Inter-Organizational Relationships

Running Head: E-BUSINESS STRATEGY OF NIKE
E-Business Strategy of Nike
Name of the Student:
Name of the University:
Author Note:

1E-BUSINESS STRATEGY OF NIKE
Introduction
The following report is based on a brief study about the organization Nike where the
key objective of the report is to understand the impact of digital technology in the respective
organization under all aspects. The other part of the report is based and is related to certain
factors that are associated with the system of reintermediation and disintermediation factors
that are associated with the respective industry the organization currently operates. Along
with this identifying the core major implications that are related to the particular industry the
organization is operating is considered to be the key major part of the report. The other part
of the report consist of certain recommendation measures that clearly demonstrates the
systematic usage of social media and social commerce that is required to be adopted within
the organization in order to maintain better system of competitive advantage and
sustainability in the future.
Overview of the Selected Firm
As compared to the functional aspects that are associated with the respective
organization Nike in international market, it is a stated part that the brand Nike is considered
to be Americas famous Multinational Corporation which operates under different business
segments that are associated with manufacturing, design, development and marketing
operation based on international markets. According to the online market operations that are
associated with the respective company, there major emphasis in order to bring customer base
in the market is through the process of making the best use of social media applications such
as instagram and Facebook.
This helps the organization to reach the target market customers through the system of
adopting advanced competitive strategies in their market functioning’s. The offline market

2E-BUSINESS STRATEGY OF NIKE
strategy of the organization is to consider beneficial factors that are related to the customers
which they believe to be their core area of importance, customer satisfaction is considered to
be the key objective of the organization in the international market to remain more unique
and innovative compared to market performance of their competitors. Nike operates in the
international market under two major forms that are associated with the system of business to
business to business to market strategies, where they are considered to be the most successful
organization in the global market which makes the adaptive usage of social media platforms
for their key success factor in business operations.
The generic market strategy of the organization is associated with the system of
gaining better mode of competitive advantage under certain factors that are related to cost
factor of the company in the market. The core major strategy adopted by the company under
the system of their generic strategy is through the process of minimizing the cost of
production in order to bring strong control over certain factors that are related to profitability
and selling price of the respective organization in the market.
Business Model Canvas of Nike
Key partnerships
 Material
providers
 Contract
manufacturers
 Brands
portfolio (Nike
brand,
Key activities
 Marketing
through
offline and
offline
platforms
 Sponsoring in
different sport
Value propositions
 Nike focuses
on culture of
intervention
 The
company
introduces
the products
Customer
relationships
 Sustainable
innovation
strategy is
being followed
 24hrs
customer
Customer
segments
Demographic
segment
(Middle clas
and lowe
middle clas
people)

3E-BUSINESS STRATEGY OF NIKE
Converse and
Hurley)
 3D printing
partnership
with HP
designs
 Payment
providers
 Retail accounts
events
 Distribution
and logistics
through
ecommerce
and offline
platforms
 Accessories
and services
for solving
problems for
the new
generations.
 In order to
improve
athletic
performance
technologica
l innovation
has been
introduced.
 Eco-friendly
products
have been
launched
 Unique
personalized
concept is
being
followed by
the
company.
service is
being provided
by the
company
 The company
has
contributed in
different
community
development
activities
 Assuring
standard
quality of
product using
the recycled
materials the
company has
established its
strong image
in the fashion
sector.
 Gift cards for
the loyal
customers
Age grou
(15-50)
Gender (mal
and femal
both)
Psychographi
segment
(people wh
are fond o
innovation
and
Sports lovers)
Geographic
segment
(mostly th
urban area)

4E-BUSINESS STRATEGY OF NIKE
 Free delivery
and fee return
policy are
being
maintained.
Key resources Channels
 Nike.com
 More than
10000 owned
retail stores
 Independent
distributors
 TV
 Licensees
 Events
 Media partners
(Facebook,
Twitter and
Instagram)
Cost structure
 Raw material
 Cost of goods
 Research and development
Revenue stream
 In the year 2018, $22.3 billion revenue i
Footwear that has contributed almost 61%
in the total revenue.

