Research

The investigation did not affect Nike’s sales much, and in fact the company’s stock went up 3%. Nike will risk losing consumers if it does not confront its problems within its workplace culture. To understand how women and minorities are unfairly exemplified within its company, Nike will have to continue to evaluate its marketing, pay and performance results.

Employees in 2016: 48% female and 52% male, by the end of 2018, 49% female and 51% male VPs is a different story, as there were 28% female and 72% male VPs in 2016 and a rise of 36% female and 64% male in 2018. There is improvement, but still room to improve for equality at the VP level. Total ethnicity of employees and VP’s has not increased as much but is slowly increasing in numbers (Representation and Pay, n.d.).

Pay Equity increased to 1:1 women vs. men globally by the end of 2018. In 2018, an article by business of fashion reported made Nike take an initiative in their diversity and inclusion beliefs. Nike improved its workplace diversity after the company was accused of gender discrimination and inappropriate behavior. These actions were initiated when Nike became aware of reports from media about the company being a toxic work environment in early 2018. Nike stated that the behavior did not reflect its core values of inclusivity, respect and empowerment (Nike, 2019).

NIKE INC. RESEARCH / PAGE 6 Situation Analysis Competition

Nike’s top competitors are Adidas, Reebok and the up and coming Under Armour. Adidas, Reebok and Nike are considered to be the top three leading sportswear companies globally. Adidas has a revenue of $16 billion globally and competes at a high level with famous sports figures and controversial stances alongside Nike (Bhasin, 2019).

Reebok has a global revenue of $3 billion and is more well-known for its shoes. Reebok is recognized more for football as Adidas is more well known for soccer but is on the come up for basketball. Reebok is considered the 2ndbiggest competitor against Nike globally (Bhasin, 2019). Under Armor is valued at $4 billion and is becoming a brand of variety marketing in American soccer, basketball, and American football. Although Reebok is owned by Adidas, it operates independently and its brand valuation is worth $1 billion (Bhasin, 2019).

Adidas is based in Germany, but trades as an American depositary receipt (Palmer, 2019). Where Adidas is more exceled than Nike globally is in Europe, which is an established soccer continent, where Adidas has much success. Adidas has been more known for its branding in soccer but has expanded its branding for other sports. Adidas owns Reebok and TaylorMade, two athletic brands that are widely known around the globe and especially in the U.S., which shows the diversity that Adidas plays within the competition role against Nike (Palmer, 2019). Adidas’s increasing growth within the market is putting a high demand on Nike to take action in order to remain one of the top companies in the athletic apparel market.

NIKE INC. COMPETITION / PAGE 7 Competition cont.

Under Armour is the newest brand of the three competitors and has made tremendous growth since 2005, when they launched. Under Armour first started out in the American football market, selling athletic under garments to go underneath athletic jerseys and apparel, but has since expanded into clothing apparel and shoes as well. Under Armour contributes to the competition within the market by having its products’ prices be at an exceptional rate for its quality. Under Armour had $5.19 billion in revenue as of December 2018. Since the beginning of April of 2019, the stock trading was around $21 per share (Palmer, 2019). Although Nike has experience and time in the market, Under Armour is up and coming and growing fast. Under Armour is expected to continue growing within the athletic apparel market and enter the outdoor performance apparel market as well, with hiring a new design team to initiate this plan (Palmer, 2019).

In order for Nike to remain on top, the company has to create and innovate to target more of the younger audiences through online shopping and promoting equality. Under Armour has grown so much because the company has targeted younger consumers, who are more willing to support smaller businesses and contribute to online orders (Palmer, 2019, p. 10).

Where Adidas excels over the other competitors within the market is being domestic and abroad in sales. Nike surpasses Adidas in the area of sponsoring some of the best athletes from each sport, male and female. Adidas has started to sponsor more high level athletes at the professional level to try to remain one of the top competitors against Nike. Under Armour has sponsored some of the top athletes and has produced some of the most modern apparel to appeal to bettering athletes’ performance. One area Under Armour has created to compete against Nike is in technology, by creating an app to monitor fitness and workouts (Palmer, 2019, p. 11).

