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Sustainable Solutions Paper
Richard J. Basch
DBA Strategy
August 16, 2015

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Sustainable Solutions Paper
The purpose of this paper is to examine Nike, Inc. within the context of the
athletic apparel and footwear industry, and, more specifically, in relation to the
development and maintenance of an organizational sustainability strategy. The
implementation of a well-defined organizational sustainability strategy is critical to
Nike’s ability to maintain its dominance as a market leader, as global competition and
pricing pressures within the athletic apparel and footwear industry are continuing to
escalate (“Global footwear industry profile,” 2014).
Nike, Inc. is one of the largest sellers of athletic apparel and footwear in the
world, with a workforce of 48 thousand employees and projected 2015 annual revenues
in excess of 30 billion U.S. dollars (O’Reilly, 2014). In this paper, I will examine the
following elements within the context of organizational sustainability: (a) stakeholder
identification and value analysis; (b) General Force Analysis (GFA) including an in-
depth General Force Matrix (GFM) analysis; (c) Porter’s Five Forces; (d) a detailed value
chain and resource analysis; (e) a detailed Strengths, Weaknesses, Opportunities, and
Threats (SWOT) analysis including key success factors; (f) an analysis of organizational
strategy; (g) an examination of industry evolution modeling; and (h) a lifecycle
assessment including a Sustainable Value Framework (SVA) analysis.
Executive Summary
Nike, Inc., incorporated in 1969, is a seller of athletic footwear and apparel, and is
engaged in the design, development, marketing, and sales of Nike products around the
world (O’Reilly, 2014). In this paper I provide an in-depth analysis of Nike, Inc. from a

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sustainability perspective and propose solutions and strategies to promote Nike Inc.’s
continued dominance as an industry leader. Sustainable solution analyses include: (a)
stakeholder identification and value analysis, (b) General Force Analysis (GFA)
including an in-depth General Force Matrix (GFM) analysis, (c) Porter’s Five Forces, (d)
a detailed value chain analysis (VCA), (e) a detailed SWOT analysis including key
success factors, (f) an analysis of organizational strategy, (g) an examination of industry
evolution modeling, and (h) a lifecycle assessment including a Sustainable Value
Framework (SVA) analysis.
From a stakeholder and value analysis perspective, stakeholders at Nike, Inc. are
comprised of a broad spectrum of individuals and organizations including executives,
employees, individual shareholders, and institutional investors. At Nike, Inc. the SVA
methodology features prominently in their decision making, which is exemplified by their
robust reporting processes at the Board of Directors (BOD) level (“Sustainability:
Sustainable business,” 2015). At the enterprise level, Nike, Inc.’s Enterprise Level
Strategy (ELS) is based on a singular focus on innovation, which is supported by Nike,
Inc.’s Mission Statement, “To bring inspiration and innovation to every athlete in the
world. If you have a body, you are an athlete” (“Nike Mission Statement,” 2015).
As described by Cameron and Quinn (2006), Nike, Inc.’s organizational culture
can be described as primarily Adhocracy-based, followed closely by the Clan, Market,
and Hierarch cultures. From a cybernetic perspective (Stacey) 2011, Nike, Inc. has
achieved its goals in term of achieving global dominance and its prominent standing in
society as an eco-friendly organization. As detailed by Argyris (1977), from a double-

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loop standpoint Nike Inc.’s dominance as a worldwide market leader and role as an
innovator support it’s original, innovation-based goals.
From a General Force Analysis (GFA) perspective, I analyzed the athletic
footwear industry based on five elements of the GFA Matrix: economics, technology,
demographic/social/culture, government/legal/military, and physical environment. As a
whole, the threats to the industry outweigh the opportunities. In relation to Porter’s Five
Forces, opportunities for Nike, Inc. include technology and a broad product mix. Risk
factors include increased competition and an upward trend in counterfeit goods.
My VCA analysis indicated several strengths and weaknesses for Nike. Inc. In
terms of strengths, Nike, Inc. is the industry leader from an R&D standpoint, which I
refer to as R&D power. Additionally, Nike, Inc.’s ability to procure goods and services is
superior based on its international scale, which I termed, procurement power.
Weaknesses include a lack of differentiation regarding back-office systems, which I
termed, logistics weakness; and the overhead burden inherent in a more mature
organization, which I referred to as HR investment risk.
In relation to my SWOT analysis, Nike Inc.’s strengths include superior R&D
investments and significant investments in technology. Weaknesses include a lack of
differentiation concerning back-office systems and processes and HR risk in the form of
increased competition for top talent. Opportunities include the ability to broaden product
offerings and efficiency via technology, and additional digital marketing efforts, which
could enhance Nike, Inc.’s reach in relation to its target audience. Threats include an
upward trend in international competitors and ecological concerns such as global
warming.

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From an organizational strategy perspective, Nike, Inc. has adopted an innovation
and differentiation strategy, which has served as a primary differentiator. Nike, Inc.’s
significant investment in venture capital and private equity supports this premise (Kharif
& Townsend, 2011). When examining the athletic footwear industry through the lens of
the Industry Evolution Modeling (IEM) process, Nike, Inc. concluded that in order to
sustain its position as a sector leader, it had to develop multiple strategic alliances and
cooperative partnerships, especially with regard to technology (“Nike News – Nike+
Running expands,” 2015). This has enabled Nike, Inc. to evolve beyond the footwear
industry, and to add significant diversification to its product base.
And finally, by examining the lifecycle of one of Nike, Inc.’s most widely
recognized products, the Air Jordan I basketball shoe, in conjunction with a detailed
SVA, Nike, Inc.’s overall sustainability strategy is apparent. From an Internal-Today
perspective, Nike, Inc. is primarily focused on minimizing waste and emissions. From an
External-Today standpoint, Nike, Inc. has developed a stakeholder roadmap as a means
of prioritizing its actions and investments. From an Internal-Tomorrow perspective,
Nike, Inc has developed a number of new, eco-friendly technologies. And finally, from
an External-Tomorrow standpoint, Nike, Inc. is dedicating significant resources to
address such key change drivers as climate change, resource depletion, and poverty.
Stakeholder Identification and Value Analysis
The term stakeholder refers to groups, organizations or persons that have a vested
interest in a specific organization, and whose thoughts and actions must be acknowledged
by an organization’s leadership (Bryson, 2004). The concept of stakeholder analysis,

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while tangentially related to stakeholders, focuses specifically on the process of
identifying and analyzing stakeholders, and may include either a narrow or broad
definition. Eden and Ackerman (2013) defined stakeholders narrowly, as only those
individuals who have the ability to affect directly an organization’s future. In contrast,
Nutt and Backoff (1992) expanded Eden and Ackerman’s (2013) definition to include
those without the direct power to control or influence an organization, as an
organization’s decisions and actions can have an effect well beyond the boundaries of the
organization itself.
Based on Nutt and Backoff’s (1992) expanded version of a stakeholder,
stakeholders at Nike, Inc. comprise a broad spectrum of individuals and organizations.
Direct stakeholders include company executives such as Mark Parker, President and
CEO, and Douglas Houser, Independent Director, who collectively own in excess of
920,000 shares (Parker, 2014). Institutional stakeholders include such mega-investment
organizations as Vanguard Group with holdings of over 41 million shares, and State
Street Corporation with holdings in excess of 32 million shares (Parker, 2014). Other
prominent stakeholders include employees, individual investors, and thousands of
vendors both domestically and across the globe (Parker, 2014). More indirectly, Nike,
Inc. stakeholders include general consumers and society as a whole, which are directly
and indirectly impacted by Nike, Inc.’s environmental decisions, such as the disposal of
manufacturing waste (Parker, 2014).
Stakeholder Value Analysis (SVA) refers to a methodology based on integrating
stakeholder values into corporate decisions (Earl & Clift, 1999). As organizations such as
Nike, Inc. face an array of increasingly complex issues such as shareholder profit

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expectations and environmental preservation, the SVA approach provides a system to
define, link, and incorporate the apprehensions of all stakeholders regarding either a
single, specific issue, or a host of issues (Earl & Clift, 1999). While the SVA approach
cannot guarantee stakeholder consensus, it can aid in achieving compromise via a process
of defining stakeholder preferences, tracking the data, and analyzing the results (Earl &
Clift, 1999).
At Nike, Inc. the SVA methodology features prominently in their decision-
making processes, which is evident in their perception of corporate responsibility at the
Board level. In order achieve their goals and priorities, Nike, Inc. has adopted a robust
corporate reporting responsibility process, based on sharing information with key
stakeholders and measuring their progress (“Sustainability: Sustainable business,” 2015).
Nike, Inc.’s Board is composed of independent, non-executive directors, and provides
oversight for its labor practices, environmental impact and sustainability issues, research
and development, and a host of additional major business initiatives (“Sustainability:
Sustainable business,” 2015). In this system, input from all stakeholders is
communicated up through the management team at the executive level and is ultimately
analyzed and reviewed by the Board (“Sustainability: Sustainable business,” 2015). This
process has enabled Nike, Inc. to maintain a direct connection to its stakeholders, and to
support common shared values such as innovation, speed to market, and a shared
responsibility for the environment and socially responsible practices (“Sustainability:
Sustainable business,” 2015).

