Nike Company has managed to build a household name, particularly in the field of sports footwear, equipment, apparel, and sports and fitness accessories. This achievement has been partly because of its close collaboration with high-ranked athletes such as Michael Jordan, John McEnroe, Bo Jackson, and Deon Sanders among others who have aided the company over the years to build a reputable name and international brand. The company is often synonymous with its phrase “Just do it” that inspired subsequent generations of sports athletes to excel both at their sports and in life (Carbasho 1).
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The company is based in Beaverton, Oregon. Nike is described as a global market leader in athletic footwear (its flagship product). By 1998, the company had exceeded revenue of $9 billion (Kumar 226). It continues to grow immensely, thanks to the excellent human resources who have developed business systems that steer the company towards success. In fact, the company’s phenomenal and intriguing success has been largely due to its visionary strategy that has involved the outsourcing of manufacturers from low-wage countries to allow it to pour its financial resources into an aggressive marketing scheme.
In fact, according to one of the company’s vice president, the business has no single clue concerning manufacturing. Rather, it is an expert when it comes to marketing (Aswathappa and Dash 293). Currently, the company has operations in six continents. It has employed a total workforce of 1 million, among them shippers, suppliers, service providers, and retailers (Hanrahan 3).
Nike Inc.’s Vision
The company’s vision is to bring innovation and inspiration to every single athlete in the world as embalmed in its slogan “Just do it”. In this respect, over the past few years, Nike Inc. has devoted most of its energy to improving the running of the business such as developing logistics, a supply chain management system, and efficient information systems. According to Hanrahan, the company is searching a perfect balance between its creative side and discipline in its financial management systems to spearhead growth and fulfill its mission (5).
Inspired by its vision, the company continues to change the face of the sports industry. It has inspired young athletes through its reputable commercials that feature sports icons such as Michael Jordan and Vincent Edward Bo Jackson who have exerted great influence in shaping up the sports industry (Carbarsho 1). Adrian Peterson of Minnesota Vikings confesses how the images from Nike’s commercial inspired him to become a Nike athlete. In addition, the company’s collaboration with the sports icon Michael Jordan has allowed it to enjoy remarkable success in the sports footwear industry through the Jordan brand that has been present for almost 25 years (Carbasho 3).
Nike Inc.’s History and Current Operations
The company was started as a venture between Phil Knight who was then a student at the University of Oregon, and Bill Bowerman who was the university’s tracks and field coach. During his MBA major, Knight identified an existing niche for affordable, high-tech sports shoes and even featured it on a paper that talked about breaking the domination of the German industry in the US sports shoe industry. Upon his graduation from Stanford, Knight and Bowerman founded the Blue Ribbon Sports, the company’s predecessor (Kumar 226).
The company began as an avid importer of Japanese athletic shoes after reaching out to a sports shoe company in Japan, namely the Onitsuka Tiger Co., back in 1962. In his plan, Phil Knight would introduce some of the products manufactured by the shoe giant company into the US. Later, Blue Ribbon Sports began the delivery of Onitsuka Tiger Company shoes to track athletes.
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In 1966, the company opened up its first retail outlet after the generation of remarkable sales of $20,000 the previous year. By 1967, the unique designs of William Bowerman had become a major hit, which allowed the company to set up distribution headquarters in Massachusetts, Boston. In 1968, the company was incorporated after the successful embracing of its design shoe, Cortez, which was the first athlete shoe to have a heal-to-toe cushioned midsole.
By 1971, the company had expanded its operations overseas with the aid of financing from Nissho Iwai Corporation and other independent contractors. Later in the year, the company would introduce its first product line Nike that had a Swoosh logo, which represented the goddess of victory in the Greek mythology. In the same year, after fallout between the company and Onitsuka Tiger over distribution, the company changed its name to Nike, Inc., which was immediately followed by the introduction of the Nike Air Shoe and a new clothing line (Ivey 5).
In 1980, the company went public. By 1981, the company began to focus on the promotion of its products in the international market from Europe, Africa, and Latin America to Eastern Europe and Asia. In 1985, the company signed an endorsement contract with Michael Jordan to introduce the Air Jordan version in 1988 that pushed the company’s success story further upwards. In the subsequent years, Nike Inc. was involved in a number of acquisitions such as Cole Haan and Canstar Sports Inc. that propelled it further to a global leader in the athletic wear industry (Ivey 6).
Today, the company is involved in the design of athletic footwear that are customized for a specific use, although a huge portion of its products can also be worn for leisure or casual purposes. Some of the specialties that influence the designs are training, running, and basketball, and hence their top selling products. Moreover, the company also makes customized products for cheerleading, football, volleyball, golf, skateboarding tennis, wrestling, and recreational and/or leisure uses (De Marco 263).
According to the company’s annual report, the Nike Brand operates based on its internal geographic organization with each geographical brand operating in the design, development, marketing, and the selling of its athletic footwear, apparel, and equipment. Beginning 2009, the company began operating under a new organizational structure that constituted six geographical brands, namely, Western Europe, Northern America, Central and Eastern Europe, China, Japan, and other Emerging Markets. This development is an expansion from its previous four geographical Nike brands (the US, Europe, the Middle East, and Africa). In addition, all of the company’s direct-to-consumer operations are managed within each of the geographical segments (Cheng 3).
