1. CASE STUDY ANALYSIS ON NIKE CORPORATION 1
Nike Corporation
Management Principles

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Case Study Analysis on Nike Corporation
1. Introduction
History
Nike is a major US footwear, clothing and sportswear supplier based in
Beaverton, Oregon. The company operates in more than 160 countries and employs over
44000 people across six continents. Nike’s revenue totalled $20.862 billion in 2011 with
total equity of $9.843 billion. Today Nike is considered the world’s leading supplier of
athletic shoes and apparel and one of the world’s most famous and strongest brands.
The company was founded in 1964 as a footwear distributor Blue Ribbon Sports
by Bill Bowerman (track and field coach at the University of Oregon) and Phil Knight
(middle-distance runner from Portland). Initially, the company operated as a distributor
for Onitsuka Tiger, the Japanese shoe maker. Most of the sales were made out of
Knight’s automobile. In 1967 the first retail store was opened.
In 1972 the jump was made to manufacturing company’s own brand of athletic
shoes and the “Swoosh” brand mark was created. The first self-manufactured company’s
shoes used Bowerman’s “waffle” design. They became extremely popular among the
runners: they had special waffle-type nubs for traction and at the same time they were
lighter than traditional athletic shoes. In 1979 Nike Air technology was successfully
launched and by 1980 the company already attained 50% of national athletic shoe market.
In 1982 Nike started to cooperate with Portland-based advertising agency
Wieden+Kennedy. Many successful advertising campaigns were mutually launched and
even Nike’s famous slogan “Just Do It” was designed by agency’s co-founder Dan

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Wieden. Throughout the 1980s, the company expanded its product lines and went global,
encompassing new regions and sports.
By November 2008 Nike already owned four major subsidiaries: Hurley
International, Cole Haan, Umbro and Converse Inc. The company’s CEO Mark Parker
said: “At NIKE, Inc. we run a complete offense, and it’s based on a core commitment to
innovation. That’s how we stay opportunistic, serve the athlete, reward our shareholders,
and continue to lead our industry”.
The Purpose of This Research
The purpose of this paper is to research and analyze the theories of management
that apply to Nike Corporation. The emphasis is made on company’s strategic planning,
organization peculiarities, leadership, management, innovation and change. Among the
main tasks are: defining company’s core competencies, inner strengths and weaknesses,
opportunities and threats that the company’s environment poses; identifying how the
company is organized, showing its structure and decision-making process; defining the
company’s leadership style and communication environment; analyzing managerial
controls and the role of Information Technology within the company; describing
innovative management processes and corporate responsibility issues.
2. Strategic Planning
The mission of Nike corporation is: to bring inspiration and innovation to every
athlete in the world.
Company’s main goal (vision) is to carry on its founder’s legacy of innovative
thinking, whether to develop products that help athletes of every level of ability reach
their potential, or to create business opportunities that set Nike apart from the competition

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and provide value for its shareholders. The company’s current financial goal is to grow
sales to $27-billion up to the year 2015.
SWOT analysis
SWOT analysis is an established instrument that helps to analyze company’s
internal and external environment. According to this method, company’s strategy is
formulated on the basis of internal strengths and weaknesses and external opportunities
and threats. SWOT analysis is an extremely powerful tool because it helps to identify
priorities and create a common vision of achieving the goals set. Also, only by taking
into consideration the components of general environment: economic environment, social
environment, political environment, legislation and pressure groups, a company will be
able to adopt the particular way of action, which will assure its performance and
advantages on present and potential competitors (Gasparotti, 2009).
Below is the SWOT analysis for Nike Corporation:
Strengths:
- Nike is a very professional and competitive company with strong management;
- It possesses no physical factories and can move its production to any location
that is more cost effective;
- Very strong brand and generally good publicity;
- It is a global brand that sells its products worldwide;
- Nike uses special materials like LunarLight foam to make shoes of high quality
and with good characteristics for sportsmen.
Weaknesses:

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- Most of the income comes from the footwear market and the company is highly
dependent on this segment. Other branded products are not so strong;
- Spoiled publicity because of accusations of poor working conditions and
workforce exploiting in the developing and newly industrialized countries.
Opportunities:
- Usage of waste from regular production to manufacture other goods;
- Diversification into adjacent markets like jewellery or sunglasses production;
- Further geographical expansion;
Threats:
- Currency value fluctuations can seriously influence real company’s profits;
- Growing competition becomes more aggressive and alternative brands steal
Nike’s market share;
- Nike’s products are very expensive and its consumers often prefer cheaper
brands. Growing price sensitivity can negatively influence company’s profits in future.
Strategy and Planning
Nike’s core competencies are innovation, research and development, marketing
and effective exploitation of globalization processes. Company’s target audience are
males and females between 18 and 35 years old who prefer active lifestyle and goods of
high quality.
Nike’s main competitors in the footwear industry are Reebok and Adidas. These
companies also use international approach to management and business; they are very
profitable and have similar problems with publicity. At the same time Nike remains the

