Comprehensive Operations Management Report: Nike Inc. Analysis

This report provides a comprehensive analysis of Nike Inc.'s operations management, focusing on key challenges and strategic responses. The introduction defines operations management and highlights its importance for maximizing efficiency and profitability within the context of Nike, a global lea...Read More

Operations
Management

Table of Contents
INTRODUCTION ..........................................................................................................................1
TASK 1 ...........................................................................................................................................1
Future impact of key challenges.................................................................................................1
Changing technologies ...............................................................................................................2
Globalization of markets including 1st and 2nd world entrants: ...............................................2
Changing customer expectations: ..............................................................................................3
Changing job designs: ................................................................................................................3
Quality management:..................................................................................................................4
Global manufacturing:................................................................................................................5
TASK 2 ...........................................................................................................................................6
Supply chain design....................................................................................................................6
Quality management...................................................................................................................8
Resource management..............................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
Operations management describes as the administration of various business practices
which helps in generating most possible highest level of efficiency among organisation (O’Neill
and et. al., 2017). It can be considered as the process of transforming labour and material into
finished products and services in order to maximising profit and revenue of an organisation. The
major focused area of management operation department is to maintain significant balance
among cost and revenue to attain highest range of net operating possible profit. Nike Inc is well
known American multinational corporation who deals in sports equipments across the globe.
This company mainly engaged in development, design, manufacturing and most popular sales
and marketing of apparel, footwear, accessories, sports equipments and services. Nike is the
worlds biggest suppliers of athletic apparel and shoes and it is largest manufacturer of men and
women equipments. This report contains the study about various changing technologies that are
adopted by company for improving their organisational performance. Globalization of market
which involves 1st and 2nd worlds entrance. Altering expectation of consumers, various ways of
quality management. In this project, design of products and services which are offered by
company. Supply chain design, capacity management and managing inventories, resource and
quality management are explained in detail.
TASK 1
Future impact of key challenges
Operations management is known as the most important function of business enterprise
because it helps in planning, controlling and coordinating those organizational resources which
are highly important to manufacture different products and services. Also, it helps in converting
inputs into outputs. Input involves raw materials, procedures, technology and human resources.
On the other side, output involves final products and services. So, it can be said that operations
management is the only department which combines and coordinates business resources to
manufacture quality goods and services (Furlong, 2013, January). In other words, this concept is
associated with that process of production which converts raw material into finished goods. This
concept plays an important role in organizations, hospitals, banking systems, customers and so
on. Earlier, organizations did not give importance to this concept but in modern scenario, it has
become the key to attain future success. NIKE is a multinational company and it also gives core
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attention to its operations management function. There are number of challenges which should
be considered by managers of operation department as they can affect future growth and
performance of company. These are as follows:
Changing technologies
This is the first challenge which can affect NIKE in its future. It is highly important for operation
manger to determine each and every aspect of operations management. Also, it helps in
providing customer satisfaction and improving organizational performance. evaluate that how
this concept can help in providing customer satisfaction and increasing organizational
performance. It involves various tools and techniques which are interrelated with technology. So,
it can be said that there is huge interrelation between technology and operation management.
Technical factors help this department in developing product's design as well as also support in
managing and improving operational system and procedures (Reardon, Timmer and Minten,
2012). With the help of changing technologies, NIKE can reduce its production cost and improve
its delivery process in the future. Technological advancement can help this company in
improving its product quality which can create better value for its customers. Continuous change
in technical forces can result in high profitability and productivity of the business. However, it's
not an easy task to implement technology into production system but with the help of technology
acquisition, integration and verification, it can take place in the most effective and systematic
manner. Old machineries of cited company manufacture general products which are not
providing an appropriate customer satisfaction in their tarted market. But by installing 3D
technology in future, NIKE can improve their product designs and also can increase their
productivity. So, it can be said that changing technology will impact on mentioned organization
and its manufacturing process in upcoming years.
