. It majorly presents what the company does to accomplish its goals for development. Process design starts with the evaluation or analysis to develop objectives leading to the creation of a distinct product that fits customers’ demand. Nike’s objective is “to bring inspiration and innovation to every athlete in the world” (Du et al., 2016, p. 57). The corporation has been consistently working to supply high-quality sport wears and equipment by controlling the manufacturing and marking phases of its business. Thus, the process design involves developing ideas on the product, manufacturing it and selling.

Nike has designed a process of developing new products leading to the delivery of quality demanded at reliable prices. The rich knowledge of the corporation about consumer’s interests has been the instrument of its competitiveness. The first phase of developing a new product in Nike involves the formulation of ideas. It utilises the understanding of customers in a mechanism called co-creation (Parkman, 2019, p. 33). Moreover, it establishes contacts with highly connected customers all over the world and communicates with them directly to know what improvements to incorporate in their products.

Screening of the generated ideas follows the conception, in which the suggestions made are refined into the intended product. Priorities are given to Nike’s long-term objectives as the ideas are being checked, and moves are taken after evaluating that they are likely to fulfil them. Furthermore, the evaluation takes into consideration the capacity to implement the ideas using the available resources and finances.

The centre of creation known as the “innovation kitchen” is where the employees develop a feasible production for marketing (Juntunen et al., 2019, p. 335). The concept is developed to test the viability of the product. Detailed accounts of the product are given thereby ensuring that customers’ interests are met. Moreover, alternatives to the newly developed products are given and consumers’ opinion is sought to ensure that their demands are catered for. Thereafter, the product is manufactured and research on its prototypes is carried out (Bauer and Borodako, 2019, p. 204). The confirmation of whether the product is in line with the set parameters is performed during processing. Market analysis is also done to ensure that the demands will be fulfilled upon unleashing the product for sale.

Marketing strategy is thereafter employed together with business analysis and commercialisation to realise profits from the sales of the newly developed product. The concepts involved are for estimations of selling scales in the identified markets, and allocation of prices on the product for distribution. The cost of sales and profits to be realised is forecasted for a given period. The product is then introduced into the targeted markets through selected segments for efficient selling (De Silva et al., 2019, p. 4). It is after introduction into the market that marketability is determined to facilitate further manufacturing and distribution through the chain of supply.

The supply chain is also a vital component of process design at Nike. It is established on policies granting permission for it to utilise different raw materials, thereby, making procurement easy. Moreover, it functions in the management of product distribution to various retail shops leading to efficient operation between producers and consumers. It is through the supply chain that the cost of transportation is managed at effective rates. Moreover, the activities therein do not require active human labour (Distelhorst et al., 2017, p. 717). Well organised work in the supply chain stems from partnerships developed between Nike, and government and business associations.

The Layout of Retail and Manufacturing Facilities

The manufacturing facility layout of Nike is based on the general steps involved in producing their goods for sale. It begins with the delivery of raw materials to the companies making various products. For instance, the shoemaking companies are supplied with textile and leathers after which they are channelled to the cutting department. The cutting is done to fit the required shapes and sizes, after which sewing follows.

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Sewing and stocking occur concurrently leading to the formation of upper and lower parts of the shoes (Jiang, 2019, p. 86). Immediately, they are taken to the heeling process where the upper parts are fixed with the sole, and finishing terminates the process resulting to a feasible product. It implies that Nike’s manufacturing facilities are designed in a sequential manner leading to the production of high-quality goods for sale.

The retail layout, on the other hand, relies on fashion and marketing trends. The products are uniquely mixed in stores and arranged in a “live and curated” style. The main objective is to ensure that customers are not bored by modernisation in the current market. Moreover, Nike’s retails are staffed by employees having an advanced understanding of fashion and sports trends, leading to a relationship between the company and consumers. The stores’ spaces are utilised maximally by macro and micro space assortment of products (Li, 2019, p. 499). The design of Nike’s retails, therefore, allows for maximum sales return and competition oriented.

Recommendations for Improvement

Marketing in the current world employs technology heavily in which website links are developed as platforms for popularisation and reaching out to customers. Nike should, therefore, consider utilising marketing potentials available through internet-based technologies that are emerging on a real-time basis. The manufacturing process of Nike should also be advanced with technology and constantly be running to ensure that competitors don’t take advantage of following underutilised opportunities (Araujo et al., 2018, p. 113). Moreover, the retailing of Nike should be enhanced in Nations like China where it has been facing market failure. It can be achieved through developing fashion and designs according to the culture of Chinese and market demands.

