BUS485 Grand Canyon University Executive Summary of Nike Report The purpose of this assignment is to summarize two strategic alternatives for your selected
BUS485 Grand Canyon University Executive Summary of Nike Report The purpose of this assignment is to summarize two strategic alternatives for your selected corporation based on individual research and team analyses.
Assume that you work as an analyst team lead at the company you have been studying throughout this course, and you are issuing a high-level communication to company CEO that summarizes your analysis. Based on what you have discovered regarding environmental scan issues, financial analysis issues, industry trends, etc., communicate a plan for implementing two strategic alternatives in an executive summary of 750-1,000 words.
Include the following in your response:
Based on your work this semester, synthesize and present key analytical findings about where the company is exceling and how or where it can improve. Refer to both your CLC and individual analysis in your summary.
Propose two creative yet viable corporate-level strategic alternatives. Critique the pros and cons of each alternative utilizing your analytical findings.
Select and defend the pursuit of one of your two viable alternatives. How does this alternative align with the firm’s mission, vision, and values? How can management employ this alternative to create competitive advantage for the firm? Suggest next steps.
Based on your analysis, identify a business unit or activity within the corporation that you would suggest defunding in order to finance your strategic alternative, or provide an alternate funding source. Defend your selection.
Given your overall proposal, how do you suggest the company promote its culture, vision, and mission to maximize its chances for success in the industry? How might the company develop its servant leaders to endorse and exemplify tenets of the Christian worldview (CWV) in the workplace? Propose and defend at least one significant leadership initiative.
Prepare this assignment according to the guidelines found in the APA Style Guide, located in the Student Success Center. An abstract is not required.
This assignment uses a rubric. Please review the rubric prior to beginning the assignment to become familiar with the expectations for successful completion.
Benchmark Information
This benchmark assignment assesses the following programmatic competencies:
BS Business Analytics; BS Business Management; BS Finance
3.3 Examine the role of leadership in creating competitive advantage through aligning strategy with an organization’s mission, vision, and values.
4.3 Determine how servant leaders develop leadership capacity in others and a shared value of service within an organization. Running head: CLC Organizational and Operational Plans
CLC Organizational and Operational Plans
Team Nike
Grand Canyon University:
3.15.2020
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Nike’s Current Organizational Structure
Nikes current organizational structure includes a board of directors that consists of 13
people. Philp H. Knight is co-founder and chairman emeritus and has been essential in driving
Nikes success since it was started in 1964. Since then Knight has appointed multiple people to
the board of directors to help lead Nike. He has appointed Mark Parker as executive chairman,
John Donahoe as president and CEO, Andy Campion as EVP and CFO, Elliot Hill as president
of consumer and marketplace, Hilary Krane as EVP and CAO & General Counsel, Monique
Matheson as EVP Global Human Resources, John Slusher as EVP and global sports marketing,
Michael Spillane as president of categories and product, Eric Sprunk as COO, Ann Miller as VP
corporate secretary and chief ethics and compliance officer, Matt Friend as CFO and Nike
operating segments and VP investor relations, and Chris Abston as VP and corporate controller.
Each person appointed brings some expertise in their field of business. This structure has
benefited the firm by maintaining competitive advantage over other companys by relying on the
innovative and functional leadership of the board of directors. The current organizational
structure challenges the firm’s success by placing barriers that may be hindering the firms ability
to be open to new strategies or ideas. The current board has been the same since 2007 and there
has been no real changes. This brings up the challenge of appointing new minds that may be
essential to the future of the firm’s success. I would change the structural issues by adding a new
perspective to the board such as a younger mind that deals with trends and social media that the
older personnel on the board may not be aware of.
Benefits and Risks of Strategic Alliance
Strategic alliance can be thinking as a arrangement between two corporations to aim to
accomplish one or multiple mutually beneficial project but both have its own independence. If
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compare to a joint venture, this has less complexity and less binding which both businesses pool
resources to main a separate business entity (Kenton, 2020).
The advantages and the benefits that firms might gets from entering an strategic alliances
with other firms can include accessing new technologies, R&D resources and IP rights,
diversifying products and services, improving material flow and product lifecycle times, making
operations more agile and reducing overhead and administrative costs (Martyak, 22016). For
most notably, Nike has formed a nonequity alliance with Apple to mix sports with music
industry and created the Nike+ iPod products, both Nike and Apple used their expertise and
popularities in their major revenue builder with their reputation on both industry to capture users
and customers by sharing their unique culture and resources to create a competitive advantage
than the competitors, this is such a innovative and beneficial way (B, 2012).