NIKE INC. COMPETITION / PAGE 8 Opposition

Nike, Inc. has been controversial in politics and has a history of contradicting some of the influencers that they brand. Nike has made a lot of changes within the last year to enhance diversity and inclusion, alleviate gender pay gaps, market their support of all cultures and stand up for what they believe is right. Despite all of Nike’s campaigns and inspiring video commercials, it has still faced some controversy with removing the release of the July edition of the “Betsy Ross” shoe. One of their controversial representatives, Colin Kaepernick, said he did not support the shoes as they represented slavery (Desmond Bieler, 2019). Nike decided to remove the shoe and not to release it, but the controversy still sparked discussion on social media about its intentions in the first place. Whether or not Nike does these types of things intentionally to spark conversation and sales is not known, but the problem is finding out what message the new leadership within Nike wants to portray consistently.

In 2018, an article by business of fashion reported made Nike take an initiative in their diversity and inclusion beliefs. Nike made an investment to put more women and minorities in leadership roles in management training and recruiting programs (Chen, 2018). Nike wanted to improve workplace diversity after the company was accused of gender discrimination and inappropriate behavior, that caused almost a dozen senior executives to resign. These actions were initiated when Nike became aware of reports from media about the company being a toxic work environment in early 2018. Nike stated that the behavior did not reflect its core values of inclusivity, respect and empowerment (Chen, 2018).

NIKE INC. OPPOSITION / PAGE 9 Opposition

Only 29% of Nike vice presidents are women, while the company’s overall workforce is 48 percent female. Among directors, 39% are women and 23% are non-Caucasian (Representation and Pay, 2019). Harassment and discrimination allegations started against Nike’s leaders in March, when a survey for female employees described inappropriate behavior by their male colleagues and chief executive Mark Parker finally became aware of it. An investigation by New York Times discovered that under the leadership of Trevor Edwards, women were denied promotions and misconduct was committed by male supervisors, which failed to be detained by human resources (Creswell, Draper, & Abrams, 2018). Before the Times story ran, Edwards resigned in March, followed by his deputy, Jayme Martin. Nine others resigned including the senior management and Antoine Andrews, head of diversity and inclusion. Nike wanted to bring change for diversity and inclusion as well as eliminating gender inequality by hiring Kellie Leonard, the former vice president of employee and corporate communications (Chen, 2018).

NIKE INC. OPPOSITION / PAGE 10 External Impediments Some of the external impediments for Nike, Inc. are dependent on what consumers want, which changes over time, what competitors are doing, and international markets. One issue is that athletic wear goes out of style. Yoga pants and sneakers are a current trend, but analysts from Morgan Stanley, an American multinational bank and financial firm, believe that shoppers will lean more towards casual comfort and style. While this type of information is in favor for Nike, who sells yoga pants and leggings, the analysts believe that consumers can go back to a more formal look, favoring denim over comfort and becoming a threat to Nike’s style (Lutz, 2015).

Another external impediment would be its competition, but specifically Under Armour. Because Under Armour is the second-largest sports apparel company in the United States behind Nike, putting Nike on the hot seat because of Under Armour’s potential of being on top with how quickly it has made it as one of the top competitors. Nike passed on sponsoring Steph Curry, whom Under Armour signed, and later Curry became one of the best players in the NBA, spiking Under Armour’s branding within the market (Lutz, 2015).

NIKE INC. EXTERNAL IMPEDIMENTS / PAGE 11 Analyzing the Publics Customers China can be a big hit for Nike, as the country is having an increase in demand of athletic apparel. Although the demand for athletic apparel in China could increase Nike’s sales, China’s consumers are known to fluctuate in style and wants within the market. Luxury brands in China have struggled because consumers in China tend to pick fast fashion retailers (Lutz, 2015). Because of the unstable market in China, Nike could see inconsistency in sales and would have to see if the good outweighs the bad in this situation.

There are three target audiences that Nike is focusing on in reaching customers, women, young athletes and runners. Nike is targeting women in sales by expanding its sales of sports bras, leggings and tights for women. Nike’s women running apparel grew in double digits one quarter in 2015, which was substantially more growth than the men’s apparel, according to Parker. Skirts and lace-trimmed jerseys have been a new feature created by Nike as a new release for women, which has helped its sales increase. Women in their 20s and 30s are investing in leggings to do everyday activities outside of working out. Nike claimed that $2 billion in sales would be added from the womNeInK’Es IlNinCe. C(LUuSTtzO, M2E0R1S5 /) .PAGE 12 Customers cont.

