Nike and Innovation

Nike has been considered one of the most innovative companies in the world, and show this through their innovations and technology development at many different levels of their company. Whether it is in their shoes, clothing, accessories, or processes, Nike is constantly looking for ways to be more efficient, and provide superior products for their consumers around the world.

In their different shoe lines, Nike has developed the most lightweight shoe that there is, at a mere 5.6 ounces. This gives them an advantage over the competition that they hope is sustainable. They were able to produce this because of major technological advances in their manufacturing methods. They also do what they can to make as small of an impact as possible on the environment, which has been of increasing importance in the industry as well as in consumer preference.

In the same way that they differentiate their shoes, they also have breakthroughs in clothing. They have different materials that were first seen at Nike, and consequently imitated by competitors. These advances in clothing and shoes have set Nike apart, and given them a distinct advantage.

Another innovative part of their business includes their technology. With new Nike Fuelbands, watches, and other programs that link with phones and iPods, Nike has a huge presence in the technology part of fitness, which Adidas, Under Armour, and other competitors have yet to dive into. These improvements have expanded Nike's success and set them apart from other companies.

In addition to the products they manufacture and sell, Nike tries to be innovative in their processes as well. They have a huge interest in the environment, and have introduced BICEP, or Business for Innovative Climate and Energy Policy. This shows that they are concerned about the well-being of the environment and their effects on it. They have programs that measure their water waste and the quality of that waste, as well as wind energy generators that are in place at some of their manufacturing plants. In addition, they use materials that can be recycled, and that still have great quality for their consumers.

By using innovation in every aspect of their company, Nike has established one of the most innovative companies, and has shown how much improvement can be seen when changes such as these are made.

Strategic Leadership

Nike has a corporate governance system that is made up of Mark Parker, President and CEO of Nike, along with 11 other board of directors members that have various backgrounds in business administration. These people come from a variety of backgrounds, which helps to bring different viewpoints and perspectives to the business, making it more well rounded. The board of directors is made up of both males and females, and only one member, Mark Parker, is a member of the board of directors and the main management team, which is good for the company, as too much overlap can cause problems within the organization. By having outside members as a part of the board, Nike attempts to avoid too many like-minded people, so there is more information and idea generation, rather than falling into the groupthink trap.

Along with the people serving on the board and through top management, Nike tries to be an ethical organization, and has policies that attempt to prevent any unethical behavior. While most organizations deal with unethical behavior at some point, Nike is proactive and regularly updates their policies. Their Code of Ethics, which they call Inside the Lines, outlines different areas of ethics, including respect, the environment, safety and health, protection of Nike property and ideas, fraud and theft, compliance with laws, conflict of interest, and other potential areas of ethical violations. Each and every employee must abide by these policies. While not every situation can be avoided, by having this document and informing employees about the expectations of ethical behavior, Nike has significantly helped the perception of their company, to a more ethical company overall.

By having a respectable company, brand image, and powerful corporate governance system, Nike has created a culture of success and ethical behavior, which is seen from the top down, with transparency in their financial statements, and easy access for employees and customers alike. This creates a confidence in the behavior of the organization as a whole. By taking steps to maintain their positive reputation as an ethical company, while also creating a direction and designing the organization around their strategic goals, Nike can continue to climb the ladder of success.

Organizational Structure

The organizational structure of Nike Inc. most closely resembles that of the divisional structure. A divisional structure is characterized by internally grouped products, projects, or product markets. Nike follows this organizational structure in the way that they group their divisions according to each sport. For basketball, soccer, golf, and track, among other sports, there is a branch of accounting, finance, marketing and research and development. This is an advantage for Nike because they are such a large corporation that splitting up their divisions is necessary to efficiently and more effectively run the organization.

Within each division, decisions are made that affect products, but generally only in their sport or division. While there is some communication between channels, sports, and divisions, they are separated in this way so that there is collaboration within sport. This also allows employees in each division to act as experts in their segment, leading to more successful products, as they know what is needed in the marketplace, as well as what has been happening in the industry of their sport.

While this organizational structure can be expensive, with accounting and finance segments for each sport, Nike is able to finance this and believes that the way the run their business adds more value to the organization than it costs. If they had one finance, accounting, or research and development team for Nike as a whole, there would be way too much to do, and not enough people to successfully get the work done. Even with enough people, there would be complications with splitting accounts up among employees, whereas with the divisional structure, it is clearly laid out to employees which sport and accounts they deal with.

In a large corporation like Nike, it is important that the structure works effectively and efficiently for them, and follows the strategy that is laid out throughout the organization. In Nike's case, this is true, as they focus on product lines that are specific for different sports. Therefore, it makes sense to structure their organization in this way as well.

Strategic Control

Among the leaders of the Nike organization, there are twelve members of the Board of Directors, which help to guide the organization to where it wants to go. Some of the main leaders of this organization include Phil Knight, as the Chairman of the Board, and Mark Parker, as the Chief Executive Officer. These two, along with the ten others, represent major leadership positions in company's such as Apple Inc, General Electric, FedEx, and Starbucks, among others. Their leadership positions in many different industries combine to create a vast knowledge pool upon which Nike can use their human capital to propel their organization forward in the sporting industry in which Nike competes. Together, they seek to make decisions that will benefit the company, its employees, customers, and shareholders alike. They help to monitor the performance of the company as a whole, and to redirect focus when things go awry. By engaging in meetings, these people can come together to evaluate the performance and actions of top management, and subsequently propel the success of the organization. 