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market leader due to its cost efficient marketing, effective advertising and research and
development. Nike’s competitors are less successful in these key factors.
Nike uses strategic planning and various planning techniques in its activity. The
main peculiarity of company’s strategy is to start their marketing and promotion with
selling innovative items to professional athletes and teams and by this means deliver the
news and fashion of new products to particular customers. Nike’s strategy also focuses
on diversity in the workplace. This strategy corresponds to company’s vision and mission
statement. Among the planning techniques that Nike uses are: contingency planning,
benchmarking, scenario planning and others.
3. Organizing for Action
Nike’s organizational structure is divisional but it has functional departments.
Converse and Jordan brands are examples of divisions created around specific products
while Nike design is a functional department. Each department has subdepartments,
responsible for handling particular tasks. On the top of company’s hierarchy are CEO
Mark Parker and a board of directors chaired by Phil Knight. In Nike, employees report
to divisional managers and divisional managers report to the CEO. Operations
department is used to provide proper communication between divisions.
Nike is an innovative company and such organizational structure helps it to
handle research and development measures. Also, because of the global competition
Nike has to react to changes quickly and make rapid decisions. Carrying most of the
features of matrix structure, Nikes organizational structure facilitates timely and quality
decision making.
4. Leadership

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Leadership involves a social influence process whereby intentional influence is
exerted by one person or group over other people or groups to structure the activities and
relationships in a group or organisation” (Yukl, 2002,p3). Leadership and management
are different categories and not always can a single person carry two of the roles
simultaneously. “A leader can be anyone on the team who has a particular talent, who is
creatively thinking out of the box and has a great idea, who has experience in a certain
aspect of the business or project that can prove useful to the manager and the team”
(Benincasa, 2012).
Leadership style is a certain manner of implementing plans, influencing and
motivating people. From 4 to 6 leadership styles are usually differentiated by the
scientists. Most widespread classification includes: democratic, authoritarian, laissez-
faire and transactional leadership styles. On the top levels of Nike Corporation laissez-
faire leadership style is applied as separate departments get relatively much freedom in
their decision-making process while top management motivates and transfers the vision
of the company to ensure keeping to mission and goals. At lowers levels of the
organization various leadership styles are used depending on the cultural peculiarities of
the population that lives on a particular territory.
Nike’s communication environment is very effective. All Nike managers are
required to communicate in a similar style across the company. The company has a
powerful digital intranet to provide effective communication between Nike headquarters
in Beaverton and the international offices. To get relevant feedback from the customers
Nike actively uses social media means. To communicate its values to the target audience

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Nike uses designated spokespersons that often base their speeches on inspirational stories
and motivate the listeners.
5. Managerial Controls
Management is relatively decentralized in Nike. It means that much freedom in
decision-making is delegated to lower levels of management. The benefits of such
approach are: lower-level managers provide relevant information concerning local
conditions, they are better motivated and strong leadership is ensured throughout the
company. Nike’s managerial controls are tightly connected with the usage of
Informational technologies. Feedforward, concurrent and feedback controls are made
using the specially designed software.
Nike has a powerful digital intranet to ensure proper communication between
headquarters and international offices. At fist Nike had a developed ERP (Enterprise
Resource Planning) System, Supply Chain and CRM (Customer Relationship
Management) Software implemented into a single SAP Platform. Later i2’s software was
implemented that helped to get control over strategic planning, demand management,
supply planning and production. In 1998 Nike purchased SAP Apparel and Footwear
Solutions (AFS) that provided better financial management, helped to decrease inventory
level, improved decision making and provided a holistic view on the whole business.
Today Nike’s AFS and Retail modules together with other SAP applications including
Supply Chain management (SCM) and Business Information Warehouse (B/W) are
implemented globally.
For example, SAP AFS Solution provides the right tools to manage the entire
supply chain from the initial purchasing of raw material to the final delivery of the

