Seminar in Business Strategy
Course Name: MGT 4329
Department of Management
Peter J. Tobin College of Business, Queens
Assignment #2
Internal Organizational Analysis
NIKE
Kendu Irving
Stephen Pendleton
Irene Samaras
Nikhil Sankar
Nathan Vaysberg
Colin Wetterau
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Contents
1. Introduction ........................................................................................................................................ 3
2.1 Overview of Corporate/Organizational Structure ............................................................................ 3
2.2 Strengths and Weaknesses of Corporate/Organizational Structure ................................................ 5
3. Corporate Culture ............................................................................................................................... 6
4. Corporate Resources........................................................................................................................... 8
5. Summary of Internal Factors............................................................................................................. 13
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1. Introduction (Irene)
Nike is one of the most famous activewear and sportswear companies in the world. They are
known worldwide and sell clothing, accessories, and shoes for all genders and ages. Nike has
an extended distribution chain with branded stores and distributors in most countries of the
world. Although the company operates in a highly competitive industry with other famous
brands like Adidas, Puma, and Reebok, they still manage to always come on top. Nike has
gone through many obstacles when developing their business, but both their strengths and
weaknesses have made them so much stronger. To succeed in maintaining a high market
share, it is essential for Nike to ensure that its internal operations and practices contribute to
fulfilling the brand’s strategic plans.
2.1 Overview of Corporate/Organizational Structure (Irene)
Nike is an American multinational corporation that is engaged in the design, development,
manufacturing and sales of footwear, apparel, equipment, accessories, and services. Their
unique structure has made them stand out from other companies in numerous ways with which
other companies cannot compete. Nike has a unique matrix organizational structure with a
strong preference for geographic and regional divisions. In order for their management to
function smoothly, they evaluate their teams and separate them based on certain products. Once
a team is divided and evaluated, they must report to the project manager which will evaluate
the progress of that product. Between Phil Knight and Bill Bowerman, leadership at Nike has
been constant.
Both Phil Knight and Bill Bowerman have partnered up and led their company to greatness.
North America, Western Europe, Central & Eastern Europe, Greater China, Japan and
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emerging markets are the regional divisions of Nike structure. Each operation in each division
is separated from each other where the regional divisions are given autonomy in taking
decisions in their regions. They believe that in order to have a successful company, you must
find individuals who are able to market your company. They must focus on their finance,
human resources, marketing, sales, and operations. Each group is followed by a President,
Executive Vice President, or Chief Officer. Nike’s global headquarters is responsible for
managing operations in the United States, Americas, and Asia Pacific. Their structure allows
employees to identify with a streamlined company culture that makes consumer needs a
priority. It enables the company to develop a valuable, globalized, and instantly recognizable
brand regardless of geographic location.
A major part of Nike’s success is due to its organizational structure. Its geographic divisional
organizational structure is based on the company’s needs as well as the conditions within its
regional markets. This structure determines the company's growth, progress and stability. The
firm has carefully chosen the organizational structures that suit them the most. It is proven that
Nike’s organizational structure is one of the best. An organizational structure defines which
tasks are assigned and which line of authority is established within an organization. Nike has a
strategy for why they do the things they do. The regional divisional structure within the
company allows them to provide different goods in different regions depending on what the
individuals’ needs are in those regions. By doing this, Nike sales will increase, and individuals
will pay more to get Nike products from a different country. Without even realizing, this forced
individuals all around the world to know Nike’s brand before any other competitors settled in.
By having each location focus on their own product, it allows them to become specialists in
that particular field.
A marketing segment manager manages the alignment between the company's products and
services and the preferences, trends, and needs of assigned markets and market segments. Most
of Nike's sales are generated by selling footwear to wholesale customers in North America.
Nike’s organizational structure has benefited the company by promoting value chains that
specifically fulfil customers' expectations, especially in the area of service and marketing.
