Responding to the Changing Business

Running Head: NIKE 0
Responding to the Changing
Business Environment

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Contents
Task-1.........................................................................................................................................2
1.1 Factors impacting business..........................................................................................2
PESTEL..............................................................................................................................2
SWOT................................................................................................................................3
1.2 Business performance..................................................................................................3
1.3 Recommendations.......................................................................................................4
Task-2.........................................................................................................................................4
2.1 Role played by management in changing business environment................................4
2.2 Organisational changes................................................................................................5
2.3 Potential impact...........................................................................................................5
Task-3.........................................................................................................................................6
3.1 Changes in relationship...............................................................................................6
3.2 Change management...................................................................................................6
3.3 Opportunities...............................................................................................................7
References..................................................................................................................................8

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Task-1
1.1 Factors impacting business
In terms of business, macro environment affects the working and operations of companies
that can be analysed by using strategic tool such as PESTEL consists of external factors
which are political, economic, social, technological, environmental and legal. While, micro
environment impacts the business directly consists of performance and operations where
using SWOT as a strategic tool can help in analysing its strengths, weaknesses, opportunities
and threats for better functioning and success in future.
PESTEL
Political
 Favourable government policies
of the US
 Political unrest in some countries
of Asia
 Changes in International Law
Economic
 Rise in labour issues and
production cost
 Recession and competition threat
 Fluctuation in profit margin
 Subsidiaries and acquisitions
Social
 Consumers being more brand
conscious
 Consumers being fashion and
health conscious
 Conditions of working at
factories
 Increase in female consumers
Technological
 Innovation
 Marketing techniques
Environmental
 Environmental concern and
global warming
 Pollution concern in China
 Decrease greenhouse emission
Legal
 Battles with Adidas and other
companies legally
 Minimum wage allegations and
child labour
 Paradise papers
 Counterfeit products (Zhang, et
al., 2012).

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Source: (Shtal, et al., 2018).
SWOT
Strengths
 Product Innovation
 Strong Global Brand
 Strong cash flow with low cost
manufacturing
 Global influence and presence
 Proficient leadership
Weaknesses
 High dependence on footwear
 High products prices
 Spending highly on advertising
 Problem of Nike Sweatshop
(Nisen, 2013).
Opportunities
 Explore emerging markets
 Increase in e-commerce business
 Expansion of product
 Initiatives towards better
environment
Threats
 Intense competition
 Fluctuations in international
markets
 Rise of counterfeit cases
 Recession
 Hazardous supply chain
management (Distelhorst, et al.,
2017).
Source: (Gurel & Tat, 2017).
This shows that Nike is dependent on external conditions which impact the strategic decision-
making process of the company. The addressing of these external factors helps the company
to make sure about the business dominance within the industry among high competition
(Mihola, et al., 2015). It is essential for Nike to maintain the position of the company in the
market along with its strategic formulation that will help in shaping its macro-environment or
remote conditions.
1.2 Business performance
Nike’s business performance can be affected by developed markets economic stability, the
Chinese economic slowdown, and developing markets rapid growth. The company’s
performance is based on the state of economies where Nike is selling its products and

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services. Furthermore, the performance of Nike is majorly dependent considering sports
apparel, shows and equipment on the market of China (Li, 2013). Also, after analysing the
macro and micro environment, Nike’s business performance is also affected by the impact of
ecological concerns that are climate change, environmental law expansion and sustainability
strategies increment.
1.3 Recommendations
After looking at the economic factors and trends affecting the business performance of Nike,
it can be recommended that the company should adapt more aggressive approach in terms of
international expansion while focusing on high-growth in developing countries based on free
trade policies. Furthermore, this action can help the company in addressing the potential
decline in the performance of Nike in the market of China. Other than this, the company
should invest in more R&D (research and development) for gaining potential demand for
integration of sports apparel, shoes and equipment with technological advancements
(Cetindamar, et al., 2016). Nike is required to improve its employment practices and
sustainability where these actions will help the company in addressing sociocultural and
regulatory concerns along with improvement in corporate image and brand image of Nike.
Task-2
2.1 Role played by management in changing business environment
Nike faced the challenge of declining sales in product lines which resulted into new
competition where it is essential for the management to play its role in terms of coordination.
This required company to use evolutionary approach for improving effectiveness that
involves change in the design of organisational structure as well along with enhancement in
the approach of human resource-centered by the management (Tang & Zhang, 2016). Nike’s
management can also use the change technique of process-oriented which includes changing
managerial strategies as well in terms of productivity and creativity enhancement in the
workflow within the company. It is essential for the top level management of the company to
maintain coordination for making efforts and face challenges altogether. This will help Nike
in improving its poor decision making along with customer-preferred shoes production. If
there will be no lack of coordination in management, there can be increase in rate of
sufficiency, innovation and efficiency while creating products. Nike can easily experience
growth while maintaining coordination as per the role of management that will helps the