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Enterprise Level Strategy
At the enterprise level, Nike, Inc.’s primary strategy is an all-consuming focus on
innovation, which is at the heart of the organization’s core philosophy (“Nike, Inc.
strategy,” 2015). This strategy is supported by Nike, Inc.’s mission statement, “To bring
inspiration and innovation to every athlete in the world. If you have a body, you are an
athlete” (“Nike Mission Statement, 2015, para. 1). Although Nike, Inc. does not have a
formal vision statement, President and CEO Mark Parker has repeatedly stated that his
goal is to ensure that the name Nike, Inc. is synonymous with the most popular and
sought-after brand name in the world (Jackson, 2013).
In order to maintain Nike, Inc.’s stated objective as the leading athletic brand in
the world, Nike, Inc. believes that sustainability is the key to future profitability, and as
such, the organization has adopted a global outlook (“Nike, Inc. strategy,” 2015). More
specifically, to support their primary strategy of innovation, Nike, Inc. has adopted a
system-wide focus on universal issues such climate change, population growth, the
availability of natural resources, and technological advancements. (“Nike, Inc. strategy,”
2015). In summary, Nike, Inc. defines their enterprise level strategy in terms of a choice.
An organization can either wait to see what the future may bring, or it can move quickly
to capitalize on opportunities (“Nike, Inc. strategy,” 2015). For Nike, Inc., their choice is
clear; lead the way and move quickly (“Nike, Inc. strategy,” 2015).
Organizational Culture Type
From an organizational perspective, the culture at Nike, Inc. is directly tied to and
supports its primary strategy of innovation (Jackson, 2013). Nike, Inc.’s CEO, Mark
Parker, believes strongly in the merits of ensuring that every employee at Nike, Inc.

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understands the core tenets of its philosophy and is a big believer in building the
organization from the ground up (Jackson, 2013). Nike, Inc. operates in a sector that is
extremely competitive ("Nike faces tough competition," 2014). In addition to increasing
competition from abroad, particularly in China and Europe, Nike, Inc. is facing additional
competition in the U. S. in the form of direct competitors such as Adidas and Under
Armour that are aggressively focusing on providing high quality products at below-
market rates (Trefis Team, 2014).
At Nike, Inc. all employees are closely monitored by their direct supervisors and
are managed and evaluated both as individuals and as team contributors (“Nike, Inc.
SWOT analysis,” 2015). All team members are expected and encouraged to share their
thoughts and ideas openly, and are compensated via competitive base wages and a bonus
structure that is reflective of their contributions to the organization as a whole (“Nike,
Inc. SWOT analysis,” 2015).
As an organization, all Nike, Inc. employees live and work according to three
primary philosophical tenets:
1. Commit to being you in every way. This means that all employees are
encouraged to think for themselves, and to say “no” whenever they feel
inclined to do so.
2. Know who you are. Alight yourself with the corporate culture, and
eliminate any disconnect between the internal and external views of the
culture.

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3. Be a control freak. All Nike, Inc. employees are expected to know their
duties and responsibilities thoroughly, and to execute their jobs with
precision and pride (Jackson, 2013).
According to Cameron and Quinn (2006), there are four types of organizational
cultures: Clan, Adhocracy, Hierarch, and Market. Clan is defined as family-like and
based on doing things together (Cameron & Quinn, 2006). Adhocracy-based
organizations are entrepreneurial and dynamic, and they tend to employ a more risk-
taking and first-to-market philosophy (Cameron & Quinn, 2006). Market-oriented
cultures are primarily results oriented with a strong focus on monitoring the competition
and get the job done (Cameron & Quinn, 2006). Hierarchy-based organizations focus
more on efficiency and stability, and are more concerned with doing things right than
they are with speed or efficiency (Cameron & Quinn, 2006). Although Nike, Inc.
embodies many of these characteristics, Nike is first and foremost an Adhocracy-based
culture, followed closely by the Clan, Market, and Hierarch cultures accordingly.
Integrated Concepts from Readings, Evidence, and Implications
In examining and synthesizing various core elements relative to Nike, Inc.’s
philosophy and operations, such as its culture and competitive environment, it is evident
that its strategy, culture, vision, and mission are aligned. First, based on the fundamental
systems thinking principle that the collective intelligence of an organization is superior to
the knowledge of one individual, in 2000 Nike, Inc. imported systems mappers into their
business units with the specific intent of documenting and leveraging their vast network
of suppliers, customers, investors, and governments (Confino, 2012). This process

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helped to ensure company-wide alignment and served as tangible evidence of Nike’s
Inc.’s proactive focus on systems integration.
Second, Stacey (2011) describes Nike, Inc. as a cybernetic system, defined as an
examination of the self-regulation and control of human activity from an engineer’s
perspective. When viewed from a cybernetic perspective, it is evident that Nike, Inc. has
achieved its goals and objectives via two primary goals: the drive to achieve global
dominance in the footwear and apparel industry, and Nike, Inc.’s standing in society as a
whole as a positive force for environmental activism. Both of these goals have been
verified and confirmed (Stacey, 2011).
And finally, from a double-loop perspective, which is defined as the alteration or
rejection of a goal in light of experience Argyris (1977), based on Nike Inc.’s experience
to-date, their experience appears to support their initial goals. Specifically, Nike’s
dominance as a worldwide market leader and position as an innovator support the fact
that its original stated goals were attainable. As a counterpoint, and to further illustrate
this example, had Nike, Inc. originally voiced its goal to be the low-cost leader in
footwear, it could be argued that from a double-loop perspective, they were unsuccessful,
as their footwear is considered expensive by most standards.
General Force Analysis: External – Remote Environment
According to Pearce and Robinson (2003), a General Forces Analysis (GFA)
relates primarily to an organization’s external environment, and is classified based on
five primary factors: economics, technology, government/legal/military,
demographics/social/cultural, and the physical environment. Each of these factors

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provides unique insights regarding industry trends, which can impact an organization’s
forecast. By leveraging each of the five GFA factors, we can gain significant insights
regarding the footwear industry.
General Force Matrix Analysis
Economics.
From an economic standpoint, according to an industry profile (“Global footwear
industry profile,” 2014) the global footwear industry is expected to be valued at over
$329.7 billion dollars by 2008, with an increase of 27.6% versus 2013. This increasing
valuation trend will have a significant effect on the footwear industry, as increased
competition for this revenue will create downward pricing pressure. From a timeframe
standpoint, these changes will take place over the course of four to five years. As this
trend is increasing, the athletic footwear industry as a whole must respond immediately
by increasing advertising expenditures to improve market share. I refer to this trend as
increased advertising expenditures. This trend is important because as companies
increase their advertising budgets, additional budgets such as research and development
(R&D) may have to be decreased. This represents a significant potential threat to the
industry, as R&D serves as the primary catalyst that drives product differentiation.
Product differentiation, in turn, drives sales and revenue.
Technology.
Technology is also expected to play a critical role in the growth of the competitive
footwear sector. A multitude of companies are expanding into new market segments
such as wearable fitness trackers and forming partnerships with such technology

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juggernauts as Apple, Inc. (“Nike to go strong,” 2014). Dasgupta, Gupta, and Sahay
(2009), in their analysis of technological innovation and strategy, found that
organizations can create a competitive advantage by leveraging technology to attract new
customers, while creating barriers to competition. From a trend perspective, the
utilization of technology will continue to increase. This increase represents an
opportunity for the larger, better-capitalized organizations in the industry, in that these
companies can leverage technology as a means of product differentiation. I refer to this
as differentiation via technology.
Demographics / social / culture.
Socially and culturally, athletic footwear has experienced somewhat of a
renaissance in the fashion world, with high-end athletic footwear fetching four-figure
prices, and top brands such as Nike, Inc. achieving prominence as status symbols
(Sedghi, 2015). One trend that is of particular relevance is the continued growth of
millennials, and, more specifically, millennial women, in the workplace (Schawbel,
2015). As more millennials continue to enter the workplace, the wage gap will continue
to close (Schwabel, 2015). Further, new research demonstrates that 37% of top
companies now have women as leaders (Schwabel, 2015). This trend will have a positive
impact on the industry, as fashion-forward women will have the income to purchase high-
end footwear and apparel. I refer to this as the millennial female income trend.
Government / legal / military.
From a governmental and legal framework perspective, Zysman and Tyson
(1984) forecasted that the U.S. will continue to experience trade pressure in sectors such
as footwear, as a result of the continued growth of developing and industrialized nations