As per the changes in time, technical forces are also upgrading which can lead NIKE to
high level of success in upcoming years. With the help of changing technologies, company can
develop its product’s quality and design which can attract a large number of customers. Usage of
computers and supporting electronic systems can help this organisation in increasing its market
share in future.
Globalization of markets including 1st and 2nd world entrants:
In this modern world, globalisation put a huge impact on growth and success of business
organisation. In these days, every company wants to expand itself in international market in
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order to gain high market share. In Nike, this phenomenon affect business life, society as well as
country's economic condition. Globalisation is accessible in increasing market competition, that
is related with products, services, costs, technological adoption etc. if cited firm will produce
lower prices trades, it can easily achieve competitive advantage. But due to new entrants and
external market forces , the business organisation is not able to perform well in target market;
which is reducing its growth and vitality. These variation affect directly and indirectly on
organisational performance. For example- if all firms wants to increase their market share then
customers will get many option. But this might be reduces the number of potential users of the
firm in an adequate manner (Flint, Blocker and Boutin, 2011). Along with this, now buyers will
get multiple choices which will affect their purchasing power. As per above diagram, it states
that globalisation is liable to increase market growth and development of the NIKE as, it
provides many opportunities of expansion in competitive environment. For example- in 1st year
the firm sales are $548.5 whereas in 2nd years its sales are increasing by $854.
Moreover, NIKE belongs to 1st world and it wanted to enter into Russian market which
basically belongs to 2nd world. For entering in that market it sponsored Olympic which was held
in Russia. By investing its fund in that Olympic it have build strong and positive position in
Russian market. This initiative of cited company helped it in entering Russia however it paid
such big amount but still it got succeed in entering Russian market. Due to globalisation market
competition is continuously increasing which can influence negative impact on NIKE in future.
Changing customer expectations:
In the modern world, almost all organisations are becoming customer oriented. It is
highly important for business enterprise to satisfy the needs and demands of their clients
otherwise they cannot survive in the competitive marketplace. By providing excellent services
and high satisfaction to consumers, NIKE can fulfil customer expectations to a high extent. It is
the major responsibility of operations management to improve and develop their products as per
the requirements of clients. For better growth and development, it is essential for company to
determine that whether their goods and services have met customer’s expectations or not.
Basically, it is the concept which is responsible for customer loyalty and repurchase decisions.
By giving core attention to client's needs and demands, NIKE can become market leader of
athletic shoes in the future. For fulfilling customer's expectations, organization should build a
strong relationship with them and also keep their promises made (Blocker and et. al., 2011).
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These are the golden keys by which NIKE can make its clients brand loyal. In present scenario,
tastes and needs of clients are also changing very fast. For example: people prefer running shoes
in morning or when they have go for jogging. Adidas is providing different variety of shoes such
as running, cloud-foam, unisex and some other kind of shoes. By providing such variety they are
attracting many customers. It is a huge challenge for NIKE which can lead this company in
under growth. So, for better future it should produce its products as per the customer's
requirement otherwise it can not exist in market place for long time period.
Moreover, by focusing on this concept, operation management of company can
effectually deal with customer’s complaints. Although, it is not a positive response but still it can
help organization in resolving consumer's problems quickly. By identifying and fulfilling
customer's needs, NIKE can become market leader in the future and also, can earn loyalty of its
potential clients. This company can increase its profitability in the future by producing products
and services according to the customer's demands.
Changing job designs:
Success and failure of every organisation depends upon their production department. So,
it is an important responsibility of operations manager to give core attention to operating process
and its factors which can help in increasing organizational productivity. They should also take
care of the technical process of production that does not disgrace jobs. Act of dehumanization
can demotivate employees which can result in less profitability and productivity. The foremost
objective of job design is to improve and develop that satisfaction which can fulfil needs and
demands of company and its workforce (Kim, Kumar and Kumar, 2012). It is the major
responsibility of operations managers to design jobs after considering technical, behavioural and
economical forces which can be execute by organisation and its employees as well. It is highly
essential to consider working environment, degree of specialization and job content while
making important decisions regarding job designs. In the present scenario, changing technologies
are affecting job designs. With the help of technical advancement, operations managers of NIKE
can train and develop their workforce through which they can adapt new changes quickly.
