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Nike's Company Business Analysis

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Company Overview

Nike manufactures athletic apparel and equipment. They produce tennis shoes, cleats, performance clothing, etc. Their main competitor, especially in North America, is Adidas. Some other competitors are Reebok, Under Armour, Oakley, and even Crocs. In Nike’s previous fiscal year which ran from May of 2018 to May of 2019, they brought in a total revenue of almost $36.5 billion and continue to increase their revenue every year. Throughout the entire world, Nike employs approximately 76,700 people. This means on average they make approximately $474,537 per employee. Nike continues to increase revenue and attempt to set themselves apart from their competitors. To do this they focus on innovation and getting products to consumers faster. Nike is also known for creating quality products but wants to focus on creating new and unique products and being able to get these products to market quicker for consumers. Nike uses quality products and famous athletes to help set their products apart from their competitors.

Economics

The economy impacts Nike just like with any other business. However, Nike’s sales are impacted a lot more during a downward cycle of the economy because of their higher prices. If people do not have as much disposable income so they would not be willing to spend as much on their wants. Nike is also impacted by the economies of countries overseas. For example, when the economy of China fell the revenue of Nike fell because of China’s unwillingness to import as much athletic wear (Burkitt). The type of competition that fits Nike the best is pure competition. They have a lot of competitors such as Adidas, Reebok, Puma, and Sketchers. There are a lot of companies in this industry requiring Nike to not only produce high-quality products but also to keep their prices low. Nike has a slight advantage over some of their competitors because they are well known and have a large chain of stores all over the world.

Global Marketplace

Nike, like most other clothing and apparel manufacturers, uses other countries to produce their products for a lower cost. Nike does not own any of these companies, but they pay them in other countries to produce their products (Safdar). They have multiple factories in multiple different countries meaning they are less affected by tariffs and other import restrictions by the United States (Safdar). This helps Nike to keep their prices low while continuing to supply the same quality of product. Nike also exports goods to other countries to sell all over the world. This is a positive of free trade allowing Nike to expand their markets and sell to people all over the world (Intro to Business 55). Nike exports goods to almost every country in the world especially to the European Union and Southeast Asia.

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Business Ethics

According to the Intro to Business textbook’s definition of ethical behavior Nike is not very ethical (79). They compete fairly with other competitors but fall short in other areas. Nike is not transparent about the issues they face, nor do they completely avoid harm to others. Nike employs athlete models to promote their brand. However, for female athletes, it is very difficult for them to be an athlete and a parent. A large issue Nike has had is being accused of firing female athletes when they become pregnant (Crouse). They are accused of not being family-friendly and being honest about how they treat their models. They are not transparent about how they treat their models either (Crouse). Also, Nike uses workers in third world countries which does not cause much harm to these workers (Safdar). Nike’s view toward corporate social responsibility is mostly a minimalist approach (Korn). They do not contribute to many programs or groups. There are some instances where Nike has donated money to Stanford but mainly because this is where one of the co-founders of Nike graduated from. Nothing Nike does directly benefits the company as a whole or protects it. The money given by Nike is almost solely all philanthropy.

Management Roles, Functions, & Skills

Nike has a vision statement of, “Bring Inspiration and intention to every athlete* in the world” (Nike). They also make it clear they consider anyone with a body as an athlete which is why there is an asterisk on the word athlete. Their mission statement is very similar, it is, “Do everything possible to expand human potential. We do that by creating groundbreaking sport innovations, by making our products more sustainably, by building a creative and diverse global team and by making a positive impact in communities where we live and work” (Nike). Both the vision and mission statement reflect Nike’s products but not so much their actions. Nike often creates the best new athletic wear for almost every sport. However, while they do some form of CSR and philanthropy, they do very little to give back on a large scale (Korn). Nike’s managerial roles resemble the structure of many other major companies in the United States. They have top, middle, and first-level managers throughout the organization. Starting in 2020 Nike will be headed by Corporate Executive Officer (CEO) John Donahoe (Safdar). John Donahoe will take over control of all areas of the company which then breaks up into different branches such as manufacturing, finance, distribution, etc. (Nike). The CEO and other top managers must have strong decision-making skills to run such a large company. It is also evident Nike feels technical skills are important because the new and previous CEO have prior connections with Nike. There are employment opportunities at Nike all over the world from marketing to distribution (Nike). No matter what form of business degree you have there is some form of a job at Nike. There are entry-level finance and sales jobs as well as middle management finance and marketing jobs (Nike). In lower-level positions, Nike values interpersonal and technical skills more than others because of the importance of leadership and being able to talk with customers. In terms of top and middle management, Nike values technical and decision-making skills to be able to understand what is happening at all levels of the company while also making important decisions.