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where wages and manufacturing costs are low. This trend represents a threat to the
established industry leaders, in that they will continue to experience downward pricing
pressure. Also, the athletic footwear industry as a whole will face increased competition
in the form of foreign manufacturers and distributors seeking to undercut the market
leaders. I refer to this as, the inexpensive footwear competitor trend. Additionally, the
production of counterfeit goods, which has become a multi-billion dollar issue, will
continue to force the major retailers to expend resources on fraud detection and
prevention (Hill, 2013). I refer to this trend as counterfeit footwear.
Physical environment.
From a physical perspective, global warming is expected to impact the
manufacture of footwear globally, as companies migrate their operations to continents
where the anticipated rise in sea-levels is less likely to affect production (Kittner, 2015).
Although there are several factors that could negatively impact the projected growth rate
of the global footwear industry such as the continued rise of industrialised nations and
climate change, overall, significant advancements in technology coupled with increasing
social acceptance and strong unit economics point to high projected growth. This is a
negative trend that is a threat to the industry. I refer to this trend as global warming.
Implications, Threats, and Opportunities of GFA
The GFA model provides a robust, well-vetted framework for conducting analysis
relative to an organization’s external environment. With this said, however, the GFA
model includes both opportunities and limitations. From an opportunities perspective,
the GFA provides: a macro perspective of issues that transcend individual businesses and

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sectors; an external versus internal perspective of these issues; and a framework for
understanding issues from a broader economic standpoint (Pearce & Robinson, 2003).
Relative to Nike, Inc., the GFA model can be utilized in conjunction with the Annual
Report to understand further Nike, Inc.’s positon about various competitors and the
athletic and footwear sectors. In terms of limitations, the GFA can be overly broad for
smaller organizations; may not account for important factors such as educational levels;
and may be challenging for an organization to understand and implement (Pearce &
Robinson, 2003). Given Nike, Inc.’s size, a GFA analysis may be difficult to conduct for
the company as a whole, and may be better suited for an analysis of each division within
the organization.
Based on my GFA of the athletic footwear industry, the threats outweigh the
opportunities. From an economic standpoint, the trend toward increasing industry
valuation is a threat in that competition will increase. This will, in turn, result in the need
for an increase in marketing and advertising expenditures, which I refer to as the
increasing advertising expenditures threat. From a government/legal/military
perspective, trade pressures will continue to be a threat. This is a trend that is increasing,
and which I refer to as the inexpensive footwear competitor threat. Additionally, a threat
that will continue to impact the footwear sector is the upward trend in the production and
distribution of counterfeit goods. I refer to this as the counterfeit footwear threat.
Another threat facing the athletic footwear industry is an increasingly hostile ecological
environment. Global warming is expected to continue to have a damaging impact on the
environment and predicted rises in sea-levels will likely have a negative impact on global
production. I refer to this as the global warming threat.

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From an opportunities perspective, there are two elements of my GFA, which I
believe will have a positive impact on the athletic footwear industry. First, a multitude of
technologies are making their way to consumers, and the use of technology in the athletic
footwear and apparel sector will continue its upward trend. This will improve
companies’ ability to diversify their product lines and further differentiate themselves. I
refer to this opportunity as differentiation via technology. Second, from a
demographics/social/culture perspective, the continued growth of millennials, and in
particular, millennial women in the workforce, will provide additional market
opportunities for companies. As the wage gap between men and women continues to
close, women will increasingly represent a larger market opportunity. I refer to this
positive trend as the millennial female income trend.
Porter’s Five Forces Industry Analysis: External – Industry Environment
Porter’s Five Forces Analysis, which was first articulated in 1979, focuses on the
following forces relative to governing industry competition: (a) the bargaining power of
customers, (b) the threat of substitute products or services, (c) the bargaining power of
suppliers, (d) the threat of new entrants, and (e) the rivalry among current competitors
(Porter, 2008). By leveraging each of Porter’s Five Forces, an examination can be
conducted based on the various external forces that may impact Nike, Inc.’s profitability.
Also, clarity can be achieved regarding how and why each of these elements affects Nike,
Inc.

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Five Forces Matrix Analysis
Barriers to entry.
According to Pearce and Robinson (2003), there are eight barriers to entry: (a)
economies of scale, (b) product differentiation, (c) capital requirements, (d) switching
costs, (e) access to distribution channels, (f) cost disadvantages independent of scale, (g)
government policy, and (h) expected retaliation. Of these eight barriers, product
differentiation, access to distribution channels, and government policy are the post
applicable to the athletic footwear industry. Each of these barriers would be considered a
significant threat to the industry, and would be classified as highly threatening.
A lack of product differentiation will likely result in downward pricing pressure
and increased market competition. Poor access to distribution channels will impact sales
volume and speed to market, both of which could result in reduced cash flow and
increased competition. Government policy is many companies can be highly unstable,
and many developing nations may threaten to increase import tariffs or subsidize various
market sectors to gain an unfair advantage.
Substitutes.
The threat of substitute products or services remains a constant challenge, as the
athletic footwear industry in the U.S. and abroad remains highly competitive (“Nike, Inc.
SWOT analysis,” 2015). Two primary brands: Reebok and Adidas present a particularly
formidable threat (“Nike, Inc. SWOT analysis,” 2015). This remains a significant and
increasing threat to the athletic footwear industry.

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Bargaining power of suppliers.
The bargaining power of suppliers also presents a significant threat in that Nike,
Inc. is particularly dependent on foreign contract manufacturers to provide materials and
produce its products (“Nike, Inc. SWOT analysis,” 2015). Nike, Inc’s dependence on
non-U.S. manufacturers, may negatively impact profitability from two perspectives:
product defects and cost overruns could immediately impact profit margins, as could
labor disputes (“Nike, Inc. SWOT analysis,” 2015). As the economy of various
developing nations improves, the threat of supplier bargaining increases correspondingly.
Bargaining power of buyers.
With regard to the bargaining power of buyers, Nike, Inc.’s profit margins are
forecasted to remain strong relative to the marketplace, based primarily on Nike Inc.’s
dominant brand position and diverse portfolio of offerings (“Nike, Inc. SWOT analysis,”
2015). Of course, an economic crisis both domestically or abroad could adversely affect
people’s purchasing power, particularly because Nike is considered a premium brand.
The threat of downward pricing remains high.
Competitive rivalry.
The rivalry among current competitors has the potential to affect negatively
profits primarily due to pricing pressures (“Nike, Inc. SWOT analysis,” 2015). Although
Nike possesses significant brand cache, a low-price, high-quality competitor could
conceivably capture significant market share, particularly in areas of the U.S. or countries
with low household incomes. (“Nike, Inc. SWOT analysis,” 2015). The three primary
competitors competing for market share with Nike, Inc. are Adidas, Under Armour, and
Reebok. Each of these competitors has experienced an increase in revenues of the course

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of the past five years, and all three are continuing to increase their share of the U.S.
market (“Industry analysis and competition,” 2014).
From a strengths perspective, Adidas, Under Armour, and Reebok each possess
robust technology and distribution systems (“Industry analysis and competition,” 2014).
In terms of weaknesses, they all are subject to the bargaining power of key market
segments such as buyers and suppliers, and they are all facing increasing pressure to
maintain their profit margins (“Industry analysis and competition,” 2014). The
competitive rivalry in the athletic footwear industry is high, and a significant amount of
jockeying to position exists. Although the barriers to entering the industry are high due
to the significant costs and associated infrastructure, which is a positive for the dominant
companies, the key differentiators continue to be innovation and technology (“Industry
analysis and competition,” 2014).
Implications, Threats, and Opportunities of Porter’s Five Forces
Concerning Porter’s Five Forces analysis, there are several implications relative
to Nike, Inc.’s goal to maintain market dominance. One of the primary, positive
opportunities is to leverage the model to determine the attractiveness of an industry
("Industry analysis and competition," 2014). Another positive element is that the five
forces validate the notion that competition extends beyond current sector competitors,
and that even customers and suppliers can be considered rivals ("Industry analysis and
competition," 2014). A third positive implication of the Five Forces analysis is that it
serves as a starting point to better understand the competitive landscape when
formulating strategy and related tactics ("Industry analysis and competition,” 2014).

