ORGANIZATIONAL PSYCHOLOGY

Case: Nike Inc.

SUBMITTED TO:
PROF. DR. MUHAMMAD SHOAIB FAROOQ
SUBMITTED ON:
June 2nd, 2017
SUBMITTED BY:
AHMAD HUSSAIN
KHALIDA BUTT
Semester:
2nd

INTRODUCTION
Nike, Inc. is a major publicly traded sportswear and equipment supplier based in the United
States. The company is headquartered near Beaverton, Oregon, which is part of the Portland
metropolitan area. It is the world's leading supplier of athletic shoes and apparel.

'If you have a body, you are an athlete' - Bill Bowerman

The chairman and co-founder of Nike, Mr. Philip H. Knight deemed my services as a
strategic marketing consultant to drive Nike out of the crisis it is facing. For this purpose, I
have studied both internal and external viewpoints in order to come up with a liable solution.
Moreover, I have also analyzed the social, economic, technological, legal, customer,
competition, international, organizational, marketing, finance and production components
after which I have prepared this report. Nike is facing child labor problems that are negatively
affecting the deals of Nike. However, it is also because of the changing preferences of the

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consumers that Nikes market share is decreasing. Further in the report, I have come up with
the marketing objective of Nike and strategies to cope up with these objectives to drive Nike
out of this crisis successfully.

When Nike co-founder Bill Bowerman made this observation many years ago, he was
defining how he viewed the endless possibilities for human potential in sports. He set the tone
and direction for a young company created in 1972, called Nike, and today those same words
inspire a new generation of Nike employees.
Their goal is to carry on his legacy of innovative thinking, whether to develop goods that
help athletes of every level of ability reach their potential, or to create business opportunities
that set Nike apart from the competition and provide value for our shareholders.

It started with a handshake between two visionary Oregonians - Bowerman and his
University of Oregon runner Phil Knight. They and the people they hired evolved and grew
the company that became Nike from a US-based footwear distributor to a global marketer of
athletic footwear, apparel and equipment that is unrivalled in the world.

Along the way, Nike has established a strong Brand Portfolio with several wholly-owned
subsidiaries with Cole Hana, Converse Inc., Hurley International LLC, NIKE Golf, and
Umbra Ltd.

Nike world headquarters is located near Beaverton, Oregon, a suburb of Portland. So while
the Pacific Northwest is the birthplace to Nike, today operate in more than 160 countries
around the globe. Through their suppliers, shippers, retailers and other service providers,
Nike directly or indirectly employ nearly one million people.

That includes more than 30,000 Nike employees across six continents, each of whom makes
their own contribution to fulfil Nike mission statement: to bring inspiration and innovation to
every athlete* in the world. For the fiscal year ending May 31, 2009, Nike reported record
revenues of $19.2 billion, a 3 per cent increase over last years earnings.

Nike Goods
Nike goods a wide series of gametackle. Their first goods were track running shoes. They
currently also make shoes, jerseys, shorts, base layers etc. for a wide range of gamewithtrack
and field, baseball, ice hockey, tennis, association football (soccer), lacrosse, basketball and
cricket. Nike Air Max is a line of shoes first freeby Nike, Inc. in 1987. The most fresh
additions to their line are the Nike 6.0, Nike NYX, and Nike SB shoes, designed for
skateboarding. Nike has fresh announcedcricket shoes, called Air Zoom Yorker, designed to
be 30% lighter than their competitors. In 2008, Nike announcedthe Air Jordan XX3, a high-
performance basketball shoe designed with the environment in mind.

Nike sells an assortment of goods , withshoes and apparel for gameeventslike association
football, basketball, running, combat sports, tennis, American football, athletics, golf and
cross training for men, women, and children. Nike also sells shoes for outdoor eventssuch as
tennis, golf, skateboarding, association football, baseball, American football, cycling,
volleyball, wrestling, cheerleading, aquatic activities, auto racing and other athletic and
recreational uses. Nike is well known and popular in youth culture, chav culture and hip hop
culture as they supply urban fashion clothing. Nike fresh teamed up with Apple Inc. to

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produce the Nike+ product which monitors a runner's performance via a radio device in the
shoe which links to the iPod Nano. While the product generates useful statistics, it has been
criticized by researchers who were able to identify users' RFID devices from 60 feet (18 m)
away using small, concealable intelligence motes in a wireless sensor network.

In 2004, they thrownthe SPARQ Training Program/Division.

Some of Nike's newest shoes contain Fly wire and Linarite Foam. These are materials used to
reduce the weight of many types of shoes.

The 2010 Nike Pro Combat jersey group will be worn by Miami, Alabama, Boise State,
Florida, Ohio State, Oregon State, TCU, Virginia Tech, West Virginia and Pittsburgh. Teams
will wear these jerseys in key match ups as well as any time the athletic department deems
necessary.

Nike has thin with more than 700 shops around the world and has offices located in 45
countries outside the United States. Most of the workshops are located in Asia, with
Indonesia, China, Taiwan, India, Thailand, Vietnam, Pakistan, Philippines, and Malaysia.
Nike is timid to disclose info about the bondfirms it works with. However, due to harsh
disparagement from some group like Corp Watch, Nike has divulged info about its bond
factories in its Corporate Governance Report.

HISTORY OF THE CASE

It was in 1998 when Nike was liable for manipulating the abroad workers and this was when
the directors were critical not to hire people less than 18 years of age but the Chairman of
Nike, Philip. H. Knight just ended up saying, Just does it. Since this outcry there was little
control of Nike over its suppliers as Nike was getting negative press diverge and learners
were disputing against Nike at the college properties. The deals of sneakers and gameapparels
were facing tasks due to the shift in teen fashions and economic downturn in Asia. Retails
stores were finishing and uncomplimentary cash served as further major problem.
Nike was co-instituted by Knight who sold shoes out of his car trunk, its control center today
are in Beaverton and with the emergence of buccaneer style shoes, the deals of Nike
augmented and in 1996, Nike converted an Creation. The personnel of Nike was pared by
1600 and most of the vice presidents at Nike have worked there for less than two months
apart from or one who worked for 27 years. A chief monetarist officer was hired by Nike
from PepsiCo. And many other vice presidents were hired from many other good firms. The
new team came up with an idea to reinvent Nike and they moved on to non-traditional market
and came up with goods for extreme gameenthusiasts. Now was the time for the executives
at Nike to consider the costs as well and they had to hold their expenses to increase the
revenues. The growth at Nike during 1994 and 1997 were fast and it was successful in
blowing the competitors such as Adidas and Reebok as its deals suddenly rose and investment
also increased. However, in 1998, deals reduced by 8% but even after the recovery of the
domestic market, deals rose only by 2%. The lean focus adopted by Nike increased the net
income by 13%. Nike counted the overseas markets or the increase in deals but since the