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finished product (Suren, 2007). Provided with such software, Nike’s managers can
maintain coordination with local suppliers and customers and control whether the
financial goals are met. The Funds Management / Budget Control solution in the
Business Warehouse software that Nike uses helps to check revenues and expenditures,
hold budgetary control and to control the financial equilibrium of business.
Also Nike actively uses social media (social networks, blogs, and media portals)
to promote their marketing efforts and get feedback from their customers.
6. Innovating and Change
Nike implements a lot of innovative approaches to handling business.
Historically, Nike shoes became successful due to innovative design, created specially for
athletes. Since then the company continues to invent new things and surprise the world
community with non-standard approaches to business.
First of all, the company was one of the first to sell the trade mark only, having no
physical production facilities and concentrating on marketing and promotion only. This
allowed Nike to minimize risks and maximize profits. Among other innovative ideas of
the company are: 225 Forest (storefront in California where wakeboarders, BMX-ers, and
skaters can customize Chuck Taylor All Stars and Hurley board shorts with their
favourite artwork); Women's Nike Training Club (Possibility for women to create a
personal virtual trainer using an iPhone app); Total90 Laser III Boot (Soccer players
submit a unique user code that comes with the boot into Nike's Soccer+ Web site to
receive an online coaching session from Italy's Juventus FC). Also Nike became famous
for its open-source approach allowing them to collaborate with virtually everyone. For
example, special Nike’s R&D laboratory provides the green technologies that can be

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accessed by various social entrepreneurs and manufacturers. With Nike’s decentralized
management and encouraged innovation, innovative ideas come from various
international offices. These and other innovations allowed Fast Company journal to call
Nike #13 of most innovative companies in the world (Sacks, 2012). At the same time,
technological innovations are no more so necessary in the case of Nike Corporation.
Nike’s organizational structure and peculiarities of management allow the
company to remain sensitive to changing consumer and social trends. Nike is always
ready for change and changes the world itself simultaneously. A good example from
Nike’s history is the time when the company, feeling the shifting consumer trends,
decided to get involved into world’s most popular sports - soccer. While soccer was not
particularly popular in the USA, for Nike it became a wonderful opportunity to go global
and become a leader in this market.
Nike is a social responsible company. In its CSR report they say: “Nike sees
corporate responsibility as a catalyst for growth and innovation, an integral part of how
we can use the power of our brand, the energy and passion of our people, and the scale of
our business to create meaningful change. The company focuses its efforts on core impact
areas tied to its long-term growth and innovation strategies: improving conditions in
contract factories, designing for a better world, achieving climate neutrality and
unleashing potential through sport”. At the same time Nike is often accused of violating
the human rights of its workforce in the developing countries and providing
unsatisfactory working conditions. This ethical issue negatively influences company’s
publicity and forces Nike to constantly look for the solutions to this problem.
7. Summary

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Nike is a good example of an innovative contemporary company that I would
really like to join. Nike provides clear career paths and wonderful opportunity to expose
your potential. Company’s management is extremely effective and because of
decentralized approach combined with encouraging all sorts of innovation, innovative
ideas come from everywhere, allowing low-level managers to become a part of the
history.
Nike is a very successful company, a true market leader. Company’s approach to
marketing, advertising and getting feedback from the customers provides an effective
model on which others can learn. Also, Nike is a very flexible company that feels and
reacts to all shifting trends in its market. Though the company has certain ethical issues
to resolve, it is still a socially responsible company with strong image.

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References
Nike official website, http://nikeinc.com/
Peggy Kataveli, CMA, “Nike boss outlines new ambitious financial goals”,
Business 2.0 Press, May 5, 2010
Carmen Gasparotti, “The internal and external environment analysis of romanian naval
industry with swot model”
„Dunărea de Jos”, University of Galaţi, Management & Marketing (2009) Vol. 4,
No. 3, pp. 97-110.
Market Research World, “SWOT Analysis Nike, Inc.”, http://www.marketing--
research.com/marketing/swot-analysis-nike-inc
Nancy E. Landrum and David M. Boje, “Kairos: Strategies just in time in the Asian
athletic footwear industry”
Pre-publication Draft of Chapter 6, To appear in Book titled: Asian Post-crisis
Management Edited by Usha Haley, expected publication date 2001.
Dwight Chestnut, “Nike's Flat Organizational Structure”, e-how,
http://www.ehow.com/facts_6887850_nike_s-flat-organizational-structure.html
S.Suren ,” SAP AFS – Intro”
SAP blog, http://www.sapafs.net/2007/08/sap-afs-intro.html, 16 Aug, 2007
“Funds management [FM] & Budget Control Systems [BCS]”, Business Information
Warehouse, University of Kentucky, BW Web Reporting – Funds Management /
Budget Control, October 1 2005.
Danielle Sacks, “Most Innovative Companies 2010”,
Fast Company, July 12, 2012