The NIKE athletic machine began as a small distributing outfit located in the trunk of Phil Knight’s car. From these rather hesitating beginnings, Knight grew to become the shoe and athletic company that would come to define many aspects of popular culture. So, NIKE, originally known as Blue Ribbon Sports, was founded by University of Oregon track athlete Phillip Knight and his coach Bill Bowerman on January 25, 1964 and officially became NIKE, Inc. in 1978. The company takes its name from NIKE. NIKE, pronounced NI-KEY, is the winged goddess of victory according to Greek mythology. The NIKE “swoosh” { } embodies the spirit of the winged goddess who inspired the most courageous and chivalrous warriors at the dawn of civilization. Nowadays, NIKE, Inc. is the world’s largest seller of athletic footwear and apparel. It employs more than 33,000 people globally, including more than 5,500 at its worldwide headquarters in Beaverton, Oregon. It sells products in more than 180 countries around the globe and it reported revenues of $19.2 billion for the fiscal year ending May 31, 2009.
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The company’s first self-designed product was based on Bowerman’s “waffle” design. This led to the development of the so-called ‘waffle’ sole which would evolve into the now-iconic Waffle Trainer in 1974. This was the beginning, which led to NIKE that we all know today, the giant designer and manufacturer of sportswear and sports equipment. NIKE entered the 1980’s playing a vital role in the field of sportswear and shoes, due to the successful launch of Nike Air technology in the Tailwind running shoe in 1979. In 1987, NIKE decided to be the leader in the specific industry and to differentiate its company from its competitors.
The focal point was the Air Max, the first Nike footwear to feature Nike Air bags that were visible. A year later, NIKE decided to launch an empowering series of advertisements with the tagline “Just do it.” By 1980, NIKE had reached a 50% market share in the United States athletic shoe market and, then, the success continued. Throughout the 1980’s, NIKE expanded its product line to include many other sports and regions throughout the world, as this company serves and sells its products worldwide. NIKE entered the new millennium with a new footwear cushioning system called Nike Shox, which debuted during Sydney in 2000. The development of NIKE Shox culminated more than 15 years of perseverance and dedication, as NIKE designers stuck with their idea until technology could catch up. The result was a cushioning and stability system worthy of joining Nike Air as the industry’s gold standard.
PRODUCTS
As far as the products that NIKE sells, they include an assortment of products, including shoes and apparel for sports activities like association football, basketball, running and other, for men, women, and children. Furthermore, NIKE sells shoes for outdoor activities such as skateboarding, cycling, auto racing and other athletic and recreational uses. NIKE is, also, well known and popular in youth culture, as they supply urban fashion clothing. NIKE markets its products under its own brand as well as NIKE Golf, NIKE Pro, Nike+, Nike Air Jordan, NIKE Shox, NIKE Skateboarding and subsidiaries including Cole Haan, Hurley International, Umbro and Converse and other. In addition to manufacturing sportswear and equipment, the company operates retail stores under the Niketown name.
COMPETITORS
Taking into account that NIKE is involved in the production of products for a wide variety of sports, it competes with every sports fashion brand in existence, such as Reebok. However, because of the absence of any single brand that rivals the products of NIKE, the company has no direct competitors, with the exception of German company Adidas.
4) SWOT ANALYSIS see http://www.mba-tutorials.com/marketing/240-nike-swot-analysis.html
a) STRENGTHS
Besides the various strengths being analyzed in this project, some additional are the following, proving that NIKE is, indeed, an innovative company:
-Being a competitive organization, NIKE has a healthy aversion towards its competitors, such as Reebok which expensed on sponsoring the games. NIKE, however, sponsored the top athletes and due to this step, it gained valuable coverage.
-NIKE has no factories; rather it uses contract factories to get the work done which makes it quite a lean organization.
-NIKE is quite strong regarding its research and development, which is quite evident regarding its evolving and innovative product range.
-NIKE manufactures high quality at the lowest possible price.
-NIKE uses lunarlite foam and flywire materials in order to make the manufactured shoes lighter and more controllable. see http://www.soopertutorials.com/business/strategic-management/3379-nike-swot-analysis.html
b) WEAKNESSES
-NIKE’s income of the business is still heavily dependent upon its share of the footwear market which leaves it at a quite vulnerable spot for any reason, such as if its market share decreases in the future.
