Business Process of Nike essay
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Nike, Inc. is one of the most prosperous multinational companies that is involved in the designs, development, supplying, marketing and selling of foot wear, clothing, and accessories but it is mainly known as one of the largest supplier of sports-wear and equipment across the globe. Nike’s The company was started in America in 1964 under the name Blue Ribbon Sports but later in 1978 it changed its name to Nike. The company has directly employed over 44,000 employees all around the world and in the financial year 2012 its revenues exceeded US$24 billion. Besides manufacturing and supplying sportswear and equipment, the company operates its retail stores where it directly sells its products to consumers under its Nike Town name, through its online shops. The company boasts of several prominent brands such as Nike Golf, Nike Pro, Nike +, Air Jordan among others. The company also enjoys sponsorship from renowned athletic super stars and high-profile teams from across the world who promotes the company’s highly recognized trademarks of Just Do It and the company’s Swoosh logo, (Frisch, 2009).
Business process is a set of activities that are carried out by various departments of a company in order to come up with the product. Nike Inc. is involved in various activities such as research and development, innovation, procurement acquisition, designing, production and manufacturing, distribution and direct sales and promotion. The research and development (RND) has the duties of going out into the market and finding out the latest trends in sport shoes, clothing and sports equipment and once it acquires this information it passes it on to the designing and innovation team. The company’s innovation and designing department is charged with the mandate of coming up with new products and new product lines in order to create new forms of a product by improving on the already existing designs or coming up with something that has not existed before in the market. They do this on paper or with the use of technology such as the 3D design technology and eventually come up with a complete sketch of the product with measurements and dimensions and these designs and sketches become the sole assets of Nike Inc. Procurement team then looks for the correct materials to make the design sketches into a real product. The team is mandated with the duties of selection and contraction of the best suppliers of the required raw materials and ensuring that the company gets the best deals by bargaining for better prices with suppliers of raw materials, (Frisch, 2009).
Nike Inc. as company does not own any manufacturing factories and hence it allows its wide range of manufacturing licensees to do the production on its behalf under a license. This way the company does not have to invest massive capital in huge factory buildings, machinery, power and manufacturing labor and this allows it to concentrate on its core activities of designing, promoting, sales and distribution of the finished products. Once the products are complete at the manufacturing factories, they are passed over back to Nike Inc. Most of the factories that carryout manufacturing and production of the sports shoes and equipment son behalf of Nike Inc. are mostly located in Asia and include China, Indonesia, Taiwan, India, Philippine and Malaysia. Where production inputs such as labor is readily available and therefore the cost of production is also much lower as compared to production in its home country, the United States. Nike too has the freedom to choose the company that offers the best deal for a certain order, for example, if the cost of production in one country is much higher than the cost of production in another in a certain time of the year, and then Nike selects it over the latter to carry out that particular production, (Zimmerli, 2007).
Nike sells most of the products through their Nike owned retail shops known as Nike Town located in various cities such as New York and London and Boston in the UK. The company also sells its products as a supplier to various distributors and sports store in various countries in the world and also allows its licensee traders to sell their products in the name of the company all around the world. Its marketing strategy involves promotion by sponsorship agreements from individual sports celebrities who are adored by many and who endorse their brand as the best hence making the public want to buy and use more of Nike’s products. The company also works with professional teams such as basketball and renowned football teams from different countries who also back up and use Nike’s feet wear, clothing and equipment during their trainings and also when playing against other teams. Other sponsorship programs include promotion of the company’s products through college and universities teams. Some of its sponsored sports celebrities include Didier Drogba, Cristiano Ronaldo and golf’s number one Rory Mcllroy. The company has also sponsored famous teams such as Manchester City, Manchester United, and Arsenal as well as various national teams such as the United States national football team.
The company also has an acquisition department whose work is to acquire or buy other shoe companies in an attempt of monopolizing the market by buy out as many companies as possible. The company first acquired Cole Haan, a footwear company in 1988 and went ahead to buy Bauer Hockey in 1994. Other acquisitions include the purchase of Hurley International from its core founder Bob Hurley. The latest acquisition is the purchase of Umbro in 2008 which was England’s most preferred sports kits company. However the company has been selling some of these investments to allow it concentrate on its core business of designing, development, sales and marketing of sports shoes, sports apparel and equipment, (Zimmerli, 2007).
Other activities within the business process include the corporate social responsibilities to give back to the community and to participate in noble acts such as environmental conservation. The company has as part of this process automated the collection of weather data from some of its offices country wide to help with climate and weather management. The company has also embarked on conservation activities through the increased use of bio-degradable materials and officiated efforts for the recycling of its products whereby through incentives it urges its customers to turn in their used up shoes, apparel and sports equipment which are then recycled and used to make running tracks and stadiums as an effort to reduce waste materials in the environment. Other efforts include improving the working environments in manufacturing factories that produce their products to enable workers to be comfortable and safe as they do their jobs. Nike has also been at the forefront to champion for human rights and protection of human freedom. It has done this by requiring this as a condition from their licensee before they award them the contract to carry out their production. Other initiatives include the training and development of factory managers as well as other middle level managers in its chain partners and stakeholders to allow them achieve personal growth.