5E-BUSINESS STRATEGY OF NIKE
 IT infrastructure
 Taxes
 Sponsorship
 Marketing
 Stores
 In the apparel sector, $10.7 billion revenu
has been gained which has almost the 29%
of total revenue.
(Created by author)
Impact of digital technology in Nike
Micro environment
The McKinsey 7S model
The model been developed combining the 7 key elements in an organization, which can
significantly contribute in achieving the organizational objectives. The 7 key elements are
strategy, structure, system, shared values, staff, style and skills. In order analyze the micro
environment of Nike, McKinsey 7S model has been described below
Strategy
Nike has brought a big change in its ecommerce strategy as it has decided to stop selling its
apparel and sneakers on the Amazon’s website directly. In order to expand its business
aggressive ecommerce strategy has been adopted by the company by elevating customer
experience. In order to create unique trend in the market as well as satisfying the customer
needs, the company has adopted this strategy (Davenportand Westerman2018). As Nike is a
popular name in the sports industry and due to its market demand, the customers will come to
find Nike. The company has adopted to stop selling its product through amazon as Nike was
not able to get control over the Amazon market place. Introducing bunch of mobile apps,

6E-BUSINESS STRATEGY OF NIKE
training club, shopping centric retail app and Run Club, the company has aimed to contribute
the society (Elberse, Aikenand Johnson2018). Therefore, Nike mainly focuses on-
 Increasing market share
 Creating trendy products
 Improvising the Nike product selling app adding more features
 Maintaining the cost leadership practice in the market
 Nike aims to increase its ecommerce sales almost 50% within coming 2020.
Structure
Following the geographic divisional organizational structure, Nike has become the global
operator. Maintaining its global corporate leadership strategy the company has maintained its
uniqueness in the regional markets (Langa2018). Nike operates in almost six segments and
generated almost 8454.00 million revenue in the year 2015. In more than 45 countries, Nike
has maintained its operations. Following the authority establishment organizational structure,
the company maintains its operations in all over the world.
Shared values
Nike has developed its business values for inspiring the emerging innovation trend.
Maintaining sustainability authenticity innovation and performance standard the company has
developed its customer centric business approach in the market (Yao2019). On the other
hand, the mission statement of the company is inspiring the athletes through innovation.
Promoting strong lifestyle, the company aims to develop relationship with the customers.
Skills
Nike has developed its string image on the market by introducing innovation as well as
efficiency in the market. The company has introduced strong advertising strategy ion the

7E-BUSINESS STRATEGY OF NIKE
market through different offline and online platforms. The company has improved its
overseas operation. The company has appointed most skilled employees to carry the strong
branding activities in the market. The company has developed strong ecommerce applications
for enhancing its retail business.
Staffs
Nike has total numbers of 76.7 thousand employees across the world. Since beginning,
Philip H knight is the strong specialized team member in Nike, who has made the significant
contribution in terms of maintaining its quality of performance (Reddy2017).
Style
Nike has significantly promoted teambuilding activities in the workplace for ensuring better
corporate culture in the workplace. Incorporating the competitive spirit in the employees, the
company has tries to maintain its efficiency in the market.
System
Nike carries the 80% of market share and increasing investment in its research and
development activities, the company has ensured its strong presence on the internet
(Shirisha2018). In order to reinforce the brand position, focusing on the broad sustainability
and strong guidance, the company has focused on maintaining its standard supply chain.
Macro environment
PESTLE analysis
Situation Analysis
Political Political environment in UK makes the significant impact on trade
activities in this country (Childsand Jin2018). Uncertainty and

8E-BUSINESS STRATEGY OF NIKE
several political movements are the major issues in UK market
that can bring the negative impact on digital service activities
introduced by Nike.
Economic Weak economic growth as well as corruption is creating huge
impact on UK economy. Analyzing the economic growth in this
country in the year 2019, it has been identified that growth rate
slowing increasing, which can create challenges for the company
to gain long terms advantage. In this particular situation, it is quite
challenging for the company in terms of enhancing digital services
in the market. However, especially in the ecommerce sector,
steady growth has increased the sales rate, which can contribute in
enhancing the opportunities in the market (Jinand Cedrola2017).
Social It cannot be denied that economic status in a country, significantly
impacts on the social standard. In the modern business
environment, digital platforms have become highly popular for
introducing as well as selling products (Hofmann, Goldand
Curtin2019). Large portion of the UK population are literate and
due to their tendency towards adopting innovation has impacted
on dragging their interest towards digital service. Therefore, the
social factors in UK is in favorable condition for Nike.
Technological In the mobile business environment technological has become an
important contributor in terms of ensuring customer satisfaction as
well as maintaining the uniqueness in the market (Hsieh,
Toffeland Hull2019). Therefore, improvising the personalized
app, the company can improve its ecommerce operations in the

