Comprehensive Analysis of Nike's Business Environment and Strategy

This report provides a comprehensive analysis of Nike's business environment, examining both internal and external factors that influence its operations and profitability. The report begins with an introduction to the concept of the business environment, emphasizing the significance of understanding both internal and external factors for organizational success. It then delves into a Five Forces analysis, evaluating the competitive rivalry, bargaining power of buyers and suppliers, threat of substitutes, and threat of new entrants within Nike's industry. The analysis highlights the strengths and weaknesses of each force, providing insights into Nike's strategic positioning. Following the Five Forces analysis, the report assesses Nike's internal environment, including its assets, competencies, and leadership. The report also conducts a SWOT analysis, identifying Nike's strengths, weaknesses, opportunities, and threats to develop a strategic business plan. The report concludes with a summary of key findings and recommendations for Nike to maintain and enhance its competitive advantage.

Business Environment

Table of Contents
Introduction ................................................................................................................................ 3
Task 5 ....................................................................................................................................... 3
1.............................................................................................................................................. 3
Five force Analysis.................................................................................................................. 3
2.............................................................................................................................................. 7
Assets and competencies of internal environment....................................................................7
3.............................................................................................................................................. 9
Conduct a SWOT analysis for Nike......................................................................................... 9
CONCLUSION.......................................................................................................................... 12
REFERENCES.......................................................................................................................... 12

·Introduction
The business environment is all about the external and internal factors which deals with
the employees, customers, business management demand of the products and various rules and
regulation which affect the functioning of business environment and profitability. The social,
political, technological and some factor which affect the whole economy with the organization
or some factors which are directly associated with the organization like demand, supply,
distribution etc. these factors are external factors(Whittington, Delaney, 2011). Factors like
internal operational threats, potential opportunities leadership quality, which are the internal
factors and can be controlled but it has a crucial rule in organization growth. An organization
can control these factors, if these factors inside and outside of the organization. It become very
beneficial. Every organization has a mission and a vision that can never be achieved by ignoring
these factors of business environment. From this project it is understood that business
environment effects on the business bodies. This report also makes us aware and clear the
concept about the role of business environment.
·Task 5
·1.
·Five force Analysis
Five force analysis of Nike helps in the most significant factors which helps in shaping
the strategies of company. Five force model helps in analysis so that they can do the proper
understanding within the external factors on the business. This model helps in managing the
company which helps in retaining the leading position in the international industry environment.
the forces of the external factors which is included in the five force analysis so that they can
remain among the strategic consideration of Nike(Aas, Pedersen, 2010). By this model company
can identify the competitors in the market and the price of the product of competitor which will
help Nike in attaining the targets. In the five force analysis of Nike of the external factors so that
the entity can determine the strength and weakness of the different forces which impact the
performance of company. It helps the company in making the correct decisions so that they can
manage the strategy and by that the entity can make the new and innovative products. This
model helps the entity in increasing the perceived value to the consumers which is very

