Strategic Management Analysis

Strategic Management Analysis


Nike Inc. is considered as a famous American multinational organization which is engaged in the development, production, design, and global marketing or sales of footwear, equipment, services, apparel, and other accessories. In this paper, strategic management of Nike Inc. is analyzed under the light of its different competitive and strategic capabilities. This gives us significant information about the strategic management and capabilities of the organization to compete with its present competitors. It was incorporated during 1967 under the laws of the State of Oregon. Nike Inc. is considered the world largest seller of apparel and athletic footwear. The organization not only sells its product by using retail accounts but also by e-commerce or internet websites. It was founded as Blue Ribbon Sports Company by Phil Knight and Bill Bowerman. After some time, the organization takes its name from Nike, the Greek goddess of victory. The organization has an excellent brand image in the global markets. It is known for its high quality and effective products. Apart from producing sportswear and equipment, the organization also manages different retail stores under the name of Niketown. It operates under different brands such as Nike Pro, Nike+, Air Force 1, Nike Skateboarding, and Air Max. These brands make it popular all over the world.

Section 1 

Nike Inc. mainly believes in providing differentiated product portfolio with a focus or more affordability and accessibility. The innovation strategy of the organization is highly appreciable. The below mentioned are the vision and mission statement of the organization:


The official mission statement of the Nike is "to bring innovation and inspiration to every athlete in the world." The organization believes that everyone is an athlete. According to the view of Bill Bowerman "everyone who has a body, is athlete". The mission statement of the organization represents its strategic goal of reaching out to the global apparel, sports shoes, and equipment market (Distelhorst, 2016). The below mentioned are some important concepts which are focused on the Mission statement of the Nike:
  • Innovation
  • Every athlete in the world
  • Inspiration
As a growing and famous producer of sports shoes, equipment, and apparel, Nike Inc. motivates and inspires people to create a winner mindset. It is covered under the inspiration component of its vision statement. The slogan of Nike Inc. "Just Do It" shows this inspirational motive. On the other hand, the mission statement of the organization also considers innovation ( This mission component of the organization is applied through the new strategy of continuous improvement of products by using innovative technologies. Apart from this "every athlete in the world" component of its mission statement pushes it to target every people around the world. So, the athletic shoes of the organization are mainly designed to attract and satisfy a large number of people around the whole world.


It can be said that till now the organization has not published its official vision statement. However, the vision statement of the organization towards its corporate social responsibility is an effective approximation of its own business. Moreover, corporate social responsibility vision of the organization helps it, and its customers thrive in a sustainable economy where people, planet, and profit are in the balance (Hill, 2014). In its vision statement of corporate social responsibility the organization mainly includes following components:
  • Sustainable Economy
  • Planet, people, and profit are in balance
  • Help Nike Inc. and its customers
CSR vision statement of Nike Inc. mainly contains the company and its consumer's as big participants in its future motive of sustainability. On the other hand, it can be said that the corresponding strategic motive of the organization implied in the “sustainability economy” component of the vision statement.  
However, it can be said that both mission and vision statement of the Nike Inc. support the development of sustainable competitive advantage in a significant manner. The mission statement of the organization mainly highlights the general strategic directions of the business which enforces it to fulfill all its objectives on a timely basis. Due to its high focus on the mission statement, the organization can easily face the current situations which make it capable of gaining competitive advantage over its potential competitors. Inspiration and innovation concept of its mission statement helps the organization in maintaining competitiveness and create tough competition among market competitors.
On the other hand, it can be said that the organization does not have a suitable corporate vision statement. In such situation, CSR vision statement of the organization becomes a good start for it ( The CSR vision statement of the organization guides it at every step of its working. This will bring improvement in firm operations, and the organization can significantly create competitive advantage in its potential market. With the vision and mission statement, the organization can keep its operations in the right direction which helpful in avoiding mistakes and possible risks. Thus, it can be said that mission and vision statement of the organization has potential to create a sustainable competitive advantage over its competitors.