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Euro was weak, deals were steady. In 1992, Acura with NIKEMN license plates was the only
American CEO to have corporate logo tattooed on his ankle. The golfer, Tiger Woods was
one of Nikes top sponsored athletes. In 1997, Nike announced boots and casual leather shoes
and Nike dominated the category with the deals of 40% in the US.
Nike was held responsible for exploiting workers by paying minimum wages to the workers
in the Third World countries and this was a major damage that could not be undone but to
reduce the impact, Nike announced literacy packages for the workers in Indonesia and some
basic improvements were made. Nike replaced solvent toluene with water based cement on
most fabrication lines. A separate unit called ACG i.e. all conditions gear was made and this
built its own staff, budget and marketing plan. Generation Y is individual oriented but the
kids still do not know that Nike sells skateboard shoes as well. ACG knew that imminent up
with cool new goods will not solve the problem but the company needs a new image. Nike
promoted its goods in the store and print ads were printed. In the millennium, Nike entered
cyberspace and educated its executives about the Web, who was trained to drive traffic
towards Nike.com to increase online deals. The clients were also allowed to tailor their goods
by choosing their own color and design. In 1999, deals rose so much that it became hard for
Nike to fill up the mandate. Polo shirts and shorts were more in demand that did hurt the
deals of higher priced items. Today, Nike is selling its goods in millions and is meeting the
real challenge by distributing on time. It was increased the pecuniary accountability and have
made the employees more conscious about deals. For advertising, it pays the agency to make
videos that climaxes the goods that are being sold by Nike; however Knight acknowledges
that creating a big company culture is not an easy task.
Nike, originally known as Blue Ribbon Game(BRS), was instituted by University of
Oregon track athlete Phil Knight and his coach Bill Bowerman in January 1964. The business
initially operated as a distributor for Japanese shoe maker Netsuke Tiger (now ASICS),
making most deals at track meets out of Knight's automobile.
According to Otis Davis, a student athlete whom Bowerman coached at the University of
Oregon, who later went on to win two gold medals at the 1960 Summer Olympics,
Bowerman complete the first pair of Nike shoes for him, contradicting a claim that they were
made for Phil Knight. Says Davis, "I told Tom Brokaw that I was the first. I don't care what
all the tycoons say. Bill Bowerman made the first pair of shoes for me. People don't believe
me. In fact, I didn't like the way they felt on my feet. There was no support and they were too
tight. But I saw Bowerman make them from the waffle iron, and they were mine."
In 1964, in its first year in business, BRS sold 1,300 pairs of Japanese running shoes
grossing $8,000. By 1965 the young house had acquired a full-time employee, and deals had
reached $20,000. In 1966, BRS opened its first retail store, located at 3107 Pico Boulevard
in Santa Monica, CalifP a g e | 4ornia next to a beauty salon, so its employees no longer
needed to sell inventory from the back of their cars. In 1967, due to rapidly increasing deals,
BRS expanded retail and distribution operations on the East Coast, in Wellesley,
Massachusetts.
By 1971, the relationship between BRS and Netsuke Tiger was nearing an end. BRS prepared
to launch its own line of footwear, which would bear the Swoosh newly designed by Carolyn
Davidson. The Swoosh was first used by Nike on June 18, 1971, and was registered with
the U.S. Patent and Trademark Office on January 22, 1974.
In 1976, the company hired John Brown and Partners, based in Seattle, as its first advertising
agency. The following year, the agency created the first "brand ad" for Nike, called "There is
no finish line", in which no Nike product was shown. By 1980, Nike had attained a 50%
market share in the U.S. athletic shoe market, and the company went public in December of
that year.

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Together, Nike and Wieden+Kennedy have created many print and television advertisements,
and Wieden+Kennedy remains Nike's primary ad agency. It was agency co-founder Dan
Widened who coined the now-famous slogan "Just Do It" for a 1988 Nike ad campaign,
which was chosen by Advertising Age as one of the top five ad slogans of the 20th century
and enshrined in the Smithsonian Institution. Walt Stack was featured in Nike's first "Just Do
It" advertisement, which debuted on July 1, 1988. Widened credits the inspiration for the
slogan to "Let's do it", the last words spoken by Gary Gilmore before he was executed.
Throughout the 1980s, Nike expanded its product line to encompass many gameand regions
throughout the world. In 1990, Nike moved into its eight-building World Headquarters
campus in Beaverton, Oregon. The first Nike retail store, dubbed Nike town, opened
in downtown Portland in November of that year.
Phil Knight announced in mid-2015 that he is planning to step down as chairman of Nike in
2016.
Acquisitions
Nike has acquired several apparel and footwear firms over the course of its history, some of
which have since been sold. Its first acquisition was the upscale footwear company Cole
Hana in 1988, followed by the purchase of Bauer Hockey in 1994. In 2002, Nike bought surf
apparel company Hurley International from founder Bob Hurley. In 2003, Nike paid
US$309 million to acquire Converse, makers of the Chuck Taylor All-Stars line of sneakers.
The company acquired Starter in 2004 and Umbra, known as the manufacturers of
the England national soccerteam's kit, in 2008.
In order to refocus on its core business lines, Nike began divesting of some of its subsidiaries
in the 2000s. It sold Starter in 2007and Bauer Hockey in 2008. The company sold Umbra in
2012 and Cole Hana in 2013. As of 2013, Nike owns two key subsidiaries: Converse
Inc. and Hurley International.
Finance
Nike Inc. will buy back $8 billion of Nike's class B stock in 4 years after the current $5
billion buyback program is completed in second quarter of fiscal 2013. Up to September
2012, Nike Inc. has bought back $10 billion of stock.
Nike was made a member of the Dow Jones Industrial Average in 2013, when it
replaced Alcoa.
On December 19, 2013, Nike Inc.'s quarterly profit rose due to a 13 percent increase in global
orders for merchandise since April of that year. Future orders of shoes or clothes for delivery
between December and April rose to $10.4 billion. Nike shares (NKE) rose 0.6 percent to
$78.75 in extended trading.
In November 2015, Nike announced it would initiate a $12 billion share buyback, as well as a
two-for-one stock split, with shares to begin trading at the decreased price on December
24. The split will be the seventh in company history.
On April 26, 2016, it was announced that Nike would release the Nike Air Force 180
"Olympic" associated with the dream team of 1992. It will drop on July 7 at select Nike
Casualswear retailers.

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Goods

A Nike brand athletic shoe

A pair of Nike Air Jordan I basketball shoes

Game equipment
Nike produces a wide range of gameequipment. Their first goods were track running shoes.
They currently also make shoes, jerseys, shorts, cleats, base layers, etc. for a wide range of
sports, withtrack and field, baseball, ice hockey, tennis, association soccer(soccer), lacrosse,
basketball, and cricket. Nike Air Max is a line of shoes first freeby Nike, Inc. in 1987.
Additional product lines were announcedlater, such as Air Huarache, which debuted in 1992.
The most fresh additions to their line are the Nike 6.0, Nike NYX, and Nike SB shoes,
designed for skateboarding. Nike has fresh announced cricket shoes called Air Zoom Yorker,
designed to be 30% lighter than their competitors'. In 2008, Nike announced the Air Jordan
XX3, a high-performance basketball shoe designed with the environment in mind.

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Nike sells an assortment of goods , with shoes and apparel for gameevents like association
football, basketball, running, combat sports, tennis, American football, athletics, golf,
and cross training for men, women, and children. Nike also sells shoes for outdoor
eventssuch as tennis, golf, skateboarding, association football, baseball, American football,
cycling, volleyball, wrestling, cheerleading, aquatic activities, auto racing, and other athletic
and recreational uses. Nike fresh teamed up with Apple Inc. to produce the Nike+ product
that monitors a runner's performance via a radio device in the shoe that links to the iPod
Nano. While the product generates useful statistics, it has been criticized by researchers who
were able to identify users' RFID devices from 60 feet (18 m) away using small, concealable
intelligence motes in a wireless sensor network.
In 2004, Nike thrownthe SPARQ Training Program/Division. Some of Nike's newest shoes
contain Fly wire and lunar lite Foam to reduce weight. The Air Zoom Romero running shoe,
announcedin 2006 and currently in its 11th generation, featured a combination of
groundbreaking innovations witha full length air cushioned sole, an external heel counter, a
crash pad in the heel for shock absorption, and Fit Frame technology for a stable fit.
The 2010 Nike Pro Combat jersey group were worn by teams from the following universities:
Miami, Alabama, Boise State University, Florida, Ohio State, Oregon State University, Texas
Christian University, Virginia Tech, West Virginia, and Pittsburgh. Teams will wear these
jerseys in key matchups as well as any time the athletic department deems it necessary.
STRATEGIC OBJECTIVES
1 Initially, Nike must redefine the mission and the vision of the company that would
assist them in focusing more on the market and the consumers.

2 The situation must be completely studied and on the basis of the analysis of the
situation, a long run strategy must be defined to counter to the child labor and other
problems such as change in customer preferences.

3 New strategies must be defined to increase deals for which Nike must come up with
new goods to satisfy the changing needs of the customers.

4 New market segments must be defined to obtain higher deals.

5 It is essential to provide strong leadership to Nike by replacing Knight with someone

else.

6 Adding flexibility especially in terms of communication will play a major role in the
success of Nike. Employees should be consulted while the strategic decisions are
being made and ideas must be shared with all the departments.

