Global Business Environment Assignment - Nike
Added on 2020-09-08
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Nike global business1
Table of ContentsIntroduction......................................................................................................................................2P1 Analyse key factors of cost, market, environment, and competition that drive globalcommerce and trade.........................................................................................................................2P2 Explain the complexity of strategic challenges faced by Nike when operating in a globalenvironment.....................................................................................................................................3P3 Evaluate the influences of globalization on organizational governance and leadership,structure, culture, and functions within Nike. 450...........................................................................5P4 Evaluate the influences of ethical and sustainable globalization on organizational functions ofNike..................................................................................................................................................6P5 Evaluate the different ways decision making can work effectively in a global context............6P6 Determine and articulate the various routes to internationalization an organization may adopt,including key barriers......................................................................................................................7Conclusion.......................................................................................................................................8Nike's Earnings Just Beat Wall Street's Expectations. http://fortune.com/2017/06/29/nike-earnings-profit-beat-expectations/..............................................................................................102
Introduction The global business environmentis the one that is found in different nations and puts an impacton the overall functioning of any company in the area of resource usage as well as the capabilityof operations (Berge and Gaede, 2017). It is further a known fact that business cannot function ina vacuum and are influenced by external factors which pose an impact on overall organisationalperformance (Hoejmose, Roehrich and Grosvold, 2014). This is majorly in the area of sale,revenue, and long-term sustainability. The present study has thus made an attempt to assess theglobal business environment faced by Nike in various nations through a case study. Emphasiswill be given on factors driving the process of globalization and strategic challenges that impactits overall working. This will be followed by studying the impact on the structure, culture as wellas functions of Nike followed by impact on organizational decision making and routes tointernationalisation. P1 Analyse key factors of cost, market, environment, and competition that drive globalcommerce and trade for NikeThere is a presence of many factors that drive the overall process of global trade and commercefor Nike. These have been discussed in the below-mentioned sections;Cost – On the basis of the case study, it can be said that Nike has maintained a competitive coststructure that is providing many benefits to the company. For example, it pays 18 dollars for theshoes made by contracts (material -11 dollars; labor – 2 dollars; additional cost- 4 dollars; profit -1 dollar). The shoes are then sold to retail firms at 36 dollars as the costing includes advertising,promotion; shipping; research and development etc. The given cost structure thus assist thecompany in getting good margin of profit. Other than this, there is also a presence of aboutcosting in various nations where the firm is working. The company has however faced severalissues in this area because of which it had to relocate from Japan to Korea and Taiwan. Increasein costing further made the company move to cheaper labour based nations such as Indonesia,China and Vietnam where it has its manufacturing plants in present. Market – Nike may get good growth in terms of sales, revenue and profitability in the emergingnations as compared to developed ones. For example, there is a greater demand of its coreproducts in Jordan especially in sportswear and running categories. The sales in China has3
also jumped to 11 percent and net income also rose from $846 million to $1 billion in 2017(Nike's Earnings Just Beat Wall Street's Expectations, 2017). The company has further setits revenue target in the middle east as $50 billion by the year 2020 and the managementexpects that female segment will generate a business of $11 billion in revenues (Here’s HowNike Is Looking To Establish Itself In The Middle East, 2017). Environment – Nike has always believed in the concept of environmental sustainability andinitiated programs in that direction accordingly. For example, in the year 1993, the firmestablished Reuse-a-shoe program for ensuring that its used shoes are further utilized for makingof basketball courts, playgrounds, and running tracks. On a negative note, maintainingenvironmental sustainability has been a quite challenging task for the company as its Tolueneconcentrations were above the set level in Vietnam factories which created skin and heartdiseases in that area. From then onwards, Nike has been particularly stringent in complying withenvironmental norms in those nations where it has set its manufacturing units. It has alsoinvolved itself in United Nations Global Compact to adhere to environmental sustainabilitynorms (Nazir and Lui, 2016). Competition and market – Adidas, as well as Reebok, have been regarded as two maincompetitors of the company but there are others as well such as PUMA, FILA, Under Armouramong others. The competition from Adidas is very tough one on account of similar kind ofoffering in the area of footwear, clothing and accessories segment. In spite of this, Nike hasgained an edge over Adidas by being a shoe choice among players of Europe's five biggestleagues. Moreover, both of them are in tough competition with each other in nations like Europeand China. Since the time of 2014, Adidas has also brought an increase in its marketing in orderto recover the lost grounds in China and Europe thereby giving increased competition to Nike. P2 Explain the complexity of strategic challenges faced by Nike when operating in a globalenvironment A large number of challenges have been faced by Nike while carrying out operations in theglobal environment. These are as follows;Relocation issues – as per the case study, Nike had to relocate its manufacturing plantsmany times on account of the increased labor cost in nations. This has been in form ofmoving to Korea/Taiwan and then to Indonesia, Vietnam as well as China. This has been4
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