Table of Contents

Executive Summary 2
Company Description 2
Mission Statement 3
AFI Strategic Framework 4
Strategic leadership and Strategy process 4
External Analysis4
SWOT Analysis 4
Opportunities 5
Threats 5
PESTLE Analysis 6
Political Factors 7
Economic Factors 8
Social Factors 8
Technological Factors 8
Environmental Factors 9
Legal Factors 9
Porter’s 5 Forces 9
Industry competition 10
New entrants in the industry Buyers 10
Supplier or seller power 11
Buyer or customer power 11
The threat of substitutes 11
Internal Analysis 11
SWOT Analysis 11
Strengths 12
Weaknesses 12
VRIO Analysis of 13
Value: 13
Rarity: 14
Imitability: 14
Organization: 15
VRIO Analysis of 13
Value: 13
Rarity: 14
Imitability: 14
Organization: 15
Conclusion 16
References 17

Executive Summary
In business today, companies need to gain a competitive advantage by showing why their product is more
valuable. The organization I selected for analysis is Nike, Inc. Nike, Inc has a broad range of products, an
extensive customer base with dedicated, loyal customers, effective marketing strategies, and an innovative
mindset. These elements make Nike, Inc unique and allow the company to stand out from its competition.
AFI Strategic planning framework including the PESTEL model, Porter’s Five Forces model, the VRIO
framework and value chain can allow Nike, Inc to create effective strategies to gain a competitive advantage
over its competitors and ensure their long-term success and growth. Both the PESTEL and Porter’s Five Forces
analysis framework show that there are both opportunities and threats that can impact Nike Inc’s business in a
positive and negative way. Capitalizing on the opportunities identified in PESTEL and Porter’s 5 Forces analysis
helps the company to grow and develop strategies to address the various threats they face and embrace
opportunities. The VRIO analysis shows that Nike has several resources and capabilities that give it an edge over its
rivals and helps it to continue to survive in this volatile external environment. The companies’ continued use of
PESTEL, VRIO, Porter’s 5 Forces and its value chain models will help it to continue to determine the areas that
require improvement so it will remain competitive in the external environment. Nike Inc’s swoosh logo and the
“Just Do It” slogan have made their name known globally. Presence is key. Nike, Inc has more than 1000 stores
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across the globe, with an intended goal of attracting new customers while maintaining its current customers. They
offer product durability, meaning their products last for a long time which will increase the chance of solidifying
their brand worldwide. They also use bonding strategies, making tailored products for consumers which will
potentially establish customer-business relationships. With the current financial position of the company, we can
come up with a set of recommendations with business, corporate and global strategies to improve their current
situation.
Company Description
Nike, Inc was founded in 1962 by Bill Bowerman and Phil Knight as a partnership under the name Blue Ribbon
Sports. Their goal then was to distribute low-cost, high-quality, Japanese athletic shoes to American consumers
while providing “inspiration and innovation to every athlete on the planet”. The first Nike brand shoe was launched
in 1972, and the company was renamed Nike, Inc in 1978. Now, it is an American multinational corporation that is
engaged with design, development, manufacturing, and worldwide marketing and sales of footwear, apparel,
equipment, accessories, and services (Nike SWOT Analysis 2022, 2022). Nike, Inc has about 79,100 employees
which is a 7.91% increase from 2021 (NIKE: Number of Employees 2010-2022, 2022). had a total revenue of $37.4
million as of January 2, 2022 (Nike SWOT Analysis 2022, 2022). They are expected to reach a total revenue of
$46.71 billion US dollars by the end of 2022 (NIKE Revenue 2010-2022 , 2022). The company’s internal analysis
indicates it has great strength in both the primary and secondary activities for value chain, although the external
industry analysis shows it is facing a good number of competitors and the industry environment is very competitive
and difficult, according to porter’s five forces. The company has maintained a strong and unique brand image and
has several opportunities for future growth; however, the company is also facing some threats including active
competitors, and scrutiny of forced labor at warehouses.
Mission Statement
Nike Inc.’s official mission statement is “to bring inspiration and innovation to every athlete in the world.” The
company furthers that everybody is an athlete, based on Nike founder Bill Bowerman’s statement, “If you have a
body, you are an athlete.” This mission statement represents the company’s strategic goal of reaching out to the
global sports shoes, apparel, and equipment market (Nike, [Link], 2022). The components in Nike’s mission
statement include inspiration, innovation, and “every athlete in the world”. As a leading manufacturer of sports
shoes, apparel and equipment, Nike Inc. inspires people to adopt a winning mindset, which is covered in the
“inspiration” component of the mission statement. The company’s slogan “Just Do It” represents this inspirational
goal. Also, Nike’s mission statement emphasizes innovation. This component is applied through the company’s
strategy of continuous improvement of products through new technologies. The “every athlete in the world”
component indicates that Nike’s mission statement pushes the company to target every consumer around the world,
since anyone with a body is an athlete.
AFI Strategic Framework:
AFI strategic framework refers to a set of activities that are needed for improving an organizations performance
