Innovation Project

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Institute of Technology Tallaght Dublin
Management of Innovation and Technology
Nike Process Innovation
CA Title: Innovation and Entrepreneurship
Lecturer: Emmanuel Darkwa
Student Name(s): Zuluka Toure
Student No(s): X00106948
Date of Submission: [DATE: 02/05/2015]
Declaration
I hereby declare that this is my original work produced without the help of any
third party.
Signed: Zuluka Toure
Date: 02/05/2015
Lecturer Feedback

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Table of Contents
1 - Table of contents 2
2 – Executive Summary 3
3 – Term of reference 4
4 – Introduction 5
5 – Background Information 6
6 – Nike Innovation models 7-9
7 – Nike Innovation History 10
8 – Nike Current Innovation Strategy 11
9 – Competition, Challenges and choice 12-13
10 – Impacts 14
11 – Conclusion and recommendation 15
12 – Bibliography and References 16-17
11 – Appendices 18-21

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Executive Summary
The purpose of the report is to determine how Nike became one of the most dominant force
in the athletics business industry by assessing its significant approach to innovation as
compare to out dated model that lead Nike to become sustainable innovator and most
prominent sportswear company of all time, The report will also highlight various competitive
facing Nike as well as it strategy, the challenges its integrated value of chain as well as
history. Some of the conclusion that were realise in the report includes:
 Environmental challenges
 Most retails rely on the suppliers
 Few group control the supply chain
 Great history of innovation and a vertically integrated business model
 The use of research and development alongside knowledge management to provide
a less cost product to its consumers
 Nike has a culture of working with other firm (Networking)
Based on the research and finding, the report has highlighted certain recommendation
need to be considered in the near future in other to continue to keep the company into a
perfect shape, these recommendations are:
 Need to implement extra effort and well-made innovation to combat their
competitors
 Continue to spend in research and development
 Come up with more significant solution to respond to the impact of related product
environment.
 Spend a little bit more on promotions and advertising

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Terms of reference
This report was commissioned by Emmanuel Darkwa, lecturer of Innovation and
Entrepreneurship module as part of Continue assessment for that module within the
Bachelor of Science (Ordinary) in Computing at the Institute of Technology Tallaght. It
accounts for 40% of the final marks and provides a detail analysis of Nike.Inc innovation
process.

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Introduction
Companies in general play a serious role within the development of economy, and they are
all competing to get to the summit. Every individualcompany has benefit and characteristics
that distinguish them from the others. This research was based on one of the most known
firms in the world, Nike Corporation.
Nike Company is one of the significant firms accountable for the manufacturing of shoes
garment, sports equipment’s and many more as well as selling the product in the market.
The report will mention the history of Nike over the past years and will also cite their active
role in sustainable innovation, research and development, competitions, challenges and may
more.
Nike has the biggest sales attributed within the world of sale of sports shoes and consumer
goods, by 1980, the firm had reached five hundred of the market share within US athletics
shoe market. Nike was the clear leader within the market with thirty one percent of the
worldwide marketplace for sports shoes. The worldwide marketplace for sports shoes
focused primarily with the first four firms that regulate seventy one percent.
Nike is a moneymaking establishment with decent growth projections, flow of cash and
extraordinary revenues to shareholders through dividends and share repurchases. Based on
history, Nike’s pay-out ratio is almost eighty percent of earnings, over the last five years,
the administration has accomplished this consistently.

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Background Information
The flagship of Nike Inc is athletics footwear brand, even though the company make other
clothing, gears and apparels. Nike Inc started in 1964 as Blue Ribbon Sports and primarily
functioned as a distributor for the Japanese shoemaker Onitsuka Tiger (now known as Asics).
It then became Nike Inc legitimately in 1971. Nike Inc was created with just $1,200 in the
bank by Bill Bowerman a coach of a field and track together with Phil Knight who is a middle-
distance runner from Portland USA and enrolled in the Oregon University.
Dimension 6 was the name chosen for the Company by Knight initially, Jeff Johnson who
was Nike’s first employee came up with a name Nike which is originated from the Greek
goddess of victory, which is pronounced “ny'-kee”.
A student of Portland State university student named Carolyn Davidson design the Nike
swoosh for just 35 US dollar in those days which could be valued as 200 US dollars today. A
stock worth of 600.000 US dollar was later awarded to her as a reward for her swoosh
designing.

