Nike Inc. Business Strategies and SWOT Analysis

This assignment delves into the strategic framework employed by Nike Inc., analyzing its business processes, open innovation practices, and human resource management. It utilizes a SWOT analysis to evaluate Nike's competitive advantages, potential challenges, and future growth opportunities within the global sportswear industry.

Running Head: Business Case Development 1
Innovation and Sustainable Business Development
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Executive Summary
Most innovative organizations, Nike included, understand that systematic changes are required
globally to ensure that innovation is achieved at scale. Owing to the same, Nike has been on the
forefront in the production of sports equipment. Among the initial products to be manufactured
by Nike are track shoes. However, as time elapsed, the company began producing jerseys, shoes,
cleats, shorts and base layers among other products. All the mentioned equipment is used in
almost every sporting activity; but mostly baseball, track and field events, tennis, ice hockey,
association football, basketball, lacrosse, and even cricket (Nike News, 2010). Talking of the
recent innovations achieved by Nike, the Flyknit has been one of them. In the apparel section, it
continues to be the top performer. It is the bit of engineering pixels integrated into several
dimensions with benefits that are sport-specific, elemental defense and breathable structure that
has ensured that the company enjoys its dominance in the market. To ensure a steady growth, the
company has implemented a couple of financial strategies like the $8 billion buying back of its
class B stock which was preceded by the $5 billion buyback program. Within a period of four
years, Nike Inc. has bought back stock worth more than $10 billion. It is such bold financial
milestones that made the company to replace Alcoa in Dow Jones Industrial Average. It did not
take long after the implementation of such financial obligations that Nike Inc. realized
outstanding profits. By 2013, the gain was thirteen percent more. This was a percentage increase
for the global orders merchandise. In 2014, the profit was above $10.4 billion. The company’s
shares also rose by about 0.6 percent to a value of $78.75 per share by 2015. By the end of the
same year, the company made another announcement. Nike Inc. proposed to initiate a share
buyback clause of $12 billion. It also announced that it would provide a two-for-one stock split.
This would then be followed with the provision of shares so as to have trading activities began at
reduced prices in the beginning of 2016 (Nike News, 2010).
Having briefly discussed the company’s innovative and financial journey, this business case
paper will argue Nike Inc’s business case with regards to the current measurement bodysuit
innovative apparel. For a strong case argument, this paper will:
i) Discuss the impacts of the Everyday Bodysuit including its reception in the current
market.
ii) Clarify the challenges to be addressed by the innovative suite.

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iii) Identify and evaluate strategies and costs likely to be implemented to have the
opportunities brought about by the innovation get realized.
iv) Discuss the gains against risks brought about by the identified innovative gear.

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Table of Content
Problem Definition......................................................................................................................................5
i) Background....................................................................................................................................5
ii) Problem Definition and Evidence.................................................................................................5
iii) Consideration of the broader context.......................................................................................5
Benefits.......................................................................................................................................................6
i) Benefits to be delivered and evidence...........................................................................................6
ii) Interdependencies..........................................................................................................................6
Strategic Response and Option Analysis.....................................................................................................7
a) Options Analysis............................................................................................................................7
Overall Project Evaluation...........................................................................................................................8
Recommendation.......................................................................................................................................11
Appendix...................................................................................................................................................11

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Problem Definition
i) Background
Back in 2004, Nike Inc. came up with a training program known as the SPARQ Program. The
main objective of this program was to ensure that the company’s gears produced reduced weight
during training sessions. For instance, the shoes that were developed then contained Lunarlite
and Flywire Foam to achieve the laid objective. Afterwards, Nike Inc. came up with
groundbreaking innovations like the introduction of external heel counters, air cushioned soles,
and Fit Frame technology in the apparel section. Most recently, Nike joined with Apple Inc. to
come up with the apparel known as Everyday Bodysuit (AIHW Strategic directions, 2017). This
is a measurement body suite developed to track the one’s performance via a radio device which
is then linked to an iPod nano. On the contrary, as much as the product is able to generate
statistical information that is very useful, many researchers have criticized it. Such is due to the
fact that these researchers were still able to identify individual RFID devices from as far as 18
meters away. The identification process, in this case, involved the use of intelligence notes that
were concealable in networks with wireless sensors (News, 2017).
ii) Problem Definition and Evidence
Every business organization in the current society understands that there are certain conditions
hindering innovation and economic growth. One such issue is climate change; which needs
global solutions. Other concerns that hinder innovation include fluctuations in raw material
prices, resource scarcity, and supply chain disruptions. Raising the issue of climate change is
important because it has a broader impact on sporting activities that Nike Inc. strives to deliver
its products to promote. Since the only way to achieve an economy that is sustainable is to have a
growth associated with low-carbon, the company ensures that it uses a carbon indicator for
assessing sustainability. It is as a result of such environmental, economic and social implications
that Nike Inc. ensure that its products are suitable for use. The same issue forms the basis of
Everyday Bodysuit development (La Rosa, Loos & Pastor, 2016).
iii) Consideration of the broader context