Nike Inc.’s Current Processes
To continue realizing success in a very competitive and dynamic consumer market, the company has had to operate its global virtual systems that it manages from its headquarters back in America. In its implementation, the company contracted nations and geographical areas that had a low cost of labor, thus restricting its production department to the task of supervision and management of quality. Through proper management of its virtual systems, the company has managed to coordinate each of its processes that are spread across the globe with the view of bringing these components together at the right point in time (Liu and Du 51).
Moreover, its virtual systems allow the company to manage the constant supply of all its finished products into the global market without much delay. It supplies over 300 new designs on an annual basis. To reduce the probable risk of outsourcing third parties, these third parties are directly linked to the company’s information systems, a plan that has resulted in an overall creation of a value delivery system (Humphries and Gibbs 21).
The company has developed its expert systems that it uses to acquire preliminary information and/or make comparisons among its candidates. The system is structured as a computer interview that requires candidates to answer a series of several multiple-choice questions that are well tailored to the systems job. The answers to the questions are then compared with profiles that are developed in correlation with the candidates in question.
In addition, the company can use the computer interview or expert to screen for unqualified applicants that do not conform to the merits of the interview. The expert system is highly developed. It can even detect and measure contradictory responses of the applicants while incorporating the use of different software into its program (Bohlander and Snell 282).
The company’s financial system entails giving its retailers time to pay for most of their purchases while ensuring that it has enough cash to pay its suppliers. In this regard, the company’s financial system is designed to control its cash needs, evaluating its credit policies, and evaluating and estimating the level and value of its receivables.
Controlling its cash needs means investing during seasons when it has excess cash and/or borrowing funds in situations of cash shortage. In this respect, the company ensures that its system does not conflict with that of its lenders to maintain good relations. Concerning the evaluation of its credit policies and the level and value of its receivables, the company compares the receivables of the current year with the receivables of the previous year (Needles and Powers 400).
Problems, Options, and Possible Solutions
In spite of its well-developed and efficient virtual supply system, this form of system is combated with various drawbacks that the company should address to ensure maximum efficiency in their implementation. The challenges include the high cost purchase and maintenance of the technical equipment needed to manage these virtual systems, lack of a face-to-face interaction with the suppliers, thus posing difficulty in building a concrete relationship with the suppliers, and the possible huge losses if control of such systems is not properly done (Tucker 10).
To solve these issues, the company needs to incorporate diversity in its virtual system such as senior management meeting up with the stakeholders involved in the system on a face-to-face platform. The goal is to supplement the telecommunications and videoconferencing that is the common mode of communication among the members who use the virtual system.
Another major problem facing Nike’s management process is the risk involved in the outsourcing of external suppliers and manufacturers in its global virtual chain. The company employs over 800,000 workers who are located in over 52 countries most of which have very weak local regulations (McFalin and Sweeney 95).
This situation leaves the company with the task of policing its suppliers in its many geographical locations, thus posing a huge challenge to its management. To overcome this challenge, the company should formulate and implement operations information systems that can allow it to monitor the activities of its contracted suppliers and manufactures who are located anywhere in the world (Daft and Marcic 227). There are various types of operations information systems that are applicable to Nike Inc.’s organizational structure. They include:
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Transaction-processing systems are involved in recording and processing data that may result from operations relating to the business such as changes in inventory, supplier purchases, customer sales, and employee wages and salaries. A transaction processing system collects data from such transactions and stores it in a specified database. It is from the information stored in the database that the organization can produce reports such as supplier transaction reports (Daft and Marcic 227).
Process Control Systems
Process control systems monitor and control the ongoing processes performed by its contracted manufacturers to keep track with the quality and quantity of their production activities. An example of such an information system is a system that controls and/or co-ordinates the production processes by the manufacturer who monitors each phase of production (Daft and Marcic 227).
Office Automation Systems
Office automation systems combine modern hardware with software such as email, teleconferencing, word processers, and desktop publishers that enable the business to handle tasks of publishing, as well as distributing information within its management circles. These systems can also make use of data from other modes of operations system to transform manual procedures of accounting into electronic or automated systems that can make crediting decisions (Daft and Marcic 227).
Emerging Trends, Technologies, and Applications in the Sportswear Retail Industry Business
A remarkable technological system that has developed is the expert system termed as the digital ecosystem, which has allowed athletes to self-track their individual progress to improve their performance. Besides its immense assistance to athletes through its ability to set performance goals and stay motivated, this expert system has been instrumental in guiding the innovation of better products by athletic wear and equipment companies such as Nike Inc. In addition, the technology has been well received by athletes who use the systems (Lin, Foster, and Scifleet 126).
Online Shopping System
Today’s society has a fast-paced way of life, which has given birth to the idea of innovation of an online shopping platform where buyers can directly buy from their favorite retailers and/or brands by the click of a button. The popularization of such a system has allowed manufacturers and retailers such as Nike Inc. to expand their businesses on a global scale due to the reduction in the costs of operation such as maintenance of retail outlets and/or improvement of their working efficiency as opposed to the traditional shopping styles.
Online shopping systems have proven to be a powerful source of information due to the interactions between the businesses with their customers. In addition, according to Stanford-Smith and Kidd, some companies have gone ahead to develop applications through which users can shop directly using their Smartphones as long as they are connected to the internet (776).
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