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Nike Innovation models
Innovation has been defined in so many different ways by so many different lectures and
professionals. One of the best definition of innovation by O’Sullivan and Dooley is
“Innovation is the application of practical tools and techniques that make changes, large
and small, to products, processes, and services that results in the introduction of something
new for the organization that adds value to customers and contributes to the knowledge
store of the organization” (O’Sullivan and Dooley 2009 page 5)
Innovation is the key intangible asset for Nike. Nike Inc could be classify as one of the best
models of persistent innovation model and content with the outcomes the company had in
the past years, However due to numerous experiment and disappointments, Nike couldn’t
relax on its achievements but instead it went ahead learning the marketplace and strive to
be competitive through radical and incremental innovation by bringing into market two very
innovative product. Nike also implement process of innovation that control all platforms of
the value of chain as well as engaging its consumers in the heart. (See Appendix A)
Fuelband- Is the full of LEDS smart eyeing bracelet that will assist you know the amount of
energy you’ve burned daily by checking your activities and assist you in keeping record of
your fitness through a wireless application. The data of this application can be downloaded
on the Smartphone, tablet or computer which will give you the feedback whether you reach
your daily achievement. The smart eyeing bracelet mark a very challenging move as well as
a change of the company from apparel into the sector of technology.
Flyknit Racer. Nike had to entirely reconsider its manufacturing process in other to create
Flyknit racer which was created through knit threading instead of multiple layers of textile.
The racer is tremendously light shoe with entirely new technology. (See Appendix B)
Innovation are business mind games that indicates that Nike might not always be the leader
in the business particularly when taken competitors like Adidas into consideration.
Companies like Jawbone and Fitbit are being observed in the market carefully by Nike.
According to (CEO Mark Parker) “Companies fall apart when their model is so successful
that it stifles thinking that challengesit”.

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Nike Marketing Strategy
Printed Commercial - Huge billboard, and advertisement in all types of magazines form a
dominant and robust commercial system. The influence of NIKE brand will have no
boundaries through the internet, globalization and e-commerce.
Supported CommercialNIKE focuses on the support to world class sport promotions such as
football, tennis, golf and basketball. Those top sports men and women are all wearing NIKE’s
products and it forms the good character for the image of the product.
Brand Identification Customers buy the product by making identification to the brand. The
customers and likely buyers depend on the illustration value of this brand, and trust it will
keep its good or improved quality in the future. This makes its product or service outstanding
from a strong rivalry. NIKE create brand identification, apply sports stars to endorse the
products and seasonal campaign, and develop numerous product lines to announce in
numerous events and sales campaign.
Nike’s supply chain
Nike distribution accuracy in a multi-product and multi-jurisdictional corporation like Nike
is serious. It increases profit limits, reduces catalogues and minimizes price markdowns as
well as ensuring that the purchaser receives the correct product variety on time. The
corporation encouraged 900 million units through its supply chain last year. Its
manufacturing network consists of over 700 factories in 42 different countries. Every single
product moves from 57 distribution centres across the network of 18,500 accounts and
140,000 retail outlets. The company distribute product to its customers in three way either
by selling to wholesalers, direct to consumer (DTC) which includes retail outlet and e-
commerce sales and finally sales to brand sectors globally.
Nike strategies
For Nike to become the world’s leading designer, merchandiser and distributor of athletic
footwear, attire and accessories, Nike followed several methods. The corporate focuses on
innovation and stress on their analysis and development so as to achieve success within the
future by doing their best to provide footwear, attire and athletic instrumentation that scale
back or eliminate injury, facilitate in athletic performance and comfort. Nike still enlarge
their operation within the USA, Asia Pacific, Europe, Near East, continent and also
the yank regions attempting to succeed in as many shoppers as potential. Their business
level strategy could be a combination of the most effective value supplier and broad
differentiation strategy, however additional stress is placed on the most