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In terms of negative implications, Porter’s Five Forces were developed at a time
when the pace of change in the business environment was slower and where markets
were viewed as less volatile ("Advantages and disadvantages," 2015). Additionally,
Porter’s model serves as merely a snapshot of a particular moment in a company’s history
and will likely quickly become outdated based on the pace of change in today’s
marketplace ("Advantages and disadvantages," 2015). Third, many companies today
have become so diverse in terms of product and service offerings, that it may be difficult
to define a company according to one specific industry or sector ("Advantages and
disadvantages," 2015).
Porter’s Five Forces present both opportunities and threats for Nike, Inc. From an
opportunities perspective, one element is particularly noteworthy, which is technology.
First, growth from an online retail sales perspective has been significant within the past
five years, both domestically and internationally (“NIKE, Inc. SWOT analysis,” 2015).
Although the digital channel potentially includes all five of Porter’s forces, according to
the U.S. Census Bureau online retail sales increased from $225.9 billion in 2012 to
$303.9 billion in 2014 (“NIKE, Inc. SWOT analysis,” 2015).
In addition to the threat of increased competition as noted earlier, a growing
underground market in counterfeit products is also having a negative impact on profit
margins. Counterfeiting is frequently correlated with an increase in online sales, as
transactions are rapid and anonymous (“NIKE, Inc. SWOT analysis,” 2015).
Additionally, economic downturns are frequently associated with an increase in illegal
transactions (“NIKE, Inc. SWOT analysis,” 2015). From an opportunities perspective,
and to counter Porter’s five forces, Nike, Inc. has significantly broadened its product mix

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to include apparel and technology. As such, Nike, Inc. has reduced its dependence on the
athletic footwear sector, thereby decreasing its overall profitability risk profile (“NIKE,
Inc. SWOT analysis,” 2015).
Detailed Value Chain Analysis: Internal Environment
A value chain is a set of actions implemented by an organization, typically in a
specific industry, in order to supply a unique and valuable service or product to a
marketplace with the goal of achieving a competitive advantage (“NetMBA,” 2010).
From a strategic standpoint, the primary value of the value chain model is it’s power to
assist in defining an organization’s core competencies, as well as areas where key
differentiators may lead to a competitive advantage (“NetMBA,” 2010). More
specifically, the value chain model can be leveraged to identify cost advantages,
opportunities for differentiation, and the potential to leverage technology to maximize
growth and profitability (“Net MBA,” 2010).
According to Millar and Porter (1985), there are nine elements in an
organizational system:
 General Administration (Management)
 Human Resources
 R&D
 Procurement
 Inbound Logistics
 Operations
 Outbound Logistics

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 Sales and Marketing
 Service
When examining Nike, Inc. through the lens of the value chain model, a number of
strengths and weaknesses can be identified within each of these elements. From a
management and general administration perspective, Nike has invested significantly in
top talent that is a strength. From a weakness perspective, Nike is vulnerable to talent
poaching, as competitors continue to increase compensation for their top executives.
This is referred to HR talent strength and HR talent vulnerability, respectively. Relative
to R&D, Nike, Inc. is the industry leader. From a weakness standpoint, Nike has to
continue to invest significant resources in this area, lest a rival surpass them. I refer to
this as, R&D power and R&D risk, respectively.
With the increase in litigation that many companies are experiencing in relation to
HR, Nike has invested heavily in robust HR technology to help insulate them from this
risk. I refer to this as, HR technology investment. Nike is not alone, in this investment,
as its other primary competitors have done the same. I refer to this as, HR investment
risk. From a procurement standpoint, Nike is on par with its primary competitors in
terms of its procurement departments and systems. Where Nike achieves, an edge is in
its bargaining power, based on its size and economies of scale. I refer to this as
Procurement power. Relative to inbound logistics, Nike, Inc. has an edge in that its U.S.
based operations are significantly larger than its rivals (“Nike, Inc. strategy,” 2015).
Where Nike, Inc. is particularly vulnerable, however, is overseas, where its inbound
logistics operations are less robust (Trefis Team, 2014). I refer to these as, logistics
strengths and logistics challenges, respectively.

23. 23
Concerning its operations, Nike is dominant domestically based on its significant
investments in infrastructure. Overseas, Nike faces stiff competition, particularly from
Adidas, whose operations are stronger internationally. I refer to this as Nike’s
operational dominance. In terms of outbound logistics, all three competitors are roughly
equal, which means that no one company enjoys a distinct advantage. This I refer to as
outbound logistical parity.
Domestically, Nike dominates the sales arena, with gross revenues that are 15%
higher than the closest competitor, which is a strength (“Nike, Inc. strategy,” 2015).
Internationally, however, Nike is less dominant, and revenues are on par with Adidas
(“Nike, Inc. strategy,” 2015). I have deemed this domestic sales dominance and
international sales parity, respectively. And finally, concerning service, Nike and its
primary rivals, Under Armour and Adidas, are virtually equal. I refer to this as service
parity.
Customized Value Chain of Activities in Table Form
Table 1: Value Chain Analysis
Business Process Your Organization Competitor 1- Adidas
Competitor 2 – Under
Armour
Management Review targeted goals
and objectives and
measure performance
monthly relative to
Management is a
strength relative to
Adidas, as Nike’s
management training
Management is a
strength relative to
Under Armour, and
Under Armour is a

24. 24
goals. Create
improvement plans to
address any negative
variances.
program is considered
by many to be the
best in the world.
Also, Nike has
invested significantly
in top talent, which is
referred to as, “HR
talent strength.”
relatively new
competitor with
weaker management
training programs.
R&D Invest heavily in
research and
development in order
to maintain a
competitive
advantage. Complete
regular analyses of
the marketplace to
determine the relative
position of
competitors.
Although Adidas
invests heavily in
research and
development, Nike,
Inc. is currently
outspending all
competitors in this
area. This is a
strength referred to
as, “R&D power.”
Under Armour is
more focused on its
clothing line than on
footwear or
technology, which
makes them far less
of a competitive
threat.
HR Conduct monthly
compensation
analyses, with a
heavy emphasis on
Adidas’s HR policies
are robust and are on-
par with those of
Nike, Inc.
Under Armour’s HR
policies are less
substantial than Nike,
Inc.’s due primarily

25. 25
employee benefits
analysis. Ensure that
all HR practices are
in compliance with
local, state, and
federal regulations.
Invest heavily in HR
infrastructure and
management
software.
Additionally, Adidas
has made significant
investments in their
HR infrastructure,
which I refer to as,
“HR investment risk.”
to the fact that they
are a newer entity.
Procurement Ensure that the
procurement of all
goods and services is
vetted relative to
established internal
pricing policies and
procedures.
Procurement practices
at Adidas are
comparable to those
of Nike, Inc.
domestically,
although Nike has a
competitive
advantage in the form
of domestic
bargaining power. I
refer to this as,
“procurement
power.”
Procurement practices
at Under Armour
comparable to those
of Nike, Inc.

26. 26
Inbound Logistics Ensure that all
incoming
communications
including (but not
limited to) calls,
emails, texts, and
faxes are routed
correctly and
addressed within a
maximum of 24
hours.
Inbound
communications at
Adidas are, for the
most part, comparable
to Nike, Inc.’s.
However, they have
fewer domestic call
centers. Nike’s
domestic superiority
in this arena is
referred to as,
“logistics strengths.”
Inbound
communications are
on par with those of
Nike, Inc. primarily
based on Under
Armour’s significant
investment in
implementing newer
technology. This is a
risk for Nike, which I
refer to as, “logistics
challenges.”
Operations Ensure that all
operational practices
and procedures are
thoroughly
documented, and that
all protocols are
followed.
Operational practices
are robust at Adidas
and are on par to
those offered by
Nike, Inc. Adidas’s
operations are
superior to those of
Nike, Inc.
internationally.
Operational practices
are robust at Under
Armour, however as a
whole, their
operations are
significantly smaller
based on the fact that
they are a relatively
new entrant to the
market. Nike’s
strengths in this arena

27. 27
are referred to as,
“operational
dominance.”
Outbound logistics Follow all established
policies and
procedures, and
ensure that all
company
communications are
screen via company
software tools.
Outbound logistics at
Adidas are on par
with those at Nike,
Inc. I refer to this as,
“outbound logistical
parity.”
Outbound logistics at
Under Armour are on
par with those of
Nike, Inc. This is
referred to as,
“outbound logistical
parity.”
Sales Ensure that all sales
are monitored weekly
and monthly, relative
to established sales
goals and that all
sales channels have
been fully optimized
and integrated into
the revenue and sales
tracking systems.
Sales practices at
Adidas are similar to
those of Nike, Inc.
with the exception
that Nike Inc.’s sales
tracking software is
superior. I refer to
this as, “domestic
sales dominance.”
From an international
perspective, Adidas is
on par with Nike,
Sales practices at
Under Armour are on
par with those of
Nike, Inc. with the
exception that overall
sales are markedly
lower, particularly in
non-U.S. countries.
This is termed,
“domestic sales
dominance.”

