Chapter 2. Strategic Planning for Competitive Advantage

As the world’s leading athletic footwear, apparel company, NIKE Inc. is dedicated to inspiring every athlete to reach peak performance. Nike co-founder Bill Bowerman sawendless possibilities for human potential embodied through sport. His philosophy still guide sour mission today: “To bring inspiration and innovation to every athlete in the world.” "And if you have a body, you are an athlete."
Through our commitment to innovation and design, they are continually challenging ourselves, and their customers, to reach that next level of achievement. They strive for:

- Innovation to serve the athlete
- Innovation to grow the company
- Innovation to inspire the world

Company Portfolio
NIKE, Inc. includes seven distinct brands, each with a powerful connection to its customers:

Nike Brand- Designs, develops and sells high-quality athletic performance gear and sport inspired casual products, including footwear, apparel, equipment and accessories.

Cole Haan- Designs markets and distributes luxury shoes, handbags, accessories and outerwear

Converse- Designs markets and distributes athletic footwear and appeal

Hurley International LLC- Designs marketing and distributes action sports and youth lifestyle footwear, apparel and accessories

Umbro- Designs distributes and licenses athletic and causal footwear, apparel and equipment primarily for football & soccer.

Nike Golf- Designs and markets golf equipment, apparel, balls, footwear, bags and accessories

Jordan Brand- Designs and markets premium footwear, apparel and accessories inspired by the dynamic legacy, vision and direct involvement of Michael Jordan

Cole Haan, Converse, Inc., Hurley International LLC, Umbro international Limited are wholly owned subsidiaries of NIKE, Inc. These affiliate business play a major role in the future growth plans. Together with their Nike Golf division, the company as a whole contributes approximately $2.7 billion of the company's $20.9 billion in revenue.

Plan For Growth
Nike is growth company. But they want to deliver growth in the right way. They seek growth that is:
- Sustainable
- Profitable
- Capital efficient
- Brand enhancing
Like many other business, Nike faced some significant headwinds. Around the world, unemployment was high, especially among youth and governments wrestled with high debt levels. Rising cost of energy and labor sparked inflationary pressures. in turn, higher cost of materials, labor and freight were evident in their margins. While the headwinds they faced were shared across their industry, the competitive advantages they have their unique to the Nike portfolio. In spite of ongoing macroeconomic challenges, they are well positioned to leverage their strengths, including scale, operational capabilities and pricing power – to help mitigate the risks beyond their control and capitalize on opportunities to grow the company.

Integrating Sustainability Into Our Game Plan
A more holistic sustainability strategy that is fully integrated into the business enables Nike to create value, not just through risk mitigation, but also through top-line growth, cost avoidance and better access to capital. As an example, their next portfolio of targets is designed to improve Nike’s environmental and social impacts for them and across their value chain, while also avoiding costs across the value chain by reducing waste, energy and water expenditures. 

At Nike, one way they seek to deliver shareholder value is through sustainable growth. To them, sustainable growth means there long-term vision to deliver profitable growth decoupled from constrained natural resources, even as they work to deliver value to their shareholders in the near term. Meeting these two objectives requires a careful balance – one their stakeholders expect of them – and it remains their commitment. They attempt to strike this balance by leveraging their significant competitive advantages, including their authentic, emotional connections with consumers; innovative product and retail experiences that lead the industry; and a strong NIKE, Inc. portfolio that gives them tremendous opportunities for growth and profitability.

As they set aggressive goals in all areas of their business – financial, social and environmental – they are committed to sharing these goals and to reporting on their performance to consumers, the investment community and others interested in their commitments and progress, including the wider sports and apparel industry, community groups and academia. Over the past 15 years, they have moved from approaching sustainability as a risk management issue to viewing it as an innovation opportunity and a competitive advantage to be integrated into every aspect of their business. 

Target & Performance 
Their vision of the future is one in which they see a world in transition from an industrial economy to a sustainable economy, where renewable sources of energy flourish, water is borrowed responsibly and returned clean to communities, waste is a new asset, workers across the industry are consistently valued and environmental impact will be a critical metric of success.

This is a future that will be good for business, economies and communities, and citizens, workers and consumers. And they are determined to set Nike up to lead and thrive, in this environment.

In order to get there, they will need to move from incremental to disruptive innovation. Their aim of decoupling growth from constrained resources will require change at a systems-wide level. No single company can eliminate toxic chemicals from vast supply chains, nor improve living conditions of workers in low-income communities, nor eliminate waste from consumption. They need step change in collaboration to drive collective understanding of the systemic issues they face and agreement on the solutions. Competitive advantage should be built on a sustainable playing field where getting better faster than the competition raises the bar for everyone. That will require relentless focus on systems innovation and collaboration across government, industry, social influencers and even consumers. It also will require putting sustainability at the heart of innovation.

They operate in a globally competitive industry, where markets change, regional and national policies play into the impacts they have and the way they can address them. In some cases, the kind of large-scale systemic changes needed to make a lasting positive impact in the environment and society. While retaining communities and businesses, this requires movement on all fronts. It sometimes requires agreeing with their common approaches and definitions. One example is in their approach to sourcing and assessing factory performance by including the expectation of progress toward the Fair Labor Association’s definition of “fair wages” into what they consider compliance. That relates to minimum wage, inflation, community vitality and other things beyond their control. It speaks to all efforts needed to bring about a better world.

Their milestones needs is along way, they take their environmental and their social targets seriously. In the same way a company’s business targets are based on the planned, the real, the owned and the predicted. They work to develop targets that organize their efforts, drive and performance to help them to take account of what’s important and how their managing.

Manufacturing

Their value chain is global:

- More than 900 contracts factories

- More than 1 million workers

- More than 500,000 different products, each with its own environmental and social footprint

Their ability to improve their own footprint and shape sustainability solutions at scale relies on fundamentally changing the nature of their relationships across the value chain, including,  importantly with the factories that make their products. Like many global companies that outsource production, their supply chain is complex, fragmented and influenced by factors beyond their power. That’s what makes their work so challenging. They do not own these factories, so they cannot mandate change. Instead, they build and influence positive change through their contracts.