important and necessary for the future success of Nike by which they can enhance the growth. It
helps in attaining the success in the competition and have to revised the overall structure of the
industry which helps in taking effective decision making(Twyman, 2010). Porter's five force
model is help the entity in attaining the success at the time of high competition and potential of
growth. This model is classified into five parts which includes :-
AXISForceDescriptionCompetitive rivalryStrongCompetition determines that they have to
maintain the share of the sports footwear market. This element of five force analysis helps in
identifying the factor which influence the environment of industry and the performance of the
employees. The external factors which create a strong force in the competitive rivalry of Nike
includes low market growth rate, high aggressiveness of firms and the limited number of
firms(Agarwal, Selen, 2011). This model helps Nike in attaining the success in high competition
and they have to focus on market and product development so that they can attain the maximum
share in the market. In the market there is low market growth rate which is due to the firms
which is high market penetration and the market saturation which helps in attaining the
success(Storey, Kahn, 2010). Bargaining power of buyerModerateConsumers of Nike affect the
performance of business and this model helps in determining the business competitiveness and
the environment of industry. In this they are having the low switching cost, moderate substitute
availability and small size of individual buyers(Chen, Tsou,Huang, 2009). In the market Nike
have a small sized of the individual consumers by which they can minimize the individual force
on the company. The external factors of the entity which leads to the moderate bargaining power
of consumers. Bargaining power of supplierWeakSuppliers affect the business which helps in the
availability of raw material(Rogers, 2016). The element of five force analysis which helps in
tackles the influence of the suppliers on firms and the environment of industry. They are having
overall supply which is high and supplier population which is large in number and the amount
of individual suppliers is of moderate size. The staff members of Nike have to minimize the
affect the individual actions on the business of Nike. The elements of five force model helps
Nike in improving the weak points so that they can attain the success in the bargaining power of
suppliers(Brinkman, Navarro, Harper, 2014). Threat of substituteModerateSubstitute is the most
significant threat which helps in the improvement of Nike along with this they are also helpful in
increasing the performance in the competitive market. It is the important and essential element
of five force model by which Nike can identify the force of substitution on the business and the

environment of industry(Santos, Spring, 2013). The external factors which helps in maintaining
the substitution of moderate threats includes the following:
·substitutes of threat are available moderately
·performance of substitutes per price is moderate
·cost for switching is low.
The substitutes which are moderately available determines the force of moderate which helps
Nike in acquiring success in the market which is very competitive(Craig, Campbell, 2012).
Company should give proper performance that would help the corporation in achieving gaols
and targets. Low switching cost of products and services which Nike is providing to their
consumers by which they can improve the performance in the competitive market(Kanchanda,
Ussahawanitchakit, 2011). Threat of new entrantsWeakNew entry of the firms in the industry
helps in increasing the high competition. The element of five force model identify the new
entrants which influence the firms and it helps in attaining the targets and improve the
performance in the competitive market. The external factors contribute to the weak threats which
will help in the improvement of the performance which includes:
·development cost of brand which is high
·economy scale is high
·cost for doing business is moderate(Oke, Walumbwa, Myers, 2012).
1 The high cost of brand development helps in the new entrants in the market
which is competitive to achieve success. To achieve success and targets the
team members are responsible to do proper production and distribution of
products and services .

l壱2
l壱Assets and competencies of internal environment
An internal environment can be explained the environment and the condition which has
been prevailing inside the company. It has been said that when a company is being formed then
there are certain components which is to be included in the environment. These component are
very much important for internal environment as without an internal environment no company
shall be able to regulate its internal as well as the business activity(Gunday, et. al., 2011). An
internal environment of a company may include the management which is being carried out by
the company, the employee of the company and the type of behaviour which is being carried out
by the company
Using auditing tool which is appropriate , assets and capabilities of internal environment of
Nike should be analysed and discussed . These elements and the activities which is being carried
out by these internal environment effect the company as a whole by sometimes there are
situation in which these element only effect the manager.
The term competence can be understood as the ability to job properly by the internal
environment. Carrying out job in an accurate manner is an important factor to be considered.
Company would not be able to achieve its targets and aim on time if the work is not being
carried out in a proper and systematic manner. Competence in an internal environment is when
the job of management and the employee is being conducted properly(Ponsignon, Smart, Maull,
2011). The management works get carried out in a proper way is an important factor to be taken
into account so that work shall not get hampered. For an example it has been seen in Nike that
all the work of internal environment is carried out by proper ability. It is because of the
competence in the internal environment only that Nike is able to carry out the work and deliver
that work in quality by which its consumer is able to get full satisfaction.
The environmental factors may be described in to different types of levels.
Micro environment is a set of running processes and situation that linked with supplier,
distributors, customers, competitors and shareholders and the group in which business operates.
These factors impacts on organizations ability to achieve the target. These factor is mainly under
the control of seniors authorities. In NIKE, the suppliers, distributors,customers, and competitors
are the four pillars which are responsible for stability and productivity of company. The material
is provided by suppliers which act as lifeline for the organizations. Distributor helps to provide

