Business Project of Nike

This consulting report, “Business Project of Nike”, was developed in response to Nike’s present concerns and challenges. Additionally, it covers the current issues that clients are facing in addition to providing advice and forming a conclusion about the situation.

Nike Inc., a multinational corporation headquartered in the United States, is a footwear and apparel manufacturer and retailer that distributes a wide range of items, including footwear and clothing, equipment, accessories, and services, throughout the world. Nike Inc. was founded in 1964 and is headquartered in the United States.

In Beaverton, Oregon, near Portland, the corporation’s headquarters are located, which is part of the wider Portland metropolitan region. Manufacturer of sports equipment, athletic footwear and apparel supplier, and manufacturer of sports equipment. The company expects to generate revenues of more than US$37.4 billion in 2020.

By the year 2020, the corporation will have 76,700 employees in its various locations throughout the world. NBA brand value will exceed $32 billion by 2020, making it the most valuable sports corporation in the world, according to the league. According to Forbes, Nike Inc. was originally valued at $29.6 billion when it was founded in 2017. According to the journal, Nike was ranked 89th in terms of overall revenue on the Fortune 500 list for the fiscal year 2018.

It is critical for Nike Inc. to safeguard its brand identification and intellectual property in order to maintain its position as a leader in the sports business and to expand its reach into new regions. There are several components to this, including employee confidentiality agreements, intellectual property due diligence, and thorough research.

Furthermore, Nike rely on celebrity endorsements and advertising to reach and collaborate with consumers, as well as intensive research and collaboration with partners. Aside from Nike’s global brand identity, which has made an unforgettable impression on the minds of purchasers, there isn’t much that stands out about the company.

Read more: Business Project of Dell

Challenges and Problems the client is facing

Challenges faced by Nike to protect its intellectual property

Being a household name and a global brand has a number of advantages and downsides. Well-known corporations such as Nike Inc. have expanded successfully due to their most valuable asset, intellectual property. Confidentiality and intellectual property technologies prevent unlawful access to a business’s assets, both domestically and globally. They have stronger bargaining leverage and a defense wall against invasion and dilution when they combine, owing to IP.

Historically, due to the territorial character of intellectual property, safeguarding intellectual property rights has been unreasonably expensive and time consuming in a number of nations. As a result of WIPO intellectual property treaties that bind member states that have signed them, a mark can be registered in any specified state utilizing a single system such as the Madrid Protocol.

Additionally, large brands must monitor for infringers, seek collaboration from infringing acts (through partnerships, distributorships, and license agreements), sue for infringement, and prevent the leakage of confidential information and trade secrets from their establishments by ensuring that each contract contains a strict confidentiality clause.

Unauthorized third-party usage of a brand can have a number of negative consequences, including brand dilution, economic losses, and goodwill destruction, and partner and investor loss.

Nike’s biggest problem is getting shoes to its customers

Due to the company’s difficulties in importing its footwear and clothes from overseas manufacturing, sales in Nike’s most important market are decreasing.

According to the corporation, its North American quarterly revenues were down 10.4 percent from the same period last year, the company’s greatest quarterly revenue drop in its history. Continuing shipping container shortages and congestion in US ports were cited as reasons for shipment delays of more than three weeks in the third quarter, according to the company. Nike’s total sales climbed by a modest 2.5 percent, owing primarily to a 51 percent gain in sales in the Greater China region, which was responsible for the increase.

The impact of Covid-19 on Nike’s supply chain is having repercussions throughout the company. Retailers in the United States have shifted gears and are stocking products in anticipation of a resurgence in consumer spending after initially reducing inventory imports as a result of the outbreak of Ebola. As a result, there is fierce competition for shipping containers on the west coast of the United States, causing congestion at the ports.

During a conference call with investors and analysts, Nike executives stated that supply chain bottlenecks that began in late December left the business short of supplies to meet high customer demand and caused shipments to wholesalers to be stalled significantly.

Nike’s CEO, John Donahoe, has claimed, however, that the company has made improvements and that shipment times are still longer than they would be otherwise. It anticipates a more consistent supply of items in the coming quarter, which it will distribute through its own channels as well as through selected retail partners.

The recent Covid-19 outbreaks in Europe are already under control, which implies that Nike can anticipate a strong sales rebound in the months to future. Nike footwear and clothing are expected to be back in stock in the near future for individuals who were unable to obtain a pair during the initial release.

Purpose of Report

This investigation was carried out in order to show Nike’s current issues to the company. A substantial amount of change has occurred in physical distribution as a result of globalization and technological improvement.