Although there are many advantages to Nike’s matrix structure, there are disadvantages of
Nike’s organizational structures as well. By having each division focus on a specific product,
confusion and conflicts occur as to whose work should be given priority. If two locations have
similar demands, duplicate duties can occur within the firm. No matter how small the division
is, this leads to wastage of money and other resources of the firm. Lack of coordination is their
biggest disadvantage because one department will not be aware of the plans of the other
departments if the demands are not distributed properly. Since the company is on a budget
regarding the development of new products, the finance department may inform the firm that
there is too much money being spent and that they should invest somewhere else. Low funds
will cause competition between each location.
Although the company has faced some advantages and disadvantages regarding its
organizational structure, about forty one percent of Nike’s total revenues were generated in
North America in 2021. Nike’s success and organizational structure has never failed them, and
their strategy continues to make them strive. In 2022, Nike's revenue in North America
amounted to about 17.2 billion U.S. dollars and continues to double and strive their revenue
throughout the years. Nike's current global revenue amounted to about 44.5 billion U.S. dollars.
Nike is experiencing the growth phase which incorporates the development of skills that allow
the organization to acquire additional resources. This allows the firm to increase the division
of labor to obtain a competitive advantage.
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Nike’s subsidiaries include Cole Haan, Converse, Hurley, Nike Golf, and Umbro which all
help strengthen Nike's ability to maximize their reach and relevance worldwide. Each brand
helps the company in regard to its long-term growth, its operations to drive consistent growth
and profitability. Their biggest competitors are Under Armour, Adidas, and Puma. Nike has
the biggest revenue among all sporting goods companies in the world. Nike’s revenue in 2019
was $39.2 billion which was far ahead of Adidas's revenue which was $25.7 billion. Nike is
the most valuable sports brand in the world. Its brand value in 2019 was $36.8 billion. As of
June 2020, it has a market capitalization of $160 billion, making it the most valuable sporting
goods company in the world unlike Adidas with a market capitalization of $50 billion. Phil
Knight is the founder of Nike and has a net worth of 39.2 billion. Phil Knight and his son Travis
Knight own more than 97% of Nike’s Class A shares.
Nike’s mission is to bring inspiration and innovation to every athlete in the world. Many other
companies want to partner with Nike due to their work ethics. Nike encourages employees to
innovate and explore new and better ways to fulfil their mission to bring inspiration and
innovation to every athlete. In 2008, the company re-evaluated their operations around
individual sports and sales have risen 70 percent since. Mark Palmer is Nike’s CEO and
explained in an interview that the reason they are so successful with each market is because
they focus on the athletes' needs in each sport. Despite changes in the market environments,
Nike has stuck to its decentralized and networked organization structure. Each department of
the company focuses on their operations such as research, marketing, or their production. The
company has subcontracted its most crucial operation, which is manufacturing itself.
Nike’s success over the years has impacted them in ways they never thought. Although they
never expected to get this big, they did this by offering more products to more people, in more
markets than any other sports company. They were able to capture a far greater market share
of the market than any other company. Like most leaders in the market, Nike values the
consumer and the importance of providing a quality product. Nike is aiming to make more
direct sales to consumers. Two ways Nike sells its products is directly to consumers through
its website and through wholesale partners like Macy's. Although Nike will continue to be
challenged by the pandemic, the company in the long run is in an excellent position. As
consumers continue to move their shopping online, the company can capture sales directly at
higher margins. Nike currently owns Jordan Brand and their only subsidiary Converse. They
used to own companies like Bauer Hockey, Cole Hann, Hurley, Starter and Umbro. Nike
focuses on brand recognition and growth along with investments in research and development
and demand generation.
2.2 Strengths and Weaknesses of Corporate/Organizational Structure (Irene)
Although Nike is a successful company and has many strengths, they have faced many
disadvantages which could affect them in the long run if there is no change. Like most big
companies, they have a strong core brand, diverse brand portfolio, low product costs, footwear
focused and have a growing market. The company has gone through several controversies
including the child labor allegations in 1990. Their weakness is their internal strategic factors
because of their poor labor conditions in foreign countries. These issues include forced labor,
child labor, low wages, and horrific working conditions that were deemed unsafe. The firm has
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been thriving over the years and has no plans of going down anytime soon. Although they have
constantly been targeted for their poor labor conditions, they have not been penalized for it
which is why they have not made a change.