On the other hand, there are some risks that could possibly appeal while two companies
become a strategic alliance, most the risks is due to the independency of both corporations, also
the culture, financial, and economic situation differences between two companies which usually
results in inefficient management, loss of competencies, loss of operational control, information
leakage, and hidden costs. All these risks can be put in two forms of risk: 1. relational risk (the
probability and consequences that both companies are not satisfice with the cooperation) 2.
Performance risk (the probability and consequences that the objectives of the alliance are unable
to be achieved) To avoid and manage those risks, companies may stay trust in the strategic
alliances, which can be divided into two types of trusting, goodwill trust and competence trust,
companies need to have faith in each others good intentions and integrity. Also, the sense of
confidence which believes the partner has the capability to accomplish its duty and given tasks in
the alliance. The control in the strategic alliances is also the key factor to manage the risks,
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regardless the trust between two companies, a set of rules and formal measure of the
performance control is indeed, which are output control, behavior control, and social control
which measure the outcomes, desired appropriate behavior, and the formation of common
valuable company culture and information (Husdal, 2015).
Business-Level Cooperative Strategy
Amidst the fluid situation of the COVID-19 pandemic, its important for Nike to undergo
various strategies to adapt accordingly. Business-level cooperative strategies serve to provide an
organization with a competitive advantage by strategically combining their resources (Hitt,
Ireland, & Hoskisson, 2017). The uncertainty-reducing strategy would be appropriate in this
situation in order to minimize risk and uncertainty (Hitt, Ireland, & Hoskisson, 2017). All though
this is a tactic largely used in fast-paced markets, it serves as an effective strategy considering
that many companies are losing money quickly (Long, 2020). Its important for Nike to take a
proactive approach to minimize their losses. Entertainment based organizations have done this
by suspending their seasons or events amid public health and safety concerns (Long, 2020).
For Nike, an uncertainty-reducing strategy to address the COVID-19 situation
specifically concerning the footwear market in the United States would be an alliance between
Nike and FedEx in regards to delivering footwear to customers. First off, this will increase
effectiveness and efficiency. Nikes North American Logistics Campus is based in Memphis,
Tennessee, and serves as their primary footwear distribution center (Nike, 2015). Meanwhile,
FedEx headquarters are also based in Memphis, Tennessee (FedEx Logistics, 2019). This
provides for a very convenient distribution and communication process with both major
organizations being based in the same city. As regulations, restrictions, and occurrences change
rapidly, this will provide Nike with a competitive advantage of getting their products out in a
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timely manner. Secondly, this move minimizes risk while providing both organizations with
value. If the Nike distribution center was based in one state while FedEx was in another, they
may be susceptible to the travel/distribution restrictions of that specific state, which could turn
out chaotic. Since they are both in the same state and city, these regulations should remain
consistent for Nike and FedEx. Nike is able to streamline their distribution and delivery during
an unstable situation, while FedEx receives a reliable client to continue to bring in revenue. This
fulfills the purpose of a business-level strategy, and effectively demonstrates a situation in which
an uncertainty-reducing strategy would be used.
Internal Governance Mechanisms
Governance within a company is important towards the completion of goals and
milestones within the company. It is what propels a corporation in what they want to achieve, so
integrating the right system can be tedious. There are multiple types of governance mechanisms,
but for the sake of Nike, the internal governance mechanisms will be covered. According to
Chron.com, The foremost sets of controls for a corporation come from its internal mechanisms.
These controls monitor the progress and activities of the organization and take corrective actions
when the business goes off track. Maintaining the corporation’s larger internal control fabric,
they serve the internal objectives of the corporation and its internal stakeholders, including
employees, managers and owners. These objectives include smooth operations, clearly defined
reporting lines and performance measurement systems (Davoren, 2017). An example of this is
independent internal audits. As a leader, it is important to know the accounts of the company.
Without this knowledge, crimes can easily be committed or goals can not be reached. Internal
audits should be done routinely. Also, giving the board of advisors levels of responsibility will
help with the fluidity of the company. For example, assigning these advisors to help out lower
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level employees such as interns will create a sense of comfort within the company. Nike is the
posterboy for how a business should be run, and that starts with the higher ups being involved in
many aspects of the company.