-NIKE was for quite some time unwilling to disclose any type of information concerning its partnering companies.
-NIKE was charged with the violation of overtime and minimum wage rates in Vietnam, 1996, that was seen as having poor working conditions, and that it was, also, charged for exploiting cheap workforce overseas.
-NIKE was positioned as a subject of criticism by anti-globalization groups due to its unruly and exploited manner that was quite a disaster for its reputation.
c) OPPORTUNITIES
-NIKE is a fashion brand which creates opportunities, since its products would become outdated before even the product wears out. In other words, consumers will feel the need to replace the product with a newer trend.
-NIKE gives a lot of effort on its corporate marketing mainly through the promotion of corporate brand and sponsorship agreements.
d) THEATS
-The market for sports shoes and sportswear is quite competitive. More specifically, the competitors are constantly developing alternative brands and techniques to take away NIKE’s market share.
-Consumers are constantly shopping around for a better deal that conveys a good quality and if one store charges a higher price for the products, the consumer would try to seek a better deal of the same product in the premises that delivers the same value but cheaper of the two.
-Due to the ecological issues of our society, the organization is constantly struggling to retain its eco-friendly reputation, but this is very difficult.
-A recession may lead to job shortages in most of NIKE’s worldwide branches.
B) CORPORATE-LEVEL STRATEGY
1) MISSION STATEMENT
The NIKE’s mission statement is the following: “To bring inspiration and innovation to every athlete in the world. If you have a body, you are an athlete”. First of all, it should be mentioned that its long-term strategy is focused on “innovation, collaboration, transparency and advocacy” across its business. However, we are going to focus on the innovative characteristics of NIKE’s strategy.
2) SHOE MANUFACTURING INNOVATION
The main point in NIKE’s strategy is innovation, as innovation has been at the heart of NIKE’s philosophy since its founding. Its strategy is based on innovation, as NIKE tries continuously to balance its products between sport and fashion. The innovative path of NIKE begun with the company’s first self-designed product, which was based on the “waffle” design. Then, NIKE developed and refined the so-called “waffle” sole which would evolve into the now-iconic Waffle Trainer in 1974. After this, NIKE started to launch various patents applied on sport shoes, which made it the leader in this industry for many years.
See wikipedia
Furthermore, it should pointed out that the company built its reputation on its technological breakthroughs in athletic shoes, and helped to introduce specialized shoes for different sports. NIKE recently teamed up with Apple Inc. to produce the Nike+ product which monitors a runner’s performance through a radio device in the shoe which links to the iPod nano. Last but not least, it should be added that NIKE took personalization to the next level with an expanded NIKEiD Web Site, where consumers can customize, almost, every kind of NIKE product. More specifically, the NIKE iD Web site provides a fun and easy way for users to customize and buy footwear and gear. The site transforms the visitor into a designer, allowing them to apply their own choice of colors and materials to a broad range of shoes, bags and equipment.
3) NIKE GOES GLOBALLY
NIKE is, without a doubt, a worldwide powerful giant in the athletic shoe and apparel industry. Nike’s short, but effective mission statement is characteristic of such success. Nike tries continuously to show globally that inspiration and innovation are its main goals, as well as their commitment to serve everyone in the world. That is why NIKE goes globally. Through a continuous effort by NIKE to remain at the top of technology and innovation, it is the market leader by a significant margin. As a result of NIKE’s pursuit of selling a broad variety of products, it possesses a noticeable competitive advantage, compared to other sportswear companies, such as REEBOK or ADIDAS. Moreover, NIKE is characterized by a significant strength in market share, brand image and recognition, as well as in research and development field. Nevertheless, the goals of this company for the future go beyond this. NIKE wants to achieve targeting in more generational demographical scales, by applying horizontal integration, global expansion, European concentration, and segmented marketing. Its focus, in order to achieve this, will lie on using various methods of segmentation to develop the targeted markets and, as a result, to increase more its market share.
Besides the above, as far as its strategy and its innovative attitude are concerned, this company has set another goal: NIKE’s increased focus on sustainable business and innovation will be tried to be in the future more integrated across the company’s business strategies, creating in this way, a more sustainable approach aimed at providing greater returns to NIKE business, communities, contract factory workers, consumers and the planet.
