Corporation Identification of Nike Company - Case Study Example

business management (Author’s name) (Institutional Affiliation) Introduction Strategic Management is a key study area for business students and especially for those who intent to pursue it as a career or venture into entrepreneurship. There are many corporations which have several units of business with regard to products or services provided. This paper projects on Nike as a transnational lucrative company in the fashion industry. A corporate research which seeks to identify its business units and product lines precedes the corporate research. A thorough research is presented not only on the Corporation’s revenue centers but also its external environment and competitiveness. Corporation Identification Nike is a multinational corporation in America that is engaged in the development, design, worldwide marketing and manufacturing of apparel, footwear, accessories, equipment and services. The corporation owns many other companies which include Hurley International, converse, Cole Haan, Umbro and others. The company has several brand names used for marketing such as Nike+, Nike Blazers, Air Max, Air Jordan and Air Force. In summary the company is owned by several instructions, the number of the holder of the company is more than 1430. This report will discuss corporation identification basing its argument on Nike Company. What is a corporation? Scholars have defined it as a firm or an organization that meets legal requirements for the purpose of being recognized as a company that has legal existence. The firm has an entity distinct and separate from its owners. A corporation is owned by shareholders, who share losses and profits of the firm (Hiller 2013, p.299). Nike Company was officially started and owned by Phil knight and Bill Bowerman; however the corporation is current owned by shareholder such as Vanguard Group Inc., State Street Corporation and many others. Product portfolio comprise of all merchandises that are manufactured and owned by an organization. They range from product lines and individual products (MacMillan et al. 1982, p.750). Nike Company has several product portfolios such as kids wear, sportswear, fashion clothes and shoes, equipment, apparel, stores and accessories. Scholar define service portfolio as the essential repository for all services and al information in a company. The portfolio lists current situation of each service and also the service design package. Service portfolio consists of under developed services (service pipeline), active services links (service catalogue) and lastly discontinued services (retired services). Corporate Research Business unit is a segment or an element of a firm such as marketing, manufacturing and accounting that is concerned with certain business function (Gupta & Govindarajan 1984, p.30). Nike Company has business units such as standalone, a category for outdoor and conditioning products. Manufacturing and distribution are other category in the corporation. Products such as footwear are manufactured outside by independent contractors in countries like Indonesia, China and Vietnam. The company uses outsourcing strategy to reduce production cost. Nike has invested heavily in marketing business units. The company uses sports sponsorships and athletes’ endorsements to build its brands across the globe. Product lines are defined by scholars as a group of products produced by same company under a single brand. Product lines are created as a strategy for marketing (Best, 2012). Nike product lines include sports equipment like basket balls, baseball sportswear; football sports shoes, sports apparels, and street shoes such as Air force shoes, Air Jordan and Air max. Other product lines are street clothes, Elite socks, MP3 players and caps. Service lines are group of facilities or provision that a company offers to its customers. E-commerce, digital sports workout subscriptions are the lines of services offered by Nike. Corporation Revenue Centers Revenue refers to assets or capital generated from organizational main operations; it can also be defined as income that is accumulated by a company after sale of services and products (Hangstefer 2000, p.40). Nike Company is one of the global corporations which have earned high revenues over the years. In 2014 the brand value of Nike was at 19 billion dollars. High performing product and service lines for the corporation in terms of revenue generation is the Footwear line with over 55 percent in the total revenue. Footwear product sale remain stable annually due to their high quality and marketing strategy employed by the company globally. External environment analysis External environments are factors outside a corporation that may affect the actual surroundings of business operations. Economic environment is defined with regard to such factors as interest rates, demand and supply, exchange rate consumer confidence that affects business operations (Gupta 2013 p.16). Marketing and sales units in Nike Company have been influenced by economic slowdown in 2008 even though it employed lower wage rate strategy in western market to manage the economic situation. With growing cases of brand counterfeiters, Nike manufacturing units have faced a challenge in designing products that can be singled out from the latter. Distribution units have shifted from retail shops to online store with the aim of getting the products near to the customer. Political environments are administrative activities or governmental conditions that alter business operation of a corporation. Nike Company outsourced its products for manufacturing; wars in Vietnam affect production of the footwear, hence the production was outsourced to other country. With United States government maintaining stable currency exchange and low interest rates, sales and finance units has benefited. War and social unrest in some developing countries which the company invested in has negatively affected its sales. Social environments are sociological factors in society that influence business operations, such as consumer