BUILDING QUALITY ORGANISATIONS

ASSIGNMENT -1

School name: SCHOOL OF ENGINEERING

Assignment Cover Sheet

for submission of individual and group work

Course/Unit code Assignment Assignment Group/Session name (if applicable)

number due date

MANU1373 1 14 Apr 2019

Course/Unit name Program title

BUILDING QUALITY ORGANISATIONS STRAGETIC BUSINESS PLAN

Lecturer/Teacher’s name Tutor / Marker’s name (if applicable)

Dr Lucy Lunevich

This statement should be completed and signed by the student(s) participating in preparation of the assignment.

Declaration and statement of authorship:

1. I/we hold a copy of this assignment, which can be produced if the original is lost/damaged.
2. This assignment is my/our original work and no part of it has been copied from any other student’s
work or from any other source except where due acknowledgment is made.
3. No part of this assignment has been written for me/us by any other person except where such
collaboration has been authorised by the lecturer/teacher concerned and is clearly acknowledged in the
assignment.
4. I/we have not previously submitted or currently submitting this work for any other course/unit.
5. This work may be reproduced and/or communicated for the purpose of detecting plagiarism.
6. I/we give permission for a copy of my/our marked work to be retained by the School for review by
external examiners.
7. I/we understand that plagiarism is the presentation of the work, idea or creation of another person as
though it is your own. It is a form of cheating and is a very serious academic offence that may lead to
expulsion from the University. Plagiarised material can be drawn from, and presented in, written,
graphic and visual form, including electronic data, and oral presentations. Plagiarism occurs when the
origin of the material used is not appropriately cited.
8. Enabling plagiarism is the act of assisting or allowing another person to plagiarise or to copy your
work.

Family name Given name Student number Student signature Date

Sundar Divya 3753005 Divya. S 13/04/2019

 BUILDING QUALITY ORGANISATIONS
ASSIGNMENT -1

Further information relating to the penalties for plagiarism, which range from a notation on your student file to
expulsion from the University, is contained in Regulation 6.1.1 ‘Student Discipline’
www.rmit.edu.au/browse;ID=11jgnnjgg70y and Academic Policy: ‘Plagiarism’
www.rmit.edu.au/browse;ID=sg4yfqzod48g1.

Assessor’s comments Grade School date stamp

(Office use only)

 BUILDING QUALITY ORGANISATIONS
ASSIGNMENT -1

BUILDING QUALITY ORGANISATION

ASSIGNMENT -1

S3753005

CONTENTS

1. INTRODUCTION ............................................................................................................................... 4
2. VISION AND MISSION ...................................................................................................................... 4
3. STRATEGIC BUSSINESS PLAN ........................................................................................................... 5
GENERAL BUSSINESS STRATEGY OF NIKE– The 4P’s ........................................................................... 6
NIKE’S INTENSIVE STRATEGIES ............................................................................................................ 8
4. COMPETITOR ANALYSIS .................................................................................................................. 9
SWOT ANALYSIS ................................................................................................................................ 10
5. KEY STRATEGIC PRIORITIES ........................................................................................................... 13
INITIATIVES TO REACH THE STRAGETIC GOALS: ............................................................................... 13
6. DISCUSSION................................................................................................................................... 14
ORGANISATIONAL STRUCTURE ......................................................................................................... 14
7. CONCLUSION ................................................................................................................................. 15
8. REFERENCES .................................................................................................................................. 15
 BUILDING QUALITY ORGANISATIONS
ASSIGNMENT -1

1. INTRODUCTION
Nike is an American multi-national company that is involved in the making, developing,
manufacturing and shipping of footwear, apparels and accessories. The company has its
headquarters in Oregon. Nike was found on the 25th January,1964. The company takes the name
from a Greek word which means victory. It’s the world’s largest manufactures of sports shoes and
equipment. It has a revenue of about US $24.1 billion. Nike has about 44,000 employees
worldwide89h and is ranked 89 in the 2018 Fortune 500 corporations based on its revenue. Nike also
sponsors athletes and sports teams with high record. Nike has been recognized as the top 100
companies to work for. It has also been among the top 50 innovative corporate companies
worldwide.

Nike’s first product were the running shoes and then they slowly started designing all the sports
apparels and supplements. In addition to designing, Nike markets all its products and operates the
retail stores under its own brand name.

