Nike's Strategic Management: CSR, Internal & External Analysis Report

This report provides a comprehensive analysis of Nike's strategic management, focusing on the external and internal environments, as well as the company's approach to corporate social responsibility (CSR). It examines the impact of political, social, economic, legal, and technological factors on Nike's operations, along with a demographic analysis. The report uses Porter's Five Forces model to assess the competitive landscape and conducts a SWOT analysis to identify Nike's strengths, weaknesses, opportunities, and threats. It explores Nike's CSR initiatives, including environmental apparel designs and recycling efforts, while also discussing the pros and cons of these responsibilities. The report concludes with recommendations for Nike to adjust its strategy to take advantage of CSR opportunities and improve stakeholder relations. This analysis is a student contribution, available on Desklib.

STRATEGY MANAGEMENT
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TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
External environment and CSR assessment of the NIKE...........................................................3
Internal environment of the company and its impact on strategic management.........................5
Pron and cone of the corporate social responsibilities................................................................7
Recommendations that would allow Nike to adjust/re-invent or develop new strategy to take
advantages of CSR opportunities..............................................................................................10
Implications for stakeholders....................................................................................................11
Conclusion.....................................................................................................................................12
References......................................................................................................................................13
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EXECUTIVE SUMMARY
Strategic management can be defined as the process of managing internal and external
environment by devising strategies for the same. It is a bundle of decisions that are undertaken
by management for the better future of company in all accords. In this regard, Nike as a company
has made strategies that aid in customer satisfaction and fast delivery of services. The report has
thus focussed on assessing the internal and external environment conditions that are faced by the
firm. This is followed by understanding the concept of corporate social responsibility and
applying it to Nike. The report has thus concluded that Nike has implemented better planning,
made the mission and vision clear so as to attain better results. By using CSR activities, firm
improves the brand image all over the world and also creates better relationships with the
customers. For taking the advantages of CSR opportunities, Nike should come under the
partnership with other companies like NGO, government and private organizations which are
working in the favor of community. In this regard, a new strategy should be developed that helps
in addressing the society issues very well. It will lead to build high goodwill in the market of
Nike and to influence the customers.
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INTRODUCTION
Strategic management plays an important role in the success of the company because it is
all about planning and managing the internal and external environment of the organization. It is a
bundle of decisions which are taken by the board of directors and managers of the company for
the better future (Ma, Lyu and King, 2010). Members plan for their future goals regarding
measures to achieve all these things and beat the competitive business world. With the help of
this, management member clear the vision and mission of the firm so by this, employees can
easily complete their work. In another words, it is a planning, monitoring and assessment of
management where organization tries to meet its goals and objectives. The present report is
based on the NIKE which is an American multinational corporation that deals in footwear,
accessories and equipments. It puts their focus on customer satisfaction and fast delivery services
(Noakes, 2012). It also includes the internal and external environment of the firm. Further, the
development into the corporate social responsibility and the implication for stakeholders has
been covered in this report.
External environment and CSR assessment of the NIKE
The external environment of NIKE includes political, social, economical and legal
environment. With the help of this, business analyzes competitive factors and policies. Further, it
also includes monetary, social and competitor’s system (Noakes, 2012). These factors provide
information about the external sources. With the use of external factors, company manages their
marketing and the planning process. NIKE used these factors for better development and for
focused future planning. The external environment factors of the cited company are explained as
follows:
Demographic- In fast growing world, taste and preferences of various people have been
changed. Customers of the UK become more health conscious and the women of the country put
their interest on sports activity. So, NIKE starts manufacturing girl’s sportswear and shoes
(Kreng and Wang, 2013). Firm starts their new showroom in south area and the main reason
behind this is that the people who lives there like to play football and for this; they need strong
and comfortable shoes. In this segment, company divides their shoes production as per the age
group and gender. Then they take a feedback on the taste and preferences of their customers and
start developing accordingly. With the help of this aspect, they raise their market share and make
a strong brand in all over the world.
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Social culture- Today's society is more health conscious and people like to go on gym,
yoga, etc. (CampbellHanaka and Forsey, Nike, 2010). So, NIKE put their focus on it and starts
producing the sportswear for both men and women. Further, they change their marketing style
and include some yoga and sports actors in their advertisement campaign. By this, they raise
their selling in sports section.