28. 28
Inc., which I refer to
as, “international
sales parity.”
Service Ensure superior
service by monitoring
all inbound and
outbound calls at
established call
centers. Regional
managers are to
perform regular store
visits to ensure strict
adherence to all
established standards
and protocols.
Service at Adidas is
on par with that of
Nike, Inc., with no
strategic advantage
for either. I refer to
this as, “service
parity.”
Service at Under
Armour is on par with
that of Nike, Inc.,
which I refer to as,
“service parity.”
Implications of Competitive Analysis
Strengths.
From a VCA perspective, Nike, Inc. is well positioned to dominate the athletic
apparel and footwear markets. In particular, Nike, Inc.’s significant investment in R&D,
which I refer to as R&D power, has allowed them to expand into businesses such as
biometric wearable products and new running shoe technology. This has helped to
diversity Nike, Inc.’s brand portfolio and insulate them from the market pressures of

29. 29
specific industries such as footwear. Nike, Inc.’s procurement process, which I have
termed procurement power, is also a strength in that Nike has a competitive edge relative
to its bargaining power based on its size and economies of scale. Nike, Inc. is also
particularly strong concerning its domestic operations, referred to as operational
dominance. This is due primarily to Nike, Inc.’s significant investment in infrastructure.
Weaknesses.
Perhaps Nike’s greatest weakness is in its lack of differentiation concerning many
of its back office systems and processes, referred to as outbound and inbound logistics,
and which I refer to as logistics strengths. Both Adidas and Under Armour have invested
heavily in technology and systems to assist them in measuring key performance data as
well as online and phone-based sales, and have quickly erased Nike’s initial head start.
Nike is also somewhat weak from an HR perspective, in that it’s compensation for
senior-level managers and executives is now similar to that of Adidas and Under Armour.
The competition for top talent remains fierce, and Nike will have to allocate more dollars
to executive compensation if it expects to compete. As a more mature organization, Nike
has also had to contend with the additional overhead burden inherent in funding
retirement and medical plans, where their smaller rival, Under Armour, is not as
burdened. I refer to this as HR investment risk.
Skills.
In terms of skills, Nike, Inc. is fortunate in that they have amassed a broad range of
management skills internationally while remaining the top name domestically. Nike is
also particularly skilled in the area of content marketing and has far outspent their rivals
in multiple media channels including television, print, and on-line. Additionally, as

30. 30
indicated in the “strengths” section of the SWOT analysis, Nike has acquired top talent
and invested heavily in the technology aspect of research and development, and as a
result, as amassed R&D skill-sets that no competitor can access. This is referred to as
R&D power.
Capabilities.
From a capabilities standpoint, Nike, Inc.’s top capability is the ability to generate brand
loyalty through advertising campaigns. Additionally, Nike has become adept at digital
advertising, and their website, and more importantly, their mobile capabilities are state of
the art, which I refer to as, domestic sales dominance. And finally, Nike, Inc. has
cultivated a culture of world-class customer service and has positioned itself as one of the
leaders in this arena. Nike, Inc. has broad reaching capabilities in the service area.
However, its primary competitors have followed suit, which I refer to as service parity.
Detailed SWOT Analysis
SWOT Factor Matrix
SO strategies.
Nike, Inc.’s superior investment in R&D, referred to as R&D power can be
utilized to exploit opportunities by continuing to diversify into new markets, particularly
in the technology sector. Nike, Inc. should continue to invest in marketing and
advertising its wearable biometric devices, and leverage these purchases to sell additional
merchandise. Concerning their sales efforts, Nike, Inc. should leverage mobile
technology and develop additional advertisements that are specifically targeted to the

31. 31
smartphone market, referred to as sales dominance. In terms of brand representatives,
Nike, Inc. should continue to partner with high-profile, positive role models in the sports
sector, and leverage these partnerships to penetrate the tween and younger market.
Company spokespeople are referred to as, HR talent strength.
ST strategies.
One of the treats to Nike, Inc.’s brand dominance is the encroachment by Adidas
into the U.S. market. This is referred to in my analysis of Porter’s Five Forces as,
Competitive Rivalry. To counter this, Nike, Inc. can leverage its investment in
technology to lure sales away from competitors via discounts on disparate branded
products. For example, if an individual purchases a wearable device, they could receive a
discount on footwear. In terms of both Adidas’s and Under Armour’s back-office
technological capabilities, Nike could consider upgrading their software infrastructure to
enhance their reporting and core business analysis capabilities. This strategy is
specifically related to the Operations element of my VCA, which I have termed
operational dominance.
WO strategies.
With regard to Nike, Inc.’s vulnerability from an international sales standpoint, which I
refer to as international sales parity, Nike, Inc. could invest additional marketing
resources into internally popular sports such as soccer, which could enhance its brand
awareness. Also, Nike, Inc. could sponsor various teams and players in multiple nations,
and feature their logo more prominently. In the quest for top talent, Nike, Inc. has the
resources to pay above-market rates, and could implement a policy to do so
internationally. In relation to my GFA, this would be considered HR investment risk.

32. 32
And finally, to reduce its employee overhead burden, Nike, Inc. could restructure its debt
by leveraging long-term loans to generate additional free cash flow. Relative to my GFA,
this would be classified as an economic strategy.
WT strategies
Nike can mitigate its weaknesses in a number of ways. First, in terms of differentiation,
Nike, could implement a temporary price-cutting strategy to broaden its customer base.
Pearce and Robinson (2003) touch on this in their GFA concept, and as per my GFA
matrix analysis, Nike must be cognizant of the international economic landscape. To
mitigate the danger of eroding profits based on the use of technology, Nike, Inc. could
simply enhance their existing software, rather than investing in new platforms. I refer to
this as an opportunity, which applies, at least tangentially, to several of the elements in
my VCA including human resources, operations, sales and marketing, and service. I
have used the following terms to describe the inherent opportunities in each: HR talent
strength, operational dominance, domestic sales dominance, and service parity,
respectively. In terms of acquiring new talent, Nike, Inc. could potentially recruit from
within its vast ranks, and promote a number of individuals without having to pay above-
market rates. This element was identified in my VCA as HR talent strength.
Key Success Factor Analysis
The following six success factors are critical for Nike, Inc.’s continued growth
based on the increasingly competitive landscape in the athletic footwear sector (Trefis
Team, 2014). First Nike must continue to invest significant resources in R&D. New
technologies, particularly in the form of wearable technology with a direct link to its

33. 33
footwear, will help to differentiate Nike ("5 game-changing Nike innovations," 2014).
Key success factors include: (a) investment in facilities, (b) technology, and (c)
personnel.
Second, continued investment in marketing and branding in the U.S. will also be
critical. Although Nike, Inc. has built a loyal brand following, it must continue to invest
heavily in marketing and branding to maintain its brand dominance. Nike, Inc. has
decreased its investment in TV and print by 40% over the course of the past three years,
while increasing its total marketing budget by $2.4 billion in 2012 (Cendrowski, 2012).
This increase was due entirely to additional investment in digital media; particularly in
the form of mobile advertising (Cendrowski, 2012). Key success factors include: (a)
technological infrastructure, (b) HR in the form of onboarding digital marketing and
branding experts, (c) additional investment in marketing and advertising technologies,
and (d) graphic and design services.
Third, although Nike Inc.’s domestic growth has been strong, Nike, Inc. must
continue to focus on international development if it wants to remain competitive with
international organizations such as Adidas. Supply chain challenges have dogged Nike,
Inc. in recent years, particularly in developing countries where employee working
conditions are increasingly being scrutinized (Sharma, 2013). If Nike, Inc. wants to
continue to be recognized as a market leader, from a global perspective it must be
committed to both sustainable business development and high supply chain standards
based on a policy of social responsibility and responsiveness to emerging issues (Sharma,
2013). Key success factors include (a) supply chain software, (b) the onboarding of
supply-chain management experts, (c) global sustainability analysis.

34. 34
Fourth, Nike, Inc must make additional investments in its operations management
infrastructure. (Hartley, 2014). As an organization with operations in more than 180
countries and almost 200,000 employees around the world, Nike, Inc. has struggled with
key operational elements such as inventory management, scheduling, and demand
forecasting (Hartley, 2014). Because these three issues are interrelated, Nike, Inc. must
ensure that it is consistently conducting in-depth sustainability analyses, evaluating the
data, creating implementation plans, and measuring actual performance relative to the
plans. Key success factors include (a) software investment, (b) technical expertise, (c)
management expertise, (d) logistical analysis based on manufacturing plan locations.
Fifth, to maintain its position as the dominant organization in the global athletic
footwear market, Nike, Inc. must continue to recruit top talent. According to Sher
(2015), companies can ill afford to address the issue of talent competition without a
robust plan. Even companies with deep pockets such as Nike, Inc. must focus on
community building, hiring from within, and shifting talent between global locations as
necessary (Senge, 2008). Key success factors include (a) HR-based skills and experience
analysis, (b) employee compensation analysis, (c) industry compensation analysis.
Sixth, from an investment standpoint, Nike must continue to examine new and
unique avenues. According to Kharif and Townsend (2011), Nike, Inc. has been focusing
on cutting productions costs, while simultaneously investing in green technology. As
such, Nike, Inc. has been expanding its investments into the venture capital arena with
the specific intent of finding companies to support its key focus on innovation as their
primary differentiator (Kharif & Townsend, 2011). Key success factors include: (a)

35. 35
financial investment, (b) venture capital investment, (c) technological innovation, and (d)
global financial markets.
Analyzing the Company Strategy Type
Porter (2008), describes three generic strategies for companies concerning
pursuing a competitive advantage: generic, low cost, and differentiation. Nike, Inc. has
selected a strategy based on innovation and differentiation. This strategy has served
Nike, Inc. well, and has helped to differentiate it versus an increasing number of
competitors that are encroaching on its traditional apparel and footwear markets. Nike,
Inc.’s strategy of investing heavily in research and development, particularly in the fields
of wearable and mobile technology will ultimately allow for greater market expansion via
cross-marketing.
Nike, Inc.’s innovation and differentiation based strategy is directly aligned with
my Stakeholder and SWOT analyses from several perspectives. First, the foundation of
Nike, Inc.’s Mission Statement is based on the concept of innovation (“Nike Mission
Statement,” 2015). Second, Nike, Inc.’s significant investment in venture capital and
private equity with the intent of adding additional technologies via R&D further supports
this premise (Kharif & Townsend, 2011). And third, based on my SVA, Nike, Inc. has
been able to maintain a direct connection to its stakeholders, thereby supporting common
shared values such as innovation, speed to market, and a shared responsibility for the
environment (“Sustainability: Sustainable business,” 2015).