(AFI Strategy Framework, 2021). This framework is divided into three categories: analysis, formulation, and
implementation. These tasks as well as the company’s mission statement and core values make up the strategic plan.
Companies must develop and analyze their strengths, weaknesses, opportunities, and threats to help detail their
current situation. Having a vision of future goals and objectives will help achieve long-term success (AFI Strategy
Framework, 2021).
What is strategy and why is it important?
As markets become more competitive, having the edge becomes less about talent and more about the methods used
to implement that talent productively. This is strategy and it is at the core of a successful business (Team, 2021).
Strategy helps provide direction, efficiency, proactivity, and durability.
Strategic Leadership: Managing the strategy process
Strategic leadership can also be defined as utilizing strategy in the management of employees. It has the potential to
influence organizational members and to execute organizational change. Strategic leaders create organizational
structure, allocate resources and express strategic vision (Strategic Leadership, 2022).
Strategic Leadership: Ethical Responsibilities (added per evaluation)
When we think of ethical issues, this can include human rights, worker’s rights, supply chain management, pollution
and toxics, habitats and resources, environmental reporting, use of controversial technologies, political activities,
anti-social finance, and animal rights (Nike, Inc, 2022). Nike, Inc has suffered allegations of forced labor in the
Nike, Inc supply chain, gender discrimination towards female athletes and parents, and failure to ensure all
employees receive a living wage. Company executives have been accused of extortionate age packets and spending
high amounts of money on political lobbying. Coerced minority workers. Uses pesticides and herbicides. Cotton
accounts for 12.34% of all insecticide sales and 3.94% of herbicide sales, even though cotton covers only 2.78% of
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global arable land. Nike used some organic cotton and Better Cotton Initiative (BCI) certified cotton, but this wasn’t
100%. Companies that have the environment in mind should have a clear statement committing to the use of 100%
sustainable cotton.
Nike also uses leather as a substantial part of its business. The leather industry uses a cocktail of harmful chemicals
to preserve leather. Tannery effluent also contains large amounts of other pollutants which can pollute the land, air
and water supply, making it a highly polluting industry. Nike made reference to using Leather Working Group
(LWG) certified leather in its Impact Report 2019, but no clear information was provided about what percentage
was certified 100% LWG gold standard. LWG Gold is the only standard Ethical Consumer considers positive.
Politics
Nike is a dubious company in terms of financial ethics and political activities.
In 2019 Nike’s highest paid Executive Officer received an astonishing $13,968,022 – around £11m. Five named
Executive Officers received over £1m in total compensation in the same year, which Ethical Consumer considers to
be excessive pay.
The company also has subsidiaries in jurisdictions considered by Ethical Consumer to be tax havens, including in
Bermuda, Delaware, Netherlands, Taiwan, Hong Kong and Singapore. At least 21 of these were considered to be a
high risk company type (such as a holding company) for likely use of tax avoidance strategies.
According to [Link], in 2019 the company had spent $1,180,000 on lobbying and in the 2020 election
cycle made $511,737 in political donations to both Republican and Democrat parties. What’s more, in 2019 32 out
of 38 Nike Inc lobbyists were said to have previously held government jobs.
Nike is also involved in lobbying. In February 2020 Nike was listed as a member of the US Council for International
Business (USCIB). Ethical Consumer regarded USCIB to be a corporate lobby group which lobbied for free trade at
the expense of the environment, animal welfare, human rights or health protection.
Animals
Nike lost a whole mark under Ethical Consumer’s animal rights category, because it retailed several products
containing animal-based materials, including leather, wool and down/feathers.
Nike lost marks for not having a clear policy against mulesing. Merino sheep are specifically bred to have wrinkled
skin, which yields more wool. Flies lay eggs in the folds of skin, and maggots can eat the sheep alive. To prevent
this condition Australian ranchers perform 'mulesing' which involves carving large strips of skin and flesh from the
backs of unanesthetized lambs’ legs and around their tails. The company stated “Nike supports the use of wool fiber
that is sourced and certified from non–mulesed sheep and will consolidate its wool sourcing accordingly, as rapidly
as supplies and pricing allow”. This was worded in such a way that it left open the possibility of the company using
wool from mulesed sheep.
How Ethical Is Nike?
Words: Lara Robertson
Category: Rated
Published: 29 Jun 2022
Share for change
FBTW
Our editors curate highly rated brands that are first assessed by our rigorous ratings system. Buying through our
links may earn us a commission—supporting the work we do. Learn more. Nike is one of the most popular
activewear brands in the world, so just how ethical is Nike? Our research shows the brand is making a start, but
the sportswear giant still has work to do across the board. This article is based on the Nike rating published in
February 2022.
From sweatshops to ‘It’s a Start’
Though it seems every man and his dog owns a pair of Nikes, not so long ago, the Nike image was synonymous with