Legal factors- NIKE is very careful for their legal and political issue because it puts an
impact on the brand image. Company maintains all working safety for its workers and employees
(Peretti and Micheletti, 2011). For the production, the company do not use harmful products.
Economic environment- In this factor, company does not launch any new product in
recession time because customers lack enough money to spend on branded shoes and accessories
(Schwartz, 2010). For the better profit, they launch their new and high products when economic
condition is good.
Technology factors- NIKE is a famous brand in all over the world so for this; company
makes their website in different languages. So by this, customers can easily book their order and
use their products and services. Further, this organization also gives the option to their customers
where they can order for specialised shoes and sportswear (Greenhouse, 2010). By this, firm
raise their profit and attract the customers.
Porter's five force model on NIKE
Potential entrants- In competitive business world, NIKE has so many competitors like
Reebok, Armor etc. They all are providing the sportswear and shoe to the customers with cheap
prices. So, sometimes it demonstrates a negative impact on the sales of NIKE.
Industry competitors- Company has competitors so it creates lot of pressure on them. For
this, firm start a modified shoes system (Brunk, 2010). In this, customers can design their shoes
as per their taste and preferences. By applying this unique method, NIKE raises their sell and
beat the other brands.
Supplier- Supply chain of NIKE is very powerful and it is famous for their fast services.
Company provides 24 hour home delivery services so for this their supplier power is better than
other brands.
Buyer- Customers are crazy on the logo of NIKE. So company takes an advantage of this
and raise their prices because they know customers are ready to pay extra for NIKE’s swoosh.
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Substitute- For the substitute option, organization starts the costumes and t-shirt section
with the logo (Peretti and Micheletti, 2011).
Corporate social responsibility (CSR) challenge face by the NIKE
Company always focussed on their brand image so for CSR they used environment
apparel designs. For this, they make software which provides the information about the
economic harmful products. The main challenge is based on using recycle product in shoes
making process and develops the awareness into all over the world. So, in World Cup 2010, firm
used recycled polyester and manufactured shoes from this product (Nisen, 2013). In 2009,
Company launched the MVP trash talk; it is a hoop shoes mixed with scrap material. The
packing of this product is also done with reduces toxic and recycled polyester. Further, for the
energy firm use solar system in their factory and they also developed the energy programs for
reducing the consumption of energy.
Internal environment of company and its impact on strategic management
Organization’s internal environment shows the strengths, weaknesses, threats and
opportunities. With the help of these factors, NIKE plans their strategic planning and then
implement on its effective working. Further, it also shows the employee’s morality, cultural
changes and the management polices and the changes. With the help of SWOT analysis,
organization can easily find out their negative and positive point and then make a change as per
the requirements. SWOT analysis of NIKE is explained as follows:
Strengths
 It is one the best shoes maker companies in the world which provides different varieties
of sports shoes.
 Only this organization makes shoes for volleyball, tennis, football, golf and the cricket
games (Ma, Lyu and King, 2010).
 NIKE uses make to use policy where they put extra stock of the shoes (Livengood and
Reger, 2010). So, when customers put their order, company as soon as possible provide
them their order.
 It recently opens a store for women where they also provide the women sports items and
shoes.
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 It sells out its products in more than 180 countries (Contractor, Kumar and Pedersen,
2010).
 The product range is innovative because in this company put the taste and preferences of
the customers, which are taken by the feedback.
 Only this company provides modified shoes services to their customers where they can
modify their shoes as per their choices.
Weaknesses
 The income of the company depends on the footwear market.
 Due to recession, they are not able to launch their new shoes.
 The price in retail sector is very sensitive so most of the income divides into the retail
sectors. By this, the price of the shoes goes high and it decreases the sell (Eltayeb, Zailani
and Ramayah, 2011).
Opportunities
 This company changes the people mind set, because most people think Nike provide
only sport related shoes. So firm start advertisement of their shoes and change the
perspective of consumer that their shoes are also used for fashion icon.
 To develop the products in sportswear, sunglasses, jewellery etc.
 By building the strong brand image into sports world and Olympics, they can easily raise
their profit.
Threats
 NIKE sells their products to all over the world so the cost and margin differences create a
big problem. Due to this problem, company gains lot of losses sometimes.
 High competition with other brands like Reebok, Puma etc (Foerstl, Reuter and Blome,
2010).
 Regular changes in design and fashion create a problem for the production department.