9E-BUSINESS STRATEGY OF NIKE
market. Due to availability of technological opportunities as well
as adoptability trend among the people it can be easier for Nike to
improve its digital service in the market.
Legal Legal factors in a country, not only impacts on the customer
relationship management practices in the market but also it has an
important contribution in the trade sector (Jinand Cedrola2017).
Strict employee standard as well as trade taxation policies, can
create little difficulties for operating in the market. In this
situation, it can be said that the legal situation in UK is in
favorable condition for Nike.
Environmental In case of Nike, the company tries to use the eco-friendly
materials as well as organic polyester in case of maintaining its
strong commitment towards environmental sustainability. On the
other hand, it is true that by reducing the carbon emission the
company has maintained its ethical practices in its business
operation. Analyzing the environmental situation in UK, it has
been identified that the government has given positive attention
towards improving the waste management policies in the trade
sector. In that situation, environmental situation in UK can be in
the favorable condition for Nike.
Competitors
Porter’s five forces
In order to analyse the competitive position of Nike in the Sportswear and apparel market,
Porter’s five force analysis has been done.

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Figure 1. Porter’s five forces
(source: Cedrola 2017)
Situation Analysis
Bargaining power
of the customers
There is no doubt that Nike is a popular name in the global
Sportswear are apparel industry. Due to its strong popularity in the
market, the company has recently stopped selling its products
through amazon as it knows that people will get dragged towards
Nike due to its standard quality of product as well as brand image
(Jinand Cedrola2017). Introducing the eco-friendly materials the
company has maintained its uniqueness in the market. In that case, it
can be assumed that bargaining power of the customers is low.
Bargaining power
of the suppliers
Especially in the Sportswear and apparel industry, increasing
opportunities in the market have helped the entrepreneurs to develop
business. With increasing numbers of companies, the number of
suppliers have also got increased. However, in case of Nike, the

11E-BUSINESS STRATEGY OF NIKE
scenario is quite different. In order to maintain its uniqueness, Nike
only operates with the 5 key suppliers, which has increased the
bargaining power of the suppliers.
Existing rivalry In the emerging business environment, New balance, FILA, Under
Armour, Reebok, Adidas and Puma are the important competitors of
Nike which are already gained the larger portion of market share
(Hsieh, Toffeland Hull2019). On the other hand, it is true that due to
strong dominance of these companies in different ecommerce
platform, it can be quite challenging for the company to compete
with this existing competitors.
Threats from new
entrants
It is true that due to various growth opportunities in the particular
sector, various companies have started developing new business in
this sector. However, compared to Nike, the new entrants will not be
able to create any kind of threat in the market due to the monopolistic
control of the company in the global market. On the other hand, it is
also true that in case of reaching the position of Nike, it will take
long time for the new companies. Therefore, threats from new
entrants is low for Nike.
Threats from
substitute products
In the Sports and apparel sector, introducing the ecofriendly and
conformable products in the market, the company has set its bench
market (Hsieh, Toffeland Hull2019). On the other hand, contributing
in different environmental sustainability activities, Nike has
developed the recycled shoes in the market, which is giving tough
competition to the other competitors. Therefore, in case of Nike,
threats of substitute products are low.

12E-BUSINESS STRATEGY OF NIKE
Evaluating the concepts of disintermediation and Reintermediation
According to the operational prospective that is related to the market operation of the
organization in the market, it is considered to be an understandable part that certain measures
and strategies that are associated with the system of disintegration and reintegration factors in
the market generally plays an adaptive role. Certain factors that are associated the process of
disintegration involves removal of several intermediaries like brokers or distributors that
formerly connected an organization to its major customers in the market.
On the other hand, reintermediation system involves the construction of fresh
intermediaries between the suppliers and customers availing them certain service assistance
that are related to the system of product evaluation and supplier search in the market for the
organization to adapt strong operation through gaining better mode of competitive advantage.
Vertical and Virtual Integration in Business
As compared to the functional aspects that are associated with the respective
organizational operation in the global market, several organizations generally make the best
use of new intermediaries in the market to adapt smoother operation to their business in order
to remain more sustainable and competitive in the market. These are related to certain
measures that are associated with the system of vertical and virtual integration. Some of the
beneficial factors that are related to the system of virtual integration function in the market
operation of the company generally involves, this helps in smoothening the supply chain

13E-BUSINESS STRATEGY OF NIKE
system of the company where it understands the key area of requirement measure to be
adopted in the business to make it more effective and advanced. Vertical integration helps the
business to make the service related to the system of after sales and distribution function
more effective under all aspects.
The other of vertical integration is that, this helps in increasing the entry barriers for
the new entrants in the market. On the other hand, several operational prospective that is
related to the system of virtual integration function helps the business under the area of
improving factors related to the system of control and process coordination measures along
with supporting the organization under the area of managing demand volatility. The core
factor of adopting the function of virtual integration in business can be that this allows the
manufactures under the area of substituting information for inventories which makes the
organization more competitive under systematic utilization of organizational resources on all
terms.

