Nike's Sustainability and Operational Strategy

This assignment analyzes Nike's operational strategies with a particular emphasis on sustainability practices. It explores how Nike integrates environmental and social responsibility into its operations management, leveraging manufacturing maps, supply chain transparency, and innovation to achieve sustainable growth. The analysis considers the influence of leadership styles, strategic flexibility, and continuous improvement on Nike's operational performance and overall business success.

Running head: STRATEGIC OPERATIONS PERFORMANCE
Strategic Operations Performance: Nike
Student Name
University name
Author Name

STRATEGIC OPERATIONS PERFORMANCE
The Company
Nike, Inc. is an American footwear designing and manufacturing company that runs
worldwide marketing. The company is the most successful company in the athletic shoes
supplying across the globe and covers 47% of the global market. The company generates
worldwide revenue of 32.4 billion this year which is 6% up from last year (News.nike.com
2016). The Blue Ribbon Sports was founded by Bill Bowerman and Phil Knight in 1964 that
changed its name in 1972 to Nike (Gibson 2012). The company strategic market campaign
promotes innovation and inspiration in athletes’ lives (About.nike.com. 2017). Outside America
the company owns runs business in 45 countries in 700 stores (Morris, Kuratko and Covin 2010).
Nike aims for the maximum number of buyers so they offer various ranges of products for all
ages. This also reflects in their company statement as they treat every customer as an athlete
should wear their products. However considering the price of their products it is easily
understandable that the company mainly targets the high income group customers.
The company enjoys the credit of being the top market leaders in the sports footwear
supplying business but there are other equally strong competitors present in the market as well.
The other two top sports footwear companies that are present in the market are Adidas and
Reebok (Team 2017). Adidas generated revenue of 19.3 billion where Reebok generated 3
billion (Adidas-group.com 2017). There are competitors like Puma, Fila, Converse, Under
Armour, New Balance, K-Swiss, Li Ning and ASICS. Apart from these competitive companies
Nike is facing serious challenges from cheaper substitute sports footwear that are gaining
popularity.

STRATEGIC OPERATIONS PERFORMANCE
Literature Review
The strategic operations performance objectives help the company to achieve the
competitive advantage in the global market. Organizational performance is also closely related to
the strategic operations that the company engages in. This section tries to explore various
literatures that discuss the concepts of performance objectives and their significance in the
organizational performance.
Quality
According Slack and Lewis (2011) five categories can be identified as cost, quality,
dependability, speed and flexibility for the performance objectives. The quality is defined as
performing the assigned tasks effectively, procuring services and goods without any faults and
the performance should be in accordance with the determined mission and vision. Desai (2008)
has stated that if any company aims for the global competence and operational effectiveness the
company must engage in the quality management. The companies have been realizing that and
that is the reason quality has been emerged as an effective strategic entity in the organizational
management. As Corbett (2008) described quality can be defined differently in different
circumstances. In the manufacturing industry the quality is generally considered to be the
standard on the products. According to Russell and Taylor (2008) quality is the essential
component for the products to be able to satisfy the consumers rather than just eliminating the
flaws and even if the company lacks a clear improvement in market the quality is able to
conform the specifications. Prajogo and Goh (2007) analyzed that quality does not include any
proper measurement or carries wrong measurement at certain times that highlights the lack of

STRATEGIC OPERATIONS PERFORMANCE
knowledge in quality. The company has to work with the both sides of quality in order to achieve
the desired performance.
Speed
Russell and Taylor (2008) stated the speed is extremely important for any manufacturing
business in the competitive market of today. The speed is the company’s capability of
performing any task fast and should be able to ensure that the gap between the producing and
reaching the consumers is bridged rapidly. The companies can easily gain more competitive
edge if they deliver the products faster than their competitors. The authors have highlighted how
current manufacturers are exploring the advantages of service that is time based. The speed of
the business has many other aspects like fast adaptation, close linkages and fast moves to the
improved speed of competing. According to Tidd and Bessant (2009) the global business
environment is always changing, therefore if the company brings new products with speed the
company can achieve performance excellence.
Flexibility
Cingoz and Akdogan (2013) define strategic flexibility as the organization’s ability to
adapt and respond to the business environmental changes. In order to develop the flexibility the
company requires to build core competence, engage in strategic leadership; develop human
resources, integrating newer technologies. The flexibility is the company’s ability to match
certain unexpected circumstances helps the company in implementing new strategies or bringing
new brand in the market. Roberts and Stockport (2009) discuss that flexibility is the
organization’s ability to maintain the relationship between the internal and external
organizational structure. Nadkarni and Herrmann (2010) highlight that flexibility makes the
company reach the superior position in the competitive market. Ussahawanitchakit and

