Case Analysis: Nike's Digital Transformation and Business Strategy

This case study provides a comprehensive analysis of Nike's business strategy, focusing on its digital transformation initiatives. The study begins with an introduction to the importance of digital transformation for modern businesses, highlighting Nike's efforts to leverage technology and data analytics to enhance its supply chain, customer engagement, and overall market position. A detailed SWOT analysis is presented, identifying Nike's strengths (brand recognition, innovation, customer base), weaknesses (labor practices, reliance on the US market), opportunities (developing markets, innovative products), and threats (counterfeit products, increasing competition). The study then outlines a strategic plan with SMART objectives aimed at enhancing brand awareness, driving digital marketing campaigns, and fostering a robust digital transformation in key markets. The analysis emphasizes the importance of Nike's digital connection, innovative products, and global expansion to maintain its competitive edge. References to existing literature support the analysis, providing a well-rounded view of Nike's strategic landscape and future prospects.

Case analysis and busines strategy

Case analysis and business strategy 1
Contents
Introduction...........................................................................................................................................2
SWOT analysis......................................................................................................................................2
Strategic Plan.........................................................................................................................................6
Conclusion.............................................................................................................................................8
References.............................................................................................................................................9

Case analysis and business strategy 2
Introduction
The digital transformation has become imperious for all businesses from minor to
great enterprises. It has dramatically reshaped the industry and the companies are also making
efforts to attain the benefits through the digital transformation. The change made through the
digital transformation whether succeeds or not but results in sharing traits of current digital
transformations. The major objective of digital transformation is to digitize the operating
model of the company. The adoption of technologies has a great role in digital
transformations. One of the remarkable things about Nike’s performance is its acceleration in
footwear sales. The reason behind the progressed growth of Nike is not only innovation but
also reserves made in digital sales channels comprising technology. The technology has
enhanced the Nike’s efficiency all over the supply chain. The digital strategy of Nike is more
than just a website or offering an app. The company has been making its digital shopping
practice a lifestyle. For instance, Nike has been investing in the mobile program known as the
‘Nike Plus Membership Program’ to generate a more personalized connection with the
customers. Nike has been also making use of data analytics to progress progressive
algorithms to improved reward active members and utilize demand-sensing technology. It
assists the company in keeping products in the supply. The company has observed that when
it offers more tailored products and experiences than it results in creating more value along
with opening opportunities for the growth of the business.
But the digital transformation has also led to the issue in Nike. Assisting digital
transformation and the demand it generates necessitates substantial investments on the back
end of the company. In line with the supply chain improvements made by Nike in the past
few years, the company endures fine-tuning its actions comprising digital tagging and
tracking of products by making use of radio-frequency identification (RFID). It enabled the
company to track products by the manufacturing until the product is sold to the customers.
Nike has attained the opportunity to build on the innovation. It is assisting the company to
differentiate by the investments made in the technology. The company can win to the
customers in the coming period of time through the innovations. The innovations are in fact
number one competitive advantage of Nike and the digital transformation will even generate
even further separation. Nike has planned to meet long term business planning which will be
met in the effective 3-5 years. The company will completely digitally transform within the
time period described.