7 Steps to make operations fasters and easier must be taken by Nikes management for
which new product types must be introduced.

8 More consideration should be given to the aspect of social corporate responsibility.

9 To refrain the employees from leaving the organization, they must be properly treated
and they should be compensated with both monetary as well as non-monetary
benefits.

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MARKETING STRATEGY
Segmentation Strategy:
Nike must identify new market segments such as non-sport segments should be identified and
they must be worked on after which only those segments should be served that are profitable.
These segments consist of off those who like adventure such as the children, females and
elders. Besides this, those gamesegments such as swimming and skating that are not yet
explored must be served.

However, before coming up with new goods , Nike must do proper analysis to identify the
competitive advantage of the new goods before they launch the goods in the market. Only if
the new goods are profitable and they match the capabilities of Nike should they be
announcedin the market. For this, the demographics, psychographic segmentation must be
done and the lifestyle of the people must be closely studied in order to know who the
potential and the existing customers are so that Nike comes up with better goods that match
their personalities.
Targeting Strategy:
Once the segments have been identified, in depth analysis of profitability and growth must be
done by Nike. Moreover, the competitors capabilities must be studied and evaluated and they
must be compared with that of Nike. Only on the basis of distinctive capabilities must Nike
target a segment so that Nike can serve these segments in a better way than its competitors.
Positioning Strategy:
The way the consumers think about the brand is called positioning i.e. the place of the brand
in the minds of the consumers. Despite the fact that Nikes goods are unique, the brand
image in not very favorable in the minds of the consumers as people are easily switching to
competitors goods and for this Nike should work on its brand image. For this, various tools
such as one to one marketing and experiential marketing must be done. Besides this, Nike
must sponsor gameevents to make the consumers aware of their presence in the market but
before this they must develop their corporate social responsibility. All this would help make
consumers loyal to Nike.
Besides this, points of parity and points of difference must be identified to tell the people the
way in which Nike is unique from its competitors and why the consumers should buy Nikes
goods over the competitors goods and positioning must be done in a way so that the
consumers are reluctant to switch to competitors goods .

Product Strategy:
Since Nike is continuously losing market share, they must improve their goods and should
provide better quality goods . For this, they should come up with goods that are more
comfortable and goods with new and better features. They must also come up with a new
product range and must introduce new goods for the existing market as well as new goods
for new market segments. A long run strategy must be developed and new marketing plans
must be announcedbut the consumer needs should be taken care of since it is essential to link
the product with consumers preferences and to promote them well to generate demand.

Pricing Strategy:
Consumers have become more savvy and intelligent and so they want value pricing, therefore
Nike should opt for value pricing. However, consumers are more concerned about the quality
of the product and not the price so Nike should work on the quality of its goods and should

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highlight the unique features of their goods . It is impossible to generate deals by selling low
quality goods at high prices, therefore this factor should be worked upon.

Promotional Strategy:
To increase market share and the number of the consumers, Nike must do Internet marketing
and promotion to increase deals. To build a stronger image of the brand, Nike must do
advertising through various mediums such as gamemagazines, Internet, billboards and radio.
To make consumer loyal to the brand, Nike must offer loyalty cards to the consumers,
experiential marketing must be done to give the consumers the true essence of the brand and
they should sponsor various gameevents.
Channel Strategy:
Currently, the goods of Nike are sold at Nike stores, at retail chains and on the Internet.
However, since the retail chains are closing down, Nike has to take some other steps. Internet
is a very good option for Nike to sell its goods and it is convenient for the customer as well.
Customization facility should be provided to the consumers as this is the best option to cope
up with the changing needs of the customers. For this, Nike should work upon their
distribution system and the automatic replenishment system must be made more efficient. All
members of the channels must be treated as partners to provide better value to the consumers
in an easy way.
NIKE MARKETING STRATEGY EVOLUTION.
Nikes marketing strategy rested entirely upon a brand image which is favorable and has
evolved into a great multinational enterprise over time. The favorable brand image has been
kept afloat due to the strong association with the Nikes logo which is quite distinctive and
the slogan Just Do It which has been used in advertisement for quite some time. The
company has been known to invest heavily in advertisements and brand promotion.
Market Segmentation
Most of the consumers of Nikes goods are mainly sportsmen. This is so because of the
utility that comes with the goods . An athlete is more likely to go a gameshoe designed and
marketed by Nike more than a person who detests sporting and exercises. Nike targets these
consumers by agreements between Nike and athletic teams, colleges athletic teams1 etc. for
product sponsorship and eventual promotion to the members of these teams. In this way, Nike
is able to reach a wide number of consumers and consumers who are more likely to buy. Even
though others are likely to buy the goods , Nike pays specific emphatic targeting to the athlete
more than any group of individuals even though it also targets the youth who have embraced
the hip hop culture (Mercer David, 1996, pp. 171).

Targeting strategies
Nike lays a number of strategies to target their immediate consumers; athletes and other
sportsmen. The targeting strategies include among others the sponsorship of goods by
professional athletic teams, celebrity athletes and college athletic teams. This strategy is
specifically successful because of its ability to reach a large number of athletes. If the athletic
team manager prescribes a specific type of track shoes made by Nike, the trainees have no
option other than to buy them. The teams can as well buy the track shoes in bulky and supply
them to the team members.
The second strategy that Nike applies is the designing of product destination. It does this by
associating success with the product. For example, when a celebrity athlete sponsors a
specific brand of athletic shoes, the brand will be associated with success. This psychological
effect is reinforced with advertisements that affirm this position.

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Finally, Nike targets the consumers who are likely to develop product intimacy; those who
care more about the utility and quality of the product than the price. In this way, the pricing is
not affected too much in a bid to accommodate a large number of consumers. However, price
has also been factored in Nikes marketing strategies as shall be seen later in this paper
(Frank, 2004, p.173)

Pricing Strategies
as stated in the foregoing section, Nike targets the consumers who embrace product intimacy
and thus care less about the product. This has enables Nike to set relatively higher prices than
its competitors. This is a strategy that calls for higher pricing points so as to push the
perceived product value. It has been established that consumers who consider a product to be
of high quality are likely to pay the high price more often and consistently. Once consumers
develop product intimacy, they come to associate their person with the product and will pay
whatever price quoted on the product provided it has the Nike logo on it.
Another very important thing to note is the fact that Nike uses the vertical integration pricing
strategy in which they take ownership of the participants at channel levels that differ and they
also engage in multifarious channel level operations both in a bid to control costs and thus
influence pricing function (Goldman S, 2000, pp154)

Distribution Strategies
Distribution strategies embraced by an organization can either give them an edge in market or
make them lag behind the winners in the market. The more efficient the product distribution
is the more deals and thus more profits. The delivery of the right product and at the right time
to the consumer not only effects utility but also leads to high degree of consumer satisfaction
and loyalty. Nike distributes its goods on level basis. The high priced premium goods are
given to certain distributors while leaving the low priced to be sold at highly discounted
prices at mega retail stores such as Wal-Mart. Whereas Reebok embraced a limited
distribution strategy Nike ventured more into a global3 market capitalization (Jeannette J,
2000, pp. 44).

Promotional and Communication Strategies

Apart from Nike selling quality goods which have led
To a high degree of customer loyalty, the promotional strategies that the company employs
are simply superb. Nike has thina number of professional and celebrity athletes which have
managed to draw a considerable attention to their goods . Some of the sportsmen signed by
Nike include soccer stars such as Ronaldinho, Ronaldo and Roberto Carlos, Basket ballers
such as Jermaine O'Neal and LeBron James2, triathlete Lance Armstrong and golf superstar
Tiger Woods. This has created a relatively high degree of Nike goods awareness. Besides
the signing of celebrity sportsmen to promote their goods , Nike has also employed a great
deal of advertisements through the mass media. Nike employs a selective- demand
advertisement focused on the high priced shoes used for traditional game(Goldman S, 2000,
pp154).
4 Ps
Nike implemented a number of marketing strategies to sell its goods . One of the most
important considerations is its marketing mix; better known as the 4Ps.

Nike is a global gameshoe giant company. It is the largest seller of athletic footwear in the
world, holding the lion share of 33% of the global market. The company has production

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facilities in Asia, deals facilities in almost 200 countries, and customer service and other
operational units worldwide.