the product to the market and customers add the value to the organization. Competitors act as
most important force who often result in price falling and quality competition which affects
profitability(Johannessen, Olsen, 2010).
Leadership role is an important internal factor which is being played by Nike. Nike's culture
has impact of styles of leadership and management styles .Formal structure is provided by Nike
describing its mission and perception statements.
Employees strengths: When we have less number of talented workforce ,at that time the strength
of employees in any organisation is an important internal factor that produces better results. The
effectiveness among the departments can be improved by building relationship between
employees. In today's competitive environment, employees play a critical role for the
organizations. Internal business factors generally consists of the following-
·internal strengths
·weaknesses
The internal factors thus affects the objectives and goals of Nike in a way it achieves.
Financial: Financial risks of Nike depends on the following factors :
·Nike's business structure of finance
· dependents which depends on business transactions of Nike
· the structure of finance
Employee risks: For any business to get succeed employees are the most important part of it.
However, number of risks are associated along with them. There could arise number of problems
in Nike due to striking action.
Internal factors in SWOT: In SWOT analysis internal business environment is often studied. are
Internal business factors consists of areas of its strengths and the areas of its weaknesses in the
business .Environment of Nike can be analysed by using SWOT analysis . SWOT assesses the
strengths, weaknesses, opportunities and threats. The main features of Nike is its strength that
allows to work in more efficient way as compared to competitors. Scope of improvement is
more in the weakness area. In internal business environment company have control over it . In

Nike, due to wider area internal factors has important place. Due to market features social that
are very huge political factors and legal factors are mixed together. The factors related to
technology are always mixed into functionality.
l壱3
l壱Conduct a SWOT analysis for Nike
SWOT analysis is a very useful technique for understanding and developing a business
strategy which is strong by taking business's strengths ,its weaknesses, the possible opportunities
and potential threats it might confront in the market. Internal factors of the organization
includes :Strength and weakness that means the organization is readily available with the
resources and experience, whereas the opportunities as well as threats both are external to the
firm(KazCham., 2014). In any company, we can conduct SWOT analysis with a group of
individual having different viewpoints. The basic aim of it is to develop an organization which is
fully aware of all the possible possibilities which are involved in decision-making process.
Strengths: To achieve organization's aim and objective strength is referred as the most
important and favourable internal factor. It constitutes assets like capital which is available , raw
material, credit, customers that are loyal, distribution channel and resources that are
valuable(Ren, 2009).
Weakness: This is an internal factor which is unfavourable to achieve objectives and goals of
organization. For any organization to grow weaknesses are the specifications of product or
service which are harmful . It could be difficult to consider honestly or equitably because
performing this can implicit criticism in a way the company has managed.
Opportunities: Opportunities refers to all the external factors which are beneficial for achieving
organizations goals and objective. It might occur because of many reasons like change in
customer lifestyle, technology advancement or methods of new production .
Threats: The external factors that are unfavourable to achieve organizations goal and objective.
Company have no control over these.
For making decisions and planning strategically within the Nike the members of the
team and project managers are responsible for it.
SWOT analysis for Nike