Case analysis and business strategy 3
SWOT analysis
Strengths
Robust brand cognizance: Nike is identified as one of the leading brands globally. The
brand’s swoosh symbol is straightforwardly identifiable by everyone. The company has been
successful in capturing almost a 31% share of the international athletic footwear market. The
quality has a great role in the robust brand image of Nike. The effective marketing campaigns
have also great in creating a brand image of Nike (Nobre & Ferreira, 2017). The rapid
innovation made by Nike also comes in forming cutting edge designs for athletic footwear,
equipment, and apparel.
Huge customer base: The brand is having lots of patrons from around the globe who track
trends of Nike and likely to partake in the events launched by Nike and even offer customer
response. The vast customer base has assisted the company to grow its market cap.
Aimed for sustainability: Nike has decided to concede the environmental matters in the
societies. The company makes sure that it will assist to contribute to finding a explanation as
a remedy to the environmental matters (Mühlbacher, et al. 2016).
Innovation: Nike is majorly built on the basis of innovation. The company has differentiated
itself by making an investment in the technology which results in innovations. Moreover, the
innovation pipeline is full of Nike and offers a great chance to win customers in the coming
period of time. The innovations in the case of Nike are viewed in the terms of number one
competitive advantage and the digital transformation will continue to differentiate the
company (Ramaswamy & Ozcan, 2016).
Iconic relationships: The long-term association of Nike with Michael Jordan has been
identified to be valuable in terms of sales. This collaboration has even resulted in ‘Air Jordan
1 shoes’. Moreover, the brand has teamed up with the well-known basketball player to assist
design ‘Air Jordan 1 shoes’.
Low manufacturing costs: Most of the footwear of Nike is produced in foreign nations. In
2018, Vietnam manufactured 47%, China manufactured 26% and Indonesia manufactured
21% of the total footwear of Nike. Nike is also having operations in India, Brazil, Argentina,
Mexico, and Italy. Other than this, Nike has recently digitalized a complete palette of 6,000
footwear materials which is helpful in enhancing harmonization across the design teams. It
enables Nike to retort to moves in consumer trends more rapidly (Wiberg, 2018).

Case analysis and business strategy 4
In-house professionals: Nike is having a team of specialists that design shoes and athletic
accessories. The company believes that it has thrived its business by conducting thorough
research for each product. Add on, the digital transformation in the form of RFID has assisted
Nike to better match supply to the demand (Reinartz, Wiegand & Imschloss, 2019). It assists
the company in avoiding mark down unsold merchandise. This way the company sells
products at full prices and it ultimately contributes to the higher margins.
Superior marketing competencies: The excellent marketing campaigns are contributing to
attaining superior marketing competencies. Nike is having great dependence on digital
marketing. The company even makes usage of social media and marketing campaigns to grab
a number of customers (Li, et al. 2018).
Digital connection: Nike is having a sophisticated digital connection. The digital strategy of
Nike is more than the website and rolling out the app. Nike has made the digital shopping
experience a lifestyle such as Nike Plus membership program has to generate a personalized
connection with the customers (Wooten & Rank‐Christman, 2019). The data analytics are
also used for demand-sensing technology to keep products in supply. The company has
attained the opportunity and value by offering tailored products and services to its clienteles.
It has an even great role in the growth of Nike (Reis, et al. 2018).
Weaknesses
Poor labor circumstances in foreign nations: Nike has been targeted on a constant basis in the
last two decades for poor labor conditions. Such concerns comprise low wages, child labor
and terrible working conditions which are deliberated as unsafe.
Retailer’s stronger hold: The retail sector of Nike makes it weak because of the compassion
against pricing. Almost 65-70% of the stocks of the company are directly sold to retailers.
The retailers serve as the core clienteles of Nike therefore the company can not contest
against its pricing structure.
Pending debts: The income statements of Nike reflects the prosperous but a quick look at the
balance sheet represents a diverse picture. The company is fronting financial pressures on a
regular basis. The debts of Nike are pending (Heavin & Power, 2018).
Reliance on the US market: Nike is having a presence worldwide but it still depends on the
US market when it comes to sales and revenue. In the year 2018, almost half of the sales were
generated from the US whereas the rest 50% of sales were made up of the rest of the world.