The marketing mix or the 4 Ps of Marketing are Product, Price, Place (distribution) and
Promotion. Nike's 4Ps are the following:

1. Product
Nike offers a wide range of shoe, apparel and equipment goods , all of which are currently its
top-selling product categories. Nike started selling gameapparel, athletic bags and accessory
items in 1979. Their brand Cole Hana carries a line of dress and casual footwear and
accessories for men, women and children.

They also market head gear under the brand name GameSpecialties, through Nike Team
Sports, Inc. They sell small amounts of plastic goods to other manufacturers through Nike
IHM, Inc. Bauer Nike Hockey Inc. manufactures and distribute ice skates, skate blades, in-
roller skates, protective gear, hockey sticks and hockey jerseys and accessories.

2. Price
Nikes pricing is designed to be competitive to the other fashion shoe retailers. The pricing is
based on the basis of premium segment as target customers. Nike as a brand commands high
premiums. Nikes pricing strategy makes use of vertical integration in pricing wherein they
own participants at differing channel levels or take part in more than one channel level
operations. This can control costs and influence product pricing.

3. Place
Nike shoes are carried by multi-brand stores and the exclusive Nike stores across the globe.
Nike sells its product to about 20,000 retail accounts in the U.S. and in almost 200 countries
around the world. In the international markets, Nike sells its goods through independent
distributors, licensees and subsidiaries. Independent distributors need not adapt to local
pressures because the 4Ps of marketing are managed by distributors.

4. Promotion
Promotion is largely dependent on finding accessible store locations. It also avails of targeted
advertising in the newspaper and creating strategic alliances. Nike has a number of famous
athletes that serve as brand ambassadors such as the Brazilian Soccer Team (especially
Ronaldinho

, Renaldo, and Roberto Carlos), LeBron James and

ONeal for basketball, Lance Armstrong for cycling, and Tiger Woods for Golf.

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Nike also sponsors events such as Hoop It Up and The Golden West Invitational. Nikes
brand images, the Nike name and the trademark

Make it one of the most recognizable brands in the world. Nikes brand power is one reason
for its high revenues. Nikes quality goods , loyal customer base and its great marketing
techniques all contribute to make the shoe empire a huge success.

Nike Marketing strategy

Nike's marketing strategy is an important component of the company's success. Nike is

positioned as a premium-brand, selling well-designed and expensive goods . Nike lures
customers with a marketing strategy centering on a brand image which is attained by
distinctive logo and the advertising slogan: "Just do it". Nike promotes its goods by
sponsorship agreements with celebrity athletes, professional teams and college athletic teams.
However, Nike's marketing mix contains many elements besides promotion. These are

Below.

Advertising
In 1982, Nike aired its first national television ads, created by newly formed ad agency
Wieden+Kennedy, during the New York Marathon. This was the beginning of a successful
partnership between Nike and W+K that remains intact today. The Cannes Advertising
Festival has named Nike its Advertiser of the Year on two separate occasions, the first and
only company to receive that honor twice (1994, 2003).

Nike also has earned the Emmy Award for best commercial twice since the award was first
created in the 1990s. The first was for "The Morning After," a satirical look at what a runner
might face on the morning of January 1, 2000 if every dire prediction about Y2K came to
fruition. The second Emmy for advertising earned by Nike was for a 2002 spot called
"Move," which featured a series of famous and everyday athletes in a stream of athletic
pursuits.

In addition to garnering awards, Nike advertising has generated its fair share of controversy:

Beatles song
Nike was the focus of criticism for its use of the Beatles song "Revolution" in a 1987
commercial, against the wishes of Apple Records, the Beatles' recording company. Nike paid
US$250,000 to Capitol Records Inc., which held the North American licensing rights to the
Beatles' recordings, for the right to use the Beatles' rendition for a year.

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Apple sued Nike Inc., Capitol Records Inc., EMI Records Inc. and

Advertising

Agency for $15 million. Capitol-EMI countered by saying the lawsuit was 'groundless'
because Capitol had licensed the use of "Revolution" with the "active support and
encouragement of Yoko Ono Lennon, a shareholder and director of Apple."

According to a November 9, 1989 article in the Los Angeles Daily News, "a tangle of
lawsuits between the Beatles and their American and British record firms has been settled."
One condition of the out-of-court settlement was that terms of the agreement would be kept
secret. The settlement was reached among the three parties involved: George Harrison, Paul
McCartney,

; Yoko Ono; and Apple, EMI and Capitol Records. A spokesman for Yoko Ono noted, "It's
such a confusing myriad of issues that even people who have been close to the principals
have a difficult time grasping it. Attorneys on both sides of the Atlantic have probably put
their children through college on this."

Nike discontinued airing ads featuring "Revolution" in March 1988. Yoko Ono later gave
permission to Nike to use John Lennon's "Instant Karma" in another advertisement.

Minor Threat advertisement

In late June 2005, Nike received criticism from Ian MacKaye, owner of Discord Records,
guitarist/vocalist for Fugazi&The Evens, and front-man of defunct punk band Minor Threat,
for appropriating imagery and text from Minor Threat's 1981 self-titled album's cover art in a
flyer promoting Nike Skateboarding's 2005 East Coast demo tour.
On June 27, Nike Skate boardings website issued an apology to Dischord, Minor Threat, and
fans of both and announced that they tried to remove and dispose of all flyers. They state that
the people who designed it were skateboarders and Minor Threat fans themselves who
created the advertisement out of respect and appreciation for the band. The dispute was
eventually settled out of court between Nike & Minor Threat. The exact details of the
settlement have never been disclosed.

Chinese-themed advertisement
In 2004, an ad about LeBron James beating cartoon martial arts masters and slaying a
Chinese dragon in martial arts offended Chinese authorities, who called the ad blasphemous
and insulting to national dignity and the dragon. The advertisement was later banned in
China. In early 2007 the ad was reinstated in China for unknown reasons.

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Sponsorship
Nike pays top athletes in many different gameto use their goods and promote/advertise their
technology and design.

Nike's first professional athlete endorser was Romanian tennis player IlieNstase, and the
company's first track endorser was distance running legend Steve Prefontaine. Prefontaine
was the prized pupil of the company's co-founder Bill Bowerman while he coached at the
University of Oregon. Today, the Steve Prefontaine Building is named in his honor at Nike's
corporate headquarters.

Besides Prefontaine, Nike has sponsored many other successful track & field athletes over the
years such as Carl Lewis, Jackie Joyner-Kersee and Sebastian Coe. However, it was the
signing of basketball player Michael Jordan in 1984, with his subsequent promotion of Nike
over the course of his storied career with Spike Lee as Mars Blackmon that proved to be one
of the biggest boosts to Nike's publicity and deals.

During the past 20 years especially, Nike has been one of the major clothing/footwear
sponsors for leading tennis players. Some of the more successful tennis players currently or
formerly sponsored by Nike include: James Blake, Jim Courier, Roger Federer, Lleyton
Hewitt, Juan Martn del Potro, Andre Agassi, Rafael Nadal, Pete Sampras, Marion Bartoli,
Lindsay Davenport, Daniela Hantuchov, Mary Pierce, Maria Sharapova, Serena
Williams.RafaelNadal is currently sponsored by Nike, Inc.

Nike is also the official kit sponsor for the Indian cricket team for 5 years, from 2006 till end
of 2010. Nike beat Adidas and Puma by bidding highest (US$43 Million total).

Nike also sponsors some of the leading clubs in world football, such as the Brazil National
Team, Portugal National Team, Netherlands National Team, US National Team, Manchester
United, Arsenal, FC Barcelona, Inter Milan, Juventus, Shakhtar, Dnipro, Porto, Steaua, Red
Star, Boca Juniors, Corinthians, Club Amrica, Aston Villa, Celtic, guila and PSV
Eindhoven. Nike will also sponsor Dundee United from summer 2009.

Nike sponsors several of the world's top golf players, withTiger Woods, Trevor Immelman
and Paul Casey.