sweatshops and unethical manufacturing. So how does this brand rate today when it comes to its treatment of
People, Planet, and Animals? How ethical and sustainable is Nike?
Nike sweatshops
Nike had been accused of using sweatshops to produce its sneakers and activewear since the 1970s, but it was only
in 1991 when activist Jeff Ballinger published a report detailing the low wages and poor working conditions in
Nike’s Indonesian factories that the sportswear brand came under fire. Soon after, it became the subject of an
aggressive and sustained campaign by United Students Against Sweatshops. Nike was initially slow to respond—but
under increasing pressure, it eventually made some changes by improving its monitoring efforts, raising the
minimum age of workers, and increasing factory audits.
The brand has since earned plaudits far and wide for its efforts. A few years ago, Business of Fashion reported that
Nike has successfully transformed its tarnished image to become a “recognized sustainability leader.” Morgan
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Stanley even ranked Nike “the most sustainable apparel and footwear company in North America for environmental
and social performance, including its labour record.” But is this actually the case?
A step backwards
Though Nike has successfully improved its reputation and has become the top-selling activewear brand globally,
many of its practices are still problematic.
In 2017, Nike took a big step backwards, as the International Labor Rights Forum reported that the company had
turned its back on its commitment to the Worker Rights Consortium (WRC). This move effectively blocked labour
rights experts from independently monitoring Nike’s supplier factories. But in 2021, Nike received a 51-60% score
in the Fashion Transparency Index (in the same scoring range as the previous year), showing it started going in the
right direction again. It’s like Nike is in an on-again-off-again relationship with doing the right thing, begging for
some stability.
Environmental impact
We rate Nike “It’s a Start” for the planet. Though Nike has made a few positive changes to its environmental
practices and is a member of the Sustainable Apparel Coalition, it still has a way to go before it can truly be called a
sustainable brand. Nike uses some eco-friendly materials, including organic and recycled cotton and polyester, and
has water reduction initiatives in its supply chain. The brand has also set a deadline to eliminate hazardous
chemicals by 2025 and the good news is that it is on track to meet its target. But while Nike has set a science-based
target to reduce greenhouse gas emissions generated from its operations and supply chain, there is no evidence it is
on track to meet its target.
Labour conditions
Nike’s labour rating is also “It’s a Start”. Though the brand has focused on female empowerment and inclusiveness
in its advertising campaigns, the women who work for Nike—from factories to headquarters—are seemingly left out
of this picture. In 2018, Nike was sued by two former female employees who accused the sneaker giant of creating a
culture of gender discrimination and sexual harassment.
On a positive note, the company is Fair Labor Association (FLA) Workplace Code of Conduct certified. It also
implements practices to encourage diversity and inclusion in some of its supply chain and discloses adequate
policies to protect suppliers in its supply chain from the impacts of COVID-19 but not workers.
The Foul Play report by the Clean Clothes Campaign and Collectif Ethique sur l’Etiquette shows just how far Nike
has to go when it comes to living wages. It highlights the difference between the ever-increasing amount of money
paid on sponsorships to sports stars and other marketing expenses, compared to the reduction of the share of the
final price of your sports gear paid to workers in the supply chain. The report calls on both Nike and Adidas to
commit to paying living wages across their supply chains by a specific date and other supporting action. Read more
about living wages for garment workers here.
In previous ratings of Nike, we couldn’t find evidence the brand ensured payment of a living wage in most of its
supply chain. When we reviewed the brand in February 2022 however, we found that Nike now ensures payment of
a living wage in a small proportion of its supply chain, which is an improvement. Of course, it’s a tiny step in the
right direction, and we urge Nike to expand this initiative to its entire supply chain.
Animal welfare
Nike does not use fur, angora, or other exotic animal hair or skin in its products, which is a step in the right
direction. However, it does use leather, wool, and down feather without specifying sources. This lack of
transparency is problematic as the welfare of animals and workers is unknown. Because of this, we have given the
brand a rating of “Not Good Enough” for animal welfare and hope for more progress soon.
Overall Rating: It’s a Start
So, how sustainable is Nike? Overall, we rate Nike “It’s a Start” based on information from our own research.
Though Nike has a few promising environmental measures in place, it’s clear that the company is not doing as much
as it should and needs to make serious changes in most areas. With an annual revenue of over $44 billion in 2021,
the sportswear giant can certainly afford it.
Good On You ratings consider hundreds of issues, and it is not possible to list every relevant issue in a summary of
the brand’s performance. For more information, see our How We Rate page and our FAQs.
See the rating.
Good swaps
If you love the Nike vibe but prefer to support brands doing “Good” or “Great”, we’ve rounded up some more
sustainable alternatives to Nike for you below.