3. Corporate Culture (Stephen)
Nike’s organizational culture combines values, traditions, habits, and rules that support the
business capabilities and resilience of the brand. Nike has stiff expectations of their
employees, set to ensure that the corporate culture breathes throughout the whole
company. At the head Nike’s corporate culture centers around creativity and innovation to
shift the current footwear/apparel market, as well as customer wants and needs. This is
greatly reflected in their spending on research and development. Morgan Stanley estimates
that Nike has spent $2.5 billion on research and development from 2012-2017. Nike’s
corporate culture can be defined with three pillars: talent, diversity, and inclusivity. The
culture in Nike is surrounded by Nike, with their numerous training programs and coaching
strategies, it is clear how Nike cottles the flame of innovation from within the
organization. Talent is essential when staying ahead of innovation and Nike understands this,
allowing for employees to build their talent and support an infrastructure which allows them
to stay on top of the footwear/ athletic wear industry as one of the primary leaders. The
diversity and inclusivity aspects of the culture go hand in hand. Nike emphasizes diversity as
a way of creativity, innovation and ultimately their competitive advantage. One way Nike
promotes diversity within the company is through their Speak Up! Program which encourages
employees to share ideas among themselves. This especially promotes the spread of diverse
ideas and concepts in the development stage of the products they release as the flow of ideas
is coming from numerous people. Inclusivity is promoted throughout Nike with programs set
to minimize bias within the corporation and breed a ground for cultural awareness, like their
Bias to Breakthrough and NCourage programs. This promotes their diverse employee base
to be able to understand other cultures and spread ideas without judgment.
Nike’s leaders are the influences that breathe the culture into the organization. In 2018, there
was a brief outcry from some of the employees that worked at Nike that caught wind in the
media. Nike CEO at the time, Matt Parker, publicly apologized because it came to his
attention that some employees had felt like they didn’t fit the ‘Nike profile’. The CEO
reassured them that ‘While many of us feel like we’re treated with respect at Nike, which
wasn’t the case in all teams. And if all of our teammates don’t see the same opportunities, we
just can’t accept that.’ This showed Nike’s dedication to promoting diversity and inclusivity
in the workplace. Nike had shifted their vision as they were so caught up with growth, they
lost sight of the people working to carry them there. Nike would later incorporate some of
the aforementioned programs that would help each voice to be heard in the workplace. Part
of this outcry also came from a group of women who felt misrepresented within the company
and called out some of the executives for inappropriate behavior. Nike has since apologized
and now has 4 women in executive roles. Nike’s commitment to diversity has been public
for a very long time and their vision and mission statement. On Indeed.com, Nike says this
about their corporate culture ‘We’re committed to fostering a culture of inclusivity and an
environment of empowerment and respect — a place where everyone can show up fully as
themselves and do their best work every day. We embrace different perspectives because we
know everyone brings unique experiences and ideas to the team.’ This promotes the idea and
programs they have in place to give every member of their team a voice to spur innovation
and lead the cutting edge of athletic attire.