2. VISION AND MISSION

Vision - “To bring inspiration and innovation to every athlete in the world”. It’s vision was drawn by
the athletes they serve. The brand continuously propels the idea that the public should reformulate
the idea of being an athlete. Nike has constantly worked towards changing our perceptions of what
an athlete is. The brand has been a major sponsor and provider of sports apparels for high-trained
players.

Nike believes in “if you have a body, you are an athlete”. Nike’s goal is to inspire every individual
whether you are fancier sprinter or the one who just wear the Nike gears for the daily tasks.

Nike focuses on doing this by creating innovating sport revolutions, by making their products more
endurable with the help of a innovative and diverse team, by enabling a positive influence in the
communities. Nike’s mission can be broken down into three key elements:
 BUILDING QUALITY ORGANISATIONS
ASSIGNMENT -1

Human potential: Nike should constantly inspire individuals to use their brand and make them
believe they can be or do better by wearing the shoe. This is part of their strategy and they have
been successful on being the first on a customer’s mind when it comes to making a sport’s purchase.

Ground-breaking innovations: Nike should constantly innovate new products that is new from the
competitors and this should create demand.

Sustainability: Nike has proven to sustain in the market with various factors being its influence.
Demand generation has been a key aspect of the company and has vitally helped them maintain
sustainability.

3. STRATEGIC BUSSINESS PLAN

Market Overview:

Nike incorporation is one of the world’s leading sports footwear and apparel brand. The
company is mainly focussed towards athletes, and manufactures merchandise such as shoes,
clothes and other sporting equipment. Over the past decade, sporting manufacturers have
experienced gradual drop in growth according to various reports which now takes a turn, over
the period. With people becoming more conscious on health and fitness, this graph is expected
to show a steady growth in the next 5-10 years. This has put forward an estimated demand for
athletic equipment.
 BUILDING QUALITY ORGANISATIONS
ASSIGNMENT -1

GENERAL BUSSINESS STRATEGY OF NIKE– The 4P’s

Nike follows several strategies in order to become the leading global designer and marketer of
sports footwear and accessories.

Nike’s foremost strategy:

PRODUCT:

Like said, one of its chief strategy is innovation, where it thrives to research and develops athletic
goods that reduce or minimal the chances of injury, help in better performances and maximize
comfort. Product mix has been an important factor of growth for Nike. Nike consistently invests in
research to build new products or enhance the existing products. For instance, Nike was originally
distributor of shoes and the company now manufactures it themselves with several other sports
apparel as known. Nike’s business line work in a way where it integrates newer technologies into its
products to enhance the effectiveness of the products and to improve consumer satisfaction.

Shoes are the most common products of Nike. It focused on growing the business and gradually
added more products into the category. The brand now offers running shoes, sports apparels, sports
shoes, walking shoes, and shoes for many of the other sports.

PLACE:

This element of strategy deals with the venue or place where the company sells or distributes its
products. Nike has been selling and distributing its products globally across large number of outlets
and stores. The products are not only sold at the brand’s outlet but also at all leading apparel and
clothing retails across the globe. This has been one way how the brand is more accessible to the
consumer. Nike also sells online, which is accessible in the click of a mobile or tablet.

The major place that the brand focuses on its distribution strategy is :

 Nike store
 Nike online stores
 BUILDING QUALITY ORGANISATIONS
ASSIGNMENT -1

 Retail stores

The retail stores is most important places where the products are sold in larger numbers because
these are easily accessible and located across the markets which are close to the livelihood. These
retailers include Walmart, Lifestyle etc and the regional local stores. Like the stated in the 4P , the
products can also be bought online on the Nike online store. In addition, the company operates
business through its brand outlets – Nike retail stores. The brand has limited the sale and
distribution of products for the retail stores; therefore, the retail stores do not always have an
updated product or would take time to have one.