INNOVATIVE PROMOTION
NIKE sponsors many high profile athletes and sports teams around the world, with the highly recognized trademarks of “Just do it” and the Swoosh logo. Thus, NIKE manages to be innovative, compared to its rivals, as it promotes its products by sponsorship agreements with celebrity athletes, professional teams and college athletic teams and it does this for many years in a successful and effective way. Following this tactic, NIKE established a strong brand name through product innovation and exciting advertisement campaigns linking them with sports and fitness. A striking characteristic example is that NIKE included in its advertisements highly known celebrities, such as Michael Jordan and Steve Prefontaine. NIKE chose professional athletes in its advertising campaign that were not only good in sports but, also, could embody the ideals of determination, individually, self sacrifice, and winning. NIKE felt that potential customers were heavily influenced by what top athletes were wearing and would purchase shoes accordingly. Thus, NIKE’s original success stemmes from its technical superiority over its competitors and it continues to lead the industry in product development and innovation. NIKE markets more than just shoes and apparel; it markets a way of life. Moreover, it should be mentioned that NIKE focused, also, in the physiological field of people, as the advertising slogan “Just Do It” placed an emphasis on self empowerment through sports and fitness for all ages.
5) INNOVATION IN ECOLOGICAL-ENVIRONMENTAL ISSUES
NIKE’s innovative philosophy is noticeable in other fields too, such as environmental issues, including the recycling of old shoes, etc. Moreover, NIKE decided to increase the use of environmentally preferred materials and reduce or eliminate toxics and waste, in its Considered Design performance products. Additionally, this sportswear firm has joined a new coalition of consumer companies, called Business for Innovative Climate and Energy Policy (BICEP), which is advocating for strong USA climate and energy legislation. What is more, NIKE recognizes the impacts of declining natural resources and the need to move to a low-carbon economy. Thus, the company’s vision, as far as the environment and ecology are concerned, is achieving zero waste throughout the supply chain and having products and materials that can be continuously reused. This vision is designed to drive innovative and sustainable business processes and models in the future. In addition, rather than trying to limit the impact of industry through the management of harmful emissions, NIKE tries to resolve the conflict between nature and commerce. So, this company envisions the creation of highly productive facilities that have positive effects on their surroundings and completely healthful products that are either returned to the soil or flow back to industry forever. It is a strategy that combines the human creativity and the abundance of nature and perfectly fits with NIKE’s positive and innovative culture.
C) COMPANY’S STRATEGY IMPLEMENTATION
OVERVIEW
Based on our analysis on the first part of the paper, where we tried to analyze Nike’s history, development, growth and corporate stratetey (giving emphasis on innovation), we will critically present, analyze and assess the company’s strategy implementation by focusing on teams and leadership.
2) INNOVATION AS A STRATEGY
NIKE, Inc.’s corporate responsibility strategy draws heavily from insights, which has been gained from its rich experience with innovation. Over the last three years, the company has used these insights to experiment with innovative sustainability solutions including its Considered Design ethos, which has enormous potential to drive sustainability best practices throughout the company. and its industry.
Nike’s long-term vision for Considered is to design products that are fully closed loop: products produced using the fewest possible materials, designed for easy disassembly and capable of being recycled into new products or safely returned to nature at the end of their life.
Nowadays, the company’s big bet is to innovate constantly and methodically throughout its business. From design to manufacturing to marketplace to recapturing, recycling and reusing. To bring discipline and focus to this quest for total change, NIKE has created the “Innovation Lab” with the mission to deliver enterprise- and industry-level sustainability solutions.
What makes this company the leader of its industry? Why is one of the most profitable worldwide? Depth study of the concept of the company will find that dare to risk, to break the conventional, unconventional is a fundamental reason for a big success.
According to the American management expert, Dr. Gary P. Hamel, “business innovation is a change in the existing competition in the core industries, as well as the ability to create new industries. This will be a fundamental under a global enterprise competitive advantage”.