36. 36
Action Plan Analysis
For Nike, Inc. to achieve its goal of organizational sustainability, it must first establish an
action plan with clear goals. These goals each must incorporate specific actions,
milestones and measurements based on one, three, and five-fear timeframes.
1) Goal 1: Increase system-wide gross revenue by 20% by 2020.
Actions Timeline Milestones Performance
Measurements
Increase investment
in R&D, continue to
acquire technologies
via venture capital
and private equity
strategies, continue
expansion in
emerging countries
Investment in U.S.
marketing
One-Year Increase total
system-wide gross
revenue by 5% vs.
2015 end of fiscal
year gross revenue.
Measure gross
revenue relative to
end of fiscal year
gross revenue for
2015.
Three-Year Increase total
system-wide gross
revenue by 20% vs.
2015 end of fiscal
year gross revenue.
Measure gross
revenue relative to
end of fiscal year
gross revenue for
2015.
Five-Year Increase total
system-wide gross
revenue by 30% vs.
2015 end of fiscal
year gross revenue.
Measure gross
revenue relative to
end of fiscal year
gross revenue for
2015.
2) Goal 2: Replace all existing back-office HR management systems by 2020.
Actions Timeline Milestones Performance
Measurements
Conduct an
extensive internal
analysis of all
existing HR
systems. Research
enterprise-level HR
systems.
One-Year Internal analysis
completed.
Enterprise level HR
system research
completed.
Internal analysis
completed. Budget
finalized and
approved.
Enterprise level HR
system research
completed.
Complete a cost-
benefit analysis.
Finalize Budget.
Purchase system.
Conduct extensive
Three-Year Cost-benefit
analysis completed.
Budget finalized
and approved.
System purchased.
All milestones
completed based on
established budgets
and metrics.

37. 37
HR system vetting
process.
Extensive HR
system vetting
completed.
Implement new
technology system-
wide.
Five-Year New HR
management system
implemented
system-wide.
New HR
management system
implemented and
fully operational.
3) Goal 3: Increase digital marketing by 50% by 2020.
Actions Timeline Milestones Performance
Measurements
Complete analysis
of all current
marketing
initiatives. Create
digital marketing
budget.
Six Months Comprehensive
marketing initiative
analysis completed.
Digital marketing
budget finalized.
All milestones
completed based on
established
milestones.
Identify new digital
marketing
technologies.
Purchase additional
technologies
One-Year New digital
marketing
technologies
identified. New
technologies
purchased
All milestones
completed based on
established
milestones.
Implement all
digital marketing
technologies, tools,
and tactics within
budgeted parameters
One and a Half
Years
All digital
marketing
technologies, tools,
and tactics
implemented within
budgeted parameters
Measure digital
marketing initiative
volume in relation
to original goal of
50% increase.
4) Goal 4: Add 10 new global sports celebrity contracts by 2018.
Actions Timeline Milestones Performance
Measurements
Identify 10 global
sports celebrities
and commence
initial discussions.
One-Year Ten global sports
celebrities identified
and initial
discussions
commenced.
All milestones
completed based on
established
milestones.
Initiate 10
spokesperson
contract
Two-Year Ten spokesperson
contract
negotiations
All milestones
completed based on
established

38. 38
negotiations to be
completed by end of
year (EOY) 2017
completed by end of
year (EOY) 2017
milestones.
Introduce 10 new
sports celebrities to
the general public
both domestically
and internationally.
Three-Year Ten new sports
celebrities
introduced both
domestically and
internationally.
All milestones
completed based on
established
milestones.
By implementing these four goals, the probability that Nike, Inc. will achieve its
stated objective to maintain its dominance in the athletic footwear arena will be
significantly enhanced. More specifically, in relation to my VCA, the following
strengths will be enhanced: (a) R&D power, via increased investment as a result of robust
technology acquisition practices; (b) HR investment risk will be minimized via thorough
vetting and testing of multiple enterprise-level HR products; and (c) Domestic sales
dominance, via a combination of increased investment in digital marketing and celebrity
sports spokespeople.
Boid Analysis
Boids analysis is an artificial life program that simulates the flocking behavior of
birds (Stacey, 2011). When viewed as a computer simulation, the Boid framework
provides a graphic representation of emergent behavior (Stacey, 2011). Boids analysis is
an example of a complex adaptive system, defined as an entity consisting of multiple
autonomous components commonly referred to as agents, which are interconnected and
interrelated (Stacey, 2011). The sports apparel and footwear industry demonstrates
similar behavior when viewed via the Boids analysis construct.

39. 39
The athletic apparel and footwear industry is governed by the following
fundamental rules: (a) innovation, (b) population growth and disposable income, and (c)
marketing and advertising ("Global Athletic Footwear Market,” 2012). These rules were
identified by examining the athletic apparel and footwear industry as a whole, and then
deconstructing the industry into its most fundamental elements. These rules function as
agents, in that each company in the athletic apparel and footwear sector focuses on one or
more of these agents at differing times during their respective lifecycles. This results in
behavior similar to that of Boyds flocking behavior as each organization deviates from
the group (or flock) to pursue one or more of the three fundamental rules and then returns.
These fundamental rules differ from other industries in that the athletic apparel
and footwear industry as a whole is extremely competitive and is particularly dependent
on innovation and brand marketing (Shaftoe, 2015). For example, in the service industry,
companies such as top-ranked consulting firm McKinsey & Company do not have to
contend with issues such as retail inventory management ("About us: What we do,"
2015). The fast-casual restaurant sector, however, must contend with all three of the
fundamental rules governing the athletic apparel and footwear industry ("Fast casual
industry analysis," 2015).
Industry Evolution Modeling
Industry Evolution Modeling (IEM) is based on an analysis of the fluctuating
dimensions of an industry relative to the specific businesses within that industry (Stacey,
2011). The model suggests that external (industry-level) events can impact the course of
action and the decision-making processes for organizations within a particular sector
(Stacey, 2011). One of the most widely recognized simulations of industry evolution

40. 40
modeling is known as “Ray’s Computer Simulation,” (Stacey, 2011, p. 249) which was
originally conceived in 1992. Ray’s simulation utilized a computer to create the first
digital organism, designed to demonstrate the logical properties of replication in the
presence of random mutation and competitive selection (Stacey, 2011). One key finding
of Ray’s simulation is that life, in both organizations and perhaps even the universe as a
whole, arises from a tension between cooperation and competition as opposed to
unconstrained competition (Stacey, 2011).
In another well-known model known as the “Fishing Experiment Findings of
Allen” (Stacey, 2011, pp. 270-271), Allen applied systems dynamics, self-organization,
cybernetic, and evolutionary models to the fishing industry, which demonstrated the
importance of diversity when examining an ecosystem. Allen found that multiple
approaches can be utilized to understand complex adaptive systems (Stacey, 2011).
Further, Allen determined that when applied to business systems, managers can leverage
these frameworks to analyze their business from multiple perspectives (Stacey, 2011). In
examining Nike, Inc.’s business model relative to both “Ray’s Computer Simulation”
(Stacey, 2011, p. 249) and the “Fishing Experiment Findings of Allen” (Stacey, 2011, pp.
270-271), we can see how these concepts have guided the organization.
From the perspective of Ray’s simulation, Nike, Inc.’s success did not occur in a
vacuum. More specifically, Nike, Inc.’s success can be attributed in large part to two
elements: (a) competition within the athletic apparel and footwear sector, and (b)
cooperation between key organizations. From a competitive standpoint, much of Nike’s
success has been driven by product innovation and a need to connect to consumers based