Nike also sponsors various minor events withHoop It Up (high school basketball) and The
Golden West Invitational (high school track and field). Nike uses web sites as a promotional
tool to cover these events. Nike also has several websites for individual sports,
withnikebasketball.com, nikefootball.com, and nikerunning.com.

Current Nike Marketing Strategies and Current Company Status

Who would have imagined it? After years on top, Nike suddenly looks like a world-class
marathoner who, in midrace, questions whether he's got what it takes to keep on running.
Nike's symptoms of distress: a global glut of shoes, flat deals in key markets, and declining
profits. Moreover, the global brand champ that captured its own winning corporate mindset
with the "Just do it" ad slogan has a new pitch, "I can"--to which investors seem to be

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retorting, "No, you can't." Losing faith, they have knocked Nike stock from its all-time
high of $76 about a year ago to a fresh $46.

What happened? While Nike has tripped on fickle fashion trends and heightened
competition before, its main obstacle today appears to be its own success. Here's why:

BIG-BRAND BACKLASH. When he founded Nike in 1972, CEO Phil Knight contended
that if "five cool guys"--the best and most popular athletes--wore his shoes, other people
would want to as well. The strategy worked wonderfully, of course, and now Nike controls
an astounding 47% of the U.S. athletic-shoe market. But the brand has become too
common to be cool. "I call it the Izard syndrome," says John Horan, publisher of Sporting
Goods Intelligence, referring to the once-hip golf shirt. "Nike is everywhere." Brand expert
Watts Wicker, chairman of the consulting firm First Matter, believes that the ubiquity of the
Nike logo--the over-Swooshing of America--turns off important core consumers, the 12- to
24-year-olds. "When I was growing up, we used to say that rooting for the Yankees is like
rooting for U.S. Steel," Wicker says. "Today, rooting for Nike is like rooting for
Microsoft."

THE MARLBORO MISTAKE. Indeed, many cool-conscious youngsters have gravitated

to other brands such as Adidas (which sells sneakers at lower prices) and Timberland (a
leader in the outdoorsy "brown shoe" trend). Instead of responding with hotter goods or
lower prices, Nike did what many overconfident giants do (think Marlboro, pre-Marlboro
Friday): It raised its prices ahead of inflation. "Retailers loaded up, but the goods weren't
necessarily reaching consumers' closets," says Josie Esquivel, who follows Nike for
Morgan Stanley Dean Witter. Now, Nike is paying with price cuts--in the 50% range--on
last year's models (except the irrepressible Air Jordan line).

THE (ASIAN) ECONOMY, STUPID. Nike's inventory glut is messiest in Asia, largely
because the company operates few outlet stores there. (In the U.S., Nike sells almost half
of its leftover shoes through its 41 factory stores and the rest through discounters like T.J.
Maxx.) Also, Nike was particularly ill prepared for Asia's economic collapse because
Knight has long believed his company's deals are recession-resistant. Management
expected revenues in Asia to almost double this year, from $1.2 billion, but retailers
canceled orders at alarming rates. It looks as though deals will rise marginally at best.

WAFFLING ON WALL STREET. Nike worsened its woes by failing to acknowledge them
soon enough. "Early last year, there was a major crack in the dam," says analyst Esquivel.
"It took them over two months to say, 'Oops, we have problems.' She lowered her rating
on the stock from buy to hold last May, just before Nike warned that profits would fall
short of expectations. As more negative news followed, some analysts complained that
management was hard to reach for information. One executive, CFO Robert Falcone,
antagonized major shareholders and left in January.

Will Nike get back up to speed? Probably--it's one of the world's most powerful brands,
and Knight is resilient as well as smart. But the recovery will be long and painful. Knight
and his senior managers are currently working on a plan to close facilities and reduce
Nike's work force worldwide. A big restructuring charge will hit profits hard this year, and
growth will likely be slow during the next few years.

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In order to recover, Nike will certainly need fresh goods to excite bored consumers. "The
lineup for the coming year looks okay," says Ralph Parks, president of Foot Action, the
second-largest athletic-shoe specialty retailer. "It looks better than 1997's, but I'm not sure
the core consumer is quite ready to jump back in."

Most important, Nike needs a new vision--of itself and its brand. This task belongs to
Knight, who turned 60 a few weeks ago and says he plans to work until he dies. That's a
good thing, because the boss's favorite motto, "There is no finish line," seems more
appropriate now than ever.

SWOT ANALYSIS OF NIKE

Strengths.
Nike is a very competitive organization. Phil Knight (Founder and CEO) is often
quoted as saying that 'Business is war without bullets.' Nike has a healthy dislike of its
competitors. At the Atlanta Olympics, Reebok went to the expense of sponsoring the
games. Nike did not. However Nike sponsored the top athletes and gained valuable
coverage.

Nike has no factories. It does not tie up cash in buildings and manufacturing workers.
This makes a very lean organization. Nike is strong at research and development, as is
evidenced by its evolving and innovative product range. They then manufacture
wherever they can produce high quality product at the lowest possible price. If prices
rise, and goods can be made more cheaply elsewhere (to the same or better
specification), Nike will move production.

Nike is a global brand. It is the number one gamebrand in the World. Its famous
'Swoosh' is instantly recognizable, and Phil Knight even has it tattooed on his ankle.

Weaknesses.
The organization does have a diversified range of gamegoods . However, the income
of the business is still heavily dependent upon its share of the footwear market. This
may leave it vulnerable if for any reason its market share erodes.

The retail sector is very price sensitive. Nike does have its own retailer in Nike Town.
However, most of its income is derived from selling into retailers. Retailers tend to
offer a very similar experience to the consumer. Can you tell one gameretailer from
another? So margins tend to get squeezed as retailers try to pass some of the low price
competition pressure onto Nike.

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Opportunities.
Product development offers Nike many opportunities. The brand is fiercely defended
by its owners whom truly believe that Nike is not a fashion brand. However, like it or
not, consumers that wear Nike product do not always buy it to participate in sport.
Some would argue that in youth culture especially, Nike is a fashion brand. This
creates its own opportunities, since product could become unfashionable before it
wears out i.e. consumers need to replace shoes.

There is also the opportunity to develop goods such as sport wear, sunglasses and
jeweler. Such high value items do tend to have associated with them, high profits.

The business could also be developed internationally, building upon its strong global
brand recognition. There are many markets that have the disposable income to spend
on high value gamegoods. For example, emerging markets such as China and India
have a new richer generation of consumers. There are also global marketing events
that can be utilized to support the brand such as the World Cup (soccer) and The
Olympics.

Threats.
Nike is exposed to the international nature of trade. It buys and sells in different
currencies and so costs and margins are not stable over long periods of time. Such an
exposure could mean that Nike may be manufacturing and/or selling at a loss. This is
an issue that faces all global brands.

The market for gameshoes and garments is very competitive. The model developed by
Phil Knight in his Stamford Business School days (high value branded product
manufactured at a low cost) is now commonly used and to an extent is no longer a
basis for sustainable competitive advantage. Competitors are developing alternative
brands to take away Nike's market share.

As discussed above in weaknesses, the retail sector is becoming price competitive.

This ultimately means that consumers are shopping around for a better deal. So if one
store charges a price for a pair of gameshoes, the consumer could go to the store along
the street to compare prices for the exactly the same item, and buy the cheaper of the
two. Such consumer price sensitivity is a potential external threat to Nike.

Nike Marketing Case Study

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I. Definition of the Issue
The Nike case study has presented the company in different angles with all aspects having
different concerns. The main issues in this case that we would focus on are concerning the
future of Nike. We would want to analyze if Nike has chosen the appropriate targets for new
marketing efforts. We would also discuss if the company can be successful in gaining market
share among women. These issues are what we think are going to affect Nikes performance
in the coming years.

II. Objectives
Our papers objective is to generate strategies that may aid Nikes development in response to
the issue through a quantitative analysis.

The paper also includes a potential problem analysis to help strengthen the strategys
defenses and enables the company to predict and anticipate future issues.