Case analysis and business strategy 5
In spite of such fame, Nike relies on the US for considerable sales and growth (Van Alstyne
& Parker, 2017).
Sexual harassment: Nike has been targeted for sexual nuisance and delinquency as a mutual
activity in the organization. As per the investigation conducted, it has been realized that Nike
is having a lethal working environment and sexual misbehavior has been widespread. The
females even left their jobs due to the unsafe feeling at the work. Such controversy has
deliberately affected the brand image of Nike (Garza Salgado & Royo Vela, 2019).
Lawsuits: Nike comes in the limelight for having a toxic ethos for females. The company was
even charged against the violation of the equal pay act. Nike was blamed for engaging in the
efficient gender pay prejudice where males are paid more than females for the similar level of
work (Yusoof, et al. 2017).
Opportunities
Developing markets: Nike is already having an existence in overseas nations, but there is an
abundance of prospects for the company. It is due to the outside markets like China, India and
Brazil are progressively thriving.
Innovative products: Nike is already having a broad product range but there is still a lot to
revolutionize. Nike is having a great reach in technology with the connotation of health and
fitness. Such as wearable technology monitors to the physical activities which can be initiated
in advancing innovative technology products. The blend of technology and athletic wear can
be proved valuable as it is the facet that has not much discovered in the concerned industry
(Cham, 2017).
Effective integration: Nike is having reliance on the independent producers for supply and
production. Nike can acquire some or make some of its own for the sake of a capable and
rationalized supply chain (Schallmo, Williams & Boardman, 2017).
Threats
Counterfeit products: The counterfeit products can deliberately influence on the revenue and
status of the company. Nike is having universal operations where the risk of counterfeit
products becomes high. Generally, various merchandisers and venders provide counterfeit
products at lower prices. The low-quality materials are used to produce low priced products

Case analysis and business strategy 6
and still have the label, Nike (Scheitz, Peck & Groban, 2018). It can stain the brand image of
Nike as the customers can feel that Nike has started creating products at low quality.
Increasing pressure on a regular basis: Nike is having a leading position in the market, still
having competition from the new brands emerging in the market. Nike has to devote more
money on advertising and marketing due to the increasing number of competitors. Nike has
started making more of the investment in marketing since 2018. The company is even making
innovative products on a regular basis to overcome competition. Such products are custom-
made as per the requirements of athletes (Diniso & Chuchu, 2017).
Currency foreign exchange risks: Nike is pretentious by the shifting foreign exchange rates as
it is having operations worldwide. The brand represents its monetary earnings in US dollars.
It affects its income as the US dollar is exposed to instability against other financial
currencies (Burris, Liu, & Appelbaum, 2020).
Marketing budget burden: Brands like Adidas and Under Armor are spending a significant
amount on marketing and advertising campaigns. As a result, it is increasing pressure on Nike
to a significant amount on the marketing and advertising campaigns.
Strategic Plan
SMART objectives are a significant tool for Nike to keep the direction of its goals of
digital transformation. The company has to manage 5 key elements to attain an effective goal
setting such as specific, measurable, attainable, relevant and time-bound. Nike will be able to
attain long term business planning through the objectives. The SMART objectives can assist
to Nike in the digital transformation of the brand.
 Nike is required to enhance Nikexperience brand insight through PR activities, press
mentions, and social media. Nike is required to upsurge its brand consciousness in NZ
and other regions. Nike is necessitated to have a robust presence in media with an
enhance of 35% officially and non-officially.
 The increase in social media followers like Instagram likes and reposts, Facebook like
re-tweets and more. There should be at least likes and reposts of 500 in each case. It
will lead to global brand awareness in NZ and other territories like Asia and the US.
 Advance a robust digital transformation campaign concentrated in NZ. It will lead to
an exciting and capable service experience (Daradkeh, Gouveia & Sen, 2018).

