7/28/2019 Nike Strategy Model

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fnancial managemen

>studynotes

The strategic models that P6 candidates

nd to b abl to us can initially sm

rathr dry and difficult. Th bst way to

undrstand how thy work is to apply thm to

a ral businss. In this cas, lts us Nik.

Corporat stratgy is all about th ovrall

scop and dirction of an organisation. It also

indicats how managrs ar to add valu,

addrssing topics such as product divrsity,

gographical covrag and ownr

xpctations. It is vital that dcision-makrs

ar clar about thir stratgy, sinc it forms

th basis for all othr dcisions.

Th nd for clarity has mad mission

statmnts incrasingly popular. Ths

gnral xprssions of th organisations

ovrall purpos ar intndd to

rflct stakholdrs

xpctations and

communicat th corporat

valus back to thm. Thy

can b thought of as thbusinsssraison dtre.

Niks mission

statmnt is to bring

inspiration and innovation

to vry athlt in th world,

togthr with a quot from

th companys lat co-foundr,

Bill Bowrman: If you hav a body, you ar

an athlt.

Th company has xpandd on its

mission statmnt with 11 maxims that vry

mploy can us to guid th dcisions thy

mak (see panel, page 55). It intgrats ths

into th dvlopmnt of its ntir workforc.Nik is th most succssful sportswar

company in th world. According to Naomi

Klin in No Logo (Flamingo, 2001), th Nik

swoosh is mor widly rcognisd around

th world than th US flag. Its Just do it

markting campaign, launchd in 1988, is

on of th most famous vr producd.

Th slogan is still familiar to millions. For

stratgy studnts futur businss ladrs

hoping to mulat th succss of Nik a

dtaild xamination of th

connction btwn mission

and stratgy is crucial toundrstanding this succss.

A companys vision is th

dsird futur stat of th

organisation. Along with th

mission, it is crucial to th stratgic

planning procss. Stratgists try to

focus th nrgis of th workforc on th

corporat vision. Niks maxims ar an xcllnt

xampl of how to communicat th mission

and vision throughout an organisation.

In ssnc, th traditional stratgic

planning procss ntails finding answrs to

thr ky qustions: whr ar w now,

whr do w want to b and how ar wgoing to gt thr? Various modls of this

procss hav bn dfind by diffrnt

acadmics. On of th most familiar of ths

is rprsntd in diagram 1.

Many functional stratgis ar dvlopd

using procsss basd on this traditional

stratgic planning modl. A good xampl of

such a stratgy-making procss is that of th

markting planning modl (see diagram 2,

page 55). Th Chartrd Institut of Markting

dfins markting as th managmnt

procss rsponsibl for idntifying, anticipat

and satisfying customr rquirmntsprofitably. Markting objctivs ar dvlop

using two strams of information: on driv

from th organisations ovrall businss

stratgy; th othr from a markting audit.

Th markting audit involvs an analysis

th organisations products and comptitiv

nvironmnt, togthr with a dtaild rviw

of its customrs. Th lattr ntails idntifyin

customrs attituds and bhaviour, and th

rlationship with th firm and its products.

Hnry Mintzbrg argud that th stratg

nactd by an organisation is a combinatio

of outputs from formal stratgy-gnration

procsss and from what h calld mrgstratgy (Mintzberg on Management, Fr

Prss, 1989). Th orthodox viw of stratgi

action is that it rsults from a dlibrat

procss i, stratgic planning taks plac

first, thn action rsults. Such a viw tlls o

part of th story. It ignors th possibility tha

action may rsult from stratgy that mrg

from sourcs othr than a formal procss.

Mintzbrgs mrgnt stratgis com abo

through vryday procsss. Thy oftn

Jerome Payne ocuses on Nike, the worlds biggest sportswearmanuacturer, to demonstrate some common business strategy models

ManageMent accounting

Business strategy

PAPER P6(ALSO OF INTEREST TO P5 CANDIDATES

GeTTyIMAGeS

1 Traditional strategic planning model

MissionSTRATEGIC

ANALYSIS

environmnt

Vision

Position auditCorporat appraisal

STRATEGIC

CHOICE

STRATEGIC

IMPLEMENTATION

Gnrat options

evaluat options

Implmnt stratgy Actual prformanc

Rviw and contro

Fdback

7/28/2019 Nike Strategy Model

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fnancial managemen

Businss mission Markting audit

Businss objctivs Swot analysis

Dfin markting objctivs

Dvlop markting stratgy

Choos markting stratgy

Implmnt markting stratgy

Monitor and control

>studynotes PAPER P6(ALSO OF INTEREST TO P5 CANDIDATES

2 Marketing planning key stepsoccur as a rsult of larning from mistaksor as a flxibl rspons to a fast-changing

comptitiv nvironmnt.