III.S.W.O.T. Analysis
Strengths

Nike has several strengths that enabled them to be one of the largest and one of the most
famous brands in the athletic footwear industry in the world. The first strength is the
products strong brand recognition. Almost all people know the brand Nike and its logo, and
usually even without the brand name the customer can still recognize the brand by looking at
the check or swoosh logo. The second strength could definitely be contributed by its
distribution. In the U.S. alone, there are around 18,000 retail accounts and outside the U.S.
there are around 30,000 international retail outlets that sell Nike goods . Nike also operates a
futures program, wherein retailers can order up to six months in advance. They sell their
goods through independent distributors in 200 countries around the world. The next strength
could be attributed to its research and development. They have a team which observes
athletes in order to provide them with the latest technologies in footwear and apparel. Since
Nike contracts with foreign manufacturers to produce their shoes, the company does not
really require a huge investment in machines and equipments, which is strength because they
have fewer expenses. Having a broad range of goods also contribute to Nikes success,
because it gives the consumers a chance to choose what they want. They have Nike
performance focusing on athletes, Nike active which includes gym to street wear, and Nike
Fusion stylish clothing made of high performance fabrics etc With regards with the
company itself, they have good marketing. Nike has online stores where people can buy or
browse for new designs etcThey market their product as high-performance goods designed
with high-technology features. Lastly, another strength is their strong management style and
culture. Their founder created a strong culture based on loyalty and camaraderie, he trusts
these employees to Just Do It. They continue to follow their founders philosophy which is
Play by the rules, but be ferociousIts all right to be Goliath, but always act like David.

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Weaknesses

Nikes main weakness is their lack of focus on one main product. This is because of Nikes
commitment on having diversified goods for athletes, meaning having too many different
goods available to sell to their customers. Due to this, they tend to have divided attention on
each product line. Although having many different goods might be advantageous (increased
deals, additional market penetration, fall back in case one product fails), Nike should also
consider the time & resources spent in maintaining each product.

Another weakness that we could identify, although not as great as the first, would be Nikes
pricing strategy. Compared to their competitors, Nikes goods tend to be more expensive
than those of their competitors. But this may be due to their goods reputation, being made
from the highest quality materials, extensively researched and developed and tested by
extraordinary athletes around the world.

Opportunities

One of the opportunities that we quickly saw is the companys efforts in penetrating the
market. Nike is currently focusing on Generation Y market (age category) and women
(gender category). Due to the strong increase in demand for clothing & footwear for leisure
eventsby Generation Y representing a large sum (of about 60 million people) of potential
consumers, Nike addresses this by acquiring Converse, increasing its offering in the currently
popular retro and classic shoes.

Besides from acquiring Converse to address the issue on Generation Y, Nike has begun
marketing towards women more aggressively by creating Nike Goddess stores and
introducing womens yoga shoes in an attempt to appeal to health conscious women.

Lately, buyers have become more brand conscious giving Nike an edge over their
competitors. Nikes name and logo present high consumer awareness that the company does
not need to include their name on each product that they produce. The swoosh logo is all
that is needed. Also, some legal/regulatory issues provide many opportunities not only for
Nike, but for international operations because of easier access to different countries.

Threats

As said in the article, Footlocker has decided to lessen the purchases of Nike shoes because
they want to sell low priced shoes and Nike shoes are quite high priced. This poses as a threat
to Nike because Footlocker accounts for 10.9% of Nikes revenue. They lost millions of
dollars because of this and if not addressed right away might cost them further loss of
revenue.

Future occurrence of terrorism and disease also is a threat to Nike because it is something that
they cannot control. An example is the September 11 attacks which slowed down the
economy. It affected not only the shoe manufacturing industry but the whole country and the
whole world as well. Diseases like SARS also threatened Nikes deals as shoes were coming
from Asia where SARS was reported to have come from. Likewise, the economic and
political condition of the countries manufacturing Nike shoes also is something that they have
no hold of which poses as a threat to Nike because shipments of goods may be delayed

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which would cause loss of deals and revenue.

Because Nike has a strong brand name, controversies affect the company in a negative way.
Some Nike followers may be turned off by controversies about Nike not being ethical, which
may or may not be true. This causes loss of deals for the company.

High level competition of Nike with Reebok and Adidas also is a threat to the company as all
of these firms have almost the same product line and target the same market. This is why
strategies are very important for Nike.

Limited exports of Nike goods due to legal restrictions also pose as a threat to Nike as the
supply of the goods internationally is limited as well. They cannot sell to other countries as
much as they would want to because of the limitation set by the government which decreases
their potential for more deals and revenues.

IV. Strategies
Upon careful analysis of Nikes strengths, weaknesses, opportunities and threats, we focused
on developing strategies that would strengthen Nike in terms of marketing, distribution, and
management.

Distribution
1) Strengthen distribution in regions where Nike is currently losing deals, these include
footwear in the U.S. Region; and footwear, apparel, and equipment in Americas region.
Along with these, a strategy of penetrating emerging markets in developing countries (e.g.
China) is also to be implemented. Easy access to Nike goods would result in higher deals and
revenues.

2) Build more specialty stores or consignment with other existing local specialty stores
catering to specific sporting needs like Stoked, Inc. for skating/wakeboarding/snowboarding,
Surf world Co. for surfing and other water sports, Golfers Choice for golf, etc. Providing for
different gameneeds increases Nikes followers.

3) Give a more aggressive take on online stores and allow consignments with other existing
specialty stores in this industry like www.skateboard.com and www.ccs.com for skating
(Hurley), and www.iloveyoga.com for yoga and other women dominated activities, etc.
Going into e-commerce can increase deals because of increasing internet users.

Marketing

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1) Develop marketing strategies that would further push its goods to its diverse target
market.

a) Sponsorship of kid-friendly programs to widen the customer base of the target market of
kids-adolescent like after school programs and summer/winter programs. (Hurley in summer
skateboarding, surfing lessons, and snowboarding lessons in winter, Impact Golf
Technologies in golf lessons, and other such subsidiaries in soccer, basketball, baseball, and
other programs). Target children and youth to make them lifelong Nike followers.

b) Internet users have continuously increased due to advancements in technology. Nike has to
be more aggressive in advertising through the internet and music videos that would cater to
the target markets of each division especially to the emerging fashion scene and the rise of
more active women.

c) Sponsor women empowerment programs to widen the customer base of active women
since Nike is currently concentrating on women.

Management
1) Strengthen office relations by offering after office programs and family social gatherings
for the employees (picnics, out of towns, etc.) to develop network and good relations among
employees.

2) Closer observance in manufacturing managements (sweatshops) especially on foreign

bondmanufacturing. Frequently review the employees code of conduct and quickly respond
to any change needed by the evolving company culture. This is to ensure that the company is
following ethical standards to avoid controversies.

This is to be able to be flexible to issues or problems and adapt to an environment that the
company cannot control.

V. Conclusion and Recommendation

By catering to the target markets specific needs in fields of sports, fashion, and lifestyle,
Nike will be able to widen its consumer base and generate more revenue. This is done by
closely monitoring the implementation of the proposed marketing and development
strategies. There have also been management issues in the past, and Nike should strive to face
these issues and prevent the occurrence of such. As a company being socially responsible, a
quick response to emerging issues should also be consistently done.

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VI. Potential Problems
Problems may arise as a result in such changes proposed in form of distribution, marketing,
and management strategies of Nike.

Distribution

Response to penetrating emerging markets might not be favorable to the company. If such a
scenario arises, this could prove detrimental to the company since money would be invested
in such an action.

Marketing

Strategies under marketing might not be welcomed as positively as expected, and if such
occurs, the company will lose money invested in such programs as well as in internet/music
videos.

Management

In the case of consistent strict observance in foreign bondmanufacturing, this may not be easy
to pursue since difficulty in international relations are bound to appear due to distance, barrier
communication, and as noted in the case illnesses that form on other countries (e.g S.A.R.S.)
Aside from this, feedback may not always be accomplished on time, thus failure to respond
quickly to issues may happen.