[Link]
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SWOT Analysis (External Environment - Opportunities and Threats)

A SWOT Analysis of Nike, Inc outlines how strengths relate with the company’s weaknesses, opportunities, and
threats. Nike Inc. is now one of the world’s biggest players in the athletic footwear market. An understanding of the
company’s strengths and weaknesses (internal strategic factors), and opportunities and threats (external strategic
factors) yields insights on how a manufacturing and retail business can achieve global success despite tough

competition. Nike Inc.’s SWOT Analysis emphasizes the importance of product development to maintain a
competitive edge; however, the results of this SWOT Analysis point out some possible new strategic directions to
further enhance Nike’s global performance and leadership.
[Link]
Opportunities
Nike, Inc is considered one of the top brands, yet the retail market is very competitive. Some high rated competitors
are advancing their way to the top. Nike, Inc needs to look for opportunities to help expand their business and keep a
competitive edge. They should continue product development including accessories, continue to expand the global
market, capitalize on special events such as being a sponsor to events such as the World Cup or the Super Bowl.
There are still many international regions that need to be tapped into for sportswear and with Nike, Inc’s global
brand recognition, it could be very beneficial in areas that have disposable income to spend. They should continue to
grow sustainably. They should also expand on AR/VR related products. In a highly competitive market, several
threats can affect a company’s business. The Covid pandemic affected many companies including Nike, Inc. An
effective budget plan focusing on pandemic related, or economic factors will be a great tool to enforce. Nike, Inc
should also investigate new markets such as Women’s athletics. They have numerous famous athletes that promote
their brand, but the big names are mostly male.
Threats
Counterfeit products are a severe threat to the brand. Nike, Inc has no control over the diverse entrance of these
products. Nike, Inc’s products are of the best quality, yet other brands can attract more customers by offering a
cheaper price. A recession or pandemic can lead to job shortages at worldwide branches. Nike, Inc has experienced
negative feedback due to advertising in mass media such as the Kasey v Nike, Inc, the Beatles song, and the horror
ad in the past. Insuring a better more successful marketing and advertising strategy will be very beneficial. The
company is exposed to international trade, so it must sell products in different currencies. This destabilizes the costs
and margins for profits over long periods of time. Increasing competition within the industry is putting pressure on
prices. Competitors develop alternative brands and techniques to counter what Nike, Inc has to offer. Consumer
tastes change, meaning Nike, Inc must continue to change the meet the needs of its customers. Consumers will shop
around for a better deal, looking for a similar product at a cheaper price. Substitute products are increasing which
threatens the Nike, Inc industry. Price fluctuations such as fuel prices causing input costs for Nike, Inc.
PESTLE Analysis
A PESTLE analysis describes the various factors that can affect an organization’s success. External influences are
powerful and can negatively affect established organizations. Using the PESTLE analysis, companies can chart the
impact of multiple external factors on their future growth. This method looks at the factors in a marketplace and
examines how those factors affect the consumer. Businesses must identify the problems or threats that may hinder
the company’s growth and devise strategies to mitigate them. In short, PESTEL stands for Political, Economic,
Social, Technological, Environmental, and Legal factors which are affecting the entire industry.
 5

