Nike Case Study
Table of Contents
This paper provides a written case analysis of corporate social responsibility strategies developed by Nike. Its business model, competitive advantages, challenges, and opportunities for the sustainable growth are analyzed.
Nike’s Competitive Advantage and Dedication to Corporate Social Responsibility
Thompson, Peteraf, Gamble, and Strickland (2014) underline nowadays it is not sufficient for a long-term survival of the company to deliver the values to customers and shareholders only. The modern organization must combine ethical behavior with a need to be a responsible corporate citizen giving back to its employees the valuable assets, the community where it operates and society, as a whole, and preserve scarce natural resources by investing in the efficient and innovative business practices.
Innovation is a core element of Nike operations. It is related not only to the product the company creates but to the way how it manufactures and delivers it to athletes. Innovation as the fundamental approach to the Nike business model is implemented in the level of operational efficiency, the strategic growth, and the impact made on the environment. As it is indicated in the case study (Paine, Hsieh, & Adamsons, 2016), innovations are considered to be a key to success. It happens in case they are applied to each level: product, brand, operations, retail, communication, and events.
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A competitive advantage of the company is being gained by the creation of the systemic approach to developing, monitoring, and changing the strategies associated with the corporate social responsibilities (Appendix 1). Under Jones’ governance, Nike has united three separate subgroups supervising its corporate responsibility: the environment, labor, and community. Moreover, the attitude towards these groups has been changed from the last department that proposes some actions into the catalysts of changes (Paine et al., 2016). The other critical step was to become more transparent by publishing the list of factories. It was an extraordinary move at that time. Finally, Jones’ proposals about the necessity to see corporate social responsibility as a foundation of Nike strategic growth, cooperate with the outside world (for instance, to combine the efforts by several companies using the same manufacturing capacities to gain improved working conditions), and create the talented and highly innovative group being responsible for the firm’s social responsibilities have been approved to distinguish the corporation as the socially responsible one.
The opportunities for sustainable business practices for Nike imply three core aims. The first one is related to minimizing the environmental footprint. The second opportunity is combined with the transformation of the manufacturing process. The third one is considered as the most important one to unleash the potential of human beings. The main goal of Nike and its CEO Parker, in particular, is to make innovative changes on a large scale. For instance, even for such seemingly invisible parts of the company’s operations as the manufacturing process and the challenges to control the working policies of manufacturers, Nike insists not on some incremental improvements to create the semblance of a tumultuous activity. The company envisions introducing game-changing principles such as decent pay and the constant improvement of skills.
The minimization of environmental impact is approached by Nike from two directions. The first one is related to the improved cooperation with material suppliers and manufacturing factories to reach a leaner production process. The second direction is associated with its advanced relationships with the retailers and customers in the area of recycling and re-use. Another crucial move was the introduction of scenario-planning workshops that allowed Nike to see the weak signals of the fast approaching big negative trends and address them timely. All the above-mentioned ones were the signs to the public that the firm was ready to be a pioneer in transforming the way how it created, manufactured, and delivered its products to customers. Not only the innovations but also the transparency of operations, as well as the true dedication to change the existing rules in the corporate social responsibility field have become the keys to creating an additional competitive advantage over its rivals.
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Nike’s Ethical Standards
Ethical norms in a business conduct by Nike are the dedication to be honest by revealing the true labor practices and set the standards how to improve them. These ones are as well the responsibility to take actions in the sphere where the changes are needed in the large scale (water scarcity problems; toxic discharges; environmental pollution, and energy shortages). The ethical principles of Nike are respect, trustworthiness, fairness, caring, and committed citizenship. Its ethical ideal of the company is to be an example of how the courage to face difficulties of the large multinational corporation will be transformed into the revolutionized business model with the system approach to economic, social, and environmental practices.
Nike’s Stakeholders
The customers are Nike’s stakeholders, the active lifestyle and a constant search for the more comfortable shoes of which are the core inspiration for the company to develop its products. As it has been indicated by Paine, Hsieh, and Adamsons (2016) the just do it approach drives Nike to be the pioneer in developing sports shoes that will revolutionize not only the customer experience but also the way how it is manufactured and impacts the surrounding. Flyknit technology as the latest firm’s achievement combines the above-mentioned issues. It means that shoes are extremely light as a priority for sportsmen; Nike has succeeded in developing the strategy of no waste product; and there is the footwear manufacturing process reform.
Shareholders are one of the organization’s stakeholders. By developing socially responsible strategies, Nike should be attentive to the profit margin it generates. The reason is that shareholders invest in the company and bear risks expecting some level of return. At the same time, Nike’s position is that by investing in some environmentally friendly technologies, developing and incorporating cutting-edge manufacturing technologies into practice, as well as providing employees with the decent working conditions, the company has established the foundation for the long-term growth. It has occurred under the conditions of scarce resources and minimization of costs to meet the financial targets.
Employees are also those stakeholders whose interests are placed high by Nike. The company strives to improve labor conditions for its enormous number of workers, i.e. 40, 000 (Paine et al., 2016). As it is indicated in the case study, Nike in the persons of Conway and Knight were not afraid to start a large scale campaign to find out the struggles of local employees. The biggest aim was to raise the working standards in the industry. It was the purpose that could and should drive fundamental changes.
Community members are another involved party. By investing in research, technologies, and business practices that can preserve natural resources for the future, Nike emphasizes the challenges of energy shortages, population growth, water scarcity, a climate change, and health matters. For instance, by inputting in DyeCoo Company the organization had seen the great potential in a new dyeing polyester process with the use of recycled carbon dioxide instead of water usage (Paine et al., 2016).
Challenges Faced and Criticism
By loudly announcing the bold target of minimization of toxic discharges into the water to zero at its factories by 2020 (a very short time frame), Nike leaders have not fully understood the complexity of the issues involved. As it is indicated in the case study, the leadership faces the serious dilemma whether the investment in the restructuring of each detail in the manufacturing flow will be in line with financial targets and promises given to its shareholders. Another important thing is whether customers are enough conscious to pay additional dollars for supporting the corporation in fighting for the planet future. Nike has the following options. The company can increase the deadline for reaching zero toxic discharges. This scenario will make the position of its leadership weak because their words will weight little. It can also report the state of the situation by the end of 2020 where it would demonstrate the efforts made, the investments volume, and the barriers faced. It should also provide a roadmap for the future actions and the estimation of the final deadline for the campaign. Nike strives to be transparent; therefore, its customers, shareholders, and the community will understand that the firm does not refuse its obligations, but explains the challenges met and the plans how to overcome them.
Nike’s Business Model
The business model of Nike is the combination of innovative shoes and its low-cost manufacturing. Starting from 2012, it is expected to achieve its financial targets by enlarging its global presence, thus being closer to customers. Nike divides its market into several geographic regions and sports categories, such as running, action sports, men and women training wear, football, basketball and sportswear. At the same time, the company has launched Nike+ digital business in cooperation with Apple. It provides an opportunity for athletes to share their sports achievements and experiences via iPhones and iPods. It is recommended that Nike cooperates with the leaders in other industries as well as pioneers. Those ones can propose to strengthen the customers’ experience as well as add knowledge and innovative ideas for the corporation to continue progress in innovative technologies in the products, people, and planet dimensions.