Nike: A Sports Giant - From Track & Field to World's Largest Retailer - Essay Sample

Introduction

Nike is renowned as the world's largest retailer and marketer of sports footwear and accessories. The company was established in 1964 by Phillip Knight and Bill Bowerman from the University of Oregon(De Tienne & Lewis, 2006). Phillip Knight used to be a track and field athlete while Bill Bowerman was his coach. The company previously referred to as Blue Ribbon Sports, now called Nike. Bill Bowerman was looking for innovative ideas to produce shoes that would be better for his athletes. This initiative would ultimately form the foundation of the company's future expansion and its tremendous success. In 1966, the company opened its first stall in Santa Monica, California(Molotch,2002). This opening served as the pioneer for other stalls to be opened by the company.

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In the initial stages, it was in a partnership with the Japanese firm, Onitsuka Tiger but the relationship collapsed as the founding partners saw that the Japanese firm was limiting its financial ability to advance and succeed in the United States market. In the year 1971, the company launched its line of footwear and rebranded to Nike, which has originated from the Greek word meaning "victory." It was in the same year that they came up with their famous trademark logo. They were able to promote their product during the subsequent track and field Olympic trials. This marketing strategy attracted the influential young athletes who signed up with the company (Flynn, 2014). The company began drawing about two million dollars in its first year of distribution. The trend saw quadruple its income the following year because it was able to endorse its prominent pioneer athletes. In 2015, the company predicted revenue of about 30 billion US dollars according to their publication( Leeds, Von & Matheson, 2017). The primary aim of the company is to become the most innovative and famous brand in the market. Due to the nature of the management strategy, the company was able to succeed and establish itself as a powerhouse.

Marketing Strategy

Nike has been able to establish itself as the world leader in footwear in the ever growing competitive market. The most fundamental reason that Nike has seen such tremendous success is the effective marketing strategy that has seen it increase its sales and have a massive distribution of its product. Its marketing strategy resonates with the philosophy behind the production of goods in factories, but the establishment of brands within the mind of the consumer (Saleem & Abideen, 2011). Its initial plan is to create its set group for a particular product. This method includes brand sponsorships of the various types of sports teams and individual athletes. The constitution of the organization that endorses the company is, including very renowned individuals who are at the peak of their respective sports. This list includes the likes of Michael Jordan, Christiano Ronaldo, Lebron James, Tiger Woods, and Kobe Bryant.

Teams that the company has sponsored over the year include Manchester United and the national football league. The company did not come up with the strategy but perfected it. It is beneficial as it enhances the popularity of the company and its brand awareness as the clientele can resonate with their celebrities whom they can see in the various endorsements. Such strategies tend to make the consumer biased in favor of the product because they would like to support and be like their favorite sport celebrity. The celebrity endorsing the company products are known to be achievers, and people tend to associate the product with victory and success. The company also pumps a lot of money into the advertising arena with the firm belief that it directly correlates with the revenue generated. It has achieved this by using the various type of media to propagate its message to the people. This platform includes both social media and mainstream media. With improved technologies, it has also seen the adoption of a various communication platform that consists of the use of chatbots.

Nike's Humanitarian Issues

Child Labor

For almost ten years, Nike was defined by many people by the term sweatshop labor. In the initial stages, the majority of the production happens in the country. However, as the company grew, it adopted the strategy of outsourcing its manufacturing to other suppliers located in different parts of the world because of the low cost of production. Nike did not own those respective factories but only sourced them. As time went, the company began to make changes and revised the code of conduct. It also hired firms tasked with audits and safety checks. Though they instituted these changes, the running of the factories remains under the owners. The main task of Nike was to negotiate for the lowest prices. The turning point was in 1996 when there was publication by a famous magazine in the country which highlighted a child stitching footballs, which had a logo of Nike (Boje & Khan, 2005).

Even though the photo might not have been real, it showed the reality on the ground. This discovery affected the company's reputation and was a huge setback. The realization of this fact made the owners of Nike to shoulder the responsibility and admit of the various inhumane acts that were being committed against the employees, which included slave wages, abuse, and forced overtime. This step prompted the company to initiate the first steps to mitigate the damage. They began by publishing a list of all the names and the location of their factories. They also implemented occupational safety and health measures to decrease the hazards that the workers were exposed. It also published reports which were available to the public to update them on the progress they had made in overcoming those challenges and improving the confidence of the customers.