PESTLE Analysis of Nike

The focus should be on the macro environmental factors of Nike, as it is an international
organization, so consists of political, economics, society, and technology.
Political Analysis
It is the responsibility of government to create such economic policies, which will have a
great effect on the growth of business. In this context, Nike, has been aided greatly by the US
policies, hence providing them with the opportunity to modernize their goods (Cotter, et. al.,
1988). And this support by the US government and also low interest rates, the international
competitiveness of the tax system and stable currency conditions, help a lot in the formation
of the foundation, which might have been sensitive to the growth of the Nike.
Economic Analysis
Like for many other groupas well firms, the biggest threat economically would be the
economic recession. The recession always have adverse effects on the growth and
advancement of Nike. As it is known that the US economy is facing a huge downturn, so in
this context the purchase by the consumers are also decreasing down (Keller, 2002). Besides
US, Asias economies downfall too has its effects on the Nike, as many of its goods are being
manufactures in the Asia as well. And consequently the voices of labor work and
are also increasing rapidly.

Social Analysis
Since people are getting health conscious day by day, so I order to remain fit, many of them

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join the fitness clubs. And joining fitness clubs mean more demand of the Nike goods like
shoes, etc. Nike has always been the first choice of people when it comes to buy something
sport/fitness related. On the other hand Nike has failed to address the problems like that of
the condition of labor and factory at different locations of the production in Asia (Clancy, et.
al., 2000). This has its negative effects on the Nike ad its sale.
Technology Analysis
Nike very efficiently applies all the marketing and technology tactics. It, mainly applies,
marketing infosystems to the economics of innovation, differentiation, segmentation etc.
So, in short with all these, Nike has been able to maintain its name in the market and its
positing as well and works effectively on its production and marketing to boost up its sale.
Legal Analysis
Being a multinational, Nike has always maintained the business ethics. It has always paid all
due importance to remaining environment friendly. Legal issues have been handled by Nike
as per the surrounding they have been operating in. Whenever any company enters a new
country, it has to worry about the existing laws and practices. Same is true for Nike.
Whenever Nike has entered a new region or country, the local trade and other laws have
marked an impact over the way things are done at Nike. Nike however has always believed in
staying away from problems. Every time they have entered a new country, they have done so
after checking the local laws in detail. If in case the regional laws are totally against what
Nike can offer, they have opted to stay out of trouble. For example, the government policies
with regard to foreign investment and franchise business are different in the developed world
and the under developed world. Nike has always paid attention to this issue. In case the
government is too friendly or too strict with them, they have preferred to take one step at a
time.
Environmental Analysis
The study of environment not only includes our overall environment of the earth but also the
micro and macro environment surrounding a business. Nike has proved it responsible in all
three cases. As far as the global environment is concerned, Nike is ISO certified from global
environment, pollution and carbon foot prints tracing point of view. Nike is a strong believer
of green environment and as per requirement they have brought changes in the way things
work and the processes to ensure that environmental factor has been taken care of. The
objectives behind them are fulfilling customers expectations, contributing in creating an
environmental friendly atmosphere, motivational boost in employees and being on top of
legislation. A positive attitude has been indicated in a study towards social and environmental
responsibility on part of firms around the world. Nike has proved it time and again that it is a
responsible organization.

Work Environment conditions.-

According to me Nike should not be wholly responsible for the working conditions in some
of the Asian countries, because Nike completely do not own the factories. The work and the
manufacturing are subthinto a local or domestic company in that particular country.
Although Nike may be technically removed from responsibility in some areas, it clearly has
the obligation to be certain that exploitation by subcontractors do not occur. As a worlds
biggest and largest manufacturing company of gameand athletic gear they should have some

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Moral responsibilities and Ethics in doing the business. Surely the pay and working
conditions that the workers of subcontractors receive is unpaid in large part to the bondthat
has been negotiated by Nike. If Nike had chosen to make improved working conditions a part
of the arrangement,
those benefits may have been passed on to the workers. Still, Nike is a publicly owned firm
whose goal is to improve the wealth of its shareholders. The workers in these Asian countries
were happy, even eager, to accept the conditions that were provided as a manufacturer of
Nike.
The reason is that those wages were probably equal or superior to wages available from other
sources. If Nike were to leave the country because of the pressures placed upon it, the
workers would undoubtedly suffer greatly.

Labor standards.-
Nike has the responsibility to hold subcontractors to those conditions that exist only in the
subthincountries. Nike has to follow the rules and conditions of the host country and see to
that they do not violate or break any rules in that country. If it insisted on prevailing
conditions in the United States, there would be little reason for Nike to seek contractors from
outside countries. However, through pressure or contractual concessions, it is possible for
Nike to seek ways to improve the conditions of workers in supplying countries. In doing so,
Nike may find that it receives some public relations benefit rather than undergoing the effort
and the cost of developing Brand Image.

Low wages.-
Nike probably should not be held responsible for the pay rates of its Indonesian
subcontractors. The worker pay, and resulting low cost of goods, is a major reason why Nike
has thinwith these subcontractors. The result has been to given jobs to Indonesians who might
not otherwise have them. It is also not clear to what degree Nike can influence the pay that
subcontractors pay to workers. Therefore, it is not fair to be continually critical of Nike in
that regard.

Negative Publicity, Question of Image.-

There is certainly major room for Nike to improve on its handling of the negative publicity.
A defensive policy of denial is always more poorly received than an open admission of fault

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with constructive strategies for improvement. Part of Nikes problem was that it didnt
address the total criticisms, and chose to answer the age issue which was started by (Mr.
Philip Knight) rather than the issue of total lower working conditions. Its strategy to
announce policy change at large public relations functions appeared insensitive, rather than
addressing criticism directly, on the spot, and with corrective action strategy in hand. From a
policy perspective, it would be better to suggest programs for training of workers, changes in
suppliers and a general improvement of the plight of the worker. The development of
advisory boards and the involvement of interested agencies and outside groupto achieve a
consensus for the improvement of working conditions might be more effective, both from a
PR point and a policy initiative than to continue to with its own inward looking policies.

Changes in the current policies.-

Nike needs to make changes in its policy, if only because its current policy has served it so
poorly.
Recruit new staff and training- In response to the growing criticisms, Nike should
create several new departments for Egg-(Labor Practice department, environmental issues
department). Nike should appoint people dedicated to labor and environmental
compliance, all located in countries where Nike goods are manufactured. These
employees should visit suppliers footwear factories on a daily basis Nike managers
should conduct on-site inspections on a weekly or monthly basis, depending upon the size
of the firm. By doing so Nike will have a track on its subcontractors and should overcome
the Labor problem and cross culture differences.
Increase Monitoring of its suppliers (Subcontractors) Nike should increase
its monitoring over its suppliers and make a strict company policy for inspection which
should meet the firms standardized rules for labor and health.
One strategy would be to involve international agencies to assist with policy adjustments
that will help to correct the problem.
Another change might be abandoning a defensive, its not too broke strategy and
admitting the problem, while outlining strategies for improvement. But Nikes major
obligation is to its shareholders and to continuing to operate in an increasingly
competitive marketplace. It does the plight of the worker not good if Nike adopts policies
that eventually cause its business to go under. The question of changes that make the
company uncompetitive is a real one that is addressed by international business managers
all the time. Clearly, Nike has to remain competitive while still causing change to occur to

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 its workers, and that is a challenge that is formidable.

WRC VS FLA.-
Perhaps not any more than to argue that the WRC is a tool of organized labor. If the FLA is
incapable of conducting independent audits of international sweatshops, then the charge may
be partially true. But the WRC, funded and backed by labor unions, refuses to meet with
firms because it would put at risk its independence. With that kind of posturing and
intransigence, both sides appear to be culpable with a highly emotional issue.

Global solution.-
Sweatshops are a global problem. A possible solution I would suggest is to change, or at least
modify, the conditions under which sweatshops continue to function. Universal workers
Rights, with minimum age and minimum wages could be a solution. Still, certain countries
will always have the advantage of low cost labor and will exploit that advantage in the
international marketplace.
Another faceable solution would be, to design a standard code of conduct and make the
Sweatshop firms to enter into an agreement for protection of labor exploitation; the firms
should be monitored by external organization. They must be certified by some of the
organization to do business overseas, like (ANSI - American National Standards Institute,
WHO, Co-Op America, FTF-Free Trade Federation, ILRF-International Labor Rights Forum)
However, the inequality between the great differences in labor cost can be lessened, but it can
best be done by continuing to promote world free trade and continuing to improve the quality
of life in developing nations, where low cost labor is most abundant.