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company with strategic ideas for effective decision making enhancement. There will be
increase in sales by bring more components which will also be helpful for the management of
the company to make long-term decisions for future success (Homburg, et al., 2017). Nike
should avoid experiencing the declining stage of the organisational culture with the help of its
management by making sure about changing and incorporating other design processes ideas.
2.2 Organisational changes
Nike went through organisational change due to its salary issues which leads towards change
in management regulatory affecting the market competitiveness (Leonidou, et al., 2013).
There is change in preferences and needs of customers in relation to high quality affordable
sport gear along with increase in changing lifestyle. The company needs to change the pace
of product for fitting as per the needs of customers. Change in the environment is hard to
control or examine where Nike needs to go through changes by putting efforts for the
creation of better world while contributing with better sustainability practices (Angeles,
2014). It is essential for Nike to make changes within an organisation to gain competitive
advantage in the market.
2.3 Potential impact
Nike’s potential impact is based on improving its functional level strategies in terms of
customer service processes, distribution and manufacturing while improving the company’s
operations. Nike should keep on doing innovation in its products with the help of the
company’s Sports Research Lab (Hoogkamer, et al., 2018). The company should strengthen
its aptitude to define and discover trends of product along with responding and foreseeing
changes to end user demands for maintaining its market share while focusing on management
of marketplace. Nike is required to adapt foreign exchange programs of risk management for
mitigating risks occurring due to any micro or macro environmental factor or condition
(Ageron, et al., 2012). The company should keep expanding in the US for taking
opportunities in foreign markets that are unsaturated to sustain leadership and improve
performance within the industry. There should be consumers’ encouragement for
participating in product design that will strengthen Nike’s customer relationship along with
customer loyalty enhancement. The company’s management is required to look after
alternative raw material sources and manufacturing operations for decreasing dependency
along with making a strong presence online (Lampikoski, et al., 2014). Lastly, the company

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should keep on participating in social responsibilities and activities for enhancing and
improving brand image.
Task-3
3.1 Changes in relationship
Nike manages its relationships with stakeholder with a department of global communication
which helps in creating credible, deep and authentic connections across the globe. The
stakeholders in normative group such as governments, diffuse groups such as public sector
are essential for the company to manage relationships with along with its business. Nike is
easily affected by the companies viewing strongly in the public eye where the company
focuses on environment protection organisations and anti-sweatshop organisations (Williams,
2016). The challenge faced by Nike was due to heavy media scrutiny for its poor working
conditions where it was essential for the company to monitor the labour issues within the
supplier factories.
Furthermore, Nike was required to implement resolution as per its code of conduct expressing
the expectations of bringing systematic and positive change for workers within the industry
and the company’s supply chain. There was some basic environmental or health and labour
standards binding the contract factories of Nike; in the non-governmental environment
protection organisations, Nike was accused by Greenpeace due to putting the greenhouse gas
in the air pocket named as SF6 (sulphur hexafluoride) at the air max sneaker bottom (Nike,
2019). Though, maintaining relationships while occurrence of changes, Nike still holds its
position being sustainable.
Moreover, Nike operates under the settled conditions by governments that have a great power
but slight interest in the business of Nike as long the company is not violating any laws
(Martinuzzi & Krumay, 2013). Nike is able to manage its relationships with its stakeholders
such as public groups and governments in terms of reflecting the company’s business. This
helps in improving the performance of the company in the market by performing activities
along with optimum utilisation of resources to shape the experience of customers at its best
(Russell, et al., 2016). Nike makes sure to keep the company’s workforce motivated while
performing business practices by maintaining relationships.

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3.2 Change management
Change is inevitable which make sure about companies having change management that
might consists of pay cuts, layoff, relocation, or downsizing. In a positive manner, change
can also be in technology improvisation, increasing market, and building new products.
Nike’s management enables to prepare effective change management helping to improve the
required performance of the company (Ertemel, 2015). It is essential for the company to
adapt change in the environment and implement change management to gain competitive
advantage. The company focused on driving deep connection with its consumers and market
share expansion by changing some positions of individuals along with strengthening its
management team globally and looking towards the leadership. Nike kept on investing in
social and environmental impacts reduction within the supply chain and business while
making substantial gains (Dauvergne & Lister, 2012). It was also required for the company to
rapidly evolve innovations delivery for better performance consisting supply chain quality
measures, on-time delivery and cost to achieve the common goal.
3.3 Opportunities
Nike has been evolved with its best management practices after making changes that involves
consistent evaluation of ways for achieving the company’s goals, creation of change culture
among teaming up with its employees, never stopping while improving and innovating,
eliminating complacency for increasing innovation, and making investment in the company’s
prior resource that is ‘people’ for growth and continuity by emphasizing design, accelerating
innovation, focusing on efficient supply chain, merchandising excellence, and manufacturing
capabilities (Brandid, 2016). Nike is developing an opportunity of becoming a technology
company by making change through gaining competitive advantage and making digital
innovation along with creating a large customer base across the globe both online and offline
(Weinman & Euchner, 2015). Lastly, the opportunities Nike can attain through changes in
relationships between its business, government, and the public sector involves improvement
in product mix, improvement in employment or labour practices, and increasing their market
presence in developing countries.

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