Inventory Management Strategy Of Nike

sale of Nike’s high-margin products to high-end customers. Regardless of the low cost of the World Shoes, they

In this project, I have chosen to provide a microeconomic-based analysis on NIKE Inc. The study will include the analytic overview of the general market of Nike brand, as well as the information about the goods, service, and areas of operation. Throughout the research of this paper, I will discuss the cost of production, as well as the supply and demand in relation to microeconomics. Moreover, we will look at how supply and demand of this market regulates the equilibrium of quantity and price, as well as the economical efficiencies where the surplus for consumer and producer is maximized. Information will be explored to understand why businesses and people make decisions and how those actions we can be used for strategy. To conclude this research paper, I will take a deeper look and make recommendations for the future profitability, future growth and sustainability of NIKE Inc. (Hubbard & Obrien, 2015).

1. Discussion: What factors drive Nike’s decision to stick with some form of network organizational structure rather than own its manufacturing operations?

Nike is the leading and yet renowned supplier of athletic apparel and shoes. The company controls close to 33% of the global athletic shoe market (Dogiamis & Vijayashanker,2009).Nike was founded by Bill Power and Phil Knight in 1962 as a Blue Ribbon Support and then was later on renamed to Nike in the year 1968 (Patrow,2003).The company supplies very high quality product in close to 100 countries with major markets being located in the U.S,U,K, Asia Pacific as well as in the Americas. The company has managed to attain its lead and legendary position via the application of innovative and yet attractive product design which is backed by quality production as well as well crafted marketing strategies.

Forecasting in the fashion industry is usually a complicated due to the fact that it’s characterized by high demand, short product life cycles and different varieties of product lines. Consequently, managing customer demand tends to be difficult, for organizations have to avoid large volumes of stock. In this industry, there’s intense competition and consumers are price conscious; accordingly, these factors have slowed the growth of this industry. As a result, this made it difficult for the companies to create brands which can offer high quality products with cheap prices (Fernino et al., 2012). Nike is one of the most popular brands throughout the whole world and the world’s leading supplier. The company designs, develops and markets

Since its creation, Nike has proven itself as a popular brand and it has created niches by selling products such as footwear, apparels and various types of sports equipment. This paper will attempt to trace the product development of Nike shoes from its origins in conception and design to the manufacturing and production process located in contract factories in developing countries to advertising and marketing of Nike as a cultural commodity and finally, the retailing of the footwear around the world.

Understanding customer needs will help Nike to define new market opportunities and drive innovation and revenue growth in every aspect of its organisation. The most basic concept underlying marketing is that of human needs. Human needs are states of felt deprivation (Kotler and Armstrong, 2006). Customer logic is derived from evaluation of a company and its product based upon customer needs, customer benefits, and product features. For branded athletic shoes, Nike has to understand customer needs on a global level as the products are sold

Nike has seldom manufactured products own premises, except their air bladders. The shoes are manufactured through outsourcing and alliances with other companies. A successful company like Nike formed its organization on the customer values that have the MOST impact on the consumers mind – Design/R&D, Marketing and Distribution. Even though manufacturing is a vital function to perform, Nike realized that there were other ways to go about this function and thereby save both cost and maintain its focus on the critical customer value areas.

Crocs’ value chain management system allowed it tremendous advantage in meeting customer needs (Business Pundit, 2008). By controlling all aspects along the value chain, Crocs could quickly adjust to customer demand, building additional shoes and fulfilling extra orders within a single selling season (von Briesen, 2009). This allowed retailers to order smaller

Enderle, K., Hirsch, D., Micka, L., Saving, B., Shah, S., Szerwinski, T. (2000, March 14). Strategic Analysis of Nike, Inc. Retrieved on December 14, 2005, from

After reviewing the 12 bases of differentiation, Nike’s equipment division focuses primarily on product features, consumer marketing, reputation, linkages among functions in the firm, and links with other firms.

A comprehensive analysis, using market data and market research, allows us to assess all areas affecting Nike’s strategic direction:

My company, partners with businesses and present systems that contributes to their overall effectiveness. Recently, I had the privilege of attending a Microsoft conference that introduced Nike’s Chairman, President and CEO, Mark Parker as the guest speaker. Apparently, due to, demand fluctuations and stiff competition, Nike possess an abundance of excess inventory. Upon hearing this startling revelation, I immediately thought about the Adapting Supply Chains to Tough Times, case study I read the other day. However, the problem that I discovered with Nike is that it has multiple locations, that all have different inventory needs. For instance, the Air Jordan X Retro “OVO” might sell well on the west coast, but not as well in the east. Therefore, my dilemma was to incorporate components of inventory management that would fit every location. Obviously, I had already begun envisioning an effective inventory system for Nike before being asked to do so. Luckily, after the conference, Microsoft supplied lunch, which was a Godsend since my stomach was emitting embarrassing sounds. At any rate, since I have an affiliation with Bill Gates, I was assigned a seat at his table. By chance, Mark Parker was also assigned to the table, as a matter of fact, he sat right next to me. Clearly, it would not be proper etiquette for me to start discussing business after introducing myself. Therefore, I took the time to learn a bit more about Mark. First, he joined Nike in 1979 and from that point

My company, partners with businesses and present management systems that help companies become more efficient. Recently, I had the privilege of attending a Microsoft conference that introduced Nike’s Chairman, President and CEO, Mark Parker as the guest speaker. Apparently, due to, demand fluctuations and stiff competition, Nike has an abundance of excess inventory. Upon hearing this startling revelation, I immediately thought about the Adapting Supply Chains to Tough Times, case study I read the other day. However, the problem that I discovered with Nike is that it has multiple locations, that all have different inventory needs. For instance, the Air Jordan X Retro “OVO” might sell well on the west coast, but not as well in the east. Therefore, my dilemma was to incorporate components of inventory management that would fit every location. Obviously, I had already begun envisioning an effective inventory system for Nike before being asked to do so. Luckily, after the conference, Microsoft supplied lunch, which was a Godsend because my stomach was emitting the most embarrassing sounds one would ever hear. At any rate, since I have a good relationship with Bill Gates, I was assigned a seat at his table. By chance, Mark Parker was also assigned to the table, as a matter of fact, he sat right next to me. Clearly, it would not be proper etiquette for me to start discussing business after introducing myself. Therefore, I took the time to learn a bit more about Mark. First, he

4.3 Extended Problem Solving This decision making process would be apparent on consumers who's purpose for purchasing a Nike product is controlled by whether or not it suits their needs. This type of consumer would not be as concerned with branding, but whether it meets their requirements. The making process would be longer. 4.4