Structure a larger demand and quantity required for these

Structure and
Operations:

Nike Inc. is an American multinational
corporation that is engaged in the design, development, manufacturing, and
worldwide marketing and sales of footwear, apparel, equipment, accessories, and
services (*). Most popular for their brand of footwear, Nike has managed to
reach global success as being one of the leading players in the athletic
industry.

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Nike has a geographic divisional
organisational structure. This places a focus in its global organisation and
regional markets. Characteristics such as global corporate leadership is
notable in the organisation, this means that the corporate managers place an
emphasis on the global organisation structure of Nike whereby any product,
decision or marketing campaign is easily implemented throughout the company.
This offers huge benefits to the company’s revenue, recognition and credibility
as being accessible to such a wide-ranging audience. Another notable
characteristic is their ‘Semi-autonomous Geographic Division’; this is where
the company’s operations are divided into segments based on regional markets.
These regions consist of North America, Western Europe, Central and Eastern
Europe, Greater China and Japan. This is seen as a positive characteristic as
it allows flexibility due to the specific needs of each region and the managers
having the capability to satisfy consumer preferences.

 

Economy contributions:

There are various ways in which Nike
contributes to the economy both locally and globally. Based in the United
States Nike caters to countries all around the world which as a result allows
them to create an estimated 2.5 million jobs (*). They employ people both
directly and indirectly. Direct jobs are usually corporate in nature and
consist of lawyers and accountants whereas indirect jobs are in regards to
factories that create the raw supplies for Nike; there is a larger demand and
quantity required for these jobs which take place around the world, generally
in developing countries which is viewed as being controversial; this will be
explored later on in the report. Nike has estimated their ‘Global Contract
Worker Count’ (FY13, Fiscal Year 2013) , the organisation  takes pride in the fact that they have ‘…a
total footprint of more than 2.5 million people across our value chain and 1
million people in the contract factories we source from directly…’ (‘Nike CR
Report,’ Nike CR Report, N.P., n.d. Web. 10 May 2014′).

 

 

 

 

 

 

 

 

 

 

Nike’s contribution to the economy goes
beyond increasing jobs but also by increasing competition. A capitalist
economic system depends on competition in order to improve existing products
and services as well as become higher quality and lower costs. The US economy
has always thrived compared to a more socialised economic system and this can
be partly accredited to having always encouraged competition. Competition
allows reduction in prices due to one company not being able to monopolise the
particular market, in this case sports wear. Adidas is Nike’s greatest
competition.  This has allowed Nike to
charge more for their product because from an objective point it is seen as superior;
due to this superiority Adidas is able to be more profitable as they sell more
at a reduced price thus being desirable from a cost point basis. The image
below demonstrates that Adidas (ADDYY) has had a bigger increase in profit
(+213.97%) compared to Nikes profitability (+169.93%).

 

 

 

Stakeholders:

Nike is an extremely profitable company and
therefore has social responsibilities that must be executed. The primary
stakeholders of Nike are those who take interest and are affected by the
company. The stakeholders that Nike engages with on a daily basis consist of
social society, industry, government, consumers and shareholders. By
maintaining a strong line of communication with stakeholders, at allows an
approach that brings the best feedback to the challenges that they have
interest in addressing.

 

Mission and Vision statement:

Nike’s mission statement is “To bring inspiration and innovation to every athlete in
the world.” Bill Bowerman, the University of Oregon track and field
coach and Nike co-founder said ‘if you have a body you are an athlete.’

Nike’s mission statement has evolved over
time in order to accurately represent the company’s business situation. While
Nike’s statement is athletic based, by focusing primarily on athletes, they
have alienated a large majority of the population which as a global brand is
dangerous as they will not identify with the statement despite the elaboration.
Nike could also incorporate their social projects into the statement
demonstrating that they are aware and active when it comes to issues around the
globe.

 

Embedding a wider social purpose:

Reputation has become an increasingly
prominent factor in regards to a consumer purchasing a product. Due to a rise
in social media, campaigns are given a platform to promote boycotts, educate
consumers on the manufacturing process and bring issues such as animal cruelty,
sweatshop conditions and where the proceeds go forward. Due to the many
different competitors on the market, a consumer is generally given the luxury
to choose which brand they will remain loyal too which is why a brands
reputation is the driving force of their business.