Case study Issues

From the analysis the major issues which I think Nike should develop to gain back its face
value and implement the strategies for doing business are.
1) Health and Safety Issues As we seen in the case one of the issues Nike is facing is
Health and safety issues. Reporter Roberta Basin when she visited Nike Factory in
Vietnam she said. The signs are everywhere of an American invasion in search of cheap
labor. Millions of people, who are literate, are disciplined, and desperate for job. It takes
25,000 workers, mostly young women, to just do it.

This statement clearly gives a picture of working conditions of the factory, where 25,000
workers work in unfavorable conditions. But contradicting to my statement, we can also

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 see 25,000 jobs, and job opportunities. In a country where half of the adult population do
farming and earns less than 1$ a day. Where as in Nike factory they earn 2.28$ a day
which is twice the income earned by farming. Although it is not Nikes fully
responsibility to take care of health and safety into consideration it is the work of
subcontractors.
But again taking into consideration firms reputation and as a moral responsibility Nike
should take action against the working conditions of the work place and workers

2) Wages Is the major issue I think Nike is facing. The company is constantly getting
allegations and criticism on this point. In the case its mentioned that an 11 year old
Indonesia makes 14 cent per hour, this amount cannot be compared with the minimum
wage in US. But I think it all depends on value of currency of a particular country if a
countries currency is lower than the US dollar at the end of the day the workers are
getting paid in US dollars. Thats what Nikes spokes a woman, Donna Gibbs argues on.
She countered that this statement was in fact false. According to Gibbs, the average
worker makes 240,000 Rupiah which is 103$ a month working a maximum of 54 hours a
week which is pretty much sufficient for a worker to fulfill his basic needs. According to
my analysis and perspective Nike should follow the basic wage rule of a country, which
Nike is following, it is Impossible to set a minimum wage rule to all the countries, as
mentioned above all the value of currency differ from country to country.
3) Ethics The main last important Issue I would like to mention is the Ethics in business,
as a business consultant I think Ethics is very important in any business, many of the
International business are rooted in the fact that political systems, law, economic
development, and culture vary significantly from nation to nation. What is considered
normal practice in one nation may be considered unethical in another. Because they work
for an institution that transcends normal borders and cultures, managers in multinational
firm need to be particularly to these differences. In the International business setting, the
most common ethical issue involves employment practice, human rights, environmental
regulations, corruptions, and the moral obligation of multinational corporations. Nike
should implement some ethics like
Employment Practices- If workers in home country are working for 12 hour a day it
should be the same in the host country, it is hard to set up this rule as mentioned before
every countries working environment and work cultural is different. I suggest Nike

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 should standardize some rules about the working conditions and working environment
with their subcontractors before subcontracting the manufacturing of goods , this might
change the working conditions of two nations and bring them together on a single
common platform.
Human Rights- Question of human rights can arise in International business. Basic human
rights still are not respected in many nations. According to me if Nike is doing business a
particular country they should respect and follow the human rights rules they cannot
exploit the workers of that country.
Environmental and pollution- this is one of the most important ethical issue. This issue
arises when environmental regulations in host nation are inferior to those in the home
nation. Many developed nations have substantial regulations governing the emission of
pollutants, dumping of toxic chemicals and the use of toxic materials in work place and so
on. I think if a company wants to do business internationally they can do so but they do
not have the right to pollute that country even though if the host countries law against
environmental issue is week, environmental issue is not the issue of a particular country it
is a global issue.
Corruption- has been a problem in almost every society in history, and it continues to be
one today. There always have been and always will be corrupt government officials.
International business can and have gained economic advantages by making payment to
those officials. Corruption is mainly seen more in developing countries.
4) Child labor Child labor is a major global issue, in all underdeveloped countries where
there are no jobs less wages, children have no other option but to work. In some countries
age limit was never considered, but according to international labor organization Nike
violated the labor law. Employment of child labor is illegal, but in developing nation with
more than 40% of people illiterate and unemployed child labor is in practice, another
reason for child labor to prevail in these nations is because of government not taking any
action, for the development of child labor.

These were the key issues I wanted to highlight from the case because the sign of a good
company reflects the firms ethics and respect to other nations. Nike should work on these
three issues and take these issues as opportunity for future development.

Conclusion- after Intensive investigations our report concludes that all the un-fair working
conditions, health and safety issues, low wages problem have been caused because of the
subcontractors. The subcontractors were very partial and un-ethical towards the employees

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and the working conditions that prevailed in outsourced countries. They made the workers to
work on deadline basis, till the assigned deadline was met. The employees were not given
their daily wage until they finished their daily Kota of manufacturing of shoes and
accessories, another reason for sweatshops to prevail in underdeveloped countries is because
of their government. The government, in an attempt to improve poverty and unemployment,
has sometimes opened doors for labor abuses. The fact that the government cannot deal
effectively with the problem of labor abuse under their very own organized programs shows
that the people working in the sweatshops cannot rely on outside forces to clean corrupt
labor practices; the industry must be changed from within. After doing the analysis of the
case the main reason behind the sweatshops were un-ethical practice of business, the root
cause of all the sweatshops is Nike being un-ethical in doing business, before subcontracting
the work to subcontractors if Nike had an agreement of working conditions and labor
protection the problem would had not taken place. From our research and as a business
consultant I think that Nike was unethical in doing business internationally, but again
contradicting to my point, I say if it is unethical to do business in a particular nation it may be
considered ethical in other nation.
Recommendation- Following on from our analysis and conclusions, we recommend that,
Nike should develop a standardize format, for labor protection and work environment. All the
subcontractors should enter into a bondwith Nike and should follow the firms rules for labor
protection and the working environment; the sub-contractors should meet the firms format of
production to gain a contract. Another solution that we recommend is Nike should appoint
inspection managers in all countries where the manufacturing takes place. The inspection
managers should inspect the factories every day and give a weekly report back to home
country, if the managers find that the subcontractors are violating the agreement they can
terminate the agreement and take legal actions. For the wages issues Nike has to follow the
local wage law of that country, and not of the international standards. Because as mentioned
before currency value and daily wage rate differs from country to country. As well as ethics in
business are concerned Nike should first incorporate some business ethics like human rights
protection, environmental issues, child labor protection. Nike should not do business with any
of the firms who do not meet their acceptation of doing business; Nike should develop a win-
win strategy. Instead of spending millions on gamestar for endorsement Nike should spend
money on developing a friendly working environment for workers.
And for last after fulfilling and incorporating all the above recommendations Nike can

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 change their punch line. If they wish so, from just does it to us just do it? This says that
we just made a difference in the world of sweatshops.

RECOMMENDATIONS TO THE MANAGEMENT

Nike must stop all child labor practices.
To develop brand salience, Nike must opt for massive advertising.
Nike must understand that the competition is tough and steps should be taken to
nullify the competitors strategies.
People should be made aware of ACG goods for which Nike must sponsor extreme
sports.
A CEO with better leadership skills must be appointed for Nike.
Since the employee turnover is high, Nike must take steps to reduce it for which they
must provide flexibility and authority to the employees.
New segments in the market should be explored to increase market share and deals.
Nike should focus more on corporate social responsibility so that a positive image of
the brand in developed especially in areas where Nikes goods are sold the most.
Nike must adapt clear consumer focus in all its practices.

Conclusion

By catering to the goal markets detailed needs in fields of sports, fashion, and lifestyle, Nike
will be able to widen its consumer base and generate more revenue. This is done by closely
monitoring the implementation of the proposed marketing and development strategies. The
gap between the elevations works done with the goals expected is minimal.

Client satisfaction with respect to eminence and usage is the highest which in turn boosts the
morale of the executives working hard with their marketing strategies.

Nike has always transformed its marketing policies appropriately by captivating the global
and state changes in any region and hence coming out to meet their discrete needs.

Thus boosting the faith on the brand NIKE.

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These all when mutual turn into the USP of Nike and clutches up its market share universally
in proportion.

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