Section 2 

Scenarios and Industry Analysis

Porter Five Forces Analysis
It can be said that the business environment of the recent time is extremely competitive and fragmented with a large number of business players. Sportswear industry has few entry barriers due to which every single organization has significant opportunity to enter into the sportswear market. In this products are differentiated on the basis of brand value and innovation. In the sportswear industry, they strive to establish their competitive advantage to thrive in the scenario of the competitive environment. The below mentioned are the five forces which influence the sportswear industry:
Competitive Rivalry or completion:
This element of the five forces model represents the level of competition affecting the industry environment and performance of the organization ( The following external factors develop the strong force of competitive rivalry in the case of Nike organization:
  • Moderate number of firms
  • Low market Growth
  • High aggressiveness of firms
Market growth in the sportswear industry is low in comparison to other industries. It is low due to the high rate of market penetration and saturation. Due to it, this situation develops a strong competitive force, as Nike and other organizations compete for a market that grows slowly and steadily. On the other hand, organizations under the sportswear industry are highly aggressive in nature. Due to it, they are competing within bigger share of markets.
Bargaining Power of Buyers:
Customers of the sportswear industry directly influence the organization's performance. This element of the porter five forces model represents how customers determine industry environment and competitiveness of business. The below mentioned are some external factors that contribute to the bargaining power of buyers:
  • Small size of individual buyers
  • Low switching cost
  • Moderate substitute availability
Low cost of switching makes it easier for the individuals to purchase sports shoes other than those from Nike. On the other hand, moderate availability of substitutes enables customers to purchase products of other brands rather than Nike ( Moreover, customers of small size reduce their individual forces on the organization.
Bargaining Power of Suppliers:
Suppliers influence the sportswear industry through the availability of raw materials. It includes following external forces:
  • Moderate size of Individual suppliers
  • High overall supply
  • Large Population of suppliers
It can be said that the high supply of sportswear industry generally influences the individual actions of suppliers. In the same manner, the large population of suppliers reducing the effect of individual supplier demand on big organizations such as Nike Inc. Furthermore, the moderate size of individual suppliers has a moderate degree of supplier affect.
The threat of Substitute: Availability of substitute influences the organization performance in global athlete shoe market in a greater manner. It includes following forces:
  • Low switching cost
  • Moderate availability of substitutes
  • Moderate performance per price of substitutes
Generally, it can be said that the moderate availability of substitutes imposes a moderate force on the sportswear industry. It is because customers have a large number of alternatives to make their decision regarding the purchase. On the other hand, individuals have a moderate likelihood of considering substitutes because of the moderate substitute performance compare to equipment, apparel, and sports shoes of Nike Inc. Furthermore, low cost of switching further makes an addition to that likelihood.
The threat of New Entrants: New organizations and new entrants can work as a barrier in sportswear industry environment. It includes following external forces: 
  • Moderate cost of doing business
  • High scale of economy
  • High-cost involvement in brand development
Due to the high cost of brand development, it is very difficult for the new entrants to enter the sportswear industry market ( Apart of this, the high scale of economy offer an edge to the Nike Inc. by creating its competitive image in its potential market. Moreover, the moderate cost of doing business prevents capabilities of new entrants to disrupt the sportswear industry environment. 
After conducting the porter five forces analysis, it can be said that sportswear industry is less attractive than the other industries. It is because the industry has intense competition, price-conscious consumers, fashion trends, and competition that slowed growth in the sportswear industry.  Slow growth of industry makes it difficult for the business organizations to create their brand image that appeals to the consumer in a significant manner. Competitive rivalry or competition force of porter five forces model is liable for bringing change in the next 24 months. It is because technology is changing continuously. Due to change in technology demand and preferences of consumers also changed. Due to it, high completion is growing in the sportswear industry which influences the organization performance and sale in a greater manner. In this situation, the organization needs to manufacture such products which differ from its competitors. By doing this, the organization can significantly create and maintain its edge in its potential market.
Porter Forces
  • Industry Attractiveness
  • Bargaining power of suppliers
  • Bargaining power of customers
  • Threat of substitutes
  • Threat from new market entrants
  • Competitive Rivalry
Force Capability    
  • Low
  • Weak Force
  • Moderate Force
  • Moderate Force
  • Weak Force
  • Strong Force

Section 3 

Evaluation of Nike’s resources and capabilities by utilizing the value chain framework

