Strategic Operations Performance Of Nike †MyAssignmenthelp.com

Question: Discuss about the Strategic Operations Performance Of Nike. Answer: The Company Nike, Inc. is an American footwear designing and manufacturing company that runs worldwide marketing. The company is the most successful company in the athletic shoes supplying across the globe and covers 47% of the global market. The company generates worldwide revenue of 32.4 billion this year which is 6% up from last year (News.nike.com 2016). The Blue Ribbon Sports was founded by Bill Bowerman and Phil Knight in 1964 that changed its name in 1972 to Nike (Gibson 2012). The company strategic market campaign promotes innovation and inspiration in athletes lives (About.nike.com. 2017). Outside America the company owns runs business in 45 countries in 700 stores (Morris, Kuratko and Covin 2010). Nike aims for the maximum number of buyers so they offer various ranges of products for all ages. This also reflects in their company statement as they treat every customer as an athlete should wear their products. However considering the price of their products it is easily understandable th at the company mainly targets the high income group customers. The company enjoys the credit of being the top market leaders in the sports footwear supplying business but there are other equally strong competitors present in the market as well. The other two top sports footwear companies that are present in the market are Adidas and Reebok (Team 2017). Adidas generated revenue of 19.3 billion where Reebok generated 3 billion (Adidas-group.com 2017). There are competitors like Puma, Fila, Converse, Under Armour, New Balance, K-Swiss, Li Ning and ASICS. Apart from these competitive companies Nike is facing serious challenges from cheaper substitute sports footwear that are gaining popularity. Literature Review The strategic operations performance objectives help the company to achieve the competitive advantage in the global market. Organizational performance is also closely related to the strategic operations that the company engages in. This section tries to explore various literatures that discuss the concepts of performance objectives and their significance in the organizational performance. Quality According Slack and Lewis (2011) five categories can be identified as cost, quality, dependability, speed and flexibility for the performance objectives. The quality is defined as performing the assigned tasks effectively, procuring services and goods without any faults and the performance should be in accordance with the determined mission and vision. Desai (2008) has stated that if any company aims for the global competence and operational effectiveness the company must engage in the quality management. The companies have been realizing that and that is the reason quality has been emerged as an effective strategic entity in the organizational management. As Corbett (2008) described quality can be defined differently in different circumstances. In the manufacturing industry the quality is generally considered to be the standard on the products. According to Russell and Taylor (2008) quality is the essential component for the products to be able to satisfy the consumers rather than j ust eliminating the flaws and even if the company lacks a clear improvement in market the quality is able to conform the specifications. Prajogo and Goh (2007) analyzed that quality does not include any proper measurement or carries wrong measurement at certain times that highlights the lack of knowledge in quality. The company has to work with the both sides of quality in order to achieve the desired performance. Speed Russell and Taylor (2008) stated the speed is extremely important for any manufacturing business in the competitive market of today. The speed is the companys capability of performing any task fast and should be able to ensure that the gap between the producing and reaching the consumers is bridged rapidly. The companies can easily gain more competitive edge if they deliver the products faster than their competitors. The authors have highlighted how current manufacturers are exploring the advantages of service that is time based. The speed of the business has many other aspects like fast adaptation, close linkages and fast moves to the improved speed of competing. According to Tidd and Bessant (2009) the global business environment is always changing, therefore if the company brings new products with speed the company can achieve performance excellence. Flexibility Cingoz and Akdogan (2013) define strategic flexibility as the organizations ability to adapt and respond to the business environmental changes. In order to develop the flexibility the company requires to build core competence, engage in strategic leadership; develop human resources, integrating newer technologies. The flexibility is the companys ability to match certain unexpected circumstances helps the company in implementing new strategies or bringing new brand in the market. Roberts and Stockport (2009) discuss that flexibility is the organizations ability to maintain the relationship between the internal and external organizational structure. Nadkarni and Herrmann (2010) highlight that flexibility makes the company reach the superior position in the competitive market. Ussahawanitchakit and Sriboonlue (2011) explore other advantages that the organization gains through flexibility like this enables the company to manage political and economic risks caused by the market threats. O perations performance could be improved greatly if the gains the organizational competency through flexibility. Cost Slack and Lewis (2011) stated that the company should be able to fulfill the responsibilities in inexpensive ways. This objective allows the company to produce cost effective goods and services and helps the company to decide the appropriate for the national and global market that ensures the financial benefit for the company. Russel and Taylor (2008) have explained how the company has to focus on product design, procurement and employee performance in order to improve the cost performance. Strategic operations performance is greatly depended on the organizations ability to meet the cost budget. Prajogo and Goh (2007) emphasized that it is not only the failure areas that need to be focused on but the company has to identify the opportunities to improve the cost. Slack, Chambers and Johnston (2009) discussed that proper cost disaggregation that can have great impact on the total cost can only ensure the continuous improvement. Pulaj, Kume and Cipi (2015) talk about the low cost strate gy as cost leadership that put great stress on organizational efficiency. This strategy allows the company to distribute its manufactured products at cheaper cost than its competitors. The strategy includes