Continuous environmental changes are affecting all business enterprises. Which is biggest
challenge for all type of firms. Without cooperating with micro and macro factors no company
can survive in marketplace for long period. By hiring high skilled labours, NIKE can cope up
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with such micro and macro forces in present as well as in future. So, it is stated that changing job
designs is also a big future situation or challenge which is affecting cited organisation.
Be taking the help of technical support, company can improve its job design which can
help it in enhancing the future growth and development. Technology up-gradation has developed
many robots which can operate business activities and practices in the most effective and
systematic manner. It can put a positive impact on NIKE in the future as by the same, company
will be able to minimise its labour turnover and operational cost.
Quality management:
Quality management is an important concept which used by business enterprise to
determine that products and services of company are according to customer's needs. It involves
four elements which are quality planning, assurance, control and betterment. The main objective
of this concept is to not only provide quality products but also achieve organizational goals and
objectives. So, it can be said that it is a major factor which can help NIKE in producing and
controlling goods and services in most effective manner. In modern world, customers have
become more advance (Wang, Chen and Chen, 2012). They prefer only quality products. For
future growth and development, it is highly important for cited company to manage and control
products quality. By doing this, it can attract huge number of customers and also can enhance its
corporate image in market place. In present time, the main key to provide customer satisfaction
is product quality. If company will manufacture and deliver quality goods then it can satisfy its
clients in better way. In future, this concept will become most important aspect for all business
enterprise. As, products of NIKE are not any more providing customer satisfaction which is a
huge challenge for this company. For surviving in market place for long time period, it should re-
innovate products designs and also use some methods through which they can measure quality
of their developed products. By following this procedure, it can secure its business from future
challenges and their impacts.
Hence, quality management is challenge for operations managers because it can influence
organizational success as well as failure in future. So, it is essential for company to produce and
deliver goods as per the requirements of customers. By proving quality products, NIKE can
achieve competitive advantage and also can become world's best footwear and apparel brand.
With the help of this concept, Cited company can improve its production system constantly and
forever.
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Global manufacturing:
Manufacturing is an production process which includes tools, machines, labours,
chemical and biological. Generally, it refer as human activity which can be from handy craft to
high technology. Also, it is known as manufacturing engineering process in which raw materials
(Inputs) are transformed into finished goods (outputs). This procedure starts from material
specification and product design. When organisation manufacture its products and services in
different location then it is called as global manufacturing (Stadtler, 2015). It can be done only
by business expansion. NIKE is multinational company it have to sale its goods in all over the
world, but due to import and export charges it face high financial loss. But implementing a new
plant in other country can reduce such expenses. With the help of global manufacturing cited
firm can increase its market share and also can increase its profitability in upcoming years.
Globalisation is forcing organizations to do global manufacturing but it is a time and
money consuming process. But if company will not go for international expansion then their
competitors can get high competitive advantage by expanding their business. To solve this
situation or challenge NIKE can target Asian markets in which they can implement new plants
with less labour turnover. China and India is biggest example of Asian market because in these
countries, cited company can hire people on low wages. By doing this, NIKE can manufacture
products in different countries and also can minimise its future risks which can be arise due to
global manufacturing.
Source: (United Nations Statistics. 2017)
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Illustration 1: Figure 1: Global manufacturing

TASK 2
Supply chain design
Nike, Inc. is worlds largest sports manufacturer and supplier across the world. Nike is a
well known strong brand who deals in sports equipments at very large geographical area. With
the entrance of new competition at market place Nike has provide better products and leading
time and even high profile fashion brand which are providing competition to their competitors.