Organizational Capabilities- All the core competencies of Nike are created by adding up all the resources and a changing a web of all practices which can be add-on factors for creating the competencies. For example, Nike creates a competitive edge over its competitors by advertising its product in media. 
Resource and values of Value Chain Analysis
There are two main broad categories of activities in value chain analysis framework- Primary Activities (outbound and inbound logistics, production and marketing) and Supporting Activities (technological development, HRM, Firm infrastructure) (Gereffi, et al., 2003).
Primary Activities-
Nike Inc. delivers its products to approx. 143 global destinations. Their delivery originates from factory to the docks which receive the products of Nike. Nike's operations of logistics consist of three lines of products: equipment, apparel, and footwear. There are four different regions who manage the orders through the logistics of company's service provider. There is a well-managed co-corporation in the company's supply chain hence there is no need to involve any middle man. Because of the facility of online system of ordering, many shipments are directly supplied to their customers instead of involving retailers.
Marketing- All the endorsing and branding activities can impact the reputation of a brand as doing the market research beforehand can help to enhance the brand image and make the footwear and apparel selling the company as a leader.
Production- Nike's mission can help to create cost effective, innovative manufacturing processes and proprietary materials with high-quality components and materials.
Technological Development- Nike has established itself as leaders and innovators in the shoe industry by differentiating their offerings accessing the use of technologies that are patented. 
Human Resources management- Human Resources include skills, accumulated wisdom, judgment, competencies, and experiences of Nike Inc. Regarding the Human Assets, Nike has declared that it has various opportunities to gear up the growth in terms of profits and competitive advantage and our leaders are working on a daily basis to ensure that the brand is inspiring many of the employees to work even harder (Walters, et al., 2000).
Firm Infrastructure-Nike is developing the logistics, information systems and management of supply chain and marketing the company’s product in new innovative ways. Moreover, Nike is finding new ways to operate on the system that creates an effective balance between financial and managerial disciplines which can drive growth effectively. With The increasing awareness of corporate social responsibility, Nike is helping to keep the environment safe and produce maximum quality products with the efficient use of resources and keeping the environment safe.
Value Creation by Nike
Intangible Resources- Nike wants to establish itself as leaders and innovators in the shoe industry by differentiating their offerings accessing the use of technologies that are patented. 
Human Resources- Human Resources include skills, accumulated wisdom, judgment, competencies, and experiences of Nike Inc. Regarding the Human Assets, Nike has declared that it has various opportunities to gear up the growth in terms of profits and competitive advantage and our leaders are working on a daily basis to ensure that the brand is inspiring many of the employees to work even harder.
Financial Resources- These monetary resources include credit lines, debt capacity, cash reserves, available equity, and other equitable financial holdings. Nike’s largest category of product is Footwear which is representing approx. 53.7% of the revenue of the company. These resources of finance are used to buy the large space for advertising be it billboards, TVs or any stadium for athletics.
Physical Resources- Resources which are in physical forms like retail stores, office supplies, inventory, machines, plants, buildings are called as Physical resources. Shoe line is considered to be the most important line amongst all other.    

Section 4 

Nike Inc. can get a significant competitive advantage in a competitive environment by improving its product quality and marketing strategy. Sustainable competitive advantage enables the organization to sustain for a long time and earn huge profit. On the other hand, by following below mentioned models, the organization can achieve sustainable competitive advantage in a competitive environment:
The Market-Based View: According to this model, Nike Inc. needs to focus not only on industry factors but also the external market orientation. It is because these are considered the primary determinants of organization performance (Bharadwaj, 2015). Furthermore, it also suggests that the strategic position of Nike Inc. largely depend on its activities. It is necessary for the organization to differentiate its activities from its competitors. It is because performance and profitability of organization largely depend on its competitive dynamics and structure within which it operates. On the other hand, the organization should consider Industrial Organization paradigm. It is because with the help of this paradigm the organization can gain significant knowledge about how the structure of the industry influences its behavior and performance. With the help of such knowledge, the organization can develop an effective strategy to gain competitive advantage.
The Resource-Based View: According to this model, the organization needs to focus more on its internal environment because it is a significant factor which helps the organization in determining an effective strategy for competing in existing market. The internal environment is considered the driven factor of competitive advantage. So, the most of the focus of organization should towards on building its internal environment. Generally, it is concluded that the resources of an organization are primary sources of gaining competitive advantage. So, Nike Inc. should focus more on its resources with which it can produce high-quality products. On the basis of its product quality, it can achieve competitive advantage in a significant manner.
The Knowledge-Based View: According to this model, knowledge is an important force which enables an organization to gain a competitive advantage over its competitors. It is because knowledge has such potential that makes it most valuable and important resource for the organization. So, it is the responsibility of the organization to focus more on getting enough knowledge, competencies, and intellectual assets (Li, 2014). It is because these are the main forces that bring improvement in performance of the organization in the digital information age environment. Generally, it can be said that material resource of the organization can decrease after use but knowledge resource never decrease and copied by others. So, Nike Inc. should focus more on developing its knowledge to compete in the international and regional market.
The Capability-Based View: As per this model, capabilities are considered as the source of competitive advantage and resources are considered as the source of capabilities. Capabilities have such potential with which it can significantly help the organization in gaining competitive advantage. Nike Inc. has many capabilities to face a large number of competitors in a single time. So, it can be said that the organization should focus more on developing its capability with which it can perform a critical task in a significant manner.  
If the organization considers all the given suggestions, it can significantly gain a significant position in its existing market as well as eyes of customers. Furthermore, the organization can also improve its product quality which enables it to provide large satisfaction to its target customers.


After studying all this, it can be concluded that that Nike Inc. has an efficient composite business structure with decentralized branches and the abundant brands. If the organization wants to position itself in its existing market, the above-mentioned recommendation strategies help the organization in doing so. This will be done through removing its weaknesses and strengthening the existing capabilities (Rothaermel, 2015). It could formulate market penetration strategies for expanding the size of its potential market in different areas. It can be said that Nike Inc. has a significant reputation in the market which can be fluently utilized in exploiting the existing business opportunities. Furthermore, the company can also apply a market segmentation strategy for niche markets in established economies. With the help of all these initiatives, it can efficiently utilize its existing technologies and resources which further prove beneficial in achieving predetermined goals of the organization.


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