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Nike’s Corporate Social Responsibility (CSR) focuses on their triple bottom line: people,
planet and profit. Focusing on people and the planet, Nike has committed to bettering the
world through sports. Internally, Nike is dedicated to promoting diversity in the
workplace. One goal that they set was to increase the representation of women in the
workplace. Nike also introduced two new CSR learning programs in 2020, the Juneteenth
learning initiative and Unconscious Bias Awareness training to promote racial awareness and
social change. Externally Nike has pledged money to several non-profits that promote social
equality and community outreach. In addition to donating to non-profits, Nike has donated
money to organizations dedicated to increasing the physical activity of children through
sports and exercise. They did so by supporting youth sports and exercise programs, as well
as training nearly 100,000 coaches to help the communities in need of such programs. With
the Covid-19 pandemic, Nike also covered the cost for food and medical expenses for those
in need as well as their own workers. They also donated apparel and sneakers to medical
professionals to aid them in times of intense work and stress. For the planet Nike has been
cited as saying they are on track to meet the 2025 renewable energy and carbon neutrality
standards. Nike has shifted their raw materials to be more sustainable and reduced the
amount of waste they have arriving at landfills. They have also taken steps to rely on more
sustainable/recyclable materials in their product designs. They have also stated that they are
shifting their focus to packaging, trying to reduce the amount of waste and potentially
shipping using reusable totes, like Target does.
Nike’s Environmental Social Governance (ESG) can be summarized when looking at their
environmental impact reports which they have open to the public. It provides quantitative
statistics regarding the ESG goals they set for the year. Looking at the impact report for 2021
it is evident that Nike has made great steps towards improving its social and personnel goals
for 2021, meeting or exceeding the expectations they set in categories like, 100% pay equity
across all employees (zero discrimination), as well as some of their community outreach
programs where they donated 36.6 million dollars to support organizations that aid in
childhood engagement with sports. The impact report shows Nike’s goals for 2025 and the
numbers that they achieved for the year of 2021. With a focus on the environment, Nike has
goals for their carbon footprint, water usage, and waste disposal. For every aspect of their
environmental goals, Nike has shown considerable improvement. Namely they achieve 78%
renewable electricity and they managed to reduce their carbon emissions by 43% of their
70% goal by 2025. Nike has been shown to struggle with meeting foundational expectations
of health and safety for their extended supply chain laborers. This has been an issue for Nike
regarding their operations practices and their questionable working conditions overseas.
The strength of this corporate culture is the emphasis on cross cultural communication and
reduced bias. Nike promotes the idea that every single one of their customers provides
valuable input. By valuing this idea and pushing inclusivity they are allowed to create truly
innovative products that have influence from numerous cultures and people. The company
has been shown to value these ideas through the face of scandal and even change their
practices to support them. They are committed to making each individual feel valued and
heard. Nike has also shown their commitment to change, both social and environmental, as
evidenced in their impact report, where they show the progress towards renewable energy,
waste and water consumption goals by the year 2025. Nike also makes several donations and
programs in the field of servicing underprivileged communities through donations and social
reform programs. One disadvantage Nike’s corporate culture ignores is their reliance on
underpaid, poor conditioned labor. Nike has released little information regarding changes to
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that and has not reflected the improvement of their manufacturing and operations labor
conditions, safety and health in their corporate culture. It is also one of the only statistics that
they saw a regression in their 2021 impact report. Their CSR and ESG goals and progress
seem to highlight the strides they make in environmental and social practices, while
seemingly sweeping their poor operations standards under the rug. As it becomes more
public knowledge that Nike utilizes underpaid labor, they may see this as a disadvantage as
more public backlash will require an executive statement and more radical changes towards
their operations management and labor practices going forward.
4. Corporate Resources
Marketing and Sales (Nikhil)
Nike is undeniably one of the world’s most recognizable brands. Their success in marketing
started as early as the 1970’s, as founder Bill Bowerman is credited as the originator of the
jogging craze that swept America in the late 1960’s and 70’s. He accomplished this by
promoting the link between jogging and a healthy lifestyle by which one can feel empowered.
Concomitant with increasing jogging is the need for a lighter, quicker running shoe. This is
where Nike was able to establish its foundation in providing a unique product, beginning its
legacy in value marketing. From their website, Nike delivers innovative products,
experiences and services to inspire athletes. From this statement, it is clear that Nike has
stayed true to its value, customer-centric marketing. Delving further into this statement is the
emphasis on the word “athlete”, which is a core focus of Nike’s marketing strategy.
What distinguishes Nike is their ability to create a sense of empowerment in people, growing
the ambition to reach stronger, faster, and higher.