3) STRATEGY IMPLEMENTATION
Indisputably, NIKE is miles far beyond the competition and the reason why is its marketing department. Its products have obtained power, while the consumer brand awareness is really high. At Nike there is a lot of space for its employees to feel free, “think out of the box” in order to produce novel ideas, novel products, which will be the new trend of the market.
Freedom is necessary for employees to explore their imagination. Thus, NIKE has created a corporate culture, which can be characterized by employee loyalty and team spirit. The logo of the company float across everything from screen savers to coffee cups at the company’s headquarters in Beaverton, Oregon.
It is worth-mentioning that, the company chooses to call its headquarters a “campus” instead of an office. Employees used to be referred as “players,” supervisors as “coaches” and meetings as “huddles.” These terms go a long way to make the daily work experience more funny and creative for the NIKE’s employees.
The Oregon campus is a sporting paradise, with tennis courts, indoor and outdoor tracks, soccer fields, running trails, two sports centers, an 11-lane pool used for swimming, scuba, and kayaking lessons.
Thirteen years after NIKE was founded, its biggest competitor, Reebok, developed its multicolored aerobic shoes. It was then that the company decided to reinvent its business and culture, becoming highly motivated about selling sports and a “NIKE way-of-life.” Taking this decision, NIKE make actually an effort to restructure its marketing campaign, focusing more on an image rather than just product commercial, a strategy which led to the “Just Do It” catchy campaign.
The last 15 years, NIKE tries to promote a whole philosophy to its employees, which is based in team working and creative way of thinking. But, in order to be effective this philosophy, employees must feel free to produce novel ideas, must not feel like being in a dull job but in a job that enhance their creativity. Thus, NIKE’ employees are given an hour and a half for lunch, to play sports or simply workout and that is a policy that not so many companies dare to follow.
All new employees view a video of sports highlights accompanied by a soundtrack, which converse the soul of the athlete and the competitive spirit. Furthermore, management sends weekly emails to update employees on the recent successes of NIKE-sponsored athletes, and often hosts spokespeople to motivate and thank its staff for contributions to the sports world. http://www.managementparadise.com/forums/marketing-management/46134-complete-project-report-nike-shoes-4.html
It is not surprising that an athletic background helps an employee, feeling that he belongs in a powerful team. In keeping with its sports approach NIKE asks its “players” to work by two principals above all others: “Honesty first and competition second. Compete with yourself not your colleagues.”
An outstanding example of commitment with his company is Nelson Ferris, a 47 year-old head of its corporate education department, who states that: “The Red Swoosh represents something other than just a company. It represents a whole value system.” Ferris, a longtime employee, even has a Swoosh tattooed above his ankle. “It stops being a job and starts to become a way that you are defining the way you are living on earth.”
4) INNOVATION NEEDS TEAMWORK
In recent years, a great deal of emphasis has been placed on the use of teams in organizations. According to Katzenbach and Smith (1993) teams can be defined “as a small number of people with complementary skills who are committed to a common purpose, performance goals and approach for which they hold themselves mutually accountable”.
A more elaborate approach to the use of teams in implementation is the adoption of teams and team structure as central components of the firm’s strategy. Teams are considered, from the vast majority of the companies, as a valuable mechanism and not just as means to ends. The approach of teams as a strategy assumes that people have similar needs and desires regardless of their position in the company, that they want to take responsibility for their own actions and wish to be rewarded as the organization thrives. Thus, teams provide the structure within which people participate and develop along with the organization.
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While breakthrough ideas may be the seed of innovation, it is teamwork that is the soil. Teamwork and innovation are two aligned concepts. Rarely are a few closet geniuses enough to turn invention into action. For that, a high performing team is needed. Or several teams inspired each other with a shared vision and the commitment to go beyond their individual agendas in order to make the difference.