41. 41
on constant pressure from some notable competitors such as Adidas and Under Armour
(Van Doorn, 2014).
In contrast, Nike has formed a number of key partnerships with potential
competitors, particularly in its wearable technology division, to leverage the power of
technology to advance its position as a global leader in sports technology ("Nike News -
Nike+ Running," 2015). Nike has concluded that it simply does not have the resources or
expertise to develop all of its products in-house; especially with regard to technology. In
order to complete in an increasingly global marketplace, Nike has made a strategic
decision to move beyond simply competing with its rivals, and has formed strategic
cooperative relationships ("Nike News - Nike+ Running," 2015). This supports Ray’s
conclusion that an organization cannot survive based on unrestrained competition alone
(Stacey, 2011).
Concerning the “Fishing Experiment Findings of Allen” (Stacey, 2011, pp. 270-
271), Nike, Inc.’s leadership has embraced this multi-perspective management
philosophy. When one thinks of Nike, typically the first things that come to mind are its
ubiquitous swoosh and it’s “Just Do It” slogan ("Just Do It," 2005). Much of Nike, Inc.’s
success stems from the core philosophy of it’s founders, who believed that Nike must
constantly reexamine and rethink its business from several key perspectives: internally,
its innovation, creativity, and energy; and externally, it’s competitors, the marketplace as
a whole, and its social responsibility ("Just Do It," 2015). This multi-pronged approach
has served Nike, Inc. well, in that its primary focus is the achievement of system-wide
goals and outcomes, versus individual successes ("Just Do It," 2015). This philosophy

42. 42
supports Allen’s findings that multiple approaches must be leveraged to maintain
diversity and to adapt to an ever-changing ecosystem (Stacey, 2011).
Based on the implications of both Ray’s simulations and Allen’s fishing
experiments, an Industry Evolution Model can be developed for the athletic footwear
industry. The athletic footwear industry as we know it today began to take hold in the
late 1970’s (Pribut, 2002). Beginning in the early-to-mid 1980’s, and thanks in large part
to the growing popularity of the cinema, athletic shoes began to move beyond their
utilitarian roots and into the realm of fashion (Pribut, 2002). As the industry continued to
evolve, companies found that in order to compete they needed to develop innovative
technologies such as shock-absorbing soles, as well as a brand image that conveyed an
image of success, popularity, and vigorous health (Pribut, 2002).
Today, footwear has evolved into a multi-billion dollar worldwide enterprise, that
has spawned numerous sub-sectors such as performance athletic apparel and wearable
technology ("Nike News - Nike+ Running," 2015). As the sector continues to evolve,
technology will play an increasingly critical role in differentiating the brands, as will
advertising technology such as mobile computing (Van Doorn, 2014). To maintain its
position of market dominance, Nike, Inc. must continue to innovate and expand its core
offerings into multiple peripheral brands (Sanusi, Lazarev, Jorgensen, Latsanych, &
Badtiev, 2014). In addition, Nike must continue to create strategic partnerships both
inside and outside of the athletic apparel and footwear industry. This will not only
insulate Nike from market pressures inherent in specific sectors such as footwear, it will
allow Nike to capture a broader audience and to cross-sell its merchandise (Sanusi, et al.,
2014).

43. 43
Life Cycle Assessment
A life-cycle assessment (LCA) is a technique used to systematically evaluate the
environmental characteristics of a particular product or service via an examination of the
various stages of its life cycle (Senge, Smith, Kruschwitz, Laur, & Schley, 2008). As
Senge et al. (2008) detailed, an LCA can be a powerful tool with regard to tracking
energy and material flows through an organization’s internal ecosystem. Following is a
brief history of Nike, Inc.’s iconic Air Jordan I shoe.
The Air Jordan I was first introduced by Nike, Inc. in 1985 after signing a five-
year endorsement contract with Michael Jordan of the National Basketball Association’s
(NBA) Chicago Bulls ("History of Air Jordan," 2015). The Nike Air Jordan I was
revolutionary for two primary reasons: (1) it paved the way for multi-colored basketball
footwear, and (2) at a retail price of $65, at the time (1985) the Air Jordan I was the most
expensive basketball shoe on the market ("History of Air Jordan," 2015). Although the
Air Jordan I was retired in 2006, Nike’s product lifecycle analysis methodology has since
been applied to all of its footwear products ("Comparative product lifestyle assessment,"
2014).
Nike, Inc.’s LCA is based on seven primary components: (1) Plan, (2) Design
(Materials), (3) Make, (4) Move, (5) Sell, (6) Use, and (7) Reuse ("Comparative product
lifestyle assessment," 2014). These seven components were verified by an independent,
third-party consulting firm, and conform to the current standards of organizational life-
cycle assessment ("Comparative product lifestyle assessment," 2014). While there is no
simple calculation for assessing the total impact of a product, by analyzing these seven

44. 44
elements we can better understand the footprint of a product’s impact on the environment
as a whole.
The Plan stage represents the first element in Nike, Inc.’s development of the Air
Jordan I shoe, and commenced at Nike, Inc.’s corporate headquarters in Beaverton,
Oregon ("Comparative product lifestyle assessment," 2014). In this stage, several key
value-chain analyses were conducted including energy, water, and the waste impacts
associated with the Nike, Inc. corporate offices. ("Comparative product lifestyle
assessment," 2014). This stage proved to have one of the lowest impact ratings, primarily
because no raw materials were created or utilized ("Comparative product lifestyle
assessment," 2014). In the next stage, Design, all of the materials related to the
production of the Air Jordan I were analyzed from the raw material extraction and
processing to the finished material production ("Comparative product lifestyle
assessment," 2014). This phase included such elements as rubber, foam, fabrics, and
packaging, and represented one of the highest impacts on the environmental footprint in
term of energy, water, and chemistry usage ("Comparative product lifestyle assessment,"
2014).
The third stage in the process, Make, involved the manufacture of the finished
product, including transportation of the finished materials and assembly at the factory
("Comparative product lifestyle assessment," 2014). This phase was the most significant
in terms of the impact on the environment and consumption of resources, and
consequently, ranked the highest in terms of energy, water, chemistry, and waste
("Comparative product lifestyle assessment," 2014). In the fourth step in the process,
Move, the Air Jordans were transported to distribution centers, and then to retail stores

45. 45
("Comparative product lifestyle assessment," 2014). The impact of transporting and
distributing the shoes ranked third relative to the other seven phases in terms of energy
usage, however chemistry, water, and waste ratings were relatively low ("Comparative
product lifestyle assessment," 2014).
The fifth stage, Sell, focused on the energy, water, and waste impacts of the retail
stores ("Comparative product lifestyle assessment," 2014). Water was the most
significant resource utilized, while all other resources were relatively minimal
("Comparative product lifestyle assessment," 2014). The sixth state, Use, included
packaging waste but excluded maintenance such as the washing and drying of the shoes,
as this was not a recommended practice ("Comparative product lifestyle assessment,"
2014). In the Use stage, impact as a whole was relatively minimal; especially in
comparison to the design and manufacturing stages ("Comparative product lifestyle
assessment," 2014). And finally, the sixth stage, Use, which focused on the disposal of
the Air Jordans as household waste; also known as the “end of life” phase ("Comparative
product lifestyle assessment," 2014). In this phase, water was the primary resource
expended related primarily to landfill maintenance ("Comparative product lifestyle
assessment," 2014).
Nike, Inc.’s LCA process is directly linked to its general sustainability
initiatives from the standpoint that sustainability presents a multidimensional challenge
(Senge, 2008). According to Senge (2008), the increasing industrialization of the last two
centuries has contributed significantly to the creation of pollution and waste. Nike’s
LCA is an attempt to categorize and quantify the primary contributing factors in an
attempt to minimize the impact through sustainable actions. Regarding the LCA for the

46. 46
Air Jordan I shoe, Nike’s efforts can be categorized as a growth through creativity
lifecycle. Growth through creativity is defined as a surge of enthusiasm and ingenuity
from passionate individuals, resulting in a product or service that is unique in the
marketplace (Greiner, 1972). At this stage in Nike’s history, Nike stood apart from other
companies in that it was willing to take risks. Not only was the Air Jordan I a
revolutionary product; Michael Jordan himself was still a relatively new player, who had
not yet reached the pinnacle of his professional career.
Sustainable Value Framework Analysis
According to Senge et al. (2008), when business priorities are aligned with the
new powers at play in the world such as consumer activism, governmental agencies, and
global technologies, they can create long-term sustainable value. While most managers
tend to frame challenges as one-dimensional nuisances, Senge et al. (2008) demonstrated
that business challenges are, in fact, multidimensional, and as such, they can be framed
accordingly. The Sustainable Value Framework concept is based on detailing the
connection between various sustainability initiatives and the core functions of any
business (Senge, et al., 2008). This framework helps to organize and categorize an
organization’s activities, and demonstrates how each element can work together to
maximize efficiency and effectiveness (Senge, et al., 2008).
Detailed Analysis of All Four Quadrants
The Sustainability Value Framework is based on both an internal and external
analysis of an organization, as it exists today and as it will exist tomorrow. The