In addition to motivational imagery, Nike utilizes celebrity endorsements to further bind the
athletic community together. The largest endorsement was that received by Michael Jordan,
as “The sportswear giant has paid him an estimated $1.3 billion by Forbes’ count since it
signed its first deal with Jordan in 1984, and it has helped make him a cultural icon.”
(Badenhausen, 2020)
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On a smaller note, Nike distinguishes themselves with their social media presence –
particularly that of Instagram. Their focus is giving a platform for marginalized groups, such
of the LGBTQ community, Paralympians, and the black community to name a few. Their
focus on smaller presences fosters a greater sense of community and brand loyalty to Nike.
Finance (Nikhil)
Nike boasts strong results in 2021, with “full year reported revenues increasing 19% to $44.5
billion. As of 05/31/2021, they have a Debt/Equity Ratio of 0.7374. This indicates that they
are mostly financed by debt. Nonetheless, “share repurchases totaling approximately $650
million for fiscal 2021, reflecting 4.9 million shares retired as part of the four-year, $15
billion program approved by the Board of Directors in June 2018. This share repurchase
along with the massive recovery in revenues from COVID-19’s effect in fiscal 2020, allowed
the company to reduce the burden of equity financing. Compared to the same time in 2020,
Nike was able to reduce their Debt/Equity by 38%. This is a favorable position for Nike as
equity financing is costly, and they now have more leveraging ability. Nike’s fiscal 2022
target is to generate over $50 billion. To achieve this goal would mean a 12% increase above
2021’s revenue of $44.5 billion. Their net profit margin nearly doubled from 2020-2021, so it
is well within the realm of possibility for this goal to be realized.
Research and Development (Nikhil)
“We believe our research, design and development efforts are key factors in our success.
Technical innovation in the design and manufacturing process of footwear, apparel and
athletic equipment receives continued emphasis…” This statement from Nike’s 10K
demonstrates their emphasis on R&D. This has carried on since their inception, when cofounder William Bowerman patented the “Waffle Trainer” in 1972, which went on to
revolutionize athletic footwear. Nike continues to differentiate themselves today with the
level of their investment in R&D, as capital expenditures account for approximately 3% of
annual revenues. The result of such investment is evident in their new lines of footwear that
boasts new technologies. “The proliferation of NIKE Air, Zoom, Flywire, Dri-Fit, Air Max,
among others, typifies our dedication to designing innovative products.” (10-K, 2021) As a
result, it is clear that the research and development department of NIKE is pivotal to their
success, as they continue to be leading innovators in athletic wear.
“Move to zero is NIKE’s journey toward zero carbon and zero waste to help protect the
future of sport.” (nike.com, 2022) They do this by recycling worn shoes and apparel, as well
as launching product lines made with sustainable materials, identified by the below icon.
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The commitment to sustainability is bolstered by research and development as new and
innovative ways to recycle and reuse existing plastics, yarns and textile are studied.
Operations and Logistics (Nikhil)
A key factor to NIKE’s success is their outsourcing of cheap, discounted labor from overseas.
Most of their products are manufactured in Asian countries, including China, Indonesia, India
and Taiwan, for their low cost and vast supply. From a financial perspective, this reduced
cost has been instrumental for NIKE’s profitability, but it is not without scrutiny. The
working conditions of these overseas factories are likened to sweatshops, painting NIKE as
an immoral company. As such, this presents itself as a risk factor in their operations and
supply chain management, which is also highlighted in the 10-K. “Our independent contract
manufacturers have experienced and may continue to experience in the future, unexpected
increases in work wages or other changes in labor standards, whether government mandated
or otherwise…”
In addition to this, because they heavily contract independent manufacturers from far
geographic distances, they are subject to high transportation costs. As stated in the 10-K, “the
cost of oil is a significant component in manufacturing and transportation costs.” With the
cost of oil being $75.21 per 42-gallon Barrel to $97.96 at the time of writing, it is clear that
the scope of NIKE’s logistics will negatively impact their profit margins in 2022.