Usually, innovation is normally misunderstood. Innovation is not a brilliant idea, innovation is a process. A brilliant idea becomes an innovation when it is turned into a product or system that produces significantly improved results. The four-phase GIFT model is a “start where you are-use what you have guide” to promote conversation (Wye, 2004). These concepts are suggestions, ideas to be used, modified, and shared. There are four steps in the innovation process:
Generate multiple, fresh ideas
Everything starts with an idea, and there is no doubt that every organization needs fresh, novel ideas to remain competitive and to deal with a rapidly changing world. In NIKE, there are gifted people who can generate innovative ideas about products, promotional activities or ideas which will help the company to maintain its corporate image. NIKE definitely follows Johansson aspect: “The best way to have a good idea is to have a lot of ideas” (Johansson, 2006, p.103). However, the company believes that not only the “creators” are responsible for the ideas generation, but almost everyone has this potential. It is also believed that: “If you want fresh ideas, talk to people who are not experts in your field”. Because of their “ignorance” in a particular field, novices and colleagues in other fields are less likely to make assumptions and dismiss ideas as too far-fetched (Sutton, 2002, January-February).
Imagine new uses for existing ideas
Thinking about how an existing idea can be used in a novel way is an important prerequisite but it is not necessarily innovative. However, combining these concepts of imagining new uses for existing ideas and combining them for your field can lead to significant innovations.
In the past, many great ideas stemmed from the marketing department of NIKE, have died on the vine because they were never picked up. Nowadays, this has been changed. There are people, who have a natural talent for recognizing good ideas and running with them. They are more focused on implementation than on creating ideas, and they also have a talent for interaction and support their ideas until the latter would be implemented.
C) Frame/Refine Non-Industry Ideas to your Field
Before the implementation of an idea start occurring, Refiners often play the devil’s advocate role, asking the challenging “what if?” questions. NIKE believes that through this process many obstacles can be observed and then better confronted. Refiners’ talents for analysis and attention to detail are perceived as very valuable in NIKE.
To increase company’s chances of related and connecting ideas, NIKE has convinced its employees to broaden their horizons. The greatest challenge for NIKE’s marketers is to expand their mind by reading books from outside their field of expertise, browse bookstores, magazine racks, libraries, and best-sellers lists for topics they might not usually read, read sections of the newspaper that you would otherwise ignore, listen and read political commentaries that you don’t agree with, find a hobby, learn to play a musical instrument, audit a course, visit a museum, do something different, share it with others, inasmuch as everything we do can enhance our professional intelligence.
The more you learn, the greater your interests and diversity of knowledge, and the greater your chances for generating ideas. Idea generation will help you imagine how ideas, concepts, and theories from all fields can be framed and applied to your field. As Dr. Sutton wrote, “Artistic geniuses don’t necessarily have a higher success rate than other creators; they simply do more-and they do a range of different things” (LaBarre, 2002, p.69).
Test and Execute the idea
One of the primary reasons great ideas fail to create an innovative change is a lack of follow through. As we all can imagine, without testing and execution, all we have is simply a novel idea. Step-by-step implementation of the above mentioned procedure, ensuring that all NIKE’s marketers follow through on their responsibilities, requires the talents of Executers. They are focused on the day-to-day realities of what must get done and making sure it does get done. Only when the Executers have completed their part of the process can the innovation come to the end.
5) NIKE’S BRAINSTORMING RULES
1. Defer judgment
2. Encourage wild ideas
3. Build on the ideas of others
4. Stay focused on the topic
5. One conversation at a time
6. Be visual
7. Go for quantity
Many organizations fail at innovation because leaders do not understand that innovation is a four-step process, and the talents required at each step of the process are very different. However, in NIKE every part of the process is considered as very important, special and time consuming. This means that for innovation to succeed, it needs to be a team-based process, where all parts of the chain could cooperate harmonically.
As the company has already recognized, the key element in order to create a culture of innovation and team working is for leaders to identify the talents needed, recognize those talents in their team members and encourage full team participation in working through the innovation process. NIKE tries constantly to create a culture of innovation in its teams. Everyone prefers the “we” instead of “I” in every expression, a tactic that help driving innovation forward.
Moreover, NIKE is a company that everyone’s aspect is valuable and considered as equal even if he is a marketing trainee or a marketing manager. There is the perception that everyone’s feedback or point of view can help the implementation of the innovation process, while any kind of discrimination (according each one’s position) is prohibited.
Julian Duncan, an assistant brand manager who is enrolled in a training program that moves him through six marketing assignments in 24 months, is a really distinguishing paradigm. The rotation, as well as NIKE’s laid-back culture, means lots of exposure to higher-ups who can help him “navigate the terrain.” On his second day at work, Duncan struck up a conversation in the cafeteria with legendary NIKE co-founder Phil Knight. A few weeks ago he e-mailed a question to a VP, and “he gave me half an hour of his time, in person,” says Duncan. “I think that’s pretty unusual.”