Support from US government

Changes in manufacturing & tax law
Politic Trade war amoung countries
al

Increasing cost of production and labor

Varying profit margins
Econo Acquisitions and subsidiaries causting financial
mical strain

People becoming brand conscious

Increasing purchasing power of females
Consumers becoming fashion & health conscious
Social
Use of sweatshops

Strong social media presence

Increasing funding in R&D investment
Techn Use of latest technology in footwear
ologic Implementation of strong marketing strategies
al

Growing population in China

Government environmental policy reforms
Envir Global warming
onme Pandemics
ntal

Feud with Adidas and other Sports companies

Allegations related to child labor
Minimum wage proclamation
Legal Product piracy

Political: Political factors are defined as government policy and legislative changes that affect the economy, such as
tax and employment laws. These factors may impact the profitability of a company. This could be anything such as a
sudden change in the existing political system. Since Nike, Inc is a global manufacturer, it is always subject to
changes in taxes, laws, and trade policies. Nike, Inc is based in the U.S., which generally has pro-growth policies.
The government has a responsibility to create economic policies, which have a great effect on the growth of a
business. Nike, Inc has been able to modernize their products because of these policies. When political factors are
favorable, it will provide a boost to a company. A few years ago, Nike, Inc released a controversial political ad
starring Colin Kaepernick. He was an outcast American football player and civil rights activist (Kelner, 2018). He
refused to stand during the national anthem as a player for the San Francisco 49ers (Kelner, 2018). This was to draw
attention to the police killings of African Americans. Nike, Inc’s ad with Colin was “Believe in something. Even if it
means sacrificing everything” (Kelner, 2018). Nike, Inc considered him one of the most inspirational athletes of his
generation and used this political statement to increase their sales and revenue.
Economic: Changes in the inflation rate, foreign exchange rate, interest rate, and the current stage of the economic
cycle all pertain to this factor. This aspect deals with the sales and profit margins of Nike, Inc. Their products are
affordable and very popular. Nike should strive to obtain new markets that are emerging across the globe. Nike, Inc
continues to sell well-known and respected shoes and apparel. These factors include inflation, exchange rates,
recessions, and product supply and demand. The biggest threat here is an economic recession. A recession will
always have an adverse effect on the growth and advancement of Nike, Inc. Nike, Inc must be careful when raising
their prices. This could cause customers to seek out cheaper alternatives. The target focus should be high income
populations and countries with higher capital.
Social: These factors reflect on society such as the culture, beliefs, attitudes, and values. They include
demographics, culture, and lifestyles. A customer’s lifestyle, education and beliefs determine their social factors
involved in the buying decisions. This includes age, gender, and the customers’ health. In today's world, health
consciousness and fitness are a big concern. This is great for Nike Inc products as more demand for its products is
necessary, but it comes with consequences. They must continue to address the problems with labor and factory
conditions that can negatively affect their sales. Trends change. Nike, Inc. needs to anticipate these changes. Nike,
Inc can develop campaigns to attract the younger generation as well as targeting the health-conscious population.
Technological: These factors include changes in technology, and how technology is used in industries and research.
Technology is consistently changing, making innovation a big necessity. Nike, Inc applies all their marketing and
technology strategies to the economics of innovation, differentiation, and segmentation. They have been able to
maintain the name in the market. Nike, Inc. must continue to invest in creating new and innovative technologies by
either matching the technology or innovation of a better alternative.
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Environmental: Companies must have an environmental consciousness to survive in the market. These factors have
