{"id":647,"date":"2015-12-02T18:52:18","date_gmt":"2015-12-02T23:52:18","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/nike-inspiring-athletes-around-the-world\/"},"modified":"2015-12-04T15:01:49","modified_gmt":"2015-12-04T20:01:49","slug":"nike-inspiring-athletes-around-the-world","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/nike-inspiring-athletes-around-the-world\/","title":{"rendered":"NIKE: Inspiring Athletes around the World"},"content":{"rendered":"

https:\/\/www.youtube.com\/watch?v=bh8r6S2FNP0<\/a><\/p>\n

Driven by a clear mission, Nike is an example of a global\u00a0organization that is highly effective at driving alignment between its business and operating model. The company leverages\u00a0a strong business focus and unique corporate structure, which combined with key\u00a0differentiating attributes (e.g., corporate structure, marketing spend, manufacturing process, technology\/innovation prioritization) makes it the powerhouse it is today.<\/p>\n

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Nike\u2019s Business Model
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Nike\u2019s mission is to:<\/p>\n

\u00a0<\/strong>BRING INSPIRATION AND INNOVATION TO EVERY ATHLETE* IN THE WORLD<\/strong><\/p>\n

*IF YOU HAVE A BODY, YOU ARE AN ATHLETE<\/em><\/p>\n

In\u00a0its simplest form, Nike is a sports apparel, footwear and equipment manufacturer. The company reports revenues across four major business segments:<\/p>\n

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  1. Footwear<\/li>\n
  2. Apparels<\/li>\n
  3. Equipment<\/li>\n
  4. Global Brands (Converse, Hurley, Jordan Brand)<\/li>\n<\/ol>\n

    Through a combination of high quality product design, use of ground-breaking technology and expansive marketing, Nike has been able to become a global leader with annual revenues of over $30 billion. But, perhaps what is most astounding about Nike’s business is its continuous ability to grow. Currently, the company has generated annual sales growth of over 8%, but it plans to increase its growth\u00a0to over 10% the next five years.<\/p>\n

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    \"Nike<\/a>
    Nike revenue and profits from 2006 to 2015<\/em><\/figcaption><\/figure>\n

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    Nike\u2019s Operating Model<\/u><\/strong><\/p>\n

    One of the key drivers of Nike\u2019s operating\u00a0model is its unique corporate structure, which it calls its \u201cCategory Offense.\u201d Based on decades of research and experience, Nike found that consumers of specific sports were more likely to share traits than those in nearby countries. As such, in 2008, Nike switched its structure to emphasize breakdowns by sport over geography. This change allowed Nike to more effectively collect consumer insights and better target new products and services to engage each segment, while ultimately resulting in geographical wins anyway.<\/p>\n

    Another unique aspect of Nike\u2019s operating model is its corporate commitment to marketing. Each year, Nike spends over 10% of its sales on marketing, which represents a larger amount than some of its competitors\u2019 total revenues. By spending as much as Nike does, the company is able to dominate the sports landscape through notable sponsorship agreements with leagues, teams and federations (e.g., NFL, FC Barcelona, Brazilian Football Team). In addition, in fiscal year 2015, Nike spent nearly $1 billion on athlete endorsements. This provided Nike with the ability to align its products with the best athletes in the world (e.g., LeBron, Ronaldo, Serena Williams) to further promote their products to an avid and engaged base of sports fans and consumers.<\/p>\n

    \"Nike<\/a>
    Nike endorsement deals (in millions of dollars)<\/em><\/figcaption><\/figure>\n

    Nike also differentiates itself from its competitors via\u00a0its emphasis on outsourcing. Currently, about 26,000 people work for Nike in the U.S., which represents a fraction of the company\u2019s total workforce of over one million people (of which more than 90% are in Asia). While the company has run into trouble in the past due to labor issues, by outsourcing production Nike is able to minimize its costs, which results in improved profit margins and more competitive product pricing.<\/p>\n

    A final key to key Nike\u2019s operating model is its emphasis on technology and innovation. By leveraging its high margin products (e.g., basketball shoes), Nike has also been able to dedicate\u00a0the necessary funds to future development. Some recent business announcements that illustrate Nike’s commitment to technology include the:<\/p>\n