Blue Ribbon Sports (BRS), later known as Nike, was
founded by track athlete Phil Knight and his coach Bill Bowerman in 1964.
Initially, BRS was a distributer for the Japanese shoe maker Onitsuka Tiger.
After 7 years of success distributing Japanese shoes, BRS officially became
Nike, inc. on May 30, 1971.
Nike, inc. is a Multinational corporation (MNE) based in
America. It specialises in world-wide sales of sportswear, footwear, apparel,
equipment, accessories and services. Its mission is to bring inspiration and
innovation to every athlete with their catchphrase “Just do it”. Famously known
for their stylish shoes, Nike, inc. is currently one of the leading sportswear
and gear manufacturer possessing more that 47% market share across the globe.
According to Google, Nike has a total of 1,142 retail
stores throughout the world and has offices located in 45 countries around the
globe. Nike’s factories are all outsourced to third parties that are located in
the region of Asia with factories in Indonesia, China, Taiwan, India, Thailand,
Vietnam, Pakistan, Philippines and Malaysia.
Nike’s ambition is to focus on global sustainability.
According to Nike, climate change has been a global issue with resources being
scarce and fluctuation in raw material. By reducing CO2 emissions, Nike is
aiming to create a ‘sustainable economy’ by using carbon levels as a benchmark.
Nike, inc. has become the world’s largest supplier of
athletic shoes and apparels through their aggressive sponsorship based
marketing strategy. Nike’s primary marketing strategy is to sponsor celebrity
athletes, professional teams and college athletic teams with their sportswear
to promote their wear as being the best in the world.
For my analysis of Nike, the country I have chosen to
research is Canada.
Political – The government of Canada can be described as
Constitutional Monarchy, Federal system, Party system and a Representative
Constitutional Monarchy means that there is a monarch,
Elizabeth II, which rules over Canada. Even though the actual governing is done
by the Prime minister and the minister, Elizabeth II has the power to appoint
and dismiss officials and decide to make peace or war.
Canada practices federalism primarily because of the
large size of the country. Therefore, the country is split into different
states: Ontario, Quebec, British Columbia, Alberta, Saskatchewan, Manitoba,
Newfoundland and Labrador, New Brunswick and Prince Edward Island with each
state having a mayor that governs the state. In the federal government, there
are three main branches which consist of the Executive, Legislative and
Judiciary. The Executive such as the Queen and Prime minster are in-charge of
running the country and carrying out the laws, the Legislative such as the
Senate is in-charge of making laws and the Judiciary has the power to deal with
deciding that has broken the law and the penalties they get.
Canada is a democratic country with the country’s people
choosing their political party. The major parties in Canada are the Liberals,
the Progressive Conservatives, the New Democratic Party, the Reform party and
the Bloc Quebecois with majority of the current government from the Liberals.
Canada’s political system runs on a pyramid structure
with three levels starting from the top: federal government, provincial
government and the Municipal level. The municipal level looks over different
cities and towns with their own set of governing. On top of that, the cities that
are part of a state has a provincial government that is in-charge of running
the province. Lastly, the Federal government focuses on the countries overall
Even though over the years there have been multiple
conflicts within Canada, the last one was in 2012 Quebec student protest. The
protest occurred because the state of Quebec decided to pursue five year
tuition increases leading to student group protests. However, after that the
country has become politically stable and has not had any internal conflicts in
5 years. Therefore, Nike would not be effected by any violence or riots in the
country and thus increasing their profits overall.
Legal – Canada comprises of two different kinds of law:
Common law and Civil Law. All the laws in Canada are common laws except for
Quebec which runs on Civil Law. In the 17th Century, explorers and
colonists came to Canada so it adopted their English common law. However, after
the Battle of Quebec in 1759, Quebec adopted the French civil laws.
I feel that Nike going into Canada will be favourable as
they adopt the common law which is the same as in their headquarters in
America. However, they should only go to the states that common law applies to
which is every state except for Quebec.
Economical – Canada has a developed mixed economy with 10th
largest GDP by nominal and 17th largest GDP by PPP in the world.
Canada is a mixed economy because there are over 1.2 million private businesses
while having more than 40 state-owned enterprises at the federal level. Thus,
Canada is considered to have one of the best mixed economies in the world.
The four biggest industries in Canada are service sector,
manufacturing sector, energy sector and Agricultural sector with their service
sector dominating the industry with three quarters of their population being in
the sector. This benefits Nike as a big portion of the company operations are
based of the service sector. Thus, this will be a win-win situation for both
Canada and Nike with Nike helping their employment issues.
Canada has also the fourth highest total natural
resources value in the world, valued at US$33.2 trillion. This makes Canada
favourable for Nike as they can get the resources locally for their
manufacturing process if they were to open a factory in Canada.