aggressive pricing and trading quality products. Low cost strategy is achieved through reducing the administrative costs, economics scale and curving of experience. Dependability According to Greasley (2007) dependability is the organizations delivering of products to its customers within promised time. One time delivery speed will not ensure customer satisfaction if the customer does not find it consistent. Dependability can be measured through measuring the satisfied customers. Slack and Lewis (2011) highlighted that the dependability is closely related to fulfilling the customer commitments in a timely and orderly manner. Dependability can lead the company to provide improved customer service and customer efficiency. Company can achieve lower cost through dependability through checking progress and reducing other costs in the process. Nikes five performance objectives The performance objectives set by Nike are based on some components. The company only focuses on consumers as they are the primary source of generating profit. As the company aims to perform effectively the suppliers play major role. Nike promotes a community that consist not only the athletes or sports enthusiasts but every average consumer. The stakeholders of the company also demands efficiency from the company. Distinct groups of highly skilled professionals are working to meet the performance objectives of the company. Various departments work to meet the objectives for the common purpose of producing best kind of shoe and other products at lower cost. Quality Quality is the most critically important performance aspect for Nikes strategic performance. Nike minimizes the defect rates, scraps and other wastes in order to offer the customers defect free shoes. Nike is a big brand name in the global sports foot wear industry as the company maintains great quality products (Lutz 2015). It is difficult to establish a popular brand and customer efficiency without quality. Nike uses good quality raw materials and high advanced machines in its manufacturing factories. The company evaluates its products on a regular basis in order to maintain the quality. Nike operates in 120 countries where more than 800000 million workers working who are working hard (Johnson and Turner 2010). Nike air system allows the company to focus on research, development, design and distribution the products. Nike reduces time, waste and material by engaging in lean manufacturing that brings quality products. As the company uses lean manufacturing process it helps it to ach ieve 50% less in defective rates. Nike engages in quality assurance initiatives to ensure better quality. Nike started Green Chemistry Program that helped them to identify the chemical substances that should not be used for manufacturing (Greenscreenchemicals.org 2013). The company engages in extensive product testing at regular intervals. Cost Nike maintains its output costs better than its competitors. The companys performance objectives constantly work on appropriate use of raw materials and human resources and looks that it does not exceed the production rates. Nike increased its revenue by 6% in 2016 as the company announced that the company has been delivering premium products with high price but at the same time it maintains the Balanced price-to-value proposition for consumers (Sec.gov. 2015). Nike mainly aims for a high priced foot wear products that actually helps the company to generate more revenue. The currency fluctuations in foreign countries did not affect the company sales much. Though the product prices are increasing but the company is reducing the manufacturing price. The companys non-ethical labor management has changed and it now no longer controls the labor costs. The company reduces its labor cost by implementing infrastructure and technological advancements. Flexibility The shoe production system of Nike demonstrates a flexibly-specialized manufacturing that has a post Fordist vision associated with it (Lee and Gereffi 2015). The company develops the flexibility through semi autonomous geographic division that fulfills the requirements of customers that belongs to regional market. In the old footwear manufacturing market the variations of shoes were limited so the integrated hierarchy dominated the industry easily. However the time has changed and with thousand types of diverse shoes and shoe related products keep coming in the market. Nike applies the strategy of introducing entirely new models semi annually. Flexibility acts as a key driver for the company to choose for manufacturing as the company can make new products quickly there. Speed Nike gives importance to the speed of delivery as it believes that delivering the products to its customers within the promised time extremely important to retain the customer efficiency. The company monitors the cycle times and through cycle time the company measures its performance. Nike like his competitor Adidas is investing a lot of money focusing on the speed (Green 2017). Mark Parker, the CEO of Nike also announced this year that they are implementing new strategy named triple double o speed (Danziger 2017). Dependability Nike fulfills its order in orderly and timely manner to its all customers. The company has its own manufacturing factories all over the world and does not depend much on suppliers (Manufacturingmap.nikeinc.com 2017). The distributors also do not take much important role in the business. This is not as crucial performance objective for Nike as others. Recommendations and Conclusion The company must overcome its weaknesses of using underpaid workers in Indonesia. The child labor issues must be addressed and resolved immediately. In Vietnam and China the company is accused of creating poor working condition the performance objectives should address this as well so that the company reputation and performance do not get hampered. The operations performance objectives must ensure that the design of Nikes products is aligned with their organizational capabilities. As the company relies on latest technologies the designed products are aligned with market preferences. The company is struggling to surpass its competitors in addressing the Total Quality Management with high quality standard in sports foot wears. It is recommended that Nike should evaluate its production efficiency and streamlining. The operations management team in the company evaluates the objectives and the activities regularly so that the production goals are met based on the market dynamics. References About.nike.com. (2017).About Nike - The official corporate website for NIKE, Inc. and its affiliate brands.. [online] Available at: https://about.nike.com/ [Accessed 23 Sep. 2017]. Adidas-group.com. (2017).Adidas with record sales and earnings in 2016. 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