Strategy and Structure
Nikes strategy was changed in mid-2017 to the triple double strategy. From this strategy,
they promised to double it cadence and impact of innovation, double production speed to market
and also double direct connections with consumers. From this approach, Nike has successfully
more than doubled their stock. What Nike is doing to create this triple double strategy is to first,
increase health awareness. Highlighting the important benefits of regular exercise with
endorsements of major celebrities is a time proven way to do this. This is helping by pushing the
notion of being fit is not only the healthy way to live but also the style that is attractive to the
population. Continuing to advance styles in athletic wear keeps Nike infront of all other athletic
wear companies that do not have as good of a grip on selling style with a purpose. Because of
this, the expected growth rate of Nike is projected to reach 355 billion in sales by 2021 by
Morgan Stanley (Ballard, 2019). The second part to this strategy is to overload the customers
with new releases in style preferences and cutting edge technology which is pushing a gap
between Nike and the competitors. The strategy of Nike is influencing the structure of how the
company is run by creating a brand that is always ahead of the competition which makes Nike
the first stop for any customer looking appearance apparel and performance out of the clothing
they wear. The structure and strategy go hand and hand because when making a change in one, it
will affect the other. Both need to have a strong foundation to build on to support the change on
the other.
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References
Ballard, J. (2019, July 31). Where Will Nike Be in 5 Years? Retrieved March 13, 2020, from
https://www.fool.com/investing/2019/07/30/where-will-nike-be-in-5-years.aspx
B., J. (2012, April 15). Nike’s Strategic Alliances. Retrieved from
http://joshsnikeblog.blogspot.com/2012/04/nikes-strategic-alliances.html
Davoren, Julie. Three Types of Corporate Governance Mechanisms. Small Business Chron.com, Chron.com, 21 Nov. 2017, smallbusiness.chron.com/three-types-corporategovernance-mechanisms-66711.html.
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2017). Strategic management: Competitiveness
and globalization: Concepts and cases (12th ed.). Boston, MA: Cengage Learning. ISBN13: 9781305502147
Husdal. (2015, September 9). Retrieved from http://www.husdal.com/2009/06/25/trust-controland-risk-in-strategic-alliances/
Kenton, W. (2020, January 29). The Risks and Rewards of a Strategic Alliance. Retrieved from
https://www.investopedia.com/terms/s/strategicalliance.asp
FedEx Logistics. (2019, February 12). FedEx Logistics to Move Global Headquarters to
Downtown Memphis. Retrieved March 15, 2020, from
https://about.van.fedex.com/newsroom/fedex-logistics-to-move-global-headquarters-todowntown-memphis/
Long, H. (2020, March 11). The first U.S. layoffs from the coronavirus are here. Retrieved
March 15, 2020, from https://www.washingtonpost.com/business/2020/03/11/layoffscoronavirus/
CLC Organizational and Operational Plans
Martyak, M. (2016, April 13). Strategic Alliances: How They Can Benefit Your Business.
Retrieved from https://www.powerlinx.com/blog/what-are-strategic-alliances/
Nike. (2015, June 26). Nike Opens Its Largest Distribution Center Worldwide In Tennessee.
Retrieved March 15, 2020, from https://news.nike.com/news/nike-opens-its-largestdistribution-center-worldwide-in-tennessee
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Running Head: ASSESSING AND MANAGING RISK
Assessing and Managing Risk
Tianxiang Li
Professor Smith
Grand Canyon University
4.5.2020
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ASSESSING AND MANAGING RISK
Assessing and Managing Risk
A comprehensive analysis of strategic alternatives and assessment of financial analysis
has an impact on the respective firm upon implementation. Stakeholders are tasked to ensure a
prime combination of recommended activities for the overall benefit of the firm. Following the
prior studies on Nikes strategic alternatives assessment and financial analysis, a recapitulation
of the two studies is recommended to point out the underlying value-enhancing strategies.
Potential value-enhancing strategies may pose a risk to a firm as determined through the
recapitulation of strategic alternative analysis and financial analysis assessment.
A. Strategic Alternatives Assessment Recap
The established Nikes brand counts on the firms outstanding strength. Unlike most
firms, Nike does not exert much effort in product promotion activities. Besides, the firm has
earned a vast global influence with its brands selling across the globe. Multicultural customers
across the world have deeply rooted the firms positive reputation and further expansion
potential. Due to economies of scale, Nike has achieved low production costs hence gaining the
financial stamina to finance iconic subsidiaries like the Air Jordan brand according to McNew
(2017).