Internal environment impact on strategic position
Strategic positioning is the position which defined the organization future position. In this
company analysis the internal environment and according to them they analysis the possibility
for something happen or not. In this planning system company follow some steps which are
explained as follows;
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The future- Each planning bases on the present and past, where company take a feedback
from their past data then according to this they predict their future (Bondy, Moon and Matten,
2012). As per example NIKE strategic planning for open a new shoes store for the women so for
this they check the women strength in UK of women and how many women are interested in
sports. So according to the research, they analyze the data and then open a new showroom with
women sports accessories and shoes.
Information collection- This information is important for the planning process. In this
firm decide the current position into the competitive market and according to the research they
start their strategic planning (Seok Sohn, Han and Lee, 2012).
Analysis-In this analysis method NIKE used SWOT, PESTLE, Porters five force model
etc. with the help of these model they can easily analysis their strength, weakness and other
factors. Further, they decide the custom range of the product and also decide that this price is
suitable or not for all the customers.
Choice of strategy- On the analysis of the internal and external environment the position
will be determined of the company. With the help of right and appropriate strategy company
clear the vision and mission of the employees. It also clears all the doubts of workers which are
related to their work.
Implementation- The main thing is implementation of the strategy. The all strategy based
on the internal growth of the company and also based on market development.
Pros and cons of the corporate social responsibilities
CSR is the beneficiary for the NIKE brand image because it improving the management
system and also create a better relation with social society. It is associated with the nonprofit
NGOs which are taking a decision for better community (Russell and Russell, 2010). NIKE do a
social work like plant a tree, donating money into schools and follow the social mission. It also
increases the relationship between the customers and suppliers and raises the quality standard.
With the CSR activities company raise the business reputation in all over the world. Further,
with the help of these activities media also promote the brand and increase the business
activities. The main pros of CSR activities are explained as follows; Environmental benefits- NIKE use Eco friendly colors in their shoes and clothes and
also use paper boxes or material in their packaging material. By this, they create an
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environmental awareness (Kim, Kang and Mattila, 2012). Further, by applying this thins
company raise their standard and also increase the sale. Social benefits- In this activity company donate the money into schools and NGOs by
this they raise the awareness of education. Organization social benefits increase their
brand image and entrepreneurship opportunities as well. Financial benefits- CSR projects lead the growth of the company and provide a higher
revenue with innovative capacity. Employees and worker try hard to do work with the
NIKE because if their CSR activities are good it means their internal environment are
also comfortable for the workers. Beneficial for business- It creates a positive image of the company into all over the
world and also attracts the customers toward hem. And in the recession time customers
help the firm by purchasing their products. Further, investors and share holders measure
the standard in ethics then invest on it.
 Benefits for employees- According to the report, workers want to do work a company
that performs CSR activities (Harwood, Humby and Harwood, 2011). As example NIKE
paid less salary to their workers but they provide a good working environment to their
employees so they are happy with company polices.
Cons of CSR activity:
 Cost- The main disadvantages of CSR activity is cost. For the big business it can be
adjustable to do a donation and all, but for the small business it is so hard to give a lot of
amounts in charity (line Louche and Idowu, 2010). Usually all small companies use
social media for CSR activity. Green washing- In CSR activity some firm give their profit to shareholders and other
NGOs but do not provide bonus to their employees and worker (Pohl and Tolhurst,
2010). So it is not good for the internal environment of the company. This is called a
green washing and it is a negative point of CSR activities.
 Cons for customers- NIKE add CSR activities cost in their shoes and sports material. So
in each and every sell they give 1 percent of profit to NGOs. So as per customer
perspective it is not good and why they for this activity. If company not add this amount
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in final sale price so they can easily afford the shoes. Just because of this reason most of
the customers do not but NIKE shoes.
Importance of CSR activities for NIKE:
CSR activities are not good for the external environment o but also beneficiary for the
NIKE. It creates a good image of the organization into all over the world and also help in
strategy planning and development (Freeman, 2010). There are some reason why it is important
for the NIKE to use this activity in their organization;
Trust and loyalty- The Corporate social responsibility based on the trust and loyalty.
The trust based on the customer services. As per example when people purchase NIKE shoes or
sports material so they have a strong belief on it and know that this product is better than other
brands. And this loyalty and trust gain by NIKE through CSR activities. So it put a positive
impact on the success of company.
Cost saving- When NIKE apply CSR activities so UK government give them deduction
into the sales tax. So by this, company save the money and used it into production and marketing
department
Brand differentiation- In pastime usually company used CSR activities for the brand
differentiation because when they do these activities so customers can easily recognized the firm.