14E-BUSINESS STRATEGY OF NIKE
Consequences Faced by Nike (Disintegration and reintegration Strategies)
Some of the major issues and consequences that are faced by the respective
organization Nike in the international market through the process of adopting certain
strategies that are related to the system of disintermediation and reintermediation were
considered to be the major area that created a rapid impact in the organizations operation in
the market. The first and foremost issue that were associated with the respective company
was related to the system of inventory management where under this respective part, the
organization lost 100 million in the area of sales.
The other part of the issues that were related to the company was based on lower
sales, where they failed to reach the target customers in order to enhance strong mode of
productivity for the organization in the international market. The major reason behind the
failure of the company adopting disintegration and reintegration strategy in the market were
which lead to the fall of their inventory management function which was not considered to be
a success factor for the business of Nike in the global market operations.
E-Value chain Nike:
Primary activities
Inbound logistics:
Nike has international procurement team for managing procurement parts of the supply chain
management. This includes contact and selection of the right supplies for perfect goods and
service.
Operations:
Nike has its offices in Europe, Africa, Middle East, great China, Latin America and Asia
Pacific.
Outbound logistics:

15E-BUSINESS STRATEGY OF NIKE
The products shipped from the manufacturers to Nike distribution centre to send them to the
stores. It has regional distribution centres to meet the needs of the retail stores thus to
customers.
Marketing and sales:
The company has excellent marketing strategy starting from the logo to inclusion of the
celebrity players in the promotion. Both the physical and online channels are main sales
channels. There is a mix of independent distributors, sales representatives and licecees to sale
the product.
Figure 2. Value chain Nike
(Source: Cgma.org. 2020)
E-supply chain:
Nike has major entities in the supply chain through which the flow of information gets passed
upstream and downstream for coordinating activities. These activities include buying, making
and moving the products and services. It has contract suppliers who collect products from the
manufacturing units. Then these are sent to Nike, the distributors resellers and finally to the
customers.
Contract suppliers Nike Distributor Reseller Customer
Upstream

16E-BUSINESS STRATEGY OF NIKE
Figure 3. Supply chain Nike
(Source: created by author)
Recommendation
Some of the recommendation measures that are required to be implemented within the
internal environment of the organization Nike through adopting the best use of social media
marketing strategy in the business are mentioned below:
 The first and foremost strategy that is required to be adopted by the organization
under the system of social media marketing strategy is to evaluate and understand the
key interest area that are related to the audience. While advertising in Facebook, it is
important to understand that the customers are more interested on simple text rather
than videos and images. This can make the organization more innovative under the
area of increasing their customer base through bringing better reach towards the target
customers in the market.
 The other strategy that is required to be adopted by Nike in order to improve social
media marketing function can be through the process of building community
engagement measures. This can be performed through the process of making the best
use of social media advertising through posting the brand related features 2 to 5 times
in a week. This can help the brand in bringing strong customer relationship in the
international market and make them reliable and consistent through developing
certain strategies that are related to the system of social commerce in the market.

17E-BUSINESS STRATEGY OF NIKE
 The customer life cycle in this regard has to be included in the operation strategies.
Awareness, engagement, evaluation, purchase, product and support experience and
bonding or advocacy are the stages of customer life cycle that represents first learning
about the bard products to buying decision. Nike needs to invest more in reaching the
customers of all types rather being selective only on the sports background.
 It is important for the organization to maintain adaptive standard in their market
operation in order to adopt innovative and advanced mode of advertising strategy
through social media marketing. Here the company can adopt RACE marketing value.
This model relates to reach, act, convert and engage procedures. They must try to
understand the competitive strategy adopted by the competitors under this respective
part and must introduce certain market operations that are distinct and gives a
differentiated approach compared to their competitors. By using the social media
platform the company can build awareness, engage audience, conversion of marketing
to sales and build relationship with the customers. This can be a better platform for
Nike to increase their customer base through the process of generating advancements
and innovation for the company to remain more competitive and sustainable in the
future.

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19E-BUSINESS STRATEGY OF NIKE
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