little to do with business. It’s about the climate, pollution, weather, and environmental laws. These factors are vital
because of the growing concern regarding environmental problems with climate change. Production of nature-
friendly products are promises Nike, Inc has made and need to continue to pursue. The factories they use have been
known to cause both air and water pollution, which can lead to an uproar by environmentalists. Nike, Inc’s large
manufacturing factories add to air pollution problems which in the eye of environmentalists causes problems Nike,
Inc must understand the legal factors involved and make necessary adjustments.
Legal: Intellectual property laws are in place to protect a business’ ideas and patents. Without these patents, an idea
can be stolen causing a company to lose their competitive edge on that certain product leading to company failure.
These factors are legal aspects that affect a business such as consumer law, copyright law, and health and safety
laws. Nike, Inc has always maintained business ethics. They continue to improve on being environmentally friendly.
Nike, Inc should continue to adhere to safety rules and regulations while also enforcing strict guidelines for
copyright regulations to ensure patents are to avoid imitations.
Porter’s 5 Forces
An analytical model called Porter’s 5 Forces is used to identify the structure of an industry and determine
competitive strategies for companies (Porter, 1998). It helps explain why industries maintain different degrees of
profitability. The five factors that make up Porter’s 5 Forces (all external) are: industry competition, new entrants in
the industry, supplier or seller power, buyer or consumer power, the threat of substitutes.
Threat of Threat of New
Substitutes - Entrants -
Moderate Moderate
Competitive Rivalry
- Strong
Bargaining Power Bargaining Power
of Buyers- of Suppliers-
Moderate Weak

Porter's 5 Forces
1. Industry competition: There is intense competition throughout Nike, Inc’s industry, and market.
Nike, Inc has several competitors including Adidas, Under Armour, Asics, Fila, and Puma.
Despite all the competition, Nike, Inc with its “Just Do It” slogan and “swoosh” logo remain on
top. There slogan is the most recognized in sports. The sports industry has very high competition;
however, Nike, Inc has a strong brand and product name that helps them continue to stand out.
Nike, Inc must continue all activities to innovate and introduce new products and services and
continue the marketing strategy of athletes, they will stay on top. New businesses would need very
high capital to compete with Nike, Inc. The research and development alone hinder new entrants.
Governmental policies require strict licensing and legal requirements to be fulfilled before a new
entrant can start selling.
2. New entrants in the industry: Nike, Inc currently holds the top position in the marketplace with
only a few competitors. New entrants to the market would mean the entrant would have to be
wildly innovative and cause a complete political change to knock Nike, Inc off its pedestal.
Entrance is simple, but making a mark is difficult. Brand development comes at a high cost.
3. Supplier or seller power: The dust is still settling on Nike, Inc for allegations of forced labor, and
worker wages and conditions at factories in China. In March of 2020, a report from Australian
Strategic Policy Institute revealed that the Chinese government was forcing young women to
produce Nike shoes in a factory. Nike says they have stopped using this factory (Pang, 2022).
4. Buyer or customer power: Nike, Inc is still leading the industry in footwear. Their image is high
quality, relatively affordable goods, and services. A shift in these areas would cause Nike, Inc to
be threatened by consumer bargaining power. As of now, Nike, Inc is in a good position and has
no need for a shift in their pricing strategy. They have a strong customer loyalty clientele.
5. The threat of substitutes: Nike, Inc has accomplished customer and brand loyalty and has a great
keeping up with innovation, keeping their products on the cutting edge of what the customers
wants and needs. The few accessible alternatives are also created by poor profit-making
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industries. This indicates that there is no upper limit on the maximum profit that businesses in the
sector where Nike, Inc operates may make.
SWOT Analysis - Strengths and Weaknesses

