Academic Master

Business and Finance

Nike Company Business Strategy


Nike, one of the biggest business brand, with $ 18.6 billion annual revenue, manufacturing apparel, athletic shoes, and equipment. With vast manufacturing processes, Nike along with other brands have social and environmental responsibility. In 1992, the brand issued its 1st protocol to reduce environmental impact and sustain its efforts to ensure its corporate social responsibility. With the help of Jones and Sprunk, two vice presidents, Nike sets the sustainability goals for future. The company reduced absolute carbon emission to have a sustainable economy while concurrently growing revenues. Nike focuses on emerging technologies, innovative partnerships, and financing in start-ups and influence policies and standards to drive innovation advance. With redesigning its supply chain, the company sets a minimum standard for every supplier factory to follow the Nike’s code of conduct. The business model of Nike is lean, green and reasonable workplace which focuses on the core components such as designing, growth, and marketing and send specs to manufacturing centers in low wage countries for production. The trendy and fashionable waterproof/windproof attire provided by competitors of the Nike, suggesting to improve the designing and quality of the products at the company.


Nike is known as pioneer in sports fashion brands worldwide with over $ 20 billion revenue for FY 2011. With its first and second global ranking in major products categories, the brand is fiercely competitive in footwear and apparel. The social and moral responsibility that’s comes with this success is also huge. According to the Harvard business case study, to improve the sustainability and growth at Nike, the company’s board’s corporate responsibility committee reviewed the preliminary sustainability goals for 2015-2020. Hannah Jones and Eric Sprunk, two members of the company’s executive team focused on removing poisonous release from the supply chain. To achieve target-zero discharge of toxic material, the estimated cost would be greater from the last year. It requires necessary resources i.e. change in system, innovation in chemistry and experts to advance scalable results within planned time limit. Nike’s vice president of sustainable innovation, Jones and vice president of products worldwide, Sprunk, along with their teams worked closely to design Nike’s sustainability goals.

Nike’s business model joined low-cost manufacturing with innovative shoe design by sending spec to self-regulating workers in low-wage countries. The company’s culture was inspired by the coach, Bowerman “just do it” formula, who famously invented the waffle sole one day by mixing urethane and preparing it on a waffle maker. Initially the company outsource the shoe manufacturing to Japan, Korea, and Taiwan and invest more budget in research than any other company. In 2012, Over 500,000 Nike products were manufactured in 900 contract factories in 45 countries. The business goal for 2015 was to expanding the brand globally and build a strong relationship with customers. The company worked more in categories of sports and geographic regions to seek growth in direct business to customers across all brands. Nike’s digital business expansion globally established when the brand developed Nike+, to offer runners and athletes to track and share their events through Apple devices. However, the core component of growth lay in innovation.

In 1977, shortly after graduating, Parker, a college runner, had joined Nike as a product engineer in R&D center and designer for footwear. He designed Nike Air max technology, a most fruitful innovation of the company. Parker with Charlie Denson as co-president had seized positions in general management, marketing, engineering, research and design including five years from 2001 to 2006. The brand’s long term business vision was investing profoundly on digital sports, Parker introduced a game changing sustainable growth innovation which contributed to a better world by remodeling the supply chain process.

The origin of Nike’s sustainability journey was dated to the 1990s, when the company’s critics said that the employees were treated inhumanly and utterly underpaid. First Nike tried to defend its stance by denying to take responsibility for their suppliers but in 1988, the company’s approach changed. Maria Eitel were appointed by Nike as the first corporate responsibility vice president and this sets the foundation for strategic framework to overcome the problems, company is facing. In late ninety, Nike initiated programs around recycling, toxic substances in production process, and water use in supply chain to cope with environmental challenges. The company also addresses sustainability in operations by looking into the reasons of overtime work and focus on the growing factors such as population growth, energy storage, water scarcity, governance, health issue, climate change, and the internet. These innovation help Nike foresee the coming threat in supply chain that can impact the business such as energy shortage or water disruptions. To take necessary precautions, Nike launched water program in 2001 to track water usage in supply chain. Jones, the vice president, continued recruiting people for financial analysis and strategic planning to integrate business decisions and sustainability. Nike took immediate action when one of the contract factory in Malaysia was treating employees inhumanly by demanding redress for the employees, including compensation of withheld salaries.