The availability of new technologies, as well as the growing use of information technology, have resulted in significant expansion in the transportation and distribution sector in recent years. Since the beginning of the COVID-19 pandemic, businesses have had difficulty resolving specific strategic difficulties, which has limited their ability to extend their own operations and reach new markets.

Impact of Research on Stakeholders

According to Nike’s annual Corporate Responsibility and Community Investment Reports, the firm uses a variety of strategies to communicate its performance to stakeholders. This company’s dedication to the Global Compact is evident throughout its website, many background materials, and an annual report on corporate social responsibility.

One-on-one meetings and other types of interaction with stakeholders are also used by Nike. Nike is a worldwide sportswear company. ‘First formal stakeholder forum was held in February and attended by all of Nike’s partners and consumers. Nike Inc. is a GRI Stakeholder (GRI). It provides defined reporting and assurance standards and methods for monitoring a company’s corporate responsibility development.

Nikeresponsibility.com provides information about worker and contract factory issues and initiatives, as well as environmental sustainability issues and initiatives. On nikeresponsibility.com and in its backgrounders, Nike discusses worker and contract factory challenges and initiatives.

Nike Inc. sources its products from contract manufacturers that are committed to improving working conditions for their employees. Nike’s Compliance department, which employs more than 80 employees, is in charge of conducting internal audits to ensure that working conditions are safe and equitable. We also perform surprise, unannounced audits of some of our plants by the Fair Labor Association in addition to our own internal audits and investigations (FLA).

A short- and long-term strategy has been devised in collaboration with World Wildlife Fund Climate Saver programs to reduce the company’s greenhouse gas emissions while also offsetting them, tracking them, and educating employees about climate change.

Nike Inc. allows all stakeholders to share their opinions and ideas with the firm through various channels. Interaction with Nike’s constituents takes place through a multitude of channels. The Global Compact is one of the most visible of these initiatives. Furthermore, a participant in the GRI as an Organizational Stakeholder, Nike Inc. is also involved in the GRI. It was in February 2004 that the first stakeholder forum was held, which brought together a wide collection of stakeholders from both within and outside the organisation to discuss existing and upcoming concerns.

Nike Inc. believes in the ongoing dialogue with the outside world, where the company’s achievements and failures are addressed, and where corporate failures and achievements are used to strengthen supply chains around the world.

Nike Inc. has taken many efforts aimed at increasing transparency over the past few years, despite realizing that much work remains to be done:

• Converse, a college licensed company in the United States, invites students selected by an independent university team to take part in monitoring the contract factory and submitting their random reports to the company’s website. Converse, a licensed company in the United States.
• Although some information was important, Nike participated in the release of Global Alliance data collected from employee interviews in Indonesian contracting companies. It is available at www.globalalliance.org, where you can learn more.
• It is estimated that Nike empowered people from all walks of life to visit Nike contract companies selected each year. In one year in Vietnam, Nike invited more than 1,000 guests to choose contracting industries.

Evaluation and Analysis of Secondary Data

SWOT analysis

Nike’s Strengths – Internal Strategic Factors

As a result, Nike Inc. is one of the world’s most recognizable brands, thanks to its simple, memorable name. Nike’s swoosh emblem is extremely well-liked by the public. 31 percent of sports shoe sales go to Nike.

Customers from all over the world follow Nike fashions, attend Nike events, and share their thoughts and opinions. Nike’s Large Client Base Nike’s large customer base helped the market reach $ 224 billion in February 2021.

We’re going to keep working to improve the environment in our communities, Nike officials declare. President and CEO Mark Parker pledges Nike’s support for environmental initiatives.

Profits have increased because of Nike’s long-term partnership with Michael Jordan. During their partnership, they created the “Air Jordan 1 Shoes.” Nike collaborated with basketball legend Michael Jordan to create the “Air Jordan 1 Shoes”.

Nike’s ability to preserve and strengthen third-party items such as Converse and Hurley has allowed it to enjoy decades of unrivalled success. Nike’s production expenses are kept to a minimum because to the majority of its footwear being created outside of the United States. Vietnam will produce half of Nike’s shoes by 2020, China will produce 22%, and Indonesia will produce 24%. Argentina, Brazil, Italy, and Mexico are also serviced by the organisation.

Shoe and sporting goods manufacturer Nike employs designers. Nike conducted a lot of research in order to develop a successful company.