Social – The official languages in Canada are English and
French, However, there are many other languages spoken by a minority in Canada
including Punjabi, Italian, Spanish, German, Cantonese, Tagalog and Arabic with
1.4%, 1.3%, 1.3%, 1.3%, 1.2%, 1.2%, and 1.1% of the population respectively.
Majority of the people in Canada are Catholic which takes
up 39% of the population while Protestants are 2nd highest with
20.3% of the population.
As Canada is a vast country with many different
provinces, they have a difference in ethnic culture and economy development
with provinces within the Central area being wealthier and have greater class
equality. However, in the more rural areas of the country people’s incomes are
25% lower than the national average and lesser education standards.
Canada is conflicted towards the views of immigrants in
their country. According to a poll, 25% of Canadians feel that people of
different ethnic background is not welcomed to the country. Thou this might be
a small amount, this might affect Nike’s business as expats will be criticised
by a forth of Canada’s population.
Nike’s modes of entry are very diverse which includes
exporting, licensing, joint ventures and wholly-owned subsidiaries.
Exporting – Nike exports their goods via e-commerce over
their official Nike store. Nike also expands their business by selling goods
via other websites such as Lazada, Zalora and ASOS. Even though these stores
cater to customers that more into fashionable apparel as compared to sportswear
which Nike specialises, Nike’s strategy allows them to have a wider target
audience just by selling their goods via these stores.
Licensing – Nike allows multiple stores to sell their
good via licensing. These stores include Royal Sporting House, Isetan and World
of Sports. These shops sell a variety of sporting goods from other different
Joint Ventures – Even though Nike does not usually do
joint ventures with other countries. There was once that Nike has tried establishing
a joint venture relationship with another company. In 2002, Royal Philips
Electronics and Nike had an agreement to develop audio sports product.
Wholly-owned subsidiaries – Nike currently have four
wholly-own subsidiaries; Converse Inc., Hurley International LLC, Jordon Brand
and Nike Golf under its wing. Hurley International LCC and Converse Inc. were
acquired by Nike in 2002 and 2003 respectively. Michael Jordon inspired Jordan
brand was established in 1997 while Nike Golf was to expand their customer base
by targeting golfers.
Nike adopts the global standardization strategy which
allows them to market their goods with uniform consistency throughout the
world. Nike standardizes their customer service, product support, marketing,
pricing and product distribution across the globe. The benefits of Nike
adopting the global standardization strategy consist of cost savings and
improvement of global business opportunity. With this strategy, Nike produces
the same products while using their already established marketing and
distribution system to further spread their success.
Nike choice of approach is the centralised approach which
allows Nike to make decisions and provide direction globally from their
headquarters in Oregon, USA. With a centralisation approach in place, Nike is
able to have full control and gain marketing efficiency by facilitating
coordination and avoid duplication of implemented activities. Nike also adopts
The horizontal organisation structure that would best fit
Nike is international division as there are three noteworthy aspects that make
Nike’s organisational structure unique. Firstly, Nike has a global corporate
leadership strategy which involves global corporate managers having offices in
Nike headquarters. This arrangement optimises Nike’s control over the company’s
global situation as new decisions or product releases are easily implemented
from the headquarters to their other offices.
Secondly, Semi-Autonomous Geographic Divisions within
Nike which company operations are segmented based on the regional markets. Nike
has regional divisions in North America, Western Europe, Central & Eastern
Europe, Greater China and Japan. This allows the company to enhance operations
in the regional sport shoes and apparels.
Lastly, Nike has two global divisions; one for their
subsidiary Converse and another for Nike’s brand licensing. The global division
for Converse handles all worldwide operations for Converse. However, the brand
licensing division is responsible for all world-wide brands licensing which
helps Nike expand its business further.
In conclusion, I feel that overall Canada is a suitable
place for Nike to expand its business into. Canada has the natural resources
and manpower to back the opening of a Nike office there and also the political
system is similar to their headquarters in America. Canada is a mixed economy
so therefore Nike is able to open their business there. However, the social
culture in Canada may affect Nike if they were to send expats into the country.
The modes of entry used in Nike are exporting, licensing,
joint ventures and wholly-owned subsidiaries. Nike uses brand licensing being
the biggest mode of entry and also expanding their market and target audience
to people who enjoys shopping for fashionable apparel in sites like Lazada.
Nike organisational structure adopts a centralised global
standardizing strategy as they expand their good globally and operate their
overseas operations from their headquarters. This not only helps Nike to expand
their business but all reduce cost by avoiding activity duplication and
miscommunication. This organisation structure will help Nike improve profits
improvements for the Nike inc.
A possible improvement that Nike could adopt is expanding
into countries like Canada they can hire their staff and managers locally to
avoid any cultural tension within the company. This will help overall optimise
Another improvement that I feel Nike can implement is to
include franchising as a mode of entry into countries. The benefit of opening
Nike for franchising allows local franchise owners to avoid social tension and
also locals will be more familiar with the market within the country.
Franchising is also a safe alternative of expanding by Nike that will help them