NIKE FUNCTIONAL ANALYSIS

Nike Functional Analysis

Nike Functional Analysis

Introduction

Nike's supply chain provides a clear view of the extent of the global nature of the company. Nike's headquarters are in Beaverton, Oregon; however, virtually all of its production takes place outside of the United States. In addition, consumer sales outside of the United States exceeded sales in the United States in 2003 with only 43% of the company's sales coming from the US.

Discussion

Nike's supply chain upstream begins with the materials used in the production of its products. The materials used in the production of Nike shoes are rubber, plastic compounds, foam, cushioning materials, nylon, leather, canvas, and polyurethane films. Materials used in production of Nike apparel are natural and synthetic fabrics and threads, plastic and metal hardware, and specialized performance fabrics. Many of these materials are available in the locations at which the manufacturing takes place, but some specialized materials have to be imported to the manufacturing company.

Nike's primary business is not the manufacturing of its footwear and apparel. Instead, the company focuses on “design, development and worldwide marketing.” (10-K) This means that Nike uses contract manufacturers to make its products. In fact, almost all shoe-manufacturing activities take place outside of the United States with the exception of the proprietary air bag. Apparel and equipment manufacturing take place in both the United States and around the world.

The Internal analysis is part of making strategic analysis of every company. Internal analysis sizes up a firm's resource strengths and weaknesses and its external opportunities and threats to provide a good overview of whether a firm's business position is fundamentally healthy or unhealthy. This will provide a clear view of Nike's resource capabilities and deficiencies, its market opportunities, and the external threats to the company's future well being and provide a starting point for our recommendations to Nike's strategic market strategy.

Strengths

Nike is an industry leader in developing innovative new products. One of the strength of Nike Corporation is its brand name recognition, because Nike has been around so long, the brand is recognized and respected both internationally and domestically. Nike has effectively marketed their products and in addition understands the importance of a quality product. They are continually improving their shoes through new technologies that are developed by their research teams. Nike's important sustainable competitive advantage is their intangible assets, such as brand image and organizational culture. Everybody knows that Nike Corporation is a competitive company.

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