[Link]

Strengths:
Nike, Inc. is globally recognized for being the number one sportswear brand in the World. They have built a popular
image as an innovative and customer-oriented brand. They have a strong research and development strategy which
allows them to continue to evolve and be innovative. They offer high quality products at an affordable price. Their
marketing strategy is strong with the use of top athletes and a significant geographical presence across the globe.
The shoes they manufacture are lighter and comfortable because they use lunarlite foam and flywire materials (Nike
SWOT Analysis 2022, 2022). It has strong distribution channels, and a strong position over its minimal long-term
debt. It has innovative shoe designs which enable consumers to design their own shoes online. Nike, Inc uses
products of the highest quality.
Weaknesses:
Nike, Inc’s income from the business is dependent on its share of the footwear market which leaves them vulnerable
if this market was to fall. Nike, Inc was faced with being in violation of overtime and minimum wage rates some
time ago and was faced with using sweat shops recently. These shops were providing poor working conditions and
exploiting a cheap workforce. This had some negative effects on profit. Some say their prices are higher than some
of the competitors such as Adidas.
Nike, Inc VRIO Analysis:
VRIO analysis helps in evaluating the resources of the firm. When the firm can understand its resources, it helps to
gain a competitive advantage and work on its weakness. VRIO analysis helps the firm to evaluate its internal
environment and work on the improvement areas. The tool helps in strategic management and in making better
business decisions. When one of the resources is not adding value, then it should be outsourced. When the resource
is not rare, but it is valuable, the firm is still competitive. When the resource is rare and valuable but not too costly, it
still provides a competitive advantage but for a limited period (Donnellan and Rutledge, 2019). When the resource is
rare, valuable, and costly, it provides a competitive advantage, and the firm must maintain the advantage to gain a
consistent and permanent competitive advantage. The four dimensions of the VRIO as depicted in the below image
are being discussed below:

VRIO Framework: Value

For a resource to be valuable, it must create a strength for the organization in relation to other organizations. If the
company has a better process, stronger access to a supply of raw material, a better supply chain, a stronger brand
recognition, a better reputation that is recognized in the industry, better trained or skilled employees, a unique
location, lower costs of production, a unique or exclusive contract with a customer, or other positive factor or
recognition, then it is valuable. In many cases, the value of a resource will decline as competitors copy or develop
their own similar resources. It may be helpful to leadership to put a time frame for how long the resource will hold
value. In some cases, this is easy. For example, if an NFL player signs a five-year contract with a team, the value is
 8

