Nike’s Strategic Management
Nike’s Strategic Management
1. Summary of Nike’s Local Actions and Global Response
Nike’s foundation was on 1964 as managed Phil Knight and Bill Bowermann who are both the former track coach in the University of Oregon. The business is focus of the decrease of the transport cost because they believe that it can also gain higher margins with low labor cost. The company made it on top and recorded to have the best performance for the past 30 years due to the image of the organization’s holy superiority. Nevertheless, in 1997, declination of the company’s fortune had declined which performed a drop down of 40% to 47% in the same year and the profit also fell for 69% in the end year. Stable into negative is the result of the Standard and poor which shows that the plan had not worked. The primary reason of the declination of the company is the fact it is doing many limited editions and special runs so that they can maintain its image to be. These only show that they have brilliant marketing brand but their strategy remain to be unproven. There are also allegations on the foreign factories of the company for having the poor air quality. It has also been added on implementing child labor with minimum pay wage and lack of compensation and sick pay. In 1998, Knight came out to clean up the image of the company and says that they had walk on the fine line. This can start to improve the 350,000 workers’ conditions in the entire Asia. The plan is to restrict on working conditions which are not acceptable. Part of the plan also is the 40% wage increase and improves the quality of the air while increasing the minimum age of 18 years old.
2.1 Nike’s Tremendous Success
Basically, the basic success of the company of Nike is through its marketing strategy. Nike also sets the trends and it had been targeted for the biggest. The company also goes out its way in creating for its image which resulted to be the loudest. The company also made to have further diversification and marketing oriented with emphasis on its tagline “Just Do It”. However, behind the successful strategic management and behind the achievements of the company, there are employees and workers who are being exploited. This only shows that the success of the company are just the front liner but behind these are the ignorant mind who are looking for the proper place exact compensation, but cannot be given by the company. It is ridiculous that the company supported child labor.
Using the ESTEMPLE Analysis, it can record the reasons on the sufferings of the company in the year 1997. In the economic factor, the company’s share in the athletic market of the world had dropped to 40% to 47% and the profit also decline by 69% as 1997 ended while the share price also decrease for 42% from 1994 to 1998. On the social side, attitudes and the tastes of the consumers were change towards the image of the product due to the issues which came out. On the technological side, the company’s image had dropped down due to the sites which generate allegations. Ecologically, the failure of the company made was also through producing of the poor quality of the air caused by the solvents which are primarily petroleum-based and lead to breathing problems. The media also plays a big role in declination of the company, the coming out in the article when Nike considered as bad dude when World Cup of 1998 shows that Nike Bullied the Brazil. In the political issues includes on the news on paying for the trip of the US Ambassador and the magazines as The Big Issue of Britain encouraged the consumer to boycott Nike. On the legal aspect, the low compensation package to its employees as not giving sick compensation while continuing to have poor factory facilities operations. And, ethical manner, is the child labor to its employees was implemented by the company without giving them proper workplace and exact compensation.
2.3 Going Back to the Previous Image!?
The achievement of Nike which was somehow built for the past 30 years is quite hard to repeat after all the bad publicity and the bad image that had experienced in the year 1997. The roller coaster business of the company only shows that there is no assurance of going into stability. Nevertheless, the company is still optimistic that they can fix the mess in their company and they will settle everything so that they start all over again and I agree with them because further strategies can help them to stand up again as holistic reorganization as applying the past yet ethical strategies in the new organization. The intensity of the competitive can overcome by the company through the further diversification and having the high level of advertising and the bargaining of power of customers to which the product are environment friendly has the cost which suits the budget of the consumers.
3. Conclusions and Recommendations
For what the Nike had experience, despite of the bad publicity, there are still chance of emerging out of dropping down. As a conclusion, any company must follow all the guidelines as in the government’s policy and the ethical standards. The company should have a total reorganization or rebirth on the company as its primary marketing strategy and must have solutions on the obstacles that it had faced. In the reorganization, Porter’s 5 forces competitive analysis can be use so that there is a clear distinction on the future of the company and the new products to implement. There should be buyer oriented products with prices lower that the competitive so that it can start a new image. The competitive threat is also hindrance but the company must have the edge as setting the trends.
Competitive Advantage. Thomson Gale. Retrieved March 31, 2008, http://www.referenceforbusiness.com/management/Bun-Comp/Competitive-Advantage.html.
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