Judging from this, while NIKE’s international supply chain has worked for them in the past,
it is clear that their dependence on outside manufacturers poses a threat to their stability and
performance.
Despite these challenges, NIKE is still improving their logistics today. “Prior to winter 2020
in North America, Nike operated almost entirely through centralized, national distribution
centers in Memphis, TN.” From a January 19th article this year Nike COO Andrew Campion
had this to say, “As we continue building a digital-first supply chain globally to serve
consumers more directly at scale, we have already tripled our capacity to serve digital
consumers.” (news.nike.com, 2022)
Also noteworthy from their operations and logistics team, is the commitment to package, ship
and refurbish products more sustainably. The specific use of ground-only shipping in the
continental United States as a mode of delivery, provides a less carbon-intensive option than
air-freight shipping.
Human Resources (Kendu)
According to Nike the goal of their Human Resources department is to “help attract, retain,
and reward the world's most innovative people by creating programs to help them thrive.
They (Nike HR teams) accelerate company growth as stewards of culture, organizational
effectiveness, talent and change.” Nike’s goal is to have a strong workforce and so the
company invests in human resource management. Monique Matherson is currently the Chief
Human resources advisor for Nike. She oversees human resource strategy which deals with
recruitment, learning and career development, succession planning, diversity and inclusion,
organizational effectiveness, employee engagement, pay and benefits, employee relations etc.
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Developing a talented, diverse, and effective workforce is a constant goal of Nike and this is
done by attracting the right workers and establishing successful management strategies at all
levels of the business. Nike’s HR department has come under scrutiny in recent years for
gender discrimination, and the internal culture has been described by many as that of a “boy
club”. Nike of course has worked to ameliorate conditions to appease its workers and help
with public relations. A strong workforce is key to Nike’s sustained success.
Information Technology (Kendu)
Nike uses IT to maximize global sales in the athletic footwear market. Nike was one of the
first companies to engage in E-business. Nike's early investment in online trading gave it an
advantage over competitors such as Adidas (Nike’s largest competitor). Nike uses its
technology to benefit the customer experience by providing personalized experience and on
demand services. Nike also uses IT systems to manage its supply chain operations.
Information Technology is utilized to some extent in nearly every department and level of
business in Nike; from marketing and sales, finance, operations etc.; Nike’s investment in IT
has contributed a great deal to the company’s success. Nike has invested a great deal into
marketing on social media and other forms of online marketing. Nike spends over 3 billion
dollars yearly on advertising and promotion. Nike’s IT capabilities play a big part in their
ability to make business decisions, develop innovative technologies and provide an effective
interface for customers to access products and services at their leisure. Nike is particularly
competitive in the area of sourcing and distributing products both in store and on digital
platforms, as well as in consumer connection developed through online interaction with
consumers through advertisements, social media, marketing, digital experiences etc. Today
Andy Campion is the Chief Operating Advisor of Nike and has an important hand to play in
Nike's global technology, digital transformation, supply chain management, distribution
logistics, connectivity etc.
VRIO Model Analysis (Colin)
Identifying a firm’s key capabilities and resources is crucial because it helps a company gain a
competitive advantage over their competitors. Companies utilize a common business analysis
framework called the VRIO model, which addresses four fundamental categories - value, rarity,
inimitability, and organization - that determines the sustainability of its competitive advantage.
A firm’s resources/capabilities that checks all four boxes becomes the core competencies of
that firm.
The first thing that comes to mind when thinking about Nike is the logo - the Nike check mark
or swoosh. Its brand image is the company’s greatest strength because consumers around the
globe can recognize the swoosh. This brand reflects aspects that almost all people strive for
throughout their lives: winning, performance, innovation, and more. Superstar athletes such as
Michael Jordan and Cristiano Ronaldo are represented by Nike which make the brand more
attractive, and customers will buy their products continually. Brand image clearly checks all
four boxes because the Nike swoosh adds value to its shoes and apparel, the company’s overall
consumer review is a near five out of five stars which is not common, imitating Nike’s brand
image is a challenging task, and the brand only continues to get better as Nike studies and
listens to its consumers to increase the quality of its products making the company a well run
system. Nike’s brand recognition is one of its leading core competencies which gives them a
serious competitive advantage over competitors.
