Nike's Internal Environment

The value chain of an organization can have a huge impact on the overall success of the company. Through primary and support activities, businesses must decide what aspects of business they want to complete themselves, and what they want to outsource to other businesses. The combination of these primary and support activities develop a strong, profitable company when the internal and external environment complement each other, and go along with the vision and strategic goals of the organization.

Primary Activities:

Nike's has 765 factories in 46 countries around the world, allowing their inbound logistics to be efficient and cost effective. The materials they get from around the world can arrive at factories in a timely fashion due to the number of factories they have spread around the globe.

 

The operations associated with Nike have to be as efficient as possible due to the quantities of products that are manufacture on a daily and yearly basis. By ensuring that their manufacturing is as quick as possible, while eliminating error, Nike can cut energy and labor costs that can significantly affect the corporation. 

Outbound logistics are also an important part of Nike's operations, and making sure that their transportation of products is useful and efficient is important. By planning their freight routes in a way that makes good use of the space they have available on the planes and ships they used to transport their products. This is another area in which the business can save a lot of money if they properly plan the system in which they operate. 

One of Nike's most known areas in their primary activities is the marketing and sales of their products. As one of the most recognizable brands in the world, they utilize their "swoosh" logo and the "Just Do It" trademark to have extremely high brand recognition and brand value. Customers see the quality and value in the Nike apparel and sporting equipment, and are willing to pay the price for it. In a competitive market, Nike has maintained a high market share in shoes, as well as in clothing. By investing money in their sales and marketing division, their specialized advertising and ability to cater to different market segments and different sports makes them stand apart from the competitor. Nike makes it a priority to inspire their customers with the "Just Do It" and "Everyone with a body is an athlete" tag-lines.

The service activity within Nike is both done by Nike themselves, as well as outsourced to retailers and other online presences. This allows customers multiple channels to reach the product, which increases convenience and access to the product for potential buyers. In addition to the retailers that they have doing customer service, Nike also has help-lines for customers to call, or they can be reached by e-mail. Giving the impression that they care about consumer concerns and potential problems with products helps them to maintain their image.

Support Activities:

By having multiple suppliers in different areas of the world, Nike uses procurement to their advantage, while also decreasing their impact on the global community. Nike has a strategic plan with their suppliers in order to lessen their carbon footprint, which goes along with their social responsibility initiative. The use of multiple suppliers helps them to keep prices down and run an cost efficient business, while acquiring quality materials to produce their goods.

Being such a large global business, Nike has to make sure that they are hiring workers that benefit the corporation around the world. They also have to ensure that their employees are working in safe conditions, as well as getting paid fair wages. They have been scrutinized for their sweatshops overseas in the past, and in order to maintain their image, they need to show that they are taking action to ensure safe working conditions and fair wages.

The technological development of the company changes a lot over time. Nike has made sure to stay up to date with the latest technology not only in materials for clothing, but also for shoes and sporting equipment. In a quickly changing industry, they have to be looking forward to where the industry could go next, and try to maintain their advantage over competitors.

Strategic planning and the general administration of Nike is very important, because as a huge organization, the CEO has to make sure that he has reliable personnel in the company bases around the world that are carrying out the goals of the organization. If the overall goals aren't clearly stated, the organization could be negatively affected by a lack of communication.

When analyzing the internal environment of Nike, it is important to see what they are doing that makes the organization so successful, but it is also vital to look at the areas in which they need to pay attention, in order to stay ahead of their competition. As a part of such a competitive industry, they need to stay on top of every aspect of the company, which they have successfully done thus far.

Nike and the External Environment

In order to have a successful company, it is necessary that people within the business are scanning the surrounding environment for potential factors that will have an impact on internal decisions and actions. These factors include the economic, technological, demographic, sociocultural, global and legal environment at the time and in the future. By paying attention to these factors, Nike can keep up with and attempt to stay ahead of their competitors.

First of all, Nike has to keep up with different age groups and determine who they want to focus on when manufacturing and marketing their products. Women have increasingly become interested in athletic wear not only for working out but also as fashion. With the expansion of age groups and gender, Nike has to diversify their products to fit the needs of more activities, as well as the tastes of each market segment. They also need to pay attention to the changing popularity of different sports. As a company that specializes in certain sports, as well as providing generic sports wear, Nike can benefit by understanding the market and the trends in popularity of sports in different parts of the world.

With the global focus shifting on health and lifestyle changes, exercise has become a spotlight within different cultures, especially in the United States. This benefits Nike greatly, as a higher percentage of people start exercising means higher sales of sporting equipment, as well as sports clothing and shoes. As they monitor different trends such as increases of marathon participants, they can alter their shoes, for example. Also, as yoga becomes a popular choice for a method of fitness, specialized apparel and equipment can be tailored for that segment as well.

When looking on a legal and political scale, Nike has to be careful about the scrutiny they have received over their manufacturing overseas. They have been known to use sweatshops, and not always have the best quality environment for their workers. They have outsourced a lot of labor to maintain the volume of production, and as a well known international company that is often times under the microscope, they have to ensure that their workers are safe and that they are producing their products in not only an efficient manner, but safe and legal manner as well.

In the economic environment, Nike has to make sure that they are releasing their products at a good time. In times of a recession, people will probably be cutting back on their high end clothing spending, which would include Nike products. Strategically, they should make sure their release of high end products is in a time when the economy isn't suffering, to increase their profitability.

Technologically, Nike makes good  use of different venues, such as their website, to create a personalized experience for customers. As a global business, they have made their website easy to maneuver, with different languages and specialized websites for different areas of the world. They also have the option of personalizing shoes, from different sports, styles, and colors. This has only enhanced their profits, and their use of computers for design and manufacturing has increased their efficiency.

By paying attention and analyzing their external environment, Nike can effectively achieve a sustainable competitive advantage over their competitors.