Case analysis and business strategy 7
 Advance a robust digital marketing campaign by Nike’s website and other platforms
like NZ growth to reach other nations. Nike will raise brand loyalty through product
modification options.
 Nike is required to complete its digital transformation in 3-5 years. The company will
continue to capitalize in the digital transformation ingenuities from digital demand
detecting to linked inventory to digitally motorized product design and advancement
(Sciarrino & Roberts, 2018).
Strategic Plan for the next 3-5 years
Purpose
Increasing sales through Digital transformation
Key Objectives
Market share Process
improvement
People Advancement Product
Advancement
Initiatives
 Membership
program
 Use of data
algorithms
 Demand
sensing
technology
 Utilizing
RFID
 Execution
of supply
chain
strategy
 Enhance
communication
 Execute
personal
planning
procedure

 Digital
tagging
 Tracking of
products
 Mark down
unsold
merchandises
Key Performance Indicators
 Market share
 Revenue per
month
 Fine tune
operations
 No delays
 Turnover
 Attendance per
month
 Sales
promoted
Nike will be active in investing in its NikePlus membership program to form an advanced
and personalized association with the customers. Nike will make use of data algorithms to
drive advanced algorithms to recompence active members and use demand detecting
technology. The company believes in creating value by offering a personalized experience to
the customers. Therefore, Nike will tailor products and experiences as an opportunity to grow
business in NZ. Moreover, Nike will create a direct relationship with the customers through
the mobile devices carried by them everywhere they go. The company will update to the

Case analysis and business strategy 8
customers about the imminent releases, check their favourite styles and store payment data to
enable checkout calmer (Bughin, O’Beirne & Deakin, 2019). The SNKRS app of Nike has
been deliberated to be a valuable marketing tool for Nike as its alert messages are sent to the
customers whenever a shoe is about to launch. It inspires customers to have a mindset for
purchasing shoes. The company aims to increase traffic and revenue through the SNKRS app
(Stonehouse & Konina, 2020).
The strategic plan of Nike also comprises assisting the level of personalization and the
demand generated necessitates substantial investments on the back end of the company. Nike
will fine-tune its processes comprising digital tagging and chasing of products utilizing
RFID. This way the company will be able to track products in the whole production
procedure until the item is vended to the customer (Zhang, 2018). Eventually, RFID will
assist Nike in matching supply to the demand in a better way. The company will also be able
to sell more items at complete price. It will subsidize to the higher margins. Other than the
RFID ingenuity, Nike will be doing an improved job getting materials in the place quicker
and ready to go in the manufacturing ahead of the demand (Sesselmann, 2016). The company
will be digitalizing its footwear materials to enhance the synchronization across design teams.
It will enable the company to retort to shifts in the consumer drifts more rapidly. Nike has
decided to invest in the key competencies on a regular basis to drive digital transformation. It
will drive to profitable growth in the coming period of time (Tran, 2020). Nike has observed
that digital transformation is assisting the company in better engaging to the customers.
Conclusion
Originally Nike is a growth company made on innovation. But the company is
progressively differentiating itself with the digital transformation. Nike is progressively
differentiating itself by making investments in technology. It has made the company win
customers and the company will consistently win customers in the coming period of time.
When innovation is the competitive advantage of Nike, digital transformation will create
even advanced separation. Nike will continue to invest in the key capabilities to progress
digital transformation and drive profits in the coming period of time. The digital
transformation will assist Nike in engaging with the customers in a better manner.
Digital transformation is not an overnight process. It is a constant process and requires
3-5 years. The changing taking place on the fast pace certainly changes to the plans. Nike is
recommended to measure progress through some metrics such as digital proficiency,

Case analysis and business strategy 9
customer focus, and return on innovation. The digital proficiency states that the percentage of
marketing spend is digital. The digital transformation is done to create brand value in the
market. The effectiveness of the digital transformation of Nike can be measured through the
percentage of revenue attained through the digital channels. The digital proficiency even
comprises the contribution made by the departments such as finance, HR, purchasing, IT,
marketing and sales. On the other hand, customer focus can be deliberated by the rate of new
customer acquisition, an increase in customer engagements, lessen time to market new
products to the customers. It also denotes the number of customer touchpoints guided to
enhance customer experience absolutely. The return on innovation also contributes to the
digital transformation. The increasing number of innovative ideas leads to innovation and
new products launched in the market.

Case analysis and business strategy 10
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