Nike’s Supply Chain
A supply chain is a system of people, companies or organizations, activities and resources that are used to take the product from the supply to the customer. A supply chain includes the activities are involved from acquisition of raw materials to the delivery of a finished product to the end user and involves value addition at every stage. The following structure shows Nike’s supply chain
These are activities that are carried out to design and come up with a product that meets and satisfies the needs of the customer and the company strives to come up with new sports shoes and apparel that satisfy the needs of its clients by improving on the already existing products or coming up with a new product all together. This stage involves idea generation where by the company can design a product based on the information gathered from its customers inform of suggestions and feedback or through research and development where the RND team goes out into the market to carryout research. The next step is to eliminate all the unviable ideas by screening all the available ideas. After this the company uses the remaining ideas and calculates each of their costs of production to find out how profitable they can be and also find out their likely target customers. After this the company seeks possible manufacturing companies that they can license to produce the product, (Ferrell, 2013).
Shoe Manufacturing and Assembly
After awarding the license to the chosen manufacturing factory, production of the product begins. Nike passes over all the product designs, dimensions and fabric descriptions to the licensee who the carries out acquisition of raw materials and other factors of production. Once that is done mass production of the product commences and the manufacturer must ensure that the requirements of Nike are met. This means that Nike is not involved in the actual production of the products directly but produces them through its licensee companies.
Nike has a network of strategic marketing which involves advertisements and promotion through sponsorships from sports celebrities and professional teams. The company sells most of its products to customers directly through its stores which are known as Nike Town that are located in various cities across the world. The company also gives licensee to other shoe stores to sell their products on their behalf. Other marketing strategies include the sale of products through the internet in their online shops where a customer can order for a product from any part of the world and then the company organizes for the shipping of the product to the customer.
The last step in Nike’s supply chain includes the collection of feed-back from customers in form of suggestions, complains or recommendations. The company has opened an online suggestion portal where customers can drop their suggestions and after receiving them the company acts by responding and uses this information for development of another product that satisfies those needs and hence the process starts over again
How Information System Has Improved Nike's Business
Collection of Information for Decision Making
Information systems are networks of hardware and software that an organization uses to collect process and create data and this data is used to communicate and for decision making and taking action. Nike Inc. uses several types of information systems among them the data warehouse. Data warehouse is an information system that is used to keep records of sales and revenue, to collect information for Research and Development so as to support decision making. The company has benefited from this information system by enabling the management to make the right decision concerning volume of production, predicting expected sales and revenues. The system also assists in collecting information and feedback from customers that is used to research and develop the kind of products that satisfies their needs.
Smooth Flow of Information
Enterprise resource planning is another information system that is highly utilized by Nike. This is an information system that integrates and facilitates the flow of information through the management of the various functional units of the organization such as manufacturing, marketing, accounting and finance and customer relations. This saves the company a lot of time that would otherwise be spent trying to reconcile the information received from the various departments since this company is very complex. Management is able to retrieve any type of information such as sales reports and expenditure reports from any of its subsidiaries in any part of the world.
Personification of Data
The company also utilizes information systems such as the enterprise information system that analyses and interprets data from the market. Such data is usually represented in form of graphs and numbers and the enterprise system is used to present it in a form that is well understood. The system is also used to develop automated systems such as the customer care response that helps to serve customers and to respond to all their queries. The system can also be used for automated services such as sales service through the online platforms where it does not require much human attention for a transaction to be carried out such as the self-service online shop for example Nike Sportswear, Nike woman, Nike basketball, Nike football among others. This reduces a lot of human capital needs that would otherwise be needed to facilitate the numerous transactions that occur daily (Nike: 2006 company profile, 2006).
How Information System Can Improve It More
The company should employ more information systems to counteract and solve some of the challenges that it currently faces. One of those challenges is the misunderstandings and hostile judgments that it receives from the media as well as the public. The company can for example make use of an information system that allows it to keep in touch with the public through constant updating and relaying of information to the media and the public through online magazines and interactions. This way the public can be able to understand the moves of the company and at the same time the company will be creating a positive image before the customers, governments as well as its licensees, distributors and stakeholders. Another challenge faced by the company is the overlapping and conflicting requirements from various customers by relaying different messages concerning their needs. This makes the work of the research and development team to be difficult as they do not understand exactly what the customers’ demand. The application of information systems can assist through the evaluation of frequencies of a certain demand and the analysis of the viability of a particular need, (Ferrell, 2013).
Nike Inc. is one of the leading multinational companies in the world that is based in the United States and has operations in over 34 countries in the world whose business identity revolves around sports feet wear and apparel. It is rated as one of the most profitable companies in the US and employs more than 44,000 people throughout the world. The company enjoys a prestigious trademark and is sponsored by various renowned world champions and sports celebrities like Christiano Ronaldo as well as national teams of various countries. The company is involved in the designing and development as well as the selling and marketing of the finished products and does not carry out the manufacturing itself but licenses various shoe factories to do it on the company’s behalf. Information systems have enabled the automation of various services such as the sale of products and this has saved the company a great deal of human resource needs. Another benefit is the free flow of information between the different departments which has helped to save a lot of time considering the complexity of the company and the fact that its operations are carried out from various parts of the world.