Nike Inc. is a marketing powerhouse, and they’re known for it. The product’s cost of production is critical. Nike will spend $ 3.7 billion in 2019 and $ 3 billion in 2020. In order to reach a broader audience, the business has utilized social media and other forms of marketing. In an effort to aid the fight against apartheid, the “Do Not Do It” campaign was launched

Nike’s Weaknesses – Internal Strategic Factors

• Dangerous and Unsafe working conditions for immigrants Nike has been criticized for poor working conditions for 20 years. A few of the issues discussed are child labor and “dangerous” working conditions.
• Retailers’ Hold – Nike’s sales department is sensitive to the price. Retailers and retailers get a 65% mark on Nike products. Aside from strong revenue statements, a simple Nike balance sheet analysis may reveal a different story. Financial crisis threatens Nike. 2020. Nike owes a total of $ 9.54 billion.
• Even after global trade, Nike still relies heavily on US sales and leadership. Globally, Nike’s revenue for 2020 revenue was 59 percent higher than for 2019. Despite its global reputation, Nike relies on US sales and growth.
• A former Nike Inc. employee says he was not treated fairly because of his Croatian nationality.
• In August, four former Nike employees filed a class complaint. Nike’s workplace hates women, the women said. The lawsuit alleges that the sportswear company failed to pay the men and women workers. Men were paid more than women for the same work in the company, according to women.
• Nike’s overconfidence in sportswear is a big mistake. 6. Shortage of Diversity: Outbreaks appear to be exacerbated by the increase in the number of social and sporting events. Many sports teams across the country are in danger of collapsing. Losing Nike could be even worse if the situation persists.
• Nike’s “Move to Zero” policy promises the company to use 100% renewable energy and emit zero CO2. Nike’s innovation-based sustainability policy contradicts this new trend. Nike’s commitment to mitigating climate change seems to be a marketing strategy.

Several female employees stated that they had made complaints to human resources but received no response. Nike’s female employees were devastated and fearful. Numerous individuals have even resigned from their positions. The company’s reputation has suffered a significant hit as a result of the incident.

Nike’s Opportunities – External Strategic Factors

• In addition to being present in several overseas countries, Nike has a lot of potential in emerging markets. This is especially true as emerging markets such as India, China, and Brazil are growing in size and value.
• Although Nike has produced many things, there is still room for improvement. Nike claims to have expanded its technological reach into the business of fitness and wellness. Workable wearable technology is the basis for new technological products. Fashion has begun to explore the benefits of combining technology with sports gear, but it has not fully explored every opportunity.
• Nike products are supplied and created by independent manufacturers, so Nike should integrate these manufacturers effectively. The company can buy a few or upgrade and build their own to create a highly efficient supply chain.
• Nike has decided to cut ties with other major retailers and distributors of major products in the US. Nike has said supermarkets including Zapoo’s, Dillard’s, and Fred Meyer will no longer be part of the supply chain. This update is designed to improve product branding and comprehensive consumer knowledge.
• Seventh, we have integrated AI. Nike Inc. has funds for small and medium-sized businesses as well as emerging businesses. The company recently purchased Collect, a forensic analysis tool, to improve online sales and predict customer spending.
• As a result of the company’s transition to digital marketing and the closure of virtual real estate, Nike has expanded its consumer-oriented strategy. Nike estimates that online sales will be 35% of product revenue by 2020. The epidemic has clearly impacted Nike consumer engagement.
• A number of female employees reported that HR received repeated complaints, but no action was taken. This episode shocked and shocked Nike female employees. Several people had to resign. The incident damaged the company’s reputation.

Nike’s Threats – External Strategic Factors

• Fake Products – Nike’s revenue and reputation can be greatly affected by counterfeit products. With business now operating worldwide, the threat of counterfeit goods has increased. Counterfeit Nike products are available in many stores and retailers. Nike Inc. branded products are manufactured with low quality materials, but are still priced at low prices. Consumers may get the impression that Nike has started making low-quality products as a result, which could damage the company’s reputation.
• Competing with new emerging companies is still a potential risk, even if Nike is a leading sports brand. Increasing competitive pressure Nike should spend a lot of money on advertising and advertising due to growing competition. At the end of the 2020 financial year, Nike spent $ 3.5 billion on advertising and production needs. When it comes to managing the market, Nike’s best bet is to do things that are specially designed to meet the needs of athletes.
• A growing number of competitors, such as Adidas and Under Armor, are expanding their advertising revenue, putting more pressure on Nike.
•  As a global company, commodity is subject to fluctuations in exchange rates. For financial reporting purposes, Nike uses the US dollar (USD). As the U.S. dollar fluctuates compared to other types of currencies, this affects income.
• Regardless of which side is right or wrong, copyright disputes are always the main issue in the media, exposing negative facts about the companies involved. There has been a tough patent battle between Nike and Adidas in the United States and Germany over Prime knit and Fly knit shoe technology.
• Companies of all sizes are vulnerable to the effects of inflation, regardless of industry. Nike has already seen a 38 percent drop in revenue by the second half of 2020, and experts expect the recession to continue to create tension in the company.
•  As shown by the recent rise in Nike stock prices following the increase in sales in China, Nike relies heavily on various global markets. If trade tensions between China and the United States continue to escalate, Nike sales could be disrupted.