preference and fashion changes. Customers in the market often change their taste and preference. The growing issue of fitness and health in the society has benefited Nike. Marketing of sportswear has been boosted by the societal demand. Manufacturing units of the company was affected by the scrutiny of working condition in some countries like China. The company was accused of underpayment of its employees and also having minors in its workforce. Technological environments are scientific technologies and innovations that might alter profit margins and productivity of a company (Gupta 2013, p.16). Digital metrics have improved interaction between the consumer and Nike Company. Through Simple Object Access Protocol, Nike has reduced production cost and accelerated manufacturing. Through online store, consumers are able to order custom made products and the corporation is able to keep in touch with them hence keeping away counterfeiters. Environmental factors are ecological issues, weather changes that affect operations in a business. In 1990s, Nike campaigned for carbon emissions reduction through overseeing pilot projects. Environmental factors affect customer’s preference hence affecting corporation productivity. Legal factors are the legal boundaries for a corporation that is defined by code of conduct. Because Nike relies on global market, it is important for the company to adapt policy frameworks in each market. The company faced some sweated labor allegation in Pakistan which made the corporation reallocate to other countries. In Indonesia the company also was affected by claims that, its workforce was being underpaid in 2003. Source of Sustainable Competitive Advantage Factors of sustainable competitive advantage are; Asset-Driven, these are foundational assets for the company such as trusted suppliers, loyal customers or operation system that is efficient. Competitive advantage is catalyzed by these assets (Oliver 1997, p.700). Difficult to copy is the second factor that sustains competition advantage. If products and services cannot be replicated easily then the company can withstand any completion in the market. Branding is another factor, building a strong brand contributes to competitive advantage (Hanson et al, 2001). Unique reputation of a brand cannot be copied; this makes corporation customers loyal to that product. The final factor is endurance and pricing power; this is a situation where a company can withstand difficulties. Corporations much create advantages that are past restraining hopes. Pricing power helps earn dominant market position (Oliver 1997, p.657). Nike enjoys sustainable competitive advantage over other companies. Branding is one of the advantages. Through its strong product image, the corporation is able to market its products and services. Its manufacturing unit enjoys customization advantage over the other competitors. Innovation is the third advantage. Nike’s products have features that seduce, stir-up emotions and create consumer fantasy (Mahdi et al. 2015, p168). Through athletes’ endorsement, products like Nike Air Jordan sneakers are easy to market because of the aura created. The company is able to manage its production cost by manufacturing its products in areas like South America and Asia where raw material are close and labor sources are cheap (Mahdi et al. 2015, p.175). The corporation top management team consist of an executive group that is committed that brings knowledge and vast experience to the company. From the manufacture to the retailer, Nike has improved its management to better its relationship with customers. Business Level Strategy Nike sponsor high profile athletes to build their brand image, athletes like Michael Jordan, Tiger Woods and Roy Mcllroy have built reputation of Nike’s sportswear products making them highly valuable in the market (Mahdi et al. 2015, p.171). The corporation also employs differentiation strategy to make its product withstand competition. It also invests heavy in development and research. High-impact marketing has been the company’s target; high-profile sports competitions such as NFL Super Bowl and soccer World Cup has helped Nike’s product sustain global competition. Nike is a competitive fashion company. Adidas and other sportswear manufacturing companies have not yet built their brands to the position of Nike. The company has penetrated over 190 markets globally which has been spearheaded by pricing power and innovation efforts (Hanson et al, 2001). The company increased its customer base in 2013 through women training and opening women fashion stores in Shanghai and another in California. To penetrate more in the global market, Nike is targeting markets of developing countries like Brazil and Africa. Conclusion In summary, Nike is one of the corporations which have utilized the technique of strategic management. It has paved its way and remained competitive over many years. The company has utilized many opportunities for example sponsoring athletes to create awareness of their products. This and the difficulty with counterfeiting their products has enhanced its competitiveness in the industry. Bibliography Best, R., 2012. Market-based management. North Carolina:Pearson Higher Ed.pp34 David, F. and David, F.R., 2016 Strategic Management: A Competitive Advantage Approach, Concepts and Cases. Murdoch: Pearson prentice Hall. pp53 Galbraith, J.R., 2014 Designing organizations: strategy, structure, and process at the business unit and enterprise levels. Hoboken: John Wiley & Sons.pp103 Gupta, A.K. and Govindarajan, V., 1984 Business unit strategy, managerial characteristics, and business unit effectiveness at strategy implementation. Academy of Management journal 27(1), pp.25-41. Gupta, A., 2013. Environmental and pest analysis: An approach to external business environment. Merit Research Journal of Art, Social Science and Humanities, 1(2) pp.013-017. 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Sustainable competitive advantage: Combining institutional and resource-based views. Strategic management journal, 18(9), pp.697-713. Read More