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effective value supplier strategy. They believe heavily on strategic outsourcing and most of
their merchandise are factory-made outside the US. One amongst the most reasons behind
their success following the {price} leadership strategy is their intensive network
structure that permits them to cancel their association with any company that fails to take
care of their customer and work terribly closely with their suppliers which permit them to
provide their product at a really very little price and of upper quality with the
latest technology that makes them the market leader and also the rest have to be compelled
to strive manufacturing similar product near their standard so as to survive within
the market. They work terribly onerous in their promoting methods and that one
amongst the first reasons behind its success.
Networking
Nike has also develop sustainable integration with other companies to advance their
innovation which allow the firm to draw on external resources in collaboration on a specific
assignment. For instance Nike setting up of a strategic association with Swiss firm to deliver
their suppliers with access to broad evidence about more ecological chemistries and
materials.

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Nike Innovation History
The history of Nike Inc innovation started way back in 1971 when Bowerman uses his wife’s
waffles iron to design Nike’s first shoe which immediately sparked a clue for a indented
design on the single of coaches to support athletes grip successively track. The Nike Waffle
Trainer was patented at the expense of his wife Barbara’s waffle iron in 1974.
“Bill Bowerman’s legacy at Nike is immeasurable,” (said Mark Parker, President and CEO
of NIKE, Inc.) “The products he designed and invented have powered Nike’s ascent as the
world’s leading sports brand, and his commitment to pushing the boundaries to maximize
athletes’ performance remains at the heart of Nike’s innovation spirit.”
The former Nike president and Co-founder has been a significant modification instrument all
over the history of NIKE by starting out retailing shoes from the back of a car at every
athletic occasions. He made a total sale of 8.000 US dollars in the first year, the company
then grown gradually to realized revenue of 27.8 billion in 2014 financial year. The ideas
put in place by Knight the former president has revolutionises and changed the whole
industry from new business strategies, to sports promotion and the endorsements of best
athletes.
Nike was also impacted when the company persuaded a marathon runners at Olympic Tracks
to wear their shoes which was an innovative strategy as it resulted in strong advertising
when some of the runners were the top finishers and popularity of Nike continued to grow
throughout the 70s. In 1979 Nike had 50% of the US running shoe market. In 1988 Nike
introduced their famous slogan ‘Just do it’ and acquired a company called Cole Haan. Nike
also sponsored many famous athletes such as Michael Jordan, a famous basketball player
and Tiger Woods, an excellent young golf player. During 1992 Nike acquired Canstar sports
which included the hockey equipment maker Bauer and opened its first Nike town store. In
early 1995 Nike acquired a license to put its logo on NFL uniforms which resulted in very
huge market success.
They launched a new brand called Jordan, in 1997, which was influenced by the famous
basketball player Michael Jordan and one of the most famous shoes of that brand were
called Air Jordan. (See Appendix C) Some incidents harmed Nike during 1998 as they had to
cut 1,200 jobs due to the fall of sales in Asia and the demand of athletic shoes fell in 1999.
Nike wanted to diversify and in the year 2000 they shifted a little towards the technological
and electronic sector and introduced athletic electronics, which included heart monitors,
two way radios and MP3 players.

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Current innovation strategy
Nike has a history of sustainable innovation, incremental enhancement plays a significant
role in the effort of the company innovation which make even a tiny change could have a
huge impact across their collection. Due to the huge amount of competitions and challenges,
the company needed advanced innovation which will bring in a whole new materialand way
to create the product. E.g. the NIKE Flykit technology.
Nike current innovation strategy was the development of the Nike Tech pack collection
introduce in summer 2015, Integration sport and style, the different iterations of Nike Tech
Pack take classic sport silhouettes and refurbish them into innovative everyday essentials.
Each collection is planned to keep athletes going regardless of the severities of Mother
Nature.
This innovative product help in the modern athlete’s struggles to achieve constant
readiness, which takes on the calm mornings, boiling afternoons and frosty evenings of the
summertime period with lightweight breathability as its newscaster. The Nike Tech Pack
Tech Hyperfuse collection uses featherweight rip stop nylon and internal, all over flocking
to make the mercurial summer weather not only tolerable, but also conquerable. (See
Appendix D)