“It’s not a single product model, nor a single manager, nor one ad, nor a single celebrity, not even a single innovation that is key to NIKE. It is the people of NIKE, and their unique and creative way of working together.”
– Phil Knight, Chairman of the Board, Co-Founder of NIKE
6) NIKE’S POWERFUL LEADER
Phillip H. Knight, Chairman and Chief Executive Officer, is the co-founder of Nike, Inc. He has been the driving force behind the company’s success since its inception in 1964 under the name Blue Ribbon Sports. Knight is 61 years of age, well-educated (he holds an undergraduate degree from the University of Oregon and an MBA from Stanford University) and very experienced.
Co-founder, Philip H. Knight, has been with Nike since its inception. As a result, he has much knowledge and experience about the company and the industries in which it competes. Knight’s strategic planning managerial style serves as strength in that his actions are planned and calculated, allowing for both risky and conservative decisions based on careful thought and analysis. His participative decision-making style can also be viewed as strength such that Knight is willing to listen to others to generate ideas. He does not limit the company’s options to one-sided ideas and decisions.
He has been an innovative creative thinker in the industry of athletic footwear and apparel. His efforts have helped to establish Nike as an industry leader in both national and international markets. Thus, it is not an accidental fact that Phil Knight, has been ranked at the 20th position at the top 25 corporate leaders of the world according to the CNN in 2005. Being a charismatic leader, he has the potential to produce useful change, for instance produce novel products that fullifil customers need and in parallel, help his firm be more competitive (Kotter (1990: 6).
7) REASON FOR SUCCESS
Phil Knight managed to convert NIKE from a small distributor of Japanese track shoes to the leader of the athletic footwear and apparel industry. To be more precise, he has transformed his technology company into a marketing company whose product is its most important marketing tool. Mr. Knight managed to understand consumers, build brands and communicate them successfully. Finding catchy slogans and flashy TV commercials, Nike managed to heat a huge target group and create an emotional tie with the customers.
One of the key elements, which lead to the company’s success, is Knight’ leadership style. This style is representative of an open-minded CEO, one willing to take calculated risks and make conservative decisions based on careful analysis of external and internal environments.
Knight’s decision-making style favors the participative approach. He is not hesitant to make unilateral decisions, but prefers to look to his trusted management team for their insight and ideas before choosing a course of action.
The first job of Phil Knight when he found the company was to define a vision for the organization. According to Kotter creating the agenda of the organization is of great importance. “Establish direction, develop a vision for future, and strategies for producing change needed to achieve that company’s vision”.
8) DEMOCRATIC/PARTICIPATIVE LEADERSHIP
Although, Phil Knight, as a democratic leader will make the final decision regarding important issues, he always invites other members of the team to contribute to the decision-making process. This not only increases job satisfaction by involving employees or team members in what’s going on, but it also helps to develop people’s skills. Employees and team members feel in control of their own destiny, such as the promotion they desire, and so are motivated to work.
Usually participation takes time, however the CEO of Nike believes that in this way the end result is better. This specific approach can be most suitable in workplaces such as Nike, where team working is fundamental, and quality is more important than speed to market or productivity.
A successful leader, like Mr Knight, has to motivate, inspire and energize people to overcome any barriers to change and development, by satisfying basic, even unfulfilled human needs (Kotter (1990: 6).
Moreover, Nike’s leader believes that if someone is looking for pockets of excellence and, he/she can’t find them, he/she can create them. The first NIKE employees were not selected on the basis of excellence. Most of them were friends of friends, but once they were hired they were transformed from average people to outstanding performers who helped shape the company. To achieve these kinds of results, NIKE focused on innovation, creativity, and energy which are now part of their brand and the organization’s philosophy.
Nike’s top management’s leadership style can be characterized by the team management approach. Top management consists of a committed group of executives all bringing together vast experience and knowledge. The group is team oriented, but is capable and does work independently recognizing the common stake that each places in Nike. This style of leadership leads to relationships of trust and respect. The c
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