STRATEGIC OPERATIONS PERFORMANCE
Sriboonlue (2011) explore other advantages that the organization gains through flexibility like
this enables the company to manage political and economic risks caused by the market threats.
Operations performance could be improved greatly if the gains the organizational competency
through flexibility.
Cost
Slack and Lewis (2011) stated that the company should be able to fulfill the
responsibilities in inexpensive ways. This objective allows the company to produce cost effective
goods and services and helps the company to decide the appropriate for the national and global
market that ensures the financial benefit for the company. Russel and Taylor (2008) have
explained how the company has to focus on product design, procurement and employee
performance in order to improve the cost performance. Strategic operations performance is
greatly depended on the organization’s ability to meet the cost budget. Prajogo and Goh (2007)
emphasized that it is not only the failure areas that need to be focused on but the company has to
identify the opportunities to improve the cost. Slack, Chambers and Johnston (2009) discussed
that proper cost disaggregation that can have great impact on the total cost can only ensure the
continuous improvement. Pulaj, Kume and Cipi (2015) talk about the low cost strategy as cost
leadership that put great stress on organizational efficiency. This strategy allows the company to
distribute its manufactured products at cheaper cost than its competitors. The strategy includes
aggressive pricing and trading quality products. Low cost strategy is achieved through reducing
the administrative costs, economics scale and curving of experience.
Dependability
According to Greasley (2007) dependability is the organization’s delivering of products
to its customers within promised time. One time delivery speed will not ensure customer

STRATEGIC OPERATIONS PERFORMANCE
satisfaction if the customer does not find it consistent. Dependability can be measured through
measuring the satisfied customers. Slack and Lewis (2011) highlighted that the dependability is
closely related to fulfilling the customer commitments in a timely and orderly manner.
Dependability can lead the company to provide improved customer service and customer
efficiency. Company can achieve lower cost through dependability through checking progress
and reducing other costs in the process.
Nike’s five performance objectives
The performance objectives set by Nike are based on some components. The company
only focuses on consumers as they are the primary source of generating profit. As the company
aims to perform effectively the suppliers play major role. Nike promotes a community that
consist not only the athletes or sports enthusiasts but every average consumer. The stakeholders
of the company also demands efficiency from the company. Distinct groups of highly skilled
professionals are working to meet the performance objectives of the company. Various
departments work to meet the objectives for the common purpose of producing best kind of shoe
and other products at lower cost.
Quality
Quality is the most critically important performance aspect for Nike’s strategic
performance. Nike minimizes the defect rates, scraps and other wastes in order to offer the
customers defect free shoes. Nike is a big brand name in the global sports foot wear industry as
the company maintains great quality products (Lutz 2015). It is difficult to establish a popular
brand and customer efficiency without quality. Nike uses good quality raw materials and high

