NATIONAL ECONOMIC UNIVERSITY

SCHOOL OF ADVANCED EDUCATION PROGRAMS

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GROUP ASSIGNMENT
INTERNATIONAL SUPPLY CHAIN
MANAGEMENT
Class: International Business Administration EEP 60B
Lecturer: Mr. Tran Hoang Kien
Group: 1

Nguyễn Phương Uyên 11185473

Vũ Thùy Linh 11182967
Phạm Xuân Trường 11185332
Nguyễn Thị Huyền Trang 11185141

Hanoi, October 2021

TABLE OF CONTENT
A. INTRODUCTION OF NIKE AND THE CHOSEN PRODUCT...............................................................1

I. INTRODUCTION OF NIKE....................................................................................................................................1
1) Overview......................................................................................................................................................1
2) Nike Mission, Vision Statement and Value...............................................................................................2
3) Nike Business Model...................................................................................................................................3
II. INTRODUCTION OF CHOSEN PRODUCT: NIKE AIR VAPORMAX 2020 FLYKNIT.................................................2
1) Nike’s Products...........................................................................................................................................2
2) Nike’s Products life cycle............................................................................................................................2
3) Nike Air VaporMax 2020 Flyknit...............................................................................................................4

B. MOTIVATION TO ESTABLISH A GLOBAL SUPPLY CHAIN FOR NIKE AIR VAPROMAX 2020. .5

I. REVENUE........................................................................................................................................................ 5
II. BENEFIT OF GLOBAL SUPPLY CHAIN..................................................................................................................6

C. DRIVE AFFECTING THE DECISION OF FIRMS IN IMPLEMENTING THE FUNCTION OF

SUPPLY CHAIN................................................................................................................................................ 7

I. MARKET GLOBALIZATION DRIVERS.................................................................................................................7

II. COST GLOBALIZATION DRIVERS......................................................................................................................7
1) Inbound logistics.........................................................................................................................................7
2) Manufacturing............................................................................................................................................7
3) Outbound logistics.......................................................................................................................................8
III. GOVERNMENT GLOBALIZATION DRIVERS....................................................................................................8
1) Policies and regulations..............................................................................................................................8
2) Emerging market.........................................................................................................................................9
V. COMPETITIVE GLOBALIZATION DRIVERS.........................................................................................................10
1) Market competition...................................................................................................................................10
2) Entry Competition.....................................................................................................................................10

D. PRESENT AND ANALYSE THE GLOBAL SUPPLY CHAIN MANAGEMENT ACTIVITIES OF ENTERPRISES.............12

I. OVERVIEW.................................................................................................................................................... 12
II. ANALYSIS......................................................................................................................................................12
1) Purchasing.................................................................................................................................................12
2) Market channels........................................................................................................................................13
3) Logistics.....................................................................................................................................................16
4) Operation...................................................................................................................................................20

F. RECOMMENDATION........................................................................................................................... 22

REFERENCES................................................................................................................................................. 23
 A. INTRODUCTION OF NIKE AND THE CHOSEN PRODUCT
I. Introduction of Nike
1) Overview
NAME: Nike
FOUNDED: 1962 (Blue Ribbon Sports)
HEADQUART Beaverton, Oregon, USA
ERS:
STATUS: Public Independent Company of
NYSE
INDUSTRY Sale of sports apparel and
SECTOR: footwear
EMPLOYEES: 77,000
TRADEMARK: “Just do it”

Nike is a major publicly traded sportswear, footwear and equipment supplier

based in the US which was founded in 1962 originally known as Blue Ribbon
Sports. Nike is the world leader in the manufacturing of sportswear and gear with
more than 47 market shares across the global (Nike.com, 2011). The company was
named after the Greek goddess of victory, Nike (Νίκη).
Nike designs, develops, markets and sells high quality footwear, apparel, and
equipment, accessories and services. Now Nike follows the global fashion trends
and is well known and popular in the youth culture and hip hop culture to supply
some fashion products. Its athletic footwear products are designed primarily for
specific athletic use, although a large percentage of the products are worn for
casual or leisure purposes. It focuses on NIKE Brand and Brand Jordan product
offerings in seven key categories: running, basketball, football, men’s training,
women’s training, NIKE sportswear, and action sports.
Apart from its own brand, Nike markets its products under Nike Pro, Nike+,
Nike Golf, Nike Blazers, Air Jordan, Air Max and others as well as its wholly-
owned subsidiary, NIKE IHM, Inc. Its reportable operating segments for the NIKE
Brand are: North America, Western Europe, Central & Eastern Europe, Greater
China, Japan, and Emerging Markets. The company wholly-owned subsidiaries