The company use their excellence supply chain as their essential competitive weapon. The major
purpose of every business organisation is to provide most satisfactory services to their potential
buyers who are willing to taking the benefits of offered services of Nike. Supply chain is mainly
focused on accomplishing organisational objectives in most efficient manner, so that firm can
earn huge amount of profit and revenue (Arif and Mahmood, 2012). The supply chain is mainly
concerned about fulfilling actual requirements of customers, improving requested delivery and
developing customers relationships. The supply chain management helps in meeting with present
and future demand of consumers though virtual outlets and companies. Major needs of customers
are depend on innovative tools and technologies, intellectual capital brands, new activities that
are related with new channel strategies or operations activities that are connected with out
sources. It is difficult for companies who are deals in multi products and jurisdictional to deliver
goods and services. Nike, Inc. use effective supply chain management system in order to
improves their profit margins, decrease price markdowns, reduce inventories and ensure their
customers to receive right product in given period of time. As per the consistence of its high
manufacturing networks of Nike, it has more than 700 factories in over 42 countries (Soni,
2014). Nike has variety of products and each moves approximate 57 distribution channels across
a wide network of 1,40,000 retail outlets or stores and 18,500 accounts. In the supply chain of
company various components are involved, these plays most significant role in delivering goods
and services to the final customers.
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(Source: Supply Chain of Nike, Inc. )
As a well known sports brand Nike, Inc. is the worlds largest manufacturer who provide
wide range of sports equipments across the world, it has number of outlets and stores who are
able to provide wide range of products and service to their customers and clients. As per the view
of above mentioned graph it has been evaluated that the supply chain of Nike has included
various major aspects such as manufacturer, contract suppliers, distributors, retailers and
customers. Company has operated various stores across the world who are providing products
and services to their customers as per the new demand and need, in the each store the price of
products are same, so it is easy for customers to buy products from any retail store (Oudshoorn
2012). The company having contract suppliers, who are directly connected with manufacturer of
Nike, Inc. suppliers supply to goods to distributors, suppliers are the link between manufacturer
and service provider, there are large number of distributors available who are interlinked with
company and provide products to the retailers. As a well known brand company does not have
any requirements for promoting their products at very large scale, Nike Inc conduct small
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Illustration 2: Supply chain of Nike, Inc.

advertising programmes in which they spend least amount. Company give their products to
different retailers with a fixed percentage of profit, retailers promote the brand through providing
significant advertising and promotional activities at market place. Retailers provide offers in
order to gaining attention of large number of customers towards the brand and its offered
products and services. Retailers helps to bridge the gap between distributors and customers, and
provide goods and services as per the need and demand of customers. The final part of supply
chain is customer, it comes after distributing products at retail stores, from retail stores and
outlets products can be purchased by consumer’s as per their own preferences and needs.
Customers are essential key of marketing, it is the responsibility of firm to provide high quality
goods and services to their potential buyers.
Quality management
The major focused area of every business organisation is to produce more quality goods
in order to attract large number of customers towards the company and its offered goods and
services. Quality management is essential key of Nike Inc. the major purpose of company is to
provide high quality products to their potential customers who are willing to taking the benefits
of offered service of firm. There are lots of competitors available at market place, so it is
required for company to produce variety of products with more quality features in respect of
providing competitive advantage at market place (Sathi, 2012). As a well known brand company
needs to maintain their quality just to manage their marketing position for gaining profit and
revenue as compared to their competitors. Nike, Inc. in order to managing quality cited company
use various quality management strategies in order to managing quality of goods and services.
Some are described as under:
Total quality management (TQM): It can be considered as the defined management concept.
TQM helps in monitoring various process so that errors can be removed during the process of
service, all the ways should be eliminated so that customers are satisfied with process and they
recognise management of supply chain, ensure that employees receive training in relation to their
work process.
Total Quality Management has various advantages for the firms which are adopting them as
there risk will be eliminated and they will be effectively use the process which are related with
quality factors of various process. This factors motivates all the staff members to increase level
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of productivity at work place. This is valuable in removing all kinds of defects which are related
with work process.