STRATEGIC OPERATIONS PERFORMANCE
advanced machines in its manufacturing factories. The company evaluates its products on a
regular basis in order to maintain the quality. Nike operates in 120 countries where more than
800000 million workers working who are working hard (Johnson and Turner 2010). Nike air
system allows the company to focus on research, development, design and distribution the
products. Nike reduces time, waste and material by engaging in lean manufacturing that brings
quality products. As the company uses lean manufacturing process it helps it to achieve 50% less
in defective rates. Nike engages in quality assurance initiatives to ensure better quality. Nike
started “Green Chemistry Program” that helped them to identify the chemical substances that
should not be used for manufacturing (Greenscreenchemicals.org 2013). The company engages
in extensive product testing at regular intervals.
Cost
Nike maintains its output costs better than its competitors. The company’s performance
objectives constantly work on appropriate use of raw materials and human resources and looks
that it does not exceed the production rates. Nike increased its revenue by 6% in 2016 as the
company announced that the company has been delivering premium products with high price but
at the same time it maintains the “Balanced price-to-value proposition for consumers” (Sec.gov.
2015). Nike mainly aims for a high priced foot wear products that actually helps the company to
generate more revenue. The currency fluctuations in foreign countries did not affect the company
sales much. Though the product prices are increasing but the company is reducing the
manufacturing price. The company’s non-ethical labor management has changed and it now no
longer controls the labor costs. The company reduces its labor cost by implementing
infrastructure and technological advancements.

STRATEGIC OPERATIONS PERFORMANCE
Flexibility
The shoe production system of Nike demonstrates a “flexibly-specialized manufacturing”
that has a post Fordist vision associated with it (Lee and Gereffi 2015). The company develops
the flexibility through semi autonomous geographic division that fulfills the requirements of
customers that belongs to regional market. In the old footwear manufacturing market the
variations of shoes were limited so the integrated hierarchy dominated the industry easily.
However the time has changed and with thousand types of diverse shoes and shoe related
products keep coming in the market. Nike applies the strategy of introducing entirely new
models semi annually. Flexibility acts as a key driver for the company to choose for
manufacturing as the company can make new products quickly there.
Speed
Nike gives importance to the speed of delivery as it believes that delivering the products
to its customers within the promised time extremely important to retain the customer efficiency.
The company monitors the cycle times and through cycle time the company measures its
performance. Nike like his competitor Adidas is investing a lot of money focusing on the speed
(Green 2017). Mark Parker, the CEO of Nike also announced this year that they are
implementing new strategy named “triple double o speed” (Danziger 2017).
Dependability
Nike fulfills its order in orderly and timely manner to its all customers. The company has
its own manufacturing factories all over the world and does not depend much on suppliers
(Manufacturingmap.nikeinc.com 2017). The distributors also do not take much important role in
the business. This is not as crucial performance objective for Nike as others.

STRATEGIC OPERATIONS PERFORMANCE
Recommendations and Conclusion
The company must overcome its weaknesses of using underpaid workers in Indonesia.
The child labor issues must be addressed and resolved immediately. In Vietnam and China the
company is accused of creating poor working condition the performance objectives should
address this as well so that the company reputation and performance do not get hampered. The
operations performance objectives must ensure that the design of Nike’s products is aligned with
their organizational capabilities. As the company relies on latest technologies the designed
products are aligned with market preferences. The company is struggling to surpass its
competitors in addressing the ‘Total Quality Management’ with high quality standard in sports
foot wears. It is recommended that Nike should evaluate its production efficiency and
streamlining. The operations management team in the company evaluates the objectives and the
activities regularly so that the production goals are met based on the market dynamics.

STRATEGIC OPERATIONS PERFORMANCE
Reference
About.nike.com. (2017). About Nike - The official corporate website for NIKE, Inc. and its
affiliate brands.. [online] Available at: https://about.nike.com/ [Accessed 23 Sep. 2017].
Adidas-group.com. (2017). Adidas with record sales and earnings in 2016. [online] Available at:
https://www.adidas-group.com/en/media/news-archive/press-releases/2017/adidas-record-sales-
and-earnings-2016/ [Accessed 23 Sep. 2017].
Cingöz, A. and Akdoğan, A.A., 2013. Strategic flexibility, environmental dynamism, and
innovation performance: An empirical study. Procedia-Social and Behavioral Sciences, 99,
pp.582-589.
Corbett, L.M., 2008. Quality Management in Operations'. Operations Management: An
Integrated Apporach, Cambridge, Melbourne, pp.78-89.
Danziger, P. (2017). Forbes Welcome. [online] Forbes.com. Available at:
https://www.forbes.com/sites/pamdanziger/2017/06/19/nike-to-stay-out-in-front-with-biggest-
data-of-all-demographics/ [Accessed 23 Sep. 2017].
Desai, D.A., 2008. Cost of quality in small-and medium-sized enterprises: case of an Indian
engineering company. Production planning and control, 19(1), pp.25-34.
Gibson, C.H., 2012. Financial statement analysis. South-Western.
Greasley, A., 2007. Operations management. Sage.
Green, D. (2017). Nike and Adidas are making huge investments that should terrify Under
Armour. [online] Business Insider. Available at: http://www.businessinsider.in/Nike-and-Adidas-