However, the problem did recur during the build-up to the 2006 world cup where photographs of Pakistani children producing Nike footballs presented to the company. This story mirrored the experience that had happened some few years back. The incident occurred as a result of one of the suppliers, saga sports, who were not able to meet the demand went against the rules by using the locals to produce them. This scene put the company in a dilemma as it was a considerable cost burden to cancel the request. However, the company still went ahead and withdrew the contact with the supplier and settling for another supplier. This action sent a strong message to the other suppliers that the company would not compromise. Nike, in the recent past, has demonstrated willingness to take stringent measures against suppliers who flouted their working policy. This turnaround has established the company as one of the pioneer companies.

Sweatshops

Since the early days of its inceptions, the company has faced numerous accusations of utilizing sweatshops to produce its products, which included footwear. These accusations mainly identified their factories, mostly in the Asian countries of South Korea, Taiwan, China, and Vietnam. Vietnam was singled out due to the poor working conditions, which might have resulted due to the lack of labor unions which could advocate for the workers' rights. Initially, the company responded casually by asserting that they did not own the companies that were in question. However, this did not slide as advocacy organizations conducted investigations into the state of affairs in these factories. They found out that the employees who mainly came from the low class in the society were desperate and thus withstood the conditions (Greenberg & Knight, 2004).

The findings also showed that they overstepped the workers' rights, and no legal measures instituted against the company succeeded due to the corrupt dealings that occurred. This report initiated widespread criticisms and backlash from the public who wanted the company to address the issues. They finally bowed to the pressure and instituted various measures to ensure that there is no abuse of the worker. This measures included the installment of a code of conduct which they dubbed SHAPE which involved the safety, health, attitude, people, and the environment. It also embraced monitoring as one of the pioneer methods of ensuring adherence to the regulations in the various Nike factories. This process is done by both internal and external persons who visit the factory and inspect the departments involved. They have also been able to establish channels through which high employees can communicate with the low-level employees, and they can do the same with the top- level employees.

Procurement Activities

Nike has a global procurement team that organizes and controls the procurement process of the company. This process involves the selection of the appropriate supplier who has the required product. The company utilizes two primary types of methods to be able to make payments to the suppliers for offering any indirect services. They have achieved this through a partnership with a network known for supplier management and invoicing. This network is only for those who are using the network system. They have an alternative of the standard mail and email system to send and receive invoices. Due to the high regard for quality, the procurement team also is in charge of the process of procuring raw materials.

The Manufacturing Supply Chain Network

The most basic structure for the company is its network of the supply chain. This chain has evolved over the years becoming better with time. The company has taken much caution in its footprint, the desired quality, and customer satisfaction. The network plays a significant role in all these aspects. For the acquisition of raw materials and the process of manufacturing, the company entirely relies on external suppliers. It has an abundant supply of supplies that complement its business. Nike has also incorporated a strategic sourcing initiative which has helped the brand to reduce the carbon footprint and thus to improve the climate. The company has spread its supply chain across several countries, which either supply the raw materials or have its factories. The company also strives to ensure that it engages in long term contracts that would be beneficial to the company (Sridharan, Royce & Patterson, 2005).

The firm has also established a prescribed set of conducts that its suppliers and manufacturers should adhere to, to ensure the quality of the final product. In addition to this code, the company also inspects compliance by having its suppliers subjected to audits that prove compliance. The supplier also discloses that the companies which it partners within the process of supply of the product are compliant. Nike also has an active distribution network to meet the growing needs of its clientele. This network includes quicker shipping of goods to the customer. They coordinate the various retail outlets, online stores, and the individual customer base.

Emerging Relevant Technologies

The world is an ever growing market, and with the emerging technologies, it is prudent to apply them in the respective companies. This technology includes the likes of artificial technology, virtual reality, and augments reality that provides an array of possibilities to the firm. Nike has utilized chatbots to enhance its customer service. This technology has helped consumers identify products, get to know their prices, order the product, and also give feedback on the state of the product. Improvements have enabled the inclusion of the chatbots in various social media platforms such as Facebook and Twitter or through the company's website. The company also has a research and development department that incorporated the upcoming technologies in the process of designing their products. This achiev...