Batson (2013) reveals that strategic alliance formation entails collaboration with an
autonomous firm to formulate a common strategic goal for purposes of collective improvement
and expansion. Despite the strong capital base implied by the strategic alternative assessment,
the formation of a strategic alliance poses a potential risk to Nike. The possibility of hidden
costs, weakening of the brands market base, management wrangles, and unstable control of the
firms operations pose a huge potential risk to Nike. The process of developing and maintaining
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a brand is quite involving. Potential value-enhancement policies that pose a threat to the firms
reputation and brand destabilization should be critically scrutinized to avoid hazardous decisions.
Both short-term and long-term financial implications of the strategies to be implemented for
Nike should be considered to ensure the global brand is maintained. Besides, setting a strategic
alliance with a globally established firm might create unnecessary competitive forces due to
natural dynamics. For instance, striking the deal with Adidas, whose P/E ratio is at 20.64 as
compared with Nikes 30.72 might work for the sole benefit of Adidas hence posing a huge loss
of global market share for Nike according to white et at. (2020).
B. Strategic Alternatives and Associated Risks Information Gaps
The formulation of value-enhancing strategic alternatives for an established firm like Nike is
a broad task. Some customized data is required to ensure the process is successful and productive
hence posing a positive growth index to the firm. For instance, organizational culture is quite
essential in the determination of the firms future. Decision-making processes and general
planning of an organization is based on the firms culture. Information on Nikes organizational
culture concerning strategic alliances and other value enhancement strategies would be quite
productive in the formulation of the best strategies to improve the firm. Consequently, some
organizations have mission and vision statements pegged to their respective organizational
culture. Despite the availability of strategic alternatives to achieve the set objectives, such firms
are limited to their culture hence hindering the decision. The information on Nikes
organizational culture and related aspects would be elemental in the formulation of valueenhancing strategic alternatives.
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Besides, Nikes outstanding threats include competitive forces from other global firms and
the introduction of poor-quality counterfeits at lower prices. A legal approach to combat
production and trading of counterfeit products would help Nike mitigate the challenges posed by
the introduction of counterfeit products. Besides, the improvement of production techniques by
the use of technology-based methods would lower the cost of production further. With low
production costs, Nike would avail products at affordable prices hence beating the competitive
forces.
C. Financial Analysis Recap
Formation of strategic alliances consideration of profitability ratios is the key financial
aspects considered in the financial analysis study according to Batson (2013). The right
combinations of these aspects would ensure safe value-enhancement strategies. Nike has
consistently maintained the promising values of profitability ratios over time (McNew, 2017).
For instance, the P/E ratio which determines the firms against its earning has been fairly
consistent. The current Nikes P/E of 32.72 explains the companys high possibility of
expansion. In this case, an expansion would mean devising technological means to combat its
weaknesses and threats (Nike Inc., n.d.).
Alliance formation could be a lucrative strategy owing to keen scrutiny before
implementation. However, the strategy entails a higher risk as compared to potential profits
attached. For instance, allying with an untrusted partner would result in conflicts that would cost
Nike both finances and reputation. Besides, alliance formation is a long-term strategy with
uncertain immediate cost implications to develop and maintain. Owing to the undefined nature of
the strategys outcome, it poses more risks than potential benefits to Nike. Also, the outstanding
Nikes profitability ratios would drastically fall after commitment to any alliance. The time to be
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taken to restore the values poses a higher risk to the companys global market positioning as
compared to the little anticipated value enhancement.
D. Financial Assessment Update
The global market is quite dynamic due to numerous external factors that affect the market.
International policies, natural calamities, internal legislative issues, and internal factors are
among the outstanding aspects that contribute to a dynamic global market. Referring to Nikes
financial position, the outbreak of the COVID-19 pandemic has negatively affected the
companys global financial position. The United States forms the biggest market for Nike
Company. In reaction to the pandemic, Nike has closed its stores in the United States, New
Zealand, Canada, Western Europe, and Australia according to Fernandes (2020). The gross loss
in sales and promotional opportunities due to the pandemic has decimated the companys
financial status as compared to the values presented in the previous study.
However, digital marketing and other internet-based techniques pose a potential rise in
Nikes profit ratios despite the pandemic. COVID-19 is a global pandemic hence most of the
firms are equally affected. Besides, as of 25th March 2020, the companys shares fell nearly by
8% due to worries over the pandemic. 16% of Nikes revenues are from china hence resulting in
the loss. The companys PEG has fallen up to 1.5x. Moreover, Nikes P/E is arguably 37x as
compared to the initial value of 32x according to Fernandes (2020)
E. Decision Matrix Applicability
A decision matrix compares the possible choices arranged on rows against the respective
parameters that should be consi…
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