STRATEGIC OPERATIONS PERFORMANCE
are-making-huge-investments-that-should-terrify-Under-Armour/articleshow/59041680.cms
[Accessed 23 Sep. 2017].
Greenscreenchemicals.org. (2013). NIKE, Inc. - Sustainable Business Report. [online] Available
at: https://www.greenscreenchemicals.org/static/ee_images/uploads/resources/NIKE_Inc.-
SustainableBusinessReport.pdf [Accessed 23 Sep. 2017].
Johnson, D. and Turner, C., 2010. International Business: Themes and issues in the modern
global economy. Routledge.
Lee, J. and Gereffi, G., 2015. Global value chains, rising power firms and economic and social
upgrading. critical perspectives on international business, 11(3/4), pp.319-339.
Lutz, A. (2015). 4 reasons Nike's business will dominate. [online] Business Insider. Available at:
http://www.businessinsider.in/4-reasons-Nikes-business-will-dominate/articleshow/
46800455.cms [Accessed 23 Sep. 2017].
Manufacturingmap.nikeinc.com. (2017). Nike Sustainability - Interactive Map. [online]
Available at: http://manufacturingmap.nikeinc.com/ [Accessed 23 Sep. 2017].
Morris, M.H., Kuratko, D.F. and Covin, J.G., 2010. Corporate entrepreneurship & innovation.
Cengage Learning.
Nadkarni, S. and Herrmann, P.O.L., 2010. CEO personality, strategic flexibility, and firm
performance: The case of the Indian business process outsourcing industry. Academy of
Management Journal, 53(5), pp.1050-1073.

STRATEGIC OPERATIONS PERFORMANCE
Nike News. (2016). NIKE, Inc. Reports Fiscal 2016 Fourth Quarter and Full Year Results.
[online] Available at: https://news.nike.com/news/nike-inc-reports-fiscal-2016-fourth-quarter-
and-full-year-results [Accessed 23 Sep. 2017].
Prajogo, D.I. and Goh, M., 2007. Operations management activities and operational performance
in service firms. International Journal of Services Technology and Management, 8(6), pp.478-
490.
Roberts, N. and Stockport, G.J., 2009. Defining strategic flexibility. Global Journal of Flexible
Systems Management, 10(1), p.27.
Russell, R.S. and Taylor-Iii, B.W., 2008. Operations management along the supply chain. John
Wiley & Sons.
Sec.gov. (2015). NKE - 5.31.2015 - 10K. [online] Available at:
https://www.sec.gov/Archives/edgar/data/320187/000032018715000113/nke-5312015x10k.htm
[Accessed 23 Sep. 2017].
Slack, N. and Lewis, M. (2011). Operations Strategy. 4th ed. Pearson.
Slack, N., Chambers, S. and Johnston, R., 2009. Operations and process management: principles
and practice for strategic impact. Pearson Education.
Team, T. (2017). Forbes Welcome. [online] Forbes.com. Available at:
https://www.forbes.com/forbes/welcome/?toURL=https://www.forbes.com/sites/
greatspeculations/2017/01/05/nike-the-calendar-year-in-review/&refURL=https://
www.google.co.in/&referrer=https://www.google.co.in/ [Accessed 23 Sep. 2017].
Tidd, J. and Bessant, J. 2009, Managing Innovation John Wiley & Sons, Ltd, Hoboken, NJ.

STRATEGIC OPERATIONS PERFORMANCE
Ussahawanitchakit, P. and Sriboonlue, P., 2011. Transformational leadership, strategic
flexibility, learning capability, continuous improvement, and firm performance: Evidence from
Thailand. International Journal of Business Strategy, 11(1), pp.162-172.