47. 47
framework is divided into four quadrants as follows: Internal-Today, Internal-Tomorrow,
External-Today, and External-Tomorrow (Senge, et al., 2008). The Internal-Today
quadrant focuses on concepts such as pollution prevention and minimizing waste from
operations, which are driven by drivers such as pollution, material consumption, and
waste management. The payoff for focusing on this quadrant are the potential reductions
in both cost and risk (Senge, et al., 2008).
The Internal-Tomorrow quadrant is based on the development of clean
technology, with the drivers being disruption, clean technology, and the management of
the company’s “footprint” or impact on the environment (Senge, et al., 2008). The
payoff for focusing on this quadrant is innovation and repositioning the company in a
positive ecological light (Senge, et al., 2008). The External-Today quadrant is based on
product stewardship highlighted by the integration of stakeholder views into businesses
processes (Senge, et al., 2008). The drivers in this quadrant are transparency,
connectivity, and the desire to create and maintain a civil society (Senge, et al., 2008).
The payoff for focusing on this quadrant are an improved organizational reputation and
the legitimization of the organization as a whole (Senge, et al., 2008). And finally, the
fourth quadrant, External-Tomorrow, is based on the sustainability of the vision (Senge,
et al., 2008). This quadrant is driven by elements such as climate change, the depletion
or resources, and an awareness of, and reduction of, poverty (Senge, et al., 2008). The
payoff for focusing on the External-Tomorrow quadrant is the creation of a sustainable
growth tragectory for the organization into the future (Senge, et al., 2008).
As an example of the impact of the Sustainable Value Framework in action,
Senge, et al. (2008) describe the transformation of the DuPoint organization. In an effort

48. 48
to remain competitive and ensure company sustainability, the executive team at DuPont
conducted an analysis of its operations and systems based on the Sustainable Value
Framework, which proved very useful in helping the organization to understand its areas
requiring action (Senge, et al., 2008).
By examining its business model through the lens of each of the four Sustainable
Value Framework quadrants; Internal-Today, Internal-Tomorrow, External-Today, and
External-Tomorrow, DuPoint was able to broaden its view of sustainability beyond its
previously myopic view (Senge, et al., 2008). In doing so, DuPont was able to achieve a
number of significant breakthroughs, particularly concerning increasing market share,
reducing the cost of products, and improving the overall value proposition for clients
(Senge, et al., 2008).
In relation to Nike, Inc., the Sustainable Value Framework provides insights into
key actionable items that Nike can implement to create a sustainable organization. From
an Internal-Today perspective, Nike must continue to focus on minimizing waste and
emissions from operations. In this regard, Nike has established specific waste reduction
targets across their business, with particular emphasis on reducing waste from finished
good manufacturing ("NIKE, Inc. sustainable business report," 2015). As an example, by
2015 Nike will have fully rolled out a redesigned footwear box that reduces the overall
weight of the box by 3%. These efforts will likely result in cost and risk reduction.
With regard to their Internal-Tomorrow strategy, Nike, Inc. has developed a
number of revolutionary technologies, such as their partnership with a company from the
Netherlands that launched the world’s first industrial dyeing machine that uses carbon
dioxide as a replacement for water to dye polyester (Verbrugge, 2015). The benefits of

49. 49
this technology are significant in two primary ways: (1) the concept is in-line with Nike’s
primary focus on innovation, and (2) technologies such as this allow Nike, Inc. to
position itself as a leader in eco-friendliness, which is critical from a social awareness
and marketing perspective. This new technology is also in line with Nike’s value system,
which rewards risk-taking and innovation.
In the third quadrant, External-Today, Nike, Inc. has created a shared roadmap for
meeting stakeholder needs in the form of its Stakeholder Engagement and Report
Reviews (“Stakeholder engagement and report reviews," 2015). These detailed reviews
of Nike’s actions help to prioritize key issues based on their interactions with key
stakeholders (“Stakeholder engagement and report reviews," 2015). By focusing on
communication, transparency, and connectivity, and actively recruiting stakeholders to
participate in programs such as their Business of Social Responsibility (BSR) initiative,
Nike, Inc. has gained a reputation as a caring and socially responsible organization
(“Stakeholder engagement and report reviews," 2015).
In the fourth quadrant, External-Tommorrow, which is exemplified by an
organization’s sustainability vision, Nike, Inc. has dedicated significant resources to
addressing such drivers as climate change, resource depletion, and poverty. For example,
Nike’s Sustainability website provides six sub-sections devoted entirely to its
sustainability efforts ("About Nike: Sustainability," 2015). For example, in its “Our
Impacts” sub-section, it specifically details its key LCA focus areas including: waste,
energy/climate, labor, chemistry, water, and community ("About Nike: Sustainability,"
2015). It’s, “Nike Better World” sub-section provides a link to many of its latest
innovations including the transformation of plastic bottles into polyester for clothing,

50. 50
turning old shoes into playground materials, and it’s “Flyknit” product, which is an
advanced technology that allows computers to stitch together shoes, while saving nearly
2 million pounds of waste material since 2012 ("About Nike: Sustainability," 2015).
These new technologies have provided a platform that underscores Nike’s core vision of
innovation that drives sustainability.
Table 2: Sustainable Value Framework
Today Future
External Strategy:
Nike, Inc. has created a
shared roadmap for meeting
stakeholder needs in the form
of its Stakeholder
Engagement and Report
Reviews. These detailed
reviews of Nike’s actions
help to prioritize key issues
based on their interactions
with key stakeholders.
Payoff: By focusing on
communication,
transparency, and
connectivity, and actively
recruiting stakeholders to
Strategy: Nike, Inc. has
dedicated significant
resources to addressing such
drivers as climate change,
resource depletion, and
poverty.
Payoff: New technologies
such as the transformation of
plastic bottles into polyester
for clothing, turning old
shoes into playground
materials, and it’s “Flyknit”
product, which is an
advanced technology that
allows computers to stitch
together shoes have created a

51. 51
participate in programs such
as their Business of Social
Responsibility (BSR)
initiative, Nike, Inc. has
gained a reputation as a
caring and socially
responsible organization.
platform that underscores
Nike’s core vision of
innovation that drives
sustainability. From a Public
Relations (PR) standpoint,
these practices will provide
Nike, Inc. with the goodwill
necessary to create a world-
wide presence as an
organization that cares.
Internal Strategy:
Continue to focus on
minimizing waste and
emissions from operations.
Establish specific waste
reduction targets across all
business units, with
particular emphasis on
reducing waste from finished
good manufacturing
Payoff: By 2015 Nike will
have fully rolled out a
redesigned footwear box that
Strategy: Nike, Inc. has
developed a number of
revolutionary technologies,
such as their partnership with
a company from the
Netherlands that launched the
world’s first industrial dyeing
machine that uses carbon
dioxide as a replacement for
water to dye polyester
Payoff: The benefits of this
technology are significant in

52. 52
reduces the overall weight of
the box by 3%. These efforts
will likely result in
significant cost and risk
reduction.
two primary ways: (1) the
concept is in-line with Nike’s
primary focus on innovation,
and (2) technologies such as
this allow Nike, Inc. to
position itself as a leader in
eco-friendliness, which is
critical from a social
awareness and marketing
perspective.
Conclusions
In examining Nike, Inc. within the context of the athletic footwear sector, and in
relation to the development and maintenance of an organizational sustainability strategy,
several conclusions can be drawn. First, from an SVA perspective, Nike, Inc. has
adopted a robust corporate reporting structure based on sharing information with key
stakeholders (“Sustainability: Sustainable business,” 2015). Nike, Inc. must continue to
maintain direct communication with its stakeholders to create and sustain a common
framework based on the shared values such as innovation, speed to market, and socially
responsible practices.
Second, from a GFA perspective, technology will continue to pay a key role in
Nike, Inc.’s success. This continued emphasis on technological innovation is critical,

53. 53
both from a competitive advantage standpoint and as a means of product differentiation.
In terms of strengths, and as detailed in my SWOT analysis, Nike, Inc. benefits from an
industry-leading R&D division, and strong procurement power, based on its bargaining
power.
From the perspective of Porter’s Five Forces, Nike, Inc. faces multiple challenges
in the form of (a) the threat of substitute products, (b) the ability of suppliers to increase
their bargaining power, and (c) increasing competition from multiple global competitors.
Further, my VCA and SWOT analyses demonstrated that, Nike, Inc. must be proactive in
addressing a number of weaknesses including: (a) a lack of differentiation with regard to
inbound and outbound logistics, (b) international vulnerability from a supply-chain
standpoint, and (c) HR investment risk based on the loss of key talent to competitors. In
summary, while Nike, Inc. has experienced significant success over the course of the past
decade, Nike, Inc. cannot afford to rest on its laurels, and must continue to focus on its
core mission of differentiation by innovation.

54. 54
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