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Challenges competition and choice
Nike Competitive Strategy
Nike is not the only sportswear company, there are other company such as Adidas and Puma
that always look to overturn the Nike stability at the top level of the sports industry. As
largest company in the Footwear and Apparels Business industry and want to be at your
best, Nike distinguishes itself from competitors in many ways. Its widespread global
presence guarantees that Nike name in nearly every part of the world. The Company’s
hostile marketing promotions push the Nike brand in every main sport worldwide along with
many less popular sports. Wherever Nike functions, it always try to sponsor the top athletes
in their various sports, which constructs brand equity and enhance confidence of future
growth prospects. Nike makes considerable use of its ordering program which permits
venders to order Nike merchandises up to six months in advance at a specified price.
However, the sales program decreases Nike’s inventory and procuring costs, letting free
cash that can be used in other parts and the program also permits Nike’s contractors to
employ lean manufacturing simply because they know in advance exactly what needs to be
produced and when. This however has an effects in price effectiveness in production by
eradicating wasted resources. Nike employs a well-diversified combination of production
contractors who produce Nike products, letting expert contractors to manufacture products
that need particular techniques and output quality. This gives Nike the opportunity to sell
specialised and high quality product in different types of sports which most of its
competitors cannot duplicate.
Chances of expansion into emerging markets
The company realises that emerging markets deliver huge growth chances, provided that
Nike has an existence in these markets before this growth happens and Nike is resolute in
moving into emerging markets before they emerged so it can take full benefit of market
growth. The company has realized dual digit revenue growth in China and other Asian Pacific
companies, as well as huge earnings growth in the Americas regions in fiscal 2008 and 2009.
These markets are not yet at the point of development, in the near future high growth is
expected.
Possible Challenges facing Nike
It is very hard to foretell the challenges that faces corporations that may face the
corporation's consideration of the completely undesirable impacts of the global financial

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crisis. Most likely, several other international corporations, and Nike will close its outlet
offices in a number of countries and / or disappointment rates of mechanisation in Asia.
Generally, it is clear that Nike has a rock-solid circumstantial of potential for a strong
competitive position in the predictable prospect and hope that, in terms of enlarged
business strategy alignment, the business will become more socially liable in the eyes of
average customers, which means an increase in providing branch product.

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Impact
As Nike reflects its understanding to the business, its value chain have environmental and
social impacts which will be reduced through long commitment to continuous improvement.
The company have worked throughout their functions, from design to distribution, resources
to contract manufacturing and to realise where our activities have the maximum impact and
where we can inspire the maximum transformation. The impacted area of activities that
Nike will look at regarding the environmental and social effect are: Waste, energy and
climate, labour, community and water.
Stimulating & Managing the Process
Knowledge is the key to every innovation, therefore innovating a product or services and it
processes require some knowledge according to
(Henderson and Clark)
“Product and service and or processes require two distinct types of knowledge: Component
knowledge and system Knowledge”
Stimulating management innovation requires various challenges for motivation and
implementation of innovation, Knowledge management as a tool for exciting innovation
and stimulation of management innovation through a lot of appropriate and centred
data management. Nike radical innovation entirely changed the way component are
integrated and linked together based on technology. The improved component are linked
together with the new way that component can integrate. Nike spent monumental add on
continue strategic information development and innovation within the information space
like product style, shopping for behaviour, development and selling, those information could
extremely complicated combination of manoeuvre and express information with reference
to client, design, selling and provide chain management. Nike encourage it workers to
assume more creative thinking in an exceedingly sort of information and creative thinking.
Nike Company has value-added price not solely to its method, however conjointly to the
unconventional manner the organisation is stimulated by propulsion demand from
its customers responding to apparel trends quicker than other retailers. Moreover,
a quick turnover that is obtained with manufacturing smaller collections and minimises
risks related to surpluses.