PROMOTION:

Most of the promotion is through word-of-mouth where customers tend to share their experiences
with friends and family once they have used a product. Nike has effective advertisements that has
been a breakthrough for the brand to meet the targets in the market. This strategy has been an
important factor to maintain the brand image among the consumers. The company uses promotion
to communicate to the target group about its products and influence these customers to purchase
the products. The brands promotional activities can be divided into the following:

 Advertising
 Individual selling
 Marketing
 Promotion of sales
 Public relations
 BUILDING QUALITY ORGANISATIONS
ASSIGNMENT -1

PRICE:

A common opinion about the brand has always been among the public that the prices of the Nike
products are high, and a reduction of the price could attract more customers to buy the products.
Today everyone wants products that are comfortable to be worn, protect the feet etc. for which the
quality places an important role. With high prices, Nike can sometime affect consumer from buying
their products. With all these considerations, Nike has two pricing strategy:

 Value- based pricing strategy

 Premium strategy

Value based pricing is the one where the price is fixed based on the factor that if the consumer will
be prepared to buy the product. This is fixed before the marketing program is designed. This is the
maximum price predicted by the company that the consumer would be willing to pay for their
products. In this pricing strategy the customer and their perceptions of the value of the product is
the key aspect of fixing the prices. Nike clearly understands this and fixes their prices.

Whereas, cost based pricing is the premium pricing used by Nike. In this pricing technique, the
company decides the price based the cost of production and supply and add some value on top of it.
Generally, these prices are high because of the high quality and worth than the competing products.
For such high price products, which is based on premium branding strategy the company uses
advertisements as its key aspect of promotions. These advertisements involve high profile celebrities
emphasizing on the brand’s premium products.

NIKE’S INTENSIVE STRATEGIES

Nike’s intensive strategy involves minimizing of production costs to increase profitability or reduce
the price of sale. Its intensive strategy involves 4 four elements:

 Product development
 Market penetration
 Market development
 Diversification
 BUILDING QUALITY ORGANISATIONS
ASSIGNMENT -1

4. COMPETITOR ANALYSIS
Adidas has been the second largest seller of sports goods after Nike. These two are the largest
selling sports footwear brands in the world.

Nike is more popular than adidas because of its several celebrity sponsorships. Celebrity
sportsman sponsorship has been the major promotion strategy used by Nike. These celebrities
are mostly basketball players. Nike has their major market in the States but now has expanded
globally. Adidas mainly focuses on the football and tennis. Their centre is in the European
countries. Over the period, Nike is also focusing on football since it is an internationally
recognized sport. Nike decided to take over its competitor and began to expand its market. The
football is usually considered to be the “World Sport”.

The products of Nike and Adidas are divided based on their pricing categories. Both the company
price their products based on different strategies. The price of both the products are high, where
the Nike is comparatively higher. Adidas pricing depends on the appearance and colour of the
shoes, where a white coloured shoe is more expensive in Adidas rather than any other shoe of
the same type in different colour. Nike pricing depends on value based and premium strategies
as discussed already.

Nike campaigns insists on its motivational saying “Just Do It” , which constantly emphasize on
the importance of fitness and confidence which attracts younger consumers to draw all the
motivation from the positive influencers.
 BUILDING QUALITY ORGANISATIONS
ASSIGNMENT -1

The distributional and promotional strategies are similar to both the brands. They have strong
distribution methods and are highly creative.

SWOT ANALYSIS
SWOT analysis is identifying both the strength and weakness and analysing the opportunities
and threats that are open to a company or an organisation.

STRENGTH:

 Nike is well built at research and development which is apparent from its
innovative range of products.
 Nike uses ‘Build to stock’ approach which facilitates quick service to customers.
 Its been recognized as the top 100 best companies to work with.
 Nike has a strong brand accreditation. It has the highest brand value of 2018.
 Nike has strong financial reports which has 4 percent growth from the previous
year.
 Nike has large number of sports sponsorships.
 It has no manufacturing outlet, hence reduces production costs.
 Its star celebrity ambassadors are always a plus.
 Side brands – Nike’s potential to sustain and elevate its side brands has enabled
its success for a long time.
 Supercilious marketing capability- The brand highly depends on the digital
marketing and in the contrary has successfully
 Huge customer base who have been devoted to the brand has been a great
advantage to the brand’s capital.
 BUILDING QUALITY ORGANISATIONS
ASSIGNMENT -1

WEAKNESS:

 Nike does not have an own manufacturing unit. Its manufactures in

foreign countries has been reported with poor labour state such as low
wages, child labour etc.
 The company’s major income still depends on the footwear sector.
 Nike’s price is comparatively high than the competitors which does not
make it a choice for price intentional group of consumers.
 Its income on a larger scale depends on the retailers. They have been
the brands core customer hence they cannot fight with pricing
structures. The retailers put in a pressure on reducing the price due to
competitors and this affects Nike revenue to a great extent.
 A larger picture of the brand’s revenue depends on the US market
though it has been expanding itself worldwide.
 Its higher price compared to competitors has been a drawback.