In July, Greenpeace propelled a high-profile movement charging Nike and other well-known companies with not putting much effort in prevention of releasing hazardous substances into the water supply by their suppliers. After the report, Nick issued a statement outlining the existing work and offering to work with Greenpeace and other NGOs to endorse better water management. This report speed up the process of treating the toxic chemicals and reaching the goals of zero toxic discharge. Nike’s new innovation agenda proposed research in material, design, water, waste, climate change, energy, and labor. The main target to achieve by 2020 involved the dropping of 10%-25% per-unit in water usage.

Nike’s business social accountability plan contributes top importance to consumers as a stakeholder group. Clients are important because they mark the company’s revenues from the equipment market sports shoes, and apparel. In the example of Nike Inc., these stakeholders’ benefits contain high value merchandises and rational rates. The business addresses these benefits through substantial R&D investments. For instance, Nike remains to deliver products with extraordinary excellence and innovative technology. Communities are essential part of Nike’s social responsibility standings. Customers incline to purchase additional merchandise that has an optimistic influence on communities. The welfares of these stakeholders consist of provision for the growth of communities. Nike Inc. serve these benefits through the Nike Foundation, which aids as the brand’s main way of assisting public expansion enterprises. For instance, the Nike Foundation started its community development plans in evolving countries, in 2005, with emphasis on backing the authorization of girls. The brand also has a range of “Civic Influence” business social responsibility courses, such as the Active Schools & Youth Sports platform, which gives moneys and athletic shoes, equipment and apparel to encourage physical activity among apprentices.

Nike Inc. knows the worth of personnel as a shareholder group that effects structural efficiency. For example, workers’ presentation straight interprets to business recital. The benefits of these stakeholders comprise reasonable recompense, profession growth chances, and a sense of perseverance. Nike gives these benefits by company social responsibility strategies and agendas that emphasis on core management progress, aptitude management by training and couching, and group structure. These company social responsibilities struggles are predicted to increase Nike’s capability to yield more standard and innovative equipment, apparel, and athletic footwear.

As fragment of its community social responsibility policy, Nike Inc. classifies governments as a shareholder part. These investors are significant because they mark how Nike functions in terms of its licenses, bounds and lawful movements in assured marketplaces for its apparel, equipment and shoes. Governments are involved in lawful and controlling obedience, as well as commercial aids to tax incomes and public growth. Reasonably, the public expansion attention is addressed over Nike’s corporate social responsibility series for public growth. In addressing the additional welfares of this sponsor group, Nike Inc. upholds a amount of rules and values to safeguard obedience in all of its professional parts. Thus, the company’s business social responsibility approach contents the benefits of governments as shareholders.

Nike’s corporate social responsibility rules also benefits the welfares of some interest groups. These investors have important outcome on Nike in terms of possible administration interference and in terms of customer insight concerning the firm and its apparel, sports shoes, and equipment. The welfares of these shareholders are diverse, with reasonable work observes, trade sustainability, and ecological preservation. Nike Inc. entertain these benefits through the Nike Foundation’s enterprises, as well as supports of a range of connected plans. The corporation also has company social responsibility strategies for refining labor organization and environmental influence. These opinions designate that Nike Inc. pleases the anxieties of concern groups as investors. General, Nike Inc. is operative in guaranteeing that its corporate social responsibility agendas provision the commercial goal of enhancing incomes from the trade of equipment, sports shoes, and apparel worldwide. The coming challenges Nike is currently facing is the designing of trendy and fashionable footwear as compare to its competitive. The brand needs to keep up with the style and comfort levels of the customers by providing better and innovative designs in reasonable prices. Nike is also struggling in apparel industry, Supplies that retail Nike produce have been undecided, too, for example Sports Authority, which marched for insolvency former this year. And Macy’s retails Nike, and though the Nike segment rests one of Macy’s Herald Square’s only unspoiled units, Macy’s is still stressed to drive traffic flow to its stocks. There are the chief contestants like Under Armour and Lululemon and then there are additional function trademarks, like the ultra-luxe Sweaty Betty and Bandier, and Outdoor Voices, imagined above, which vanities itself on marking that emphases on amusing, rather than being modest and the finest. In other words, it’s the anti-Nike, and that could be attractive to misses who required a substitute to Nike’s “just do it” attitude. Another major concern is that most popular merchandise might be going out of fashion. This is particularly a worry since basketball attire books for 12-14% of Nike’s trade.



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