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Conclusion and Recommendation
Some of the key elements that defines the achievement or let-down of an organisation is
the innovation and marketing strategies that it follows. For Nike to remain a market leader
and at the summit, the company has to work hard to put many strategies in place that
differentiate them from other similar firms. It is clear that Nike has a positive future due
the development they’ve reached, but need an extra effort, well-made innovations to
combat their competitors. Keeping innovation is the key to preparing the future, the firm
need to continue to spend in research and development in other to keep itself at the pole
position of innovation and design. The company has to also come up with more significant
solution in respond to the impact of related product environment and continue to increase
in promotion or advertising

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References and Bibliography
Fashion,2014. Air Jordan XX9. [Online]
Available at:http://stealmag.com/fashion/71727.html
[Accessed30 April 2015].
JasonLancellotti ,L. & Paolo,R.,2010. Investmentreport. [Online]
Available at:http://leeds-
faculty.colorado.edu/madigan/4820/Presentations%202010/NIKE%20Report%202010.pdf
Lin,C.-C.A. G. L., n.d. A SuccessfulMarketing Strategy forNikeInc.. [Online]
Available at:
http://ttqs.wda.gov.tw/Column_Files/3ffca119102a4fbdaef5ba32cc9064aa/A%20Successful%20Mar
keting%20Strategy%20for%20Nike%20Inc.%20The%20Story%20Behind%20and%20Its%20Analysis.p
df
[Accessed30thApril 2015].
Meskovska,A.,2013. Stimulating managementinnovation through knowledge. [Online]
Available at:
http://www.seeita.org/?Stimulating%20management%20innovation%20through%20knowledge%20
management%20-%20Ana%20Meskovska.pdf
Nike,Inc.,2012. SustainableBusinessperformancesummary. [Online]
Available at:http://www.nikeresponsibility.com/report/uploads/files/FY12-
13_NIKE_Inc_CR_Report.pdf
Nike,Inc,2009. A GROWTH COMPANY. [Online]
Available at:http://media.corporate-ir.net/media_files/IROL/10/100529/nike-gs09/docs/nike-
growth-story.pdf
Nike,Inc,December23rd,2013. THROUGH THE YEARS:NIKE’SHISTORYOF SUSTAINABLE
INNOVATION. [Online]
Available at:http://news.nike.com/news/through-the-years-nike-s-history-of-sustainable-
innovation--2
Nike+,2015. EFFORTLESSCOOL:THE SUMMER2015 NIKETECH PACKCOLLECTION. [Online]
Available at:http://news.nike.com/news/effortless-cool-the-su15-nike-tech-pack-collection
Nike,2012. Sustainability. [Online]
Available at:http://about.nike.com/pages/sustainability
Soni,P.,December2nd,2014. Traditionally Innovative:TheHistory Of NIKE. [Online]
Available at:http://marketrealist.com/2014/12/nikes-forecast-for-emerging-markets-current-and-

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future-concerns/
UK Essays,2003. Nike: Well-designed and innovation. [Online]
Available at:http://www.ukessays.co.uk/essays/management/nike-well-designed-and-
innovation.php

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Appendices
Appendix A – The 4Ps of Innovation space
Source - SeesaaBlog,2013. 4Ps of innovation space. [Online]
Available at:http://oitauniversity.seesaa.net/upload/detail/image/4-ps-of-innovation-
space.png.html
[Accessed1stMay 2015].

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Appendix B - Nike Flyknit
Source - Nike,2012. Sustainability. [Online]Available at:
http://about.nike.com/pages/sustainability

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Appendix C – Air Jordan Shoe promoted by Micheal Jordan
Source - Fashion,2014. Air Jordan XX9. [Online]
Available at:http://stealmag.com/fashion/71727.html

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Appendix D - Hyperfuse Windrunner for both men and women
Source - Nike+,2015. EFFORTLESS COOL:THE SUMMER2015 NIKE TECH PACKCOLLECTION.
[Online]Available at: http://news.nike.com/news/effortless-cool-the-su15-nike-tech-pack-collection

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