Nike is a multinational brand that is engaged in the design, develop,manufacturing and
shoe selling for wide range of sports that includes baseball, volleyball and several other sports.
The company is strong at its research and development process due to their fresh product
range(Santos, Spring, 2013). Nike is a leading company in the market containing half of the
shares of the market leaving the rest market share to be divided into other opponents present in
the market. The company may also change the outlook and perspective of other companies in the
market being the leader by influencing them to bring change in the work. The company holds
the bargaining power with the suppliers to attain loyalty of customer. Products of Nike are made
for everyone: men, women, and kids of all the age groups. And distributes one new shoe style
every day. Company is facing higher competition. The main competitors are Reebok,Adidas,
Puma etc.
Strengths of Nike:
lNike is very popular brand in the such areas of economy that has top of the mind recall among
customers.
l It is a very competitive organization with its approach of “Just Do It.” Nike was founded on
the key principal that it would make shoes for anyone who could walk or run and this has been
the guiding philosophy behind Nike.
lIts strengths are the key drivers of the organization's growth and global leadership in the
sports shoes. The company's effective marketing plans also contribute to this strength.
lIt is mostly used brand for sports whole countries. So that this brand footwear manufactured
outside of United State and also have this brand in Argentina, Brazil, India, and Mexico.
lThis company on its own research, design, and development efforts are very well and this
believes that one of the key factors of the success is for competitive environment.
lSocial and research in an innovation in both the design and manufacturing process of its own
footwear products and athletic equipment helped in the Nike to produce good products. Nike has
employee for specialists in the areas of biomechanics, chemistry, sales team and other experts
are consult with Nike for particular designs,materials and concepts for products and
improvements(Johannessen, Olsen, 2010).
Weaknesses:
lThis company was faced bitter criticism of labour practices and conditions on work. Nike
have undertaken efforts to improve better conditions for practically approx one million workers.

When conditions improved, most of its factories are in development and developed countries
still not meet company's standards.
lDue to the strong image, this company typically command a superior of the products it sells,
which is turn pillars higher profitability(KazCham., 2014). But cost of the product is may be
higher than of competitors.
lThe retailers sector is very price is different. So Nike do its business through retailers who
stock other brands as well. Yet, all most of income is borrowed from selling retailers. So
margins going to get tend griped if retailers try to pass some of the low price competition
pressure into Nike.
Opportunities:
lWhile this company already has adopted various market share So that their is still heavy
growth is there. Developing countries such as china and along with other developed markets like
India and Brazil have the potential for drive ultimate profits.
lIn few years ago, the company has begun to diversify in to many accessories and other luxury
products apart its footwear segments.
lThis company has the exclusive advantage of offering value for money. Another opportunity
is for Nike is to improve its various products looks attractive many for customers and also
opportunity for improve its productivity in developement and growing retailers.
lProduct and market development offers Nike many opportunities.
lThere is so many opportunities for develop the products and markets such as sunglasses and
jewellery.
Threats :
lThe competition is one of the threats for Nike.
lThe footwear and their equipment in industry is highly competitive, in the UK and around the
countries. Their are various companies for sports equipment that produce similar products and
rapid changes in technology and productivity test constitute significant risk factors for the
company.
lThe majority for its sales can be generated outside of UK, Nike is exposed to significant
currency fluctuations.
Future strategy is that it can be pursue by the company, to create a sustainable competitive
advantage. .

Future plans to reach 40 billion in 2021
In recent, Nike announced a revenue target of approx 40 billion by the end of year 2021.
In the year, 2010 to 2016 company increased sales revenue by approx 11 billion. The Nike's
integrate with marketplace will another growth driver for the future where market shares are
primarily expected to driven by online sales which are projected for grow to approx eight billion
in the next seven years(Crook, et. al., 2011).
·CONCLUSION
From the above report it has been observed that the entity have to use the Porter's five
force model so that they can find out the competitors in the industry and by that Nike have to
develop the products and services by which they attain the goals and targets along with the
leading position in the market. Members of the company have to perform accurate analysis so
that members can find out where improvements is necessary and on the basis of that members
can perform development in a correct manner which will help to achieve success and growth in
competitive market. Further, Nike have to do the SWOT analysis so that they can find out the
strength and weakness and by that they can make a weakness as a strength by which they attain
the targets in the competitive market. it has been further described in the project that a business
environment is very much important for the company and there are several kinds of measure
which has been used by the company top include business environment. There are various kinds
of factors are included in the formation of environment in the company so that a proper
regulation of business shall be maintained.
·

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