The Use of Technology in Process Design

Nike implemented the use of “state-of-the-art” technologies in researching the market. The application of these techniques enhanced the ability of the corporation in knowing the interests of its customers. Moreover, Nike is using computerised operation systems in running the processes of manufacturing sport wears, apparel, and equipment. Through its research laboratory, Nike can determine the quality and value of the products before being distributed to the targeted markets (Mahdi et al., 2015, p. 175).

Planning and Control

The significance of planning and controlling the process of production is to maximise profit realised from the company sales. Just like the process of managing inventory, the organising activities ensure that customers’ requests are supplied on time to foster income generation as they get satisfied. The planning helps in setting the direction to take and schedule for the process of production as well. Through that, maximum utilisation of the raw materials, workers’ efforts, and machinery in operating the plant are achieved (Stindt, 2017, p. 155). Thus, a well-fashioned design and control of production helps Nike in running business programs in economically independent nations like China, Thailand, and Japan.

Nike plans for the production of sportswear to fit the market demands through innovation is undertaken on a long term basis. The process of new product development is taken on a long-term basis to come with ideal outputs leading to customers’ satisfaction and maximum profit generation. On the other hand, the processes of scheduling, loading, and sequencing are executed on a short-term basis due to the demand fluctuations. The management of production has to be regulated regularly leading to a short period of production (Stindt, 2017, p. 157).

Independent Demand

Demand is independent when the inventory being consumed or required has a general pattern that does not rely on other external factors for it to be produced. For instance, the number of cars to be distributed for marketing does not rely on a quantified value for production to take place. On the other hand, the dependent demand of a given inventory relies on the other ones being processed or already in the market.

The case with several tyres of a car being a dependent demand, the number has to be four for a single car. Therefore, their production relies on the number of cars in the market. The demand for shoes, jerseys, skates, and sports equipment is not defined by another product available in the market (Sarkar and Shewchuk, 2016, p. 177). Mostly, production by Nike follows a trend displayed in consumption rate of cutomers and fashions on sale.

Forecasting of the Demand in Supply Chain

The demand forecasting of Nike was originally organised in a manner that allowed for six months before the placement of requests. Thereafter, Nike proceeded to the implementation of i2 software. The main objectives were to run the supply chain easily with the software and reduce inventories that were being consumed for production to take place (Holbrook, 2016, p. 23). Upon stemming of the inaccuracy of the software in forecasting the market requirements to facilitate exact quantity during production, Nike moved to SAP and Enterprise Resource Planning (ERP) technology which heavily depend on the order placement.

Currently, the forecasting in Nike encompasses intuition and modernised computer systems to make predictions on the demand. It entails a mixture of art and technology, and opinions obtained from the retailers. By merging the three tools in running the supply chain, the efficiency of Nike has increased leading to the mitigation of the losses which were originally incurred when the i2 software was used exclusively (Jiang, 2019, p. 86). Therefore, it implies that Nike’s forecasting is very appropriate in running the business.

Scheduling, Loading and Sequencing

The manufacturing plan of Nike entails multiple stages of operation. It involves estimation of the products demanded in the market, whereby, the quantity to be produced is controlled in a manner that matches overall customers’ requirements. The capacity required is planned aggregately, thus sustaining the value of inventory on demand to ensure the progress of business activities. Scheduling of all business activities is also part of the operations design. It facilitates effective communication during the manufacturing process and shipment of products to the market (Burgelman, 2017, p. 232). The expectations of Nike at the planning stage of the manufacturing process is to meet customers’ demands and allocate appropriate prices on the products.

Nike also controls the activities within its business plan through scheduling, loading of raw materials and products as per the operations layout. Moreover, monitoring the progress of each duty, and programming the manufacturing process in a sequence are also executed as part of its design. Achieving effective control of activities in Nike is through supply chain management and utilisation of a system of resource planning in marketing. The overall regulation of Nike’s running is associated with the production and retailing of sports shoes and equipment (Burgelman, 2017, p. 233). It also meets the market demands in terms of quantity and enhances the competitiveness of the corporation in reaching the customers.

Capacity Management

Nike has invested in the proper management of its programs by training the contractors who receive instructions on operating. The two major facets of capacity management are the application of principles in production and employee coordination. Good manufacturing principles encompass the exploitation of skills in developing high-quality products to maximise output. On the other hand, organising employees enhances teamwork and effective communication.

The supply chain is managed through the control of raw materials inflow and product dissemination of the targeted markets (Burgelman, 2017, p. 201). The activities in its program involve procurement and proper running of the logistics within the entire Nike’s business. It is through proper handling of the supply chain that profits are realised from the sales of finished products.

