Executive Summary:
This report analyses the actual strategic position of the sports company Nike and carries out the development of the global sport’s industry and its influences on Nike. In order to analyse the external and internal influences, this report will commence with Porter’s value chain model and his five forces framework to critically evaluate the reasons for Nike’s strategic decision to outsource its manufacturing factories to Asia. The reader will also achieve an understanding of the environment in which the company operates, which will be enlarged in the following part, by evaluating the advantages of international trade for Nike.
The second part of this report will concentrate on two of Whittington’s schools of thought and concentrates on Nike’s systemic approach to its strategic position. Finally, Mintzberg ́s cultural and environmental schools of thought will be discussed and compared to illustrate Nike’s development between the years of 1996 and 2000.
Table of Contents
EXECUTIVE SUMMARY
QUESTION ONE:
A) PORTER’S VALUE CHAIN
B) PORTER’S FIVE FORCES FRAMEWORK
C) BENEFITS FOR NIKE FROM INTERNATIONAL TRADE
QUESTION TWO:
A) WHITTINGTON’S SYSTEMIC AND PROCESSUAL SCHOOLS OF THOUGHT
B) APPLICATION OF THE SYSTEMIC SCHOOL OF THOUGHT TO NIKE
QUESTION THREE:
A) MINTZBERG’S CULTURAL AND ENVIRONMENTAL SCHOOLS OF THOUGHT
B) APPLICATION OF MINTZBERG’S CULTURAL SCHOOL OF THOUGHT TO NIKE
Objectives and Topics
This report examines the strategic positioning of Nike by evaluating its internal operations and external environmental factors. The research aims to justify Nike's strategic decision to outsource manufacturing to Asia while analyzing its global market development through various strategic frameworks.
- Porter’s Value Chain and Five Forces analysis of Nike's operations
- Advantages of international trade for global sports brands
- Application of Whittington’s systemic and processual schools of thought
- Comparison of Mintzberg’s cultural and environmental schools of thought
- Corporate strategic response to public pressure and ethical labor practices
Excerpt from the Book
a) Porter’s Value Chain
Porter’s Value Chain (1998) outlines the most important activities for a firm to identify its competitive advantage, achieved through its core competences. According to Porter, a business is divided into different processes and functions, which he separates into five primary and four support activities. Hereby, the subsystems of the company are allocated to their effects on costs and profit to evaluate the firms core competences to create a profit margin (http://www.ifm.eng.cam.ac.uk/dstools/paradigm/valuch.html, no date). Consequently, this model of strategy includes also outsourced activities as the work of subcontractors or suppliers. During all activities of the value chain, a company has the opportunity to improve its processes by outsourcing cost-driving processes to achieve superior value by focusing only on its core competences, which is described by Porter (1998) as “differentiation”.
Nike were manufacturing in Asia because of mainly three reasons. With outsourcing all manufacturing processes to specialists in Southeast Asia and moving its production facilities abroad, the company was able to concentrate on their core competences as research and development, marketing, and retailing (De Wit, B. & Meyer, R. 2010, p. 946). De Wit and Meyer also supporter Porter in his perception, that “a differentiator thus aims at cost parity or proximity relative to its competitors by reducing costs in all areas that do not affect differentiation” (De Wit, B. & Meyer, R. 2010, p. 270). Accordingly, the strategy of Nike was to focus on their core competences, which were responsible for their differentiation. The time consuming manufacturing processes, which did not ask for a high level of skills or know-how, and did not contribute to the company’s differentiation, were outsourced to due cost advantages (De Wit, B. & Meyer, R. 2010, p. 946). For Nike, this was a possibility to improve its processes to achieve superior value by lowering its costs of labour and by creating a faster and cheaper production system Asia.
Summary of Chapters
EXECUTIVE SUMMARY: Provides an overview of the analysis concerning Nike's strategic position, the impact of the sports industry, and the application of strategic management theories.
QUESTION ONE: Examines Nike’s strategic decision-making through Porter’s Value Chain and Five Forces model, and evaluates the benefits derived from international trade.
QUESTION TWO: Explores Whittington’s schools of thought, specifically focusing on the systemic approach and its practical application to Nike’s corporate strategy.
QUESTION THREE: Discusses Mintzberg’s cultural and environmental schools of thought and applies the cultural framework to understand Nike's strategic evolution between 1996 and 2000.
Keywords
Strategic Management, Nike, Porter’s Value Chain, Five Forces Framework, International Trade, Outsourcing, Whittington, Systemic School of Thought, Mintzberg, Cultural School of Thought, Competitive Advantage, Differentiation, Corporate Responsibility, Supply Chain, Strategic Positioning
Frequently Asked Questions
What is the core focus of this assignment?
The assignment provides a strategic analysis of the sports brand Nike, focusing on its operational decisions, market positioning, and the influence of global industry factors.
Which theoretical frameworks are applied in the report?
The report utilizes Porter’s Value Chain and Five Forces Framework, Whittington’s systemic and processual schools of thought, and Mintzberg’s cultural and environmental schools of thought.
What is the primary objective of the research?
The primary goal is to critically evaluate why Nike chose to outsource its manufacturing to Asia and how this decision relates to its broader strategic objectives and competitive differentiation.
What research methodology is employed?
The work employs a case study approach, utilizing secondary research and theoretical application to analyze Nike's corporate strategy within the context of global sports industry standards.
What does the main body cover?
The main body is divided into three sections: analyzing competitive structure and international trade benefits, discussing Whittington's perspectives on strategy, and examining Mintzberg's cultural school of thought regarding Nike.
Which keywords characterize the work?
Key terms include strategic management, outsourcing, competitive advantage, Porter's models, systemic strategy, and cultural influence in business.
How did Nike respond to public criticism regarding its manufacturing?
According to the report, Nike responded by establishing a Labor Practices Department, forming a Corporate Responsibility Division, and joining various organizations to align with international labor standards.
How is the "systemic school of thought" applied to Nike?
It is applied by viewing Nike as an organization embedded in its social and cultural environment, where strategy is a result of navigating external pressures and stakeholder expectations.
- Citation du texte
- Studentin Katharina Klier (Auteur), 2011, Case Study - Nike's dispute with the University of Oregon in De Wit & Meyer, Munich, GRIN Verlag, https://www.grin.com/document/184757