(Source: Total Quality Management, 2017)
Six Sigma
It is that process which provides helps to organisation to improve their capabilities over
their business process. This will increase the performance of employees as well as decrease the
production of defect goods which are producing by Nike. This company is focusing on offering
diverse range of products and services to customers in different categories; football, men's
training, action sports and many more. Through this the firm will generate economic value for
their shareholders in order to keep them happy (Graham, 2013). This is that process which help
to organisation in improving their strategy in order to get better quality of products and services
with the help of reducing defects in products. This approach deals with define the quality of
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Illustration 3: Total Quality Management

products and services which is providing by organisation, control all measures which are taken
by organisation in order to deal with issues. After that they have to analyse the issues which are
facing by operation and production department so that they can take better decision for achieving
better result. Apart from this, through this they can improve the efficiency and skills of
employees by providing them better quality of services. Else it will helpful for organisation in
targetting their goals and objectives in time period.
Resource management
It is an efficient and effective way of developing company's resources as to ensure that
they are available when required. In the present era, it is very important for organisation to
ensure that they utilise their resources in a efficient manner so that its profitability is boosted. It
is a way which is used for boosting productivity while minimising wastage.
In Nike, there is separate resource department which ensures that all the activitiesd taking
place at global level are as per the company capability and every single resource is being used in
a most efficient manner (Cruz and Rincon, 2012). The managers in company are constantly
engaged in planning, leadership and control of various resources. Different types of resources
that are currently engaged in company are:
 Human resource: The company has well established job profiles which keep personnel
engaged in their work.
 Financial resources: There is huge capital that is invested in various activities. For
example it is investing approximately 5 billion pounds in advertisement.
 Natural resources: The production of shoes and other equipments requires resources
which are present naturally. The suppliers are asked to provide them as per requirement
at lower price bracket.
 Facilities: There are huge infrastructure that is there in company and it requires
maintenance as to function properly.
These are some of the resources which are used by organisation and managed in order to
gain a competitive position in market. In Nike, managers use all of them with highest rate of
efficiency. For this they have certain ways:
 They have created a single resource pool which is designed for every region as to ensure
that everyone is aware of available resources.
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 They have strategy of using TQM and Lean production which ensures that all resources
are used while wastage is minimised.
Nike understands that it is very vital for company to gain market share which is only
possible if it uses resources in a effective manner. The significance of management of resource is
stated below in reference to Nike.
Resource management is having a huge significance for Nike because they are having
their own manufacturing units so it is essential for them to use their resources appropriately
(Parisio and Glielmo, 2013, July). The company is having their own retail outlet in the market so
it is essential for them to utilise their resources effectively. Some of the specific points are here
which shows the significance resource management in Nike;
Utilising human resources: As it is a large structured organisation it is essential for them to use
their employees in better manner. Most of the companies are using human resources
management which can help to them to utilise their employees best ways. It helps to them to use
their employees to enhance their productivity. It is essential that people working in the
organisation has to be skilled according to the organisation needs and human resource
management supports to improve the production which can help to provide better customer
satisfaction.
Finance management: It is must to keep profits and revenues according to the objectives in the
organisation. Most of the companies use budgets and other financial tools, so NIKE has also use
this to maintain their expenditures according to their budgets which can help to them to maintain
their operation cost.
Technological resources: It is essential for the company to manage their technological resources
because they are having a used a lot of technology in the manufacturings and communication
which supports to them to improve their efficiency. It can also help to them to generate best
productivity by using these technological resources which can help to the company to improve
their profitability and customer satisfaction.
CONCLUSION
From the above report, it can be concluded that operations management is a concept of
production department which is concerned with controlling and designing manufacturing
process. Also, it helps in redesigning or modifying existing business operations. This concept
ensures that whether organizational activities and practices are operating in the right manner in
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terms of limited utilisation of available resources or not. Operations management help
organization in producing high quality goods and services which can satisfy customer's needs
and demands effectually. This project report is based on, NIKE which is a multinational
company and deals in footwear, accessories, equipments, services and apparel. Also, it is known
as world's biggest supplier of apparel and athletic shoes. In this report, different challenges of
operations management has been evaluated which can influence impact on future performance of
NIKE. Along with this, some areas of operations management has been determined which can
help organization in achieving future success.
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