Management of the company’s inventory is also executed by its capacity, and involves the utilisation of i2 software in the process. It entails making orders and delivering goods through the dissemination system of the corporation. Besides that, it unveils information about the resources and how they are consumed during production. In addition, system of timing constitutes part of the capacity management, and entails scheduled running of the activities during the process of manufacturing of new products and the prototypes. It ensures that production and retailing are executed on time (Burgelman, 2017, p. 204).

The quality management system also exists, and its assurance programs deliver data to the control section leading to the fulfilment of customers’ expectations. Finally, the environment management system forms a component of Nike’s business, in which the process of manufacturing is monitored until the final stage to ensure that no pollution occurs (Tang et al., 2018, p. 5002). Moreover, it ensures that recycling is to accomplish the strategy of attaining zero wastage in the course of production.

Fluctuations in the Demand

Everything in Nike’s business begins with the consumers’ interests, thus dealing with fluctuations involves defining what the customers require to be in the market. By knowing what caused the variation, Nike can develop a new product fitting the customers’ demands, either by modifying the existing ones or coming up with it from scratch (Tang et al., 2018, p. 5006). Nike also makes prices flexible when the demand is low and supply in the market is high.

It is through bargaining platforms that Nike monitors the interest of customers and manage the sales to escape incurring losses. Alternatively, Nike can analyse the market and determine the demands as they trend in terms of fashion and quality for a given season (Kositphon and Chaovalitwongse, 2016, pp. 71-72). Thereafter, while the supplies are low it can cease the distribution until the demand escalates to take advantage and allocate high prices for maximum profit returns.

Technology Use and Feedback Control

Technology is currently exploited in running businesses all over the world. Nike is utilising it in the supply chain, where a software is applied in strategic planning to enhance efficiency in offering services to customers. Besides that, Nike is benefiting from the software by coordinating its activities like an advertisement to attain worldwide popularisation of the products. However, the software was intended to facilitate a reduction in inventories and promoted its level of performance in the world market, which failed after few months of taking over (Tang et al., 2018, p. 509). In a nutshell, the software is currently in conjunction with other strategies in running the supply chain processes.

The feedback control is adequate following the incorporation of arts and technology in running the business, especially in the supply chain. Through the data obtained from the retailers and organised programs with consumers, the efficiency in running the production and marketing activities have been successful. The implication is that the feedback control is effective in managing the company’s business (Sarkar and Shewchuk, 2016, p. 192). However, the input should be placed on the use of technology to enhance marketing programs and mitigate the downfalls which were initially incurred by using the software in forecasting.

Innovation and Improvement

Nike is driven by the long term goal of utilising innovation in inspiring athletes. The company’s success is therefore anchored on innovation, and it engages the very consumers of its finished products in developing feasible and high-quality products. Moreover, innovation has placed Nike on the level of undisputable in production, and marketing of sportswear and equipment (Gassmann et al., 2016, p. 88).

Nike solves the issues of athletes’ experience and has become the successful corporation in competing for consumers worldwide. The matrix management system exists for controlling the programs of innovation, which in turn leads to the development of highly competitive products for marketing (Bauer and Borodako, 2019, p. 205). The process is run through delegation of duties, which begins from the Chief Executive Officer and proceeds downwards to the subordinate staffs.

Improving the processes of production and marketing is vital for achieving success and being consistent in high performance while operating businesses. For Nike to improve, proper management of files is a tool that would foster development. Implementation of a filing system for all the obtained information and data would be instrumental for accountability and evaluation of the programs to be undertaken.

Conception is also another tool for improvement that should be considered by Nike. There should be an established system where employees at all capacity bring in ideas and derive maximum output out of them through unanimous consents and active role playing during their execution (Curtis and Amanda, 2019, p. 5). The conception tool will also ensure cohesion within the corporation while working towards a given objective.

Nike is a lean organisation in which systematic strategies are used to produce maximum quality possible for the wellbeing of customers as it reduces wastage to zero. It is by lean management that Nike has achieved an optimum supply of products and delivery of services to the customers. Accomplishing that entailed empowering staff in all capacities to be responsible for ensuring quality through innovation (Liu et al., 2018, p. 156). In a nutshell, operations of Nike are well organised to balance the demand and production processes, thereby, producing maximum yield in terms of customers’ satisfaction and profit obtained from the sales.

Conclusion

Operation Management of Nike is a vital component and a contributor to its business strategy’s success. The operation strategies are well established with the focus on customers ensuring their satisfaction with the products, and also limits all chances of wastage. Through well-organised planning and control of business operations, Nike achieves ease of monitoring demand through the supply chain, thereby enhancing efficacy in marketing. The application of technology in the processes should, therefore, be highly exploited to improve the efficiency of operations.

Reference List

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