These twelve Board members serve on various committees throughout the organization including the audit committee, compensation committee, corporate responsibility and sustainability, executive committee, finance committee, and the nominating and corporate governance committee. By splitting up into expert areas and smaller teams of board members, they can more clearly see the successes and areas of needed improvement in different areas of the organization. With many important segments and areas of coverage, Nike can more fully cover the needs of each group of shareholders, which ultimately will make the company more successful. Without these committees, their following would not be as strong and their company not as sound overall. 

In addition to their board of directors being held accountable for corporate responsibility, finance, audit, and corporate governance, Nike has a high expectation of ethical behavior from their employees as well. Their code of ethics, which they call "Inside the Lines", must be read and agreed to by each Nike employee, and includes policies on protection of intellectual property, accuracy in financial statements, fraud and theft, conflict of interest, and other important subjects in which corporations much follow in order to maintain investor confidence. 

Between the board of directors, the committees served on, and the code of ethics all Nike employees and members must follow, Nike has a strong strategic control system in place to avoid all possible violations of investor trust. 

International Strategy

Throughout the life of Nike Inc., they have expanded from a shoe company, to everything in athletics. From shoes to clothing,  to the sporting equipment used, Nike has been one of the biggest international successes in athletics. As a recognizable symbol worldwide, they are able to tap into many different market segments, different sports, and different groups of people throughout the world in order to achieve the success they have had.

In the United States, Nike is a market leader in sports equipment and apparel, and they have multiple star athletes that are endorsed by Nike, which also happens around the world with athletes like Tiger Woods, Lebron James, Rory McIlroy, and Rafael Nadal. The sports that these athletes represent are popular around the world, in some countries more than others, which is why Nike has diversified their sponsorships, in order to get worldwide attention and brand recognition. These athletes are a major influence on the image that Nike has around the world.

When marketing and selling worldwide, Nike has to take into account the trends, values, customs, and overall culture of the countries they are selling in. Their marketing plan has to be different to cater to the popular sports, the fashion trends, and the values that each country has. In their ad campaign that aired before the London Olympics, Nike had a goal of reaching athletes around the world with a simple, but effective message of "finding the greatness" in each and every person. This was a perfect campaign for them before the Olympics, as it brought in sports and people from all walks of life, of different ages, ethnic groups, and playing different sports. It sent across the message that each one of us has greatness, and not only Olympic athletes can be great at what they do. This was an effective way to get the attention of their markets worldwide, at a time when everyone around the world is watching the Olympics.

Along with these campaigns, Nike outsources a lot of production, which helps to keep the costs down. They have very successful technology that is advanced and efficient for the manufacturing plants all over the world. Nike has had success on an international scale because of the way it carries out its international strategy. Their campaigns worldwide, combined with its international athletes that use and promote the products, have a big impact in the way the company runs, and the success that it has had.

Business Level Strategy

Nike incorporates a business level strategy that most resembles a differentiation strategy. Through product innovation, technology development, and high quality products, they are able to differentiate themselves from competitors and build their brand image.

Overall cost leadership is not something that Nike looks to utilize. Their products are higher end prices that customers are willing to pay for because they see value and unique qualities in them. Through NikeID and other personalization procedures, such as college sponsorships, Nike enhances the perception that the product they provide is one of a kind and specialized for the customer wants and needs.

Nike does not utilize a focus strategy either, as they have a wide market segment, from clothing, to shoes, to sporting equipment, and is sold around the globe. Rather, they look to be the best in the industry in all of these areas. The non-price attributes that Nike attributes to their products, such as the swoosh and the "Just Do It" motto are something that customers see value in and separate their products from competitors.

They also have a number of high profile athletes that they sponsor and use as brand images, which has a big impact on the buyer base. Athletes like Tiger Woods, Rory McIlroy, Michael Jordan, and Lance Armstrong all have enhanced the value of Nike, even through times of trouble with Tiger and Lance. Because they have built up their reputation so much, and because their products are high quality and viewed as valuable, they do not lose their buyers.

By focusing on a differentiation strategy, Nike takes on a lot of investment into research and development, as well as technology innovation, in order to always have the upper hand on the competition. In this way, they can patent a lot of their products and materials, helping to create the sustainable competitive advantage that they want to achieve.

Intellectual Capital

When analyzing intellectual capital and intellectual property, Nike is among the top companies that comes to mind. Between brand recognition, brand loyalty, social capital and human capital, Nike is among the leaders in the industry.

One of their biggest forms of intellectual capital includes their logo, the Nike Swoosh. Customers perceive this as having value and are willing to pay extra money to have this logo on their clothing. It is recognized worldwide, and is one of the easiest to distinguish, which adds huge value to the company and to each of their products. With such a wide industry, and so many specialty products, the Nike Swoosh, and the Just Do It slogan combine to create enormous value for the company. Without these, Nike wouldn't be where it is today.

Another important part of their intellectual capital includes their human capital. They have millions of workers worldwide that combine to create a unique workforce who communicate with each other and hold similar values aligned under the company business model. Between the people who come up with the new product ideas, those that help with innovation technology, and those that specialize in each type of sport or activity that Nike covers, the employees are invaluable to the organization.

Lastly, the social capital that Nike has within and surrounding the organization is extremely important to them. They have influential and beneficial relationships with college athletic departments and professional athletes who wear their products and give the company great exposure. They also have partnerships for sponsoring events, and other networking opportunities that they take advantage of in order to get brand recognition and brand loyalty.

The combination of these factors help to provide Nike with a highly reputable, recognizable product that customers are willing to pay for, and competitors are unable to copy. Both of these significantly improve the chance of survival and success within the industry, which is easily seen in the case of Nike.