 

 

 

Nike has been subjected to controversy when
it was revealed that their workers in manufacturing were underpaid, overworked
and were subjected to abhorrent working conditions. This portrayed the brand in
an extremely negative light as it showed the contrast of their ‘overpriced’
products in comparison to the wages and cost of manufacturing. This is one of
the reasons as to why embedding a wider social purpose from the outset is
becoming increasingly important for all businesses to consider. Nike is seen
participating in social projects such as sponsoring the Homeless World Cup,
which is an organization that supports homeless people by helping them change
their life conditions through the encouragement of sport and providing an
agenda through soccer that creates local programs which build self-esteem and
community participation. Their primary goal for this program was to try to
remove homeless throughout the world. Nike Inc. is also a founding partner of
the United Nations High Commission for Refugees (UNHCR) ninemillion.org
initiative, which wants to focus global attention on the world’s immigrant
youth, and to raise funds to provide education and sports programming for the
more than 9 million youth who are living in refugee camps today.

 

Winding up companies within UK Law:

 

 

 

Pestle Analysis:

The ever-expanding free trade policy is
now an opportunity for Nike as they are able to penetrate markets overseas with
no worry of price barriers. Unfortunately, this could pose a moderate threat in
the future with the unstable political climate after the UK leaving the
European Union; this would not affect all regions but could have an impact
within Europe. Furthermore, most major markets within the athletic footwear
industry currently offer conditions of a stable political climate (Rowland,
2016) posing less of a risk for companies and more of an opportunity to grow. A
stable political condition in most major markets presents opportunities for
Nike to grow its business in these areas. Nike has benefited considerably from the growth-orientated
policies of the US government, which has maintained low interest rates,
currency exchange stability, and internationally competitive tax arrangements
(Whitehead, 2012). 

 

 

Within the global athletic
footwear industry, the economy is stable within a developed market such as the
US market, which offers a good opportunity for companies such as Nike to grow.
Asia-Pacific showcased a persistent trajectory of growth over the period 2009
and 2014 as a result of sound economic conditions and better employment opportunities in the region
(PRNewswire, 2016) and it is predicted that the Asia-Pacific region is going to
continue to grow. In the Latin America region, Brazil and Peru are some of the
fastest growing countries, especially with the decrease in poverty and an
increase in economy and demographics (Amer Sports,). Reduced economic activity automatically leads to a fall in
business. The recession had troubled most brands. However, Nike’s
performance has improved since 2011 onwards.

There is an increasing
interest in healthy lifestyles and wellbeing, and therefore a greater interest
in gym and health club memberships, which is an opportunity for companies to
target a market where there is a need. The consumer need to be active, which opens
up vast opportunities for the footwear industry. With the enhanced
awareness of a healthy lifestyle, consumers are using health apps and social
media to monitor health. Companies have the opportunity to capture audiences,
through advertising their brand, and being active online.  

 

Visible and Invisible hand:

The invisible hand is a term used by Adam Smith to describe the unintended social
benefits of individual self-interested actions. (Thornton, Mark
“Cantillon and the Invisible Hand”). It has captured the notion that
individual’s efforts to pursue their own interest may frequently benefit
society more than if their actions were directly intending to benefit society.
In relation to Nike, the invisible hand is evident within endorsement deals.
Many athletes main source of income stems from their endorsement deals as
opposed to their athletic performance. This is evident in the case of Tiger
Woods whereby Nike’s stock price movement was impacted vastly. In 1996 Tiger
Woods signed his first Nike Golf endorsement contract, and the revenue from
1996 to 2012 increased by 364%. By assuming that Nike Gold contributed roughly
3% of the increase, Nike Golf and as a result Tiger Woods is responsible for
increasing the price of Nike common stock to roughly 11%. This is an example of
invisible hand as the endorsements agreed upon by the athletes with Nike were
done for their own individual self-interest but as a result benefitted society with
the stock going up, allowing for possible expansion which increased demand for
product and thus increasing jobs.

 

Regulations and its impact:

With expanding
environmental laws, it is becoming increasingly important for consumers to see
companies being ethical and using sustainable strategies. This can be an
opportunity and threat for businesses as it can improve brand image, and give a
competitive advantage. Alternatively, sustainable strategies are time consuming
and costly, which will negatively impact Nike’s profit margin.

 

With
expansion of employment laws a threat can be identified, especially within
developing countries where labour costs need to be increased. This is especially
a threat for those larger athletic footwear companies such as Nike who have
many of their production facilities located in developing regions (Rowland,
2016). Furthermore, employment laws affect health and safety laws. For smaller,
new company’s regulatory pressures could be a threat as this can also be costly
and time consuming.