PESTLE Analysis

Political

The “backend” of a corporation, where we don’t see much in the way of politics, is critical. Currently, politics has the most impact on how a firm manufactures its goods or how much money it produces, for example. Despite the fact that it may appear insignificant to us, political concerns affect whether or not a company will survive. Some of these are from Nike, such as.

• In addition, Nike’s ‘home nation,’ the United States, has outstanding growth policies that are particularly beneficial to this corporation. The fact that interest rates are low and that international tax treaties are well-structured are two examples of these considerations.
• The Nike business model, on the other hand, makes them extremely vulnerable to altering tax and manufacturing laws.
• In some cases, customs-related procedures are difficult to complete or perhaps impossible to complete due to a range of political issues.

Economic

Due to its position as a medium-sized corporation, Nike Inc. is less vulnerable to economic concerns than some of its competitors; still, the following are crucial economic considerations to keep in mind:

• Nike Inc., as well as several other well-known companies, could suffer if the stock market were to crash. Customers may move to lower-quality items because of cheap labor costs in Far Eastern nations, which could hurt Nike’s sales.
• Nike’s sales are at least partially dependent on low labor costs in Far Eastern countries. As a result of Nike’s ‘deep pocket’ of financial resources, the company is able to explore tiny new markets where it can sell its products. The situation is changing, and the development in Less Economically Developed Countries may result in rising Nike prices throughout the world as a result of this.

Social

There has never been a more exciting time to be in the public relations industry. Due to the significant significance placed on social standing in modern organizations, the following considerations should be kept in mind:

• In contrast, Nike Inc. receives a great deal of criticism for their questionable manufacturing practices, which would make them extremely happy.
• As ‘health consciousness’ develops throughout the world, more and more people are making lifestyle adjustments to improve their health. These individuals will almost certainly purchase a large amount of sporting goods. The Nike sweatshops, in fact, have been the subject of a Wikipedia article on their operations.

Technological

With the use of technology, businesses may come up with new ideas in a variety of different methods. Nike Inc. is merely one example of a company that has benefited from the usage of technology. There are many others. Here are a few examples of technological aspects that are having an impact on it.

• Social media makes it possible for something to gain popularity or go away more swiftly than it ever has in history. Using social media incorrectly, on the other hand, can be damaging to Nike’s long-term success.
• Nike also has the opportunity to utilize beneficial information-based metrics as a result of technological improvements, which will assist them in optimizing targeting and manufacturing while increasing revenue and profits.

Legal

The legal and political parts of a PESTLE investigation, on the other hand, are separated from the legal and political elements, which are sometimes incorporated in ‘PEST’ assessments. Although Nike is not subject to numerous governmental limitations, we haven’t lost sight of the most important one: the environment.

Like many major corporations, Nike is able to avoid paying a significant amount of tax. To be honest, this shouldn’t have surprised any of us. Although this hasn’t been strictly enforced in recent years, it’s still something to bear in mind. Furthermore, Nike’s dubious marketing methods, such as fraudulent discounts, may expose the company to legal repercussions in the future.

Environmental

The importance of environmental issues is only growing in importance. Although only a few variables influence Nike’s performance in this area, the following are the most significant.

 There is no doubt that Nike’s mass production facilities have a harmful influence on the environment. Not only do Nike’s factories cause a significant amount of air pollution, as do other businesses, but several of their facilities have also been linked to direct polluting of rivers.

 Nike, on the other hand, has shown a significant desire to make its current activities more “environmentally friendly”.

Recommendations and Conclusion: Business Project of Nike

When it comes to this new approach, Nike Inc. would profit from the adoption of an enterprise resource planning system to assist them. Additionally, it should be done in conjunction with their efforts to connect their many independent manufacturers into their enterprise resource planning system (ERP).