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The difference between Nike Inc. and other competitor companies in the market is that Nike
understands that athletes require a head-to-toe system that is cohesive and works in a proper
manner to eliminate possible distractions. In such a case, athletes are able to allow their bodies
and minds to focus particularly on the task they have. With such an integrated approach, the
company has been able to achieve its objective of designing equipment for all sporting activities
from field and track to in-door activities. The new apparel is therefore an exemplary suite that
fixates on speed. It is one of a kind; in the form that it is made from two recent technologies in
the company (Rouse, 2017). These are the AeroSwift and Nike Vapor Kits. The kit is breathable,
able to stretch more and lightweight. It is not only that, but also the fact that Nike integrated a
new system that makes the kit very unique. The knitting process is new in the sense that it
integrates double and single knit to increase breathability, properly fit and stretch more. It is such
a marvelous kit that the legendary Cristiano Ronaldo also got impressed. He said the body suit
made him more agile and feel lighter (PNMSOFT, 2017).
Benefits
Everyday Bodysuit’s zero-distraction ethos happens to be extended to its hyper strong sleeve that
matches in design. To ensure that one gets the best out of the gear, the sleeve is made to include
additional pads for protection and reinforcements for help during use in areas considered to be of
high-risk without necessarily having to inhibit agility. Everyday Bodysuit also happen to nicely
pair with the NikeGRIP socks. These socks provide a solution which is two-sided through the
integration of more traction at points regarded as key contact areas. Such is achieved via nano-
fiber technology (Nike Innovation, 2017).
i) Benefits to be delivered and evidence
Regardless of the area of use, Everyday Bodysuit is made from a design that is industry-defining.
It is a gear that would carter for the needs of customers. It is the starting point for all the
innovative designs likely to be made by Nike onwards. In other words, it is a game changer for
Nike. When Nike is innovating to gain a competitive edge, we focus on building innovation
partnerships, investing in start-ups, emerging technologies and new science. We test and
prototype solutions, and then take them to market (Nike Innovation, 2017). When we see
opportunities to create industry-wide change, we drive market shifts through sharing, open-

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sourcing, and creating coalitions and consensus. We work to influence standards and policies to
drive innovation forward (Nike Innovation, 2017).
ii) Interdependencies
The manufacture and supply of Everyday Bodysuits depends on the work portfolio. This
portfolio is all about reinvention of the company’s looks against the manner in which the
sporting gears are made. Most of the kits currently manufactured by the company depend on the
Flyknit technology. This technology helps designers to have every stitch micro engineered. All
the stitches are then scientifically tuned for the purpose of meeting customers’ specifications. It
is by this Flyknit technology that the company has realized a sixty percent waste reduction.
Translated to monetary value, the amount of waste reduction since 2013 is $3.5 million.
Strategic Response and Option Analysis
To achieve the ultimate goal of sustainability, there are a number of key initiatives set by Nike.
One of the strategies is to attain a $27 billion revenue target by 2018 from the sales of the new
kits. On top of that, Nike Inc. believes that it has the potential of generating more than $12
billion by freely accumulating cash flow. It is expected that the bodysuit will contribute to the
company’s revenue growth (Kissinger, 2017). According to the management of Nike, ushering in
a new technological era begins with inspiration and innovation. With a powerful competitive
advantage in its portfolio, Nike has always ensured that it develops distinct brands and
compelling products relevant to the customers. It is the will to build and accelerate the
company’s portfolio that forms the basis of the focus. The NIKE Brand happens to be the
company’s most powerful asset with regards to its portfolio. It makes up to about 85% of the
total revenue (Kissinger, 2017).
a) Options Analysis
The company has identified an opportunity to have its performance enhanced in the athletic
apparel and footwear market (NASDAQ, 2017). The opportunities identified, in this case,
include:
i) Improve employment or labor practices
ii) Enhance product mix

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iii) Have market presence in the developing countries increased
Regarding the improvement of labor practices, this opportunity will help in addressing
controversies that are likely to arise. With the development of the strategies that are proactive,
the new suit’s image is likely to be improved. Also, the improvement of product mix is a strategy
that would help in the attraction of more customers particularly those who are non-athletes, to by
the Everyday Bodysuit. By ensuring that it improves its presence in the in developing markets,
Nike will be able to realize high potentials of growth. It is, therefore, necessary that Nike
transforms its strategies and policies to ensure that it continues leading in the athletic apparel and
footwear equipment market.
Overall Project Evaluation
Nike has enjoyed a steady global leadership and a steady growth in the footwear equipment and
apparel market for a long time. Such is due to the following factors:
a) Having a brand image that is strong
b) Rapid processes of innovation
c) A proper network for product distribution
However, the company has an annual revenue target of over $3.5 billion every year after fiscal
2017 ends. In addition to that, the company has made an aggressive investment progression in
the developing markets (NASDAQ, 2017). From the same, a double-digit growth is expected.
With regards to the new gear, Nike will have to work with more retail partners to ensure that the
customers enjoy different yet elevated experiences. Such experiences include having concepts
that are category-segmented executed within certain markets. The production of Everyday
Bodysuit is estimated to be the main long-term growth driver. On the contrary, the company
intends to create and strengthen the gear’s retail presence globally by investing an approximated
capital of $600 million for the purpose of developing the Direct to Consumer business
(NASDAQ, 2017).
i) Annual Financials

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ii) Everyday Bodysuit Production costs

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Recommendation
Every business organization has its own weaknesses. In this case, the setbacks associated with
the company have the potential of disrupting its growth trajectory within the equipment and
apparel market. Herein, we shall identify the strategic factors likely to reduce the performance of
Nike Inc. The most outstanding factors that should be addressed are:
1. Controversies associated with labor.
2. Product mix limitations
3. Presence in the developing markets being limited
Controversies in labor are among the issues that have caused influenced business operations of
Nike Inc. This factor has largely contributed to the tarnishing of the brand image of the company.
Secondly, in as much as the company has expanded its product mix, the product lines that crop
cannot capture a large apparel and equipment market. In addition to that, Nike suffers from
inferior presence in the markets still developing. Some of the issues that cause that inferior
presence include imitation, pricing and patent protection. The mentioned factors should,
therefore, be addressed by having the strategies and policies regarding employment and labor,
developing markets penetration and product mix development changed.
Appendix
i) Financial Data Presentation

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ii) Revenue

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