OPPURUNITIES:

 Product enlargement such as introducing sunglasses, jewellery etc.

 Expanding its products for more sports and not confining itself to certain
classifieds.
 Develop its brand to several other countries where it’s not established.
 Support different market occasions globally like the OLYMPICS, WORLDCUP, FIFA
etc.
 Efficient incorporation is where the brand can acquire few of its manufacturers
or manufacture some of its own which can enhance supply chain.
 Open stores in level 2 cities to expand market.
 The brand can open academies across the world for sport schoolings.
 The brand can enhance its online options to reach out to a larger group.
 BUILDING QUALITY ORGANISATIONS
ASSIGNMENT -1

THREATS:

 Replicate products- A lot of retailers have begun to counterfeit the Nike

products at a less price. These low-priced products are generally of low
quality and this can lower the brand image. The consumers might think that
Nike has began to produce products of low quality.
 There can be increase in pressure of competition. Nike has to innovate new
methods of marketing and promotions.
 Currency instability can affect revenue.

NIKE vs COMPETITORS MARKET SHARE:

 BUILDING QUALITY ORGANISATIONS
ASSIGNMENT -1

5. KEY STRATEGIC PRIORITIES

There are several strategic priorities that the company has put forward in the coming years. These
explain how the company plans to drive its next phase of long-term with respect to sustainability
and growth. The company focuses in achieving the highest single digit revenue growth over the
year. Some of the priorities that the Nike Inc. has put forward for the coming years are that:

 The company believes innovation plans to drive 50% growth of the revenue in all platforms,
is forecasted to grow by 15 percent in the year 2019 to more than 30 percent.
 The product to market speed is expected to be increased as twice since the company
reduces the overall production time by 50%.
 The company expects that the triple double strategy drives greater and more compatible
sale through the season.
 The company also expects to grow its economy by geography.
 The company is also keen in achieving its $50 billion target by 2020.
 In the next five years, the company expects an incremental growth in Direct to Customer
revenues, which is estimated to be $7 billion.

INITIATIVES TO REACH THE STRAGETIC GOALS:

The company with focused growth in its key categories, introduces the Triple Double
Strategy. The triple double strategy includes deploying more technological innovations to
increase growth in sales. The new strategy helps in spot waving customer interests by
making the brand – more unique, more mobile and more exclusive. Nike believes that this
strategy is taking them closer to the consumer. This triple double strategy includes three
core sections-

2X Innovation:
To double the measure and influence of innovation, the company aims to show more
definite plan and speed the innovation, which amplifies to avail more choices to the
customer. This enables the company to design more innovative products and gets to reach
the customer on a faster pace than earlier.

2X Speed:
The company aims at speeding up the reach of products to the customers by cutting the
time of production by 50 percent. This also reduces its production investments and helps
increase revenue on a great ratio.

2X Direct:
To increase or improve all the methods of direct relationships with consumers and to
restructure the future of retail by improving online stores and all partnered Nike consumer
experiences. Therefore is facilitates in doubling up the direct customer relationship.
 BUILDING QUALITY ORGANISATIONS
ASSIGNMENT -1

6. DISCUSSION
ORGANISATIONAL STRUCTURE
Nike has a geographical divisional organisation structure, which is based on the needs and
demands of the company in its global organization and regional markets. This organisational
structure of Nike supports growth and stability. The advantage of this structure is that its flexibility
in satisfying specific consumer preferences of the brand. The disadvantage of this is that this limits
to manage the operations of Converse, which has become a subsidiary of Nike since 2013.

Of several organisation structure, the company chooses to follow the geographic division structure
which no much of lead than its inherent advantages. Its more presumable that this is the only
structure that fulfils the company’s basic demands. This structure facilitates the company to fulfil all
the consumer based on its market demands across different geographical locations. The structure
does come with inherent disadvantages which should be dealt with. This organisation structure may
well fit the 21st century, where expanding of business has been a major criterion of growth.