To us a musical analogy, a composrmight play a scor h has writtn and find that

h isnt happy with it. H may amnd a fw

bars, find that its bttr but not quit right

and so on, until th finishd pic vntually

mrgs. Th orthodox viw of stratgy

would hav th musician crat th prfct

scor first tim. Th final product rsults both

from th initial ida (formal stratgy) and th

larning procss (mrgnt stratgy).

On of th prim sourcs of mrgnt

stratgy is organisational cultur. This has

many sourcs, including th corporat

mission and th rtlling of ky vnts from

th organisations history. An ancdot about

Bowrman provids an xampl of such a

story: h claimd that his dsign for th sol

of Niks first st of running shos was

inspird by th shaps of his wifs waffl-

makr. Thir sols would both grip wll and

b lightwight. This story illustrats an aspct

of Nik cultur and th implmntation of

nk 11 mxm

1It is our natureto innovate. Th

company ss innovation

as on of its cor

organisational comptncis.

2Nike is a company.

Nik is a profit-making

ntity and it achivs this

goal vry wll. In th quartr

ndd August 31, 2007 it

rportd that its nt incom

was up 51 pr cnt on th

sam quartr in 2006.

3Nike is a brand.

Th swoosh logo is

instantly rcognisabl

around th world. Nik ss

this as th symbol of its global

ladrship. It will ntr only

thos markts that it thinks it

can dominat. It says: If w

cant lad it, w dont nd it.

4

Simplify and go.

Nik products hav short

lif-cycls in trms bothof tchnology and fashion.

Th company blivs that

making quick yt skilful

dcisions is ky to its succss.

This aspct of Niks vision,

togthr with th svnth

maxim, is particularly powrful

in articulating th companys

hugly succssful us of

mrgnt stratgy.

5

The consumer

decides. Th company

is knly awar of thsophistication of its customrs

and it trats thm as its

ky stakholdr.

6Be a sponge.

employs at Nik ar

ncouragd to b

curious and opn to nw

idas, whatvr thir sourc.

7

Evolve immediately.

Nik ss itslf as bing

in prptual motion viwing chang as a ky

sourc of innovation. This

attitud can asily b obsrvd

in th wid rang of products

that Nik offrs its consumrs.

It is anothr xampl of th

companys us of mrgnt

stratgy to good ffct.

8Do the right thing.

Nik thinks of itslf as a

rsponsibl global citizn,

mbracing th stakholdr

viw of corporat socialrsponsibility. It ncourags

its popl to b honst and

transparnt and to promot

divrsity and sustainability.

9Master the

fundamentals. All th

innovation in th world

is uslss if you cant put it

into action. A crucial part of

Niks succss is its ability to

rfin its prformanc thrcnt growth in profits

suggsts that its achiving this.

10We are on the

offence always.

To stay ahad in an

xtrmly comptitiv

nvironmnt, Nik urgs its

popl to act lik ladrs in thi

fild to achiv victory.

11

Remember the

Man. Th lat Bill

Bowrman is still hldin high stm throughout Nik,

both for his undrstanding of

athlts nds and for his

innovativ spirit. evn from th

grav h xrts a strong cultura

influnc on th organisation

h hlpd to start to th

xtnt of bing quotd in its

mission statmnt.

mrgnt stratgy through innovation and

th incorporation of chanc vnts.

Although initially dvlopd for training

purposs, Niks maxims ar an xcllntillustration of th organisations cultur. Th

ncourag mploys to valu innovation,

th brand and th customr and also to

mov fast in xploiting nw opportunitis.

Th strngth and cohsivnss of this

cultur across Niks global oprations has

mad it asir for th company to xploit

mrgnt stratgy and xpand th brand in

nw markts. For xampl, Nik movd

byond making running shos in th ighti

and now producs a wid rang of appar

for all mannr of sports.

It should b clar that organisations na

a combination of dlibrat and mrgnt

stratgy. A companys mission and vision a

ky sourcs of mrgnt stratgy. An

organisation with a strong, cohrnt cultur

can us mrgnt stratgy to gain significa

comptitiv advantag ovr its rivals.

Jerome Payne is a tutor with 7city Learnin