Entrepreneurship

Nike does not allow for a lot of intrapreneurship within their company. They rely almost solely on their research and development team for developing new products (Gay). I could not find any articles that discussed how any of Nike’s products were created by an employee outside of research and development creating a product. However, Nike employs people they feel are the most successful designers to encourage and lead product innovation. Also, Nike does not franchise any stores directly but their subsidiaries such as converse do (Germano). Nike is publicly traded on the New York Stock Exchange as NKE (Nike, Inc.). It became public in December of 1980 and currently, their share price is $97.26 (Nike, Inc.).

Key Takeaways – Nike

Researching Nike has shown me how much a company does that the average person doesn’t think about. There are many areas that people often overlook until the company gets caught in a scandal or becomes transparent. While exploring the topics from this semester I discovered how little it appears Nike cares about its models, employees, etc. For the most part, they only care about making profit and developing the next greatest product. I agree companies should be motivated by this however I feel they should also care for their employees and encourage having a life outside of work. Researching this company allowed me to think like a business person because it made me think of how I would want to run a business if I owned one. It also helped me to realize what I consider ethical and how I would want my employees to be treated. After writing this paper and doing research on Nike I am honestly not quite sure if I would want to work for Nike. Some of what they do such as firing models if they become pregnant, not encouraging intrapreneurship, etc. goes against what I feel to be ethically correct. However, I feel it would be interesting to be involved in their process for creating new products as well as learning how they compete with their top competitors like Adidas and Under Armour while continuing to grow. On the other hand, as a consumer I feel like my view of Nike as a company has changed slightly but not enough for me to stop buying their products. This may also be why Nike is not worried about being transparent because they know as long as they are not involved in a major issue people will continue to buy their products for the most part.

Works Cited

  1. Burkitt, Laurie. ‘As China’s Economy Slows, Consumers Pick Up some of the Slack; Apple, Nike, Starbucks and Others Gain by Tapping Country’s Growing Upper Middle Class.’ Wall Street Journal (Online), Nov 03, 2015. ProQuest, http://proxy.luther.edu/login?url=https://search.proquest.com/docview/1729154512?accountid=2792.
  2. Crouse, Lindsay. ‘Nike and Pregnancy: Your Questions, Answered.’ProQuest, May 14, 2019, http://proxy.luther.edu/login?url=https://search.proquest.com/docview/2224545431?accountid=27921.
  3. Gay, Jason. ‘OFF DUTY — Gear & Gadgets: Sneaker, Tie Thyself — Nike’s Self-Lacing Innovation is a Pricey Harbinger of Smart Footwear to Come.’ Wall Street Journal, Dec17, 2016. ProQuest, http://proxy.luther.edu/login?url=https://search.proquest.com/docview/1849629157?accountid=27921.
  4. Germano, Sara. ‘Nike to Cut Jobs as it Combats Sneaker Slump; Nike Says Layoffs Will Affect 2% of its Global Workforce.’ Wall Street Journal (Online), Jun 15, 2017. ProQuest, http://proxy.luther.edu/login?url=https://search.proquest.com/docview/1909720384?accountid=27921.
  5. Gottfried, Miriam. ‘Nike’s Best Defense is a Good Offense; Company’s Scale should Help it Win Back Market Share.’ Wall Street Journal (Online), Mar 22, 2017. ProQuest, http://proxy.luther.edu/login?url=https://search.proquest.com/docview/1879694400?accountid=2791.
  6. Hsu, Tiffany, et al. ‘Nike and Kaepernick Back in Culture Wars After ‘Betsy Ross Flag’ Sneaker Furor.’ProQuest, Jul 02, 2019, http://proxy.luther.edu/login?url=https://search.proquest.com/docview/2250581051?accountid=2701.
  7. Intro to Business Luther College. Pearson Collections, 2018.
  8. Korn, Melissa. ‘U.S. News: Nike Founder to Fund Oregon Science Center.’ Wall Street Journal, Oct 18, 2016. ProQuest, http://proxy.luther.edu/login?url=https://search.proquest.com/docview/1829666583?accountid=27921.
  9. “Nike, Inc.” Business Insights: Essentials, Gale Business, 2019, proxy.luther.edu/loginurl=https%3A%2F%2Fbi.gale.com%2Fessentials%2Fcompany%2F306325%3Fu.
  10. “Read Nike’s Mission Statement and Find Information about NIKE, Inc. Innovation, Sustainability, Community Impact and More.” Nike News, 2019, about.nike.com/
  11. Safdar, Khadeeja, and Patrick Thomas. ‘Nike Posts Strong Sales, Plays Down Trade Risks; CEO Says Sneaker Giant can Adjust Supply Chain to Avoid any Tariff Hits.’ Wall Street Journal (Online), Jun 27, 2019. ProQuest, http://proxy.luther.edu/login?url=https://search.proquest.com/docview/2247864107?accountid=27921

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Nike’s Company Business Analysis. (2022, September 01). Edubirdie. Retrieved November 27, 2022, from https://edubirdie.com/examples/nikes-company-business-analysis/
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Nike’s Company Business Analysis [Internet]. Edubirdie. 2022 Sept 01 [cited 2022 Nov 27]. Available from: https://edubirdie.com/examples/nikes-company-business-analysis/
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