This structure may be a failure for organisations that do not have a strong leadership. This
structure works best when the management and employees possess a common vision. A strong
brand recognition and thoroughly understood mission when not prominent, the structure is a
failure. This structure is best for differing cultures, language and consumer liking between different
geographical areas. Also, this structure is the best choice since logistical concerns can be met.
 BUILDING QUALITY ORGANISATIONS
ASSIGNMENT -1

7. CONCLUSION

Nike business strategy and organisational structure has been the prominent reasons for the
brand to be successful in the market in the aspects sales and revenue. Though the competing brands
have been equally potential and successful, the brand name of Nike has taken the frontier. Nike has
the most famous designers and its innovations have been the most important factors for its success.
Its promotional campaigns have made strong impacts on the consumer which has been its biggest
strength. Though the brand has been taken rounds of talk on its prices, its quality has always kept
forefront.

8. REFERENCES
 King Kong. (2019). 6 Top Marketing Strategies from Fortune 500 Companies - King Kong.
[online] Available at: https://kingkong.com.au/6-top-marketing-strategies-from-fortune-
500-companies/ [Accessed 13 Apr. 2019].
 The Balance Small Business. (2019). Nike's Vision Statement: The Asterisk Is There for a
Reason. [online] Available at: https://www.thebalancesmb.com/nike-mission-statement-
and-maxims-4138115 [Accessed 13 Apr. 2019].
 Cuofano, V. (2019). Nike Mission Statement and Vision Statement In A Nutshell -
FourWeekMBA. [online] FourWeekMBA. Available at: https://fourweekmba.com/nike-vision-
statement-mission-statement/ [Accessed 13 Apr. 2019].
 Anon, (2019). [online] Available at:
https://www.researchgate.net/publication/299889166_Strategic_Marketing_Plan_of_Nike
[Accessed 13 Apr. 2019].
 Ijbmer.com. (2019). [online] Available at:
http://www.ijbmer.com/docs/volumes/vol6issue3/ijbmer2015060302.pdf [Accessed 13 Apr.
2019].
 Panmore Institute. (2019). Nike Inc.’s Marketing Mix (4Ps/Product, Place, Promotion, Price) -
An Analysis - Panmore Institute. [online] Available at: http://panmore.com/nike-inc-
marketing-mix-4ps-product-place-promotion-price-analysis [Accessed 13 Apr. 2019].
 Fundamentals of Marketing. (2019). Pricing Strategies & Elasticity. [online] Available at:
https://julieaskewblog.wordpress.com/marketing-principles/pricing-strategies-elasticity/
[Accessed 13 Apr. 2019].
 Panmore Institute. (2019). Nike Inc. Generic Strategy & Intensive Growth Strategies -
Panmore Institute. [online] Available at: http://panmore.com/nike-inc-generic-strategy-
intensive-growth-strategies [Accessed 13 Apr. 2019].
 Bhasin, H. (2019). SWOT analysis of Nike - In depth Nike SWOT analysis. [online]
Marketing91. Available at: https://www.marketing91.com/swot-nike/ [Accessed 13 Apr.
2019].
 Serna, L. and Serna, L. (2019). Nike SWOT Analysis Is Really Interesting. [online]
LuckScout.com. Available at: https://www.luckscout.com/nike-swot-analysis/ [Accessed 13
Apr. 2019].
 BUILDING QUALITY ORGANISATIONS
ASSIGNMENT -1

 GmbH, f. (2019). One telling data point shows Nike is dominating Adidas in sneakers (NKE) |
Markets Insider. [online] markets.businessinsider.com. Available at:
https://markets.businessinsider.com/news/stocks/nike-stock-price-data-point-shows-
dominating-adidas-2018-6-1026873106 [Accessed 13 Apr. 2019]- Bar diagram.
 Nike News. (2019). NIKE, Inc. is Accelerating a Consumer-Led Transformation to Ignite Its
Next Phase of Long-Term Growth. [online] Available at: https://news.nike.com/news/nike-
inc-is-accelerating-a-consumer-led-transformation-to-ignite-its-next-phase-of-long-term-
growth [Accessed 13 Apr. 2019].
 Singh, P. (2019). Nike announces strategies for long-term growth. [online]
Fashionunited.com. Available at: https://fashionunited.com/executive/management/nike-
announces-strategies-for-long-term-growth/2017102618003 [Accessed 13 Apr. 2019].
 Smallbusiness.chron.com. (2019). Geographic Organizational Structure. [online] Available at:
https://smallbusiness.chron.com/geographic-organizational-structure-3807.html [Accessed
13 Apr. 2019].