Nike’svision is “To bring inspiration and innovation to every athlete in the world.” While its mission statement is to “do everything possible to expand human potential. We do that by creating groundbreaking sports innovations, by making our products more sustainably, by building a creative and diverse global team, and by making a positive impact in communities where we live and work.”
Inspiration: as a consumer company Nike has learned how to leverage marketing to generate and stimulate demand. This is at the core of the Nike business model. Indeed, Nike spends billions of dollars each year to boost demand for its products
Innovation: Nike positions itself as an innovative company that is willing to innovate its products over and over. This is another critical element as innovation implies the substitution of the old for the new. Thus it enhances its sales over time, this is part of Nikeflywheel
To every athlete: Who’s an athlete for the company? According to Nike “if you have a body, you are an athlete.” This connects to the inspirational element. Most of Nike’s slogan follows an inspirational tone, and that is part of its demand generation strategy
To do everything possible to expand human potential. We do that by creating groundbreaking sport innovations, by making our products more sustainably, by building a creative and diverse global team and by making a positive impact in communities where we live and work.
In this mission we can extract three key elements:
Human potential: once again Nike has to inspire, and it needs to leverage consumers’ psychology to be always on top of their minds when making the purchase of a sport’s item. Making a person believe it can get better by wearing the shoe is part of that strategy
Groundbreaking sports innovations: If you innovate you can come up with new products and those products will generate more demand
To use the power of sport to move the world forward. We believe in a fair, sustainable future—one where everyone thrives on a healthy planet and level playing field.
Demand generation isn’t an easy game
In Nike Business Model I highlighted how Nike’s strategy moves around demand generation. It is important to remark that when I say Nike, I refer to the company which owns several brands in six categories Running, NIKE Basketball, the Jordan Brand, Football (Soccer), Training, and Sportswear (our sports-inspired lifestyle products).
To have an idea of how expensive it can be to demand generation, one of the critical strategies that Nike uses is to stipulate endorsement contracts with athletes. As you can see from the table above, until 2023, Nike has over $10 billion planned for spending on those endorsement contracts:
Source: Nike Annual Report 2021
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Those amounts might be way higher over the next years. Indeed, Nike highlights:
The amounts listed for endorsement contracts represent approximate amounts of base compensation and minimum guaranteed royalty fees we are obligated to pay athlete, public figure, sport team and league endorsers of our products. Actual payments under some contracts may be higher than the amounts listed as these contracts provide for bonuses to be paid to the endorsers based upon athletic achievements and/or royalties on product sales in future periods. Actual payments under some contracts may also be lower as these contracts include provisions for reduced payments if athletic performance declines in future periods.
For instance, in 2021 over three billion dollars were spent toward demand creation expenses.
Nike objectives
Like most companies, one of Nike’s primary objectives is to make a profit and ensure its long-term viability. More broadly speaking, however, there are certain business objectives that define results or outcomes the company endeavors to meet as it grows.Â
Business objectives are also dictated by a company’s particular strengths, weaknesses, opportunities, or threats and should define how it acts or behaves in the market. In most cases, objectives do not change until a company’s circumstances change.Â
Let’s now return to Nike and analyze its four key objectives below to get a feel for how the company intends to position itself moving forward.
Create groundbreaking sports innovations
Nike is synonymous with sports innovation. The company spends vast amounts of time liaising with professional sports athletes and consumers to increase performance and deliver a better product experience.
The Nike Sport Research Lab (NSRL) in Beaverton, Oregon, is a research and development institute that opened in 1980. It has been responsible for innovations such as:
Cold-weather running apparel that provides temperature regulation and visibility in low-light conditions.
Nike React technology that provides better cushioning to runners while also being lightweight and delivering better energy returns.
GO FlyEase sneakers, are a lace-free, hands-free shoe for consumers with disabilities.
Make products more sustainably
Nike’s sustainability objectives are based on more than 30 years of research into reducing its environmental impact.Â
A 70% reduction in greenhouse gas emissions in owned or operated facilities.
A 50% increase in the use of environmentally preferred materials across cotton, leather, rubber, and polyester.
A 10% reduction in per-unit manufacturing waste, an ambitious goal that encompasses manufacturing, distribution, packaging, and even headquarters.
Build a creative and diverse global team
Nike believes that diversity and creativity in the workplace are intertwined and accelerate innovation. The company also uses its love of sport as a way to overcome cultural barriers and bring people together.Â
This is particularly important for Nike as a global company whose teams share and work toward a singular goal. To help Nike become a leader in diversity and inclusivity, it has set the following 2025 targets:
At least 45% of global VP positions and above are occupied by women.
At least 35% of the U.S. corporate workforce is occupied by racial and ethnic minorities.
30% representation of racial and ethnic minorities at the Director level and above in the United States. Minorities include American, Indian or Alaskan Native, Asian, Black or African American, Hispanic/Latino, Native Hawaiian, or Other Pacific Islander.
Make a positive impact on communities
Nike serves local communities all over the world through the power of sport. The Nike Community Impact Fund (NCIF) funds local programs to get kids active in communities where employees live, work, and play.Â
Each one-year grant ranges from $5,000 to $10,000 per neighborhood. In Portland, Oregon, where Nike headquarters is located, this number increases to $25,000. Grants are awarded to local organizations that make a positive impact on the community via sport, play, and other initiatives.
The NCFI also operates in the southern states of Tennessee, Mississippi, and Arkansas to allow children from disadvantaged areas to realize their potential through sport.