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How has Nike built such a positive image that people all over the world can relate with? Nike's
marketing strategy has placed it at the top of the list of global marketers by encouraging athletes
to achieve the impossible. Aside from the quality of the products, the ‘Just Do It’ slogan has
brought this company to new heights and dominated the global market. Advertisements with
high profile athletes in every sport, not just the major ones like football and basketball, are key
to Nike’s marketing strategy. Nike’s ability to reach customers in the global market is highly
valuable and unique which offers a sustainable source of competitive advantage.
Where does Nike drop the ball and not check every box? Competitors like Adidas, Puma, and
New Balance are starting to catch up with Nike by also offering a large range of products.
Adidas is currently out competing Nike in innovation as they have invested north of $140
million into research and development in just 2021 alone. Nike still excels in product range by
offering a wide variety of products which attracts customers with diverse needs, but it is not a
core competency as other companies have imitated their products. Therefore, product range
does not offer a sustainable competitive advantage.
Strengths and Weaknesses of Corporate Resources (Colin)
Corporate resources are made up of tangible and intangible assets. Tangible assets can range
from equipment to location and finances whereas intangible assets are technology, culture, and
reputation. Nike flourishes on the latter because it has a positive reputation through its global
brand recognition. By getting superstar athletes on board and wearing the latest and greatest
Nike shoes and apparel, young athletes want to be affiliated with Nike in hopes to be like their
favorite athlete that is sporting the swoosh. Nike’s reputation is built on athletic excellence
which makes the brand more valuable and desirable, and who better to represent Nike than the
great Michael Jordan. Nike has invested over $2.5 billion on R&D alone in the last decade
according to Morgan Stanley which has a significant reason as to why they are leading the
athletic footwear and apparel industry. Another feather in Nike’s cap when it comes to
reputation is their consistent, above and beyond efforts to go green. The Move to Zero
campaign has taken off by not only protecting the future of the planet but the future of sport as
well. The supply chain technology allows Nike to directly serve customers at scale and has
nearly tripled its capacity to operate in every continent. Conducting business in foreingn
countries comes with some obstacles though. In Europe, energy prices have risen five times
the amount they were just a year prior which affects Nike’s distribution channels. Additionally,
dependence on overseas manufacturing continues to be a challenge for Nike as over 95% of all
shoes sold in the United States are manufactured abroad. Nike’s reputation took a hit with the
alleged unethical labor practices in East Asia. The low cost of wages and producing high quality
products for a fraction of the cost of that in North America is the main reason Nike’s major
factories are in Asia. All in all, Nike’s strengths outweigh the weaknesses because of its
intangible assets.
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5. Summary of Internal Factors (Nikhil)
This IFAS table condenses the strengths and weaknesses of NIKE’s internal factors. They are
one of the world’s biggest and most recognizable brands with their iconic “swoosh” and
catchphrase, “Just do it.” As a result, this gets the highest rating of 5, and a generous
weighting of 20%. Their Move to Zero initiative is beneficial for their sustainability efforts,
and for this they are awarded a score of 4. In January of 2022, they started the expansion of
domestic distribution channels in the continental United States. This is postured to
significantly improve their logistics but is still in development. For this, they are awarded a 3.
Their dependence on overseas manufacturing is a weakness, as it opens them up to sensitivity
to oil prices and other increased costs of transportation. In addition, their usage of
outsourcing labor from Asian countries is not set to change from Nike’s operations, so they
are given a 2 for the handling for this issue. Overall, NIKE is rated 3.4 which is above the
industry average of 3.
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How Nike is transforming its supply chain to best serve consumers. Nike News. (2022,
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