It is possible that Nike would have more control over its production processes and information if the company integrated its manufacturing processes and information systems. If Nike wants its supply chain to flow smoothly from producer to store, it must maintain complete control over the data it collects and uses.

Nike Inc. would be able to reduce expenses and streamline operations if they had access to real-time information from each level of the supply chain. Using the POS data from the ERP system, manufacturers can then get started on their manufacturing processes. Nike’s ability to integrate its supply chain is critical to the company’s long-term success.

There are sufficient resources available to ensure that the company maintains its position as the world’s leading provider of sporting goods footwear, equipment, and clothing. To be successful, the business must, nevertheless, deal with concerns such as competition, labor abuses, imitation, and patent protection, among others. As a result, Nike Inc. should reconsider its strategy in these areas. Additionally, the company must collaborate with government bodies in order to address concerns regarding patent enforcement.

Strategy No. 1: It’s time to shift to a demand-driven approach to planning and company operations.

Supply chain management teams improve their ability to measure demand through the use of digital technology. As a result of real-time information from Internet of Things (IoT) and artificial intelligence (AI) technologies, supply chain management teams can now take immediate action and automatically adapt their supply chain to meet customer needs.

The importance of the cloud in the new supply chain grows in importance only. Additional businesses transfer their data and applications to the cloud to develop standard data models that can be assisted with data from other sources. It has had an effect on the level of foresight and accuracy in planning that was not achieved previously two years ago.

Many organizations are reaping the benefits of modernization, which strengthens the traditional practice. According to our recent research, the cloud has improved delivery performance and increased revenue by an average of 20 percent to 30 percent per year. We were able to reduce inventory by 25-60 percent while reducing asset costs by 5-10 percent, which allowed us to reduce our operating capital requirements. Consumption of goods increased from 30 percent to 35 percent during the year.

Strategy No. 2: Build a supply chain that is flexible and nimble by integrating planning and manufacturing.

This year, supply chain management is all about speed and power. When it comes to production and planning, companies grow much better at harmonizing the two.

A fully integrated solution, on the other hand, still seems unattainable to some businesses. It was determined that only 55% of companies have “fully integrated business plans,” according to a 2014 study. Only 9% of respondents said that “they have a well-integrated planning area for supply. These problems continue today. For businesses.

In order to integrate real-time planning and performance, there may be a lot of data and statistics. With the advent of cloud-based technology that integrates financial obligations and organizing building materials into business operations such as purchasing, manufacturing and asset management through the same web interface, this bar is now being broken. With possible zero latency plan-to-production processes now possible, businesses can respond more quickly and efficiently to volatility in their markets.

Strategy No. 3: Profitable innovation can be hastened by optimizing supply, manufacturing, and management of the product.

The time when product development and supply-chain planning were handled separately by companies is over. Product designers will no longer be able to “throw product designs on the wall” for those in charge of finding and producing products if they want to stay competitive.

When it comes to mobile phones, for example, manufacturers are constantly forced to develop and release new models to stay ahead of the competition. A single platform (usually cloud-based) grows into a single way to integrate design teams and supply chain planners. New sharing tools and smart procurement processes such as supplier suitability can help product developers find the right components in advance, based on factors such as component availability, quality, and price.

According to our findings, properly integrating design processes and procurement plans can reduce waste costs and recycling by 10% – 20%, speed up marketing time by 10% – 20%, and increase revenue by 10% – 20%.

Strategy No. 4: By combining sales and operations planning with corporate business planning, you can ensure that your supply chain is aligned with your company objectives.

Over the past few years, businesses have witnessed a significant growth in the dangers they are exposed to. There is an increasing number of market issues that leaders must deal with, ranging from Brexit to costs and beyond.

Companies must, as a result, integrate their marketing and operational planning (S&OP) plans with their strategic planning and forecasting efforts. Invest in the development of planning capabilities that can transform large-scale company aims and risks into a local action plan that is continually updated to reflect shifting market conditions.

By combining business planning, supply and demand forecasting, and S&OP, you may develop an effective closed loop that runs from planning to implementation and finally performance management.

Strategy No. 5: Enable supply chain sustainability.

The C-suite is increasingly placing a high priority on characteristics such as growth and profitability, as well as other areas of sustainability, such as social and environmental concerns, as part of their overall strategy.

The notions of sustainability and profitability have traditionally been considered mutually exclusive concepts, however this is no longer the case. Recent statements from the Business Roundtable on the purpose of a corporation suggest that corporations should place a high priority on sustainability in addition to maximizing profits for shareholders, according to the Business Roundtable.