Nike’s redefinition of its business model
Nike’s business model is all about demand generation. In short, if you sell shoes, an item that can be easily commoditized, you need to be able to differentiate your brand from the other brands.Â
That’s what creates a long-term advantage in a market that is skewed toward commoditization.Â
Nike has been very good at that, by also launching new brands, and limited collections (and by acquiring other brands).
An example of that is a Jordan shoe, which for many, it isn’t just a shoe, it’s a piece of art!Â
And as such, people are willing to get into long lines, to get one.Â
Jordan shoes are not only extremely expensive (some pieces) but very high in demand.Â
The Jordan Brand made Nike over $4.7 billion in revenues in fiscal 2021.
Nike invented influencer marketing way before social media.
And the way Nike did it with the Jordan Brand really creates a business impact.
Jordan isn’t just a brand it’s a cultural phenomenon that defined various generations of our times.Â
This is what demand generation is about.Â
When you build up a business model from scratch, the most important element to start with, and the element that will work as a glue for your overall business, is value.Â
And value is comprised of two critical elements: one is about how you help me practically solve an issue, and another one is about perception, and desire.Â
At a commercial level, to enable a brand that survives in the long run, the latter is as important as the former.Â
Key takeaways:
Like most companies, one of Nike’s primary objectives is to make a profit and ensure its long-term viability. More broadly speaking, however, business objectives define results or outcomes the company endeavors to meet as it grows.
One of Nike’s key objectives is to create innovation in sport which it does in the Nike Sport Research Lab (NSRL). The company has also set several ambitious environmental targets to meet its sustainability objectives.
With a global workforce, Nike also realizes the importance of diversity and inclusivity in the workplace. What’s more, the company seeks to positively impact communities and improve outcomes for children through sport and play.
Nike makes money by primarily selling footwear via wholesale customers that distribute the Nike brands across the globe. As of 2021, almost 63% of revenues came from footwear and 28.8% in apparel. The most successful Nike brand is the Jordan Brand, which in 2021 brought over $4.7 billion in revenues to the company. Nike is the master of demand creation and generation through its influencer campaigns, where athletes become an inspiration for everyday people. Therefore, product development combined with marketing and distribution makes Nike one of the most valuable brands in the world.
Nike vision is “to bring inspiration and innovation to every athlete in the world.” While its mission statement is to “do everything possible to expand human potential. We do that by creating groundbreaking sport innovations, by making our products more sustainably, by building a creative and diverse global team and by making a positive impact in communities where we live and work.”
Nike has a matrix organizational structure incorporating geographic divisions. Nike’s matrix structure is also present at the regional and sub-regional levels. Managerial responsibility is segmented according to business unit (apparel, footwear, and equipment) and function (human resources, finance, marketing, sales, and operations).
Adidas’ mission is “To be the best sports brand in the world.” Adidas AG is a German multinational initially founded in 1924 by Adolf Dassler who developed spiked running shoes out of his mother’s house. Today, the company is the largest sportswear producer in Europe and the second largest globally behind rival Nike.
Tesla’s vision is to “create the most compelling car company of the 21st century by driving the world’s transition to electric vehicles,” while its mission is “to accelerate the advent of sustainable transport by bringing compelling mass-market electric cars to market as soon as possible.” Tesla used a transitional business model as its ecosystem grows.
Amazon’s mission statement is to “serve consumers through online and physical stores and focus on selection, price, and convenience.” Amazon’s vision statement is “to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices.”
Apple’s mission is “to bring the best user experience to its customers through its innovative hardware, software, and services.” And in a manifesto dated 2019 Tim Cook set the vision specified as “We believe that we are on the face of the earth to make great products and that’s not changing.”
Netflix’s core mission, strategy, and vision are that of “improving its members’ experience by expanding the streaming content with a focus on a programming mix of content that delights members and attracts new members.”
Coca-Cola’s Purpose is to “refresh the world. make a difference.” Its vision and mission are to “craft the brands and choice of drinks that people love, to refresh them in body & spirit. And done in ways that create a more sustainable business and better-shared future that makes a difference in people’s lives, communities, and our planet.”
Starbucks highlights its mission as “to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.” And its vision is to “treat people like family, and they will be loyal and give their all.”
Microsoft’s mission is to empower every person and every organization on the planet to achieve more. With over $110 billion in revenues in 2018, Office Products and Windows are still the main products. Yet the company also operates in Gaming (Xbox), Search Advertising (Bing), Hardware, LinkedIn, Cloud, and more.
Walmart’smission can be summarized as “helping people around the world save money and live better – anytime and anywhere – in retail stores and through eCommerce.” While its vision is to “make every day easier for busy families.” Walmart defines “busy families” as the bull’s eye of its business strategy.
Nike vision is “to bring inspiration and innovation to every athlete in the world.” While its mission statement is to “do everything possible to expand human potential. We do that by creating groundbreaking sport innovations, by making our products more sustainably, by building a creative and diverse global team and by making a positive impact in communities where we live and work.”
Google mission statement is to “organize the world’s information and make it universally accessible and useful.” Its vision statement is to “provide an important service to the world-instantly delivering relevant information on virtually any topic.” In 2019, Sundar Pichai emphasized a renewed mission to allow people “to get things done!”
Gennaro is the creator of FourWeekMBA, which reached about three million business students, executives, and aspiring entrepreneurs in 2021 alone | He is also Head of Enterprise Sales for a high-tech startup, which he helped grow at a double-digit rate since the onset | In 2012 Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