For example NIKE promote their new shoes brand by create a racing program UK (Hill, Jone
and Schilling, 2014). In this program all the cancer patients run for the health and they all are
wearing NIKE shoes, sports dress. With the help of this activity organization promote their brand
and media also support them by shooting the show in all over the world.
Customer engagement- NIKE corporate social responsibility included their customers as
well. In this they take a feedback from them and according to their feedback company plan their
next CSR activity. So by this, firm creates a strong relationship with their customers (Wheelen
and Hunger, 2011).
Employee’s engagement- Same as the customers' relation company also take a
participation of their employees and workers in their activity secession.
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Recommendations that would allow Nike to adjust/re-invent or develop new strategy to take
advantages of CSR opportunities
From the above research, it has been found that CSR activities of Nike are most effective
and in the favor of community and environment. In the present time, competitors of the firm
have developed new CSR activities to take the advantages of market and influence the target
customers. In this context, for taking the new CER opportunities, it has needed for Nike to either
develop new strategy or make modifications in the existing (Swayne, Duncan and Ginter, 2012).
For this, some recommendations that would allow company to adjust/re-invent or develop new
strategy to take advantages of CSR opportunities are as follows.
Insist on profitability: Top management of Nike should focus on business values and
think carefully that how CSR opportunities gives the advantage to the organization on terms of
making money (Eden and Ackermann, 2013). Although, it has hard for the company to meet all
the needs of the society but it can create shared values according to the interest of individual. By
considering the CSR opportunity as a medium of making the profit, Nike should adjust or re-
invent its current strategy. It will lead to create awareness in the market about the products by
serving the community and nation.
Link to company’s core purpose: For an organization, it has its responsibilities to offer
some services to the beneficial for the society. In this context, it is needed to find a valuable CER
opportunity and strategy. In the case of Nike, the management should link its business objectives
with the CSR strategy for getting the success (Thompson and Martin, 2010). If the company get
the success in linking major purpose of doing business with CSR opportunities then it will be
easy to take competitive advantages. By doing this, organization will develop and offer
sustainable goods to the community where they have no need to make compromise to buy the
products.
Understand customers: Most of the time, companies do not understand diversity of their
customers and develop a picture on the basis of their assumption (Hodgkinson and Healey,
2011). It sometimes may not be accurate. In the case of Nike, it has understood its target
consumers very well. So it is working as a most leading firm in the world. But in the case of CSR
opportunities, Nike should more know about its service users. It will help in develop the plan
according to the nature of the customers and deliver the services as per the needs.
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Focus on right issues: In the recent time, there are various issues being faced by the
society. In this situation, it is important for the organizations to show some responsibilities
towards the community. Nike has worked in this direction very well and to take competitive
advantages of the present competition, it has needed to make focus on CSR opportunities. In this
direction, company should concentrate on serious CR issues such as energy costs, recycling,
forest prevention, job programs for reducing unemployment rate etc (Hair, Sarstedt and Ringle,
2012). So, on the basis of such kind of new and more focused CSR opportunities, either a new
strategy or adjustment in the existing strategy can be made.
Implications for stakeholders
NIKE is one of the famous sports brand in all over the world so they have some social
responsibility toward their employees and stakeholder. For this company launch new shoes for
the athletes and change their ability into sustainable economy (Ackermann and Eden,2011).
Company has different stakeholders some are from government, consumers and some from
social society. They all are having the strong image in the company so their decision also put an
important role in the organization. They all are responsible for the better CSR activities so for
this they do different things which hare explained as follows;
 Include all the department of the NIKE in CSR activity. The all department give their
suggestion for better and developing activities.
 Company managed the portfolio on the CSR activity. So by this they can cover more
activities with limited budget.
 Analyzing another company’s CSR activity like NIKE analysis the Reebok activities and
compare with them. The main reason behind this is Reebok is second famous brand in
sports accessories so always company want to beat them in competitive business world.
And by this, they can easily judge their activity then plan a better one.
 Specifying the stakeholder activities and time to time update them (Whan Park, MacInnis
and Iacobucci, 2010).
 By providing sales schemes, company changes their activity.
 NIKE recently adds customers in their CSR activity. By this, they create a strong
relationship between organization and the customers.
 With the use of recycle product, firm maintains the class in business world and also
attracts the customers by this activity.
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