five years. In other cases, you may need to determine how long it will take before others gain a similar or substitute
resource, which will decrease the value of your resource. Nike, Inc uses its financial resources to a greater extent
which helps it to act against all threats. Nike has a set of trained and loyal employees who add value to the company
and remain associated with the company for a longer time. Nike has acquired patents in its products which
eliminates competition. Nike has a perfect distribution network which adds as a valuable resource (Andersen and
Samuelsson, 2016). They reach out to maximum people by using efficient tactics. The product reach and promotion
help Nike to maintain profits; however, the cost in the manufacturing process is high, which creates a disadvantage
for the company and affects its profits. Nike, Inc analyses the customer feedback and their expectations to make
innovations, but this involves a lot of cost as well, which is not valuable. The research and development team needs
to be improved to restrict the costs involved in the process.
VRIO Framework 2: Rare
A resource is considered rare if it cannot be easily purchased on the open market by competitors or if there is a
limited supply of that resource and your organization controls the largest share. It can also be rare if there are many
competitors in the marketplace and only a few of the competitors have this resource. An example would be if a
business needed to hire employees based on a specific background, but where there is a limited supply of workers
containing this background. Over time, some resources become rarer as scarcity increases because of demand for it,
while others become less rare because high demand for something in short supply tends to increase production or
availability.
Nike has maintained patents on some of its products to avoid any competition. This helps them to be the sole
supplier and maker of a particular set of products. The employees of the company are satisfied with association and
Nike ensures to retain them by providing better working conditions, ensuring their sustainability and retention. Nike
has a great distribution network, and its competitors are unable to meet the investment and the time involved to
improve its distribution networks (Hofmann, Gold, and Curtin, 2019).
VIRO Framework 3: Inimitable
A resource to be inimitable if there is no substitute at a reasonable price or it is not easy and quickly duplicable by
others. Intellectual property falls into this category. A strong and respected brand or reputation, along with a great
culture can also be included.
It can be challenging for competitors to imitate the financial resources of another company. Nike has been
accumulating resources and serving its consumers since 1964, maintaining their profit. The products on which Nike
has a patent cannot be imitated, giving them an edge from competitors. Imitating or hiring employees from Nike is
possible if the competitor can influence the employee. The distribution network of the company is very strong which
has been developed gradually.
VRIO Framework 4: Organized
Organizations often possess key resources but are not structured to maximize the value of those resources. For
example, an organization may have a patent on a product but have an expensive manufacturing process or a poorly
developed supply chain. In both these cases, the organization possesses key resources, but cannot execute
effectively.
Nike has patents on some of its products, but they are not well organized (Ahmed et al, 2016). Nike is unable to use
the patents to its advantage. The company has a great distribution network which helps it to reach different
consumers at different places within a minimum time. The company has a great distribution network which helps it
to reach out to different consumers at different places within a minimum time. It ensures that its products are easily
available at all the outlets. This approach helps Nike to maintain a competitive advantage.
VRIO analysis helps a firm or company analyze its competitive advantage in the market. It helps in eliminating the
factors which are not useful for the company in the long run. Nike has an advantage in financial resources and
distribution networks, but it needs to work upon gaining an advantage from its patented products.
Brand Image: Nike is considered a big brand which is the biggest strength for the company. Consumers recognize
it as a valuable service which leads to building trust and usage. Its brand image helps to create a competitive
advantage over other competitors. The company meets all the dimensions of the VRIO analysis and is performing
above normal. The company is into introducing new products and improving the existent products to meet the
expectations of its consumers (Kim, 2019). Nike, Inc brand image is valuable, rare, costly to imitate, and sustains an
above normal competitive performance.
Product innovation: The team at Nike is quick to analyze the changing needs of its consumers, which helps it to
introduce the products to the market in a short span of time. Through new innovations, the company can maintain its
trust among the athletes and its users in turn creating a competitive edge, but there are competitors, such as Adidas,
Asics, Fila, Puma, Under Armour, Skechers, and New Balance which have been introducing innovation in their
products. However, they are unable to meet the innovations being done by Nike due to the cost involved (Hofmann,
 9

Gold and Curtin, 2019). Nike, Inc’s product innovation is valuable, rare, costly to imitate, and sustains an above
normal competitive performance.
Fit Technology: The fit technology of the company provides a competitive advantage for the company and helps it
perform normally. Nike uses polyester which is cheap and easily available. It can introduce the new products in
countries where wearing polyester fabric clothes is not new or less common. The fit technology of the company
provides a competitive advantage to the company and helps it perform normally. Nike, Inc’s fit technology is
valuable and sustains aet a normal competitive performance; however, it is not rare or costly to imitate.
Supply chain management: The Company can manufacture its products from China and Vietnam which helps in
reducing its labor cost. (Kim, 2019). The same technique is being used by Adidas and the costs involved in
imitation are less. Nike is finding new markets and making improvements in its network to maintain the completive
advantage. Nike, Inc’s supply chain is valuable and sustains a normal competitive performance; however, it is not
rare or costly to imitate.
Conclusion
Overall, Nike, Inc should continue to increase the number of retail stores abroad. Their focus on resources and
development should focus on creating new fashion trends and the customer’s preference. Nike, Inc should improve
its applications on smart phones and gadgets. A new target could be more on female athletes and product
innovations on athletic footwear for children. With their “Just Do It” mentality, Nike, Inc can overcome all the
weaknesses and threats they are faced with.

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