Because companies like Under Armour do such a respectable job in marketing to younger athletes, Nike has had to adjust to catch the attention of younger customers as well. Mark Parker believes that children who play sports are an essential part to Nike’s growth in business (Lutz, A. 2015, April 7). One way Nike does a great job in marketing is by using children and younger athletes in its videos and campaign ads to attract the younger generations. Nike sponsors little leagues and clubs, which promotes not only its brand, but its support in young athletes. Because Nike sponsors so many well-known professional athletes, this draws in younger generations,

The running branding within Nike is not performing the way Mark Parker would like his company to, but believes as long as Nike puts its efforts into enhancing the running promotion within its company, it can perform at its peak. Nike has been innovating new running shoes to compete with Under Armour, Adidas and Lululemon specifically (Lutz, A. 2015, April 7). Nike has shown innovation within this category by updating the Nike+ running app, which helps runners track their distance, pace, route, time and calories (Lutz, 2015). Sponsoring running events globally has also been one-way Nike has recruited new customers.

NIKE INC. CUSTOMERS / PAGE 13 Producers Nike’s producers consist of 74,000 employees worldwide and manufactures of all its apparel and shoes globally. Around 85% of its shoes are delivered overseas (Story Map Journal, n.d.). The lean supply chain of Nike saves $0.15 per unit in comparison to a traditional distribution model. Over 900 million units are moved per year by Nike, which gives the company a competitive advantage (Story Map Journal, n.d.). Instead of owning or operating its own companies, Nike outsources services to 14 different countries globally and 96% of those companies are in Vietnam, China and Indonesia (Story Map Journal, n.d.).

NIKE INC. PRODUCERS / PAGE 14 Enablers A couple of Nike’s enablers are Philip H. Knight and Mark Parker. Philip H. Knight has been a director since 1968 and is the co-founder of the company and led Nike, Inc. as a small partnership into one of the world’s largest athletic apparel companies (Corporate Governance, n.d.). Mark Parker has been the president and CEO of Nike since 2006. Parker contributed to Nike in product research, design, marketing and brand management (Corporate Governance, n.d.). Kobe Bryant, Kevin Durant, Lebron James, Roger Federer, Serena Williams, Tiger Woods and Michael Jordan are some of the names of professional athletes that Nike sponsors (Andre, 2016). Because these athletes are high profile, they use their platform to enable Nike’s growth within the athletic apparel market. Influencers like this enhance its branding and build a stronger name as being more credible.

NIKE INC. ENABLERS / PAGE 15 Limiters

There were always be some limiters against a big brand like Nike, but where groups like women, minority groups, activist groups, etc. voice their negative opinions of Nike, the company typically responds with support towards those groups. An example of some limiters of Nike would be when Nike made a campaign with Colin Kaepernick the face of it. Kaepernick was known for kneeling during the national anthem before NFL games as a quarterback and many people were offended and did not support his actions. People took to social media videos and images of themselves burning Nike apparel and posting that they would never buy Nike again (Cbs, 2018).

NIKE INC. LIMITERS / PAGE 16 SWOT Analysis Strengths

Sponsoring some of the best athletes in the world has helped Nike become superior in the athletic apparel market. Without these athletes, Nike’s commercials and campaigns would not be as effective. It is easier to connect and relate to the marketing and commercials that Nike displays, because it is most likely the consumer’s favorite athletes whom they aspire to be like. Because of this emotional tie with the athlete, the affect to inspire and influence young athletes or consumers is more powerful and effective in promotion and sales.

Nike’s branding is one of the most recognized logos across the world. They have established a strong branding where it is easy for anyone, even those are not consumers of Nike, to connect the company with the Nike swoosh. Because of its strong branding, Nike has millions of customers around the world who follow trends, engage via social media and provide feedback as well. Nike is very well-known and a lot of that is contributed to the high-profile athletes the company sponsors globally.

NIKE INC. STRENGTHS / PAGE 17