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 include Converse Inc., which designs, markets and distributes casual footwear,
apparel and accessories and Hurley International LLC, which designs, markets and
distributes action sports and youth lifestyle footwear, apparel and accessories.
Nike sponsors many high-profile athletes and sports teams around the world,
with the highly recognized trademarks of “Just Do It” and the Swoosh logo (which
represents the wing of the Greek goddess Nike).
Nike began outsourcing in mid 1970s. Currently, Nike is the largest athletic
shoe company in the world, controlling more than 36% of the US athletic shoe
market and has more than 33% of the global athletic footwear market. Nike’s
products include apparel and sports equipment (Nike, Inc, 2009). Out of Nike’s
830 suppliers, 70 of them produce shoes. Nike has direct employees of 24,291 with
vast majority in the US and had about $12.2 billion in revenues of which $6.5
billion came from footwear sales and $3.5 billion from apparel in 2004.
2) Nike Mission, Vision Statement and Value
a) Nike Mission Statement
Nike mission is to bring inspiration and innovation to every athlete* in the
world. [*If you have a body, you are an athlete.] “This mission drives us 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”.
b) Nike Vision Statement
“We see a world where everybody is an athlete — united in the joy of
movement. Driven by our passion for sport and our instinct for innovation, we aim
to bring inspiration to every athlete in the world and to make sport a daily habit.”
c) Nike Values
 Do the right thing
 Be on the offense always
 Serve athletes
 Create the future of sport
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 Win as a team

3) Nike Business Model

Nike Business Model is based on producing and selling athletic and sports
products, including footwear, clothing, equipment – and also some services.
Everything under one if the most famous brands in the world. Let’s take a closer
look at how and why Nike company has become so relevant in the business world.

a) Customer Segments of Nike

Nike markets to anyone who wants to buy athletic and sports apparel,
footwear, and equipment. Geographically speaking, Nike’s market is divided into
four main divisions, also in order of revenue:
 North America
 EMEA (Europe, Middle East, and Africa)
 Greater China
 APLA (the Asia Pacific and Latin America)
b) Value Proposition of Nike
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 Nike offers products to inspire anyone to become an athlete. Their products
heavily rely on the quality, innovation, and status of the brand. This is the
foundation of the brand and it is exactly what the customers seek when they buy a
Nike’s. Nike offers a great variety of items, for many different sports and
activities.
But, indeed, what matters for the audience is acquiring a product that has
been heavily studied and developed from the best raw materials and technology
available. Also, they want to carry the successful reputation the brand states, since
athletes as Michael Jordan, Tiger Woods, and Cristiano Ronaldo speak for the
company.
c) Channels of Nike
Nike uses many different channels for marketing. Its main channel is the
brick-and-mortar stores, especially the Nike-branded ones. The company has an
extensive sales network, with 1,152 physical stores throughout the world (numbers
of 2019).  Nike also has an e-commerce platform, which serves more than 45
countries.
Besides that, Nike employs other channels, such as social media, digital,
print and TV advertising, brand events, and heavy sponsorship of athletes and
teams. Therefore, its marketing expenses usually reach over $3.5 billion a year
($3,753 million in 2019).
d) Customer Relationships of Nike
The relationship with the customers is practically restricted to self-service.
The customer will check the product in a store (online or offline), buy and use it.
There will be some interaction with a salesperson when needed. Moreover, there is
a FAQ session on the website and customer support via phone, e-mail, or live chat.
Nike also has Nike ID which is a personalization service that brings Nike
products closer to customers’ desires.
e) Revenue Streams of Nike

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 The revenue streams of the company are the sales of its products: footwear,
apparel, equipment, and accessories. The total revenue reached $ 39,117 million, in
2019.
f) Key Resources of Nike
 Physical structures: five distribution centers in Memphis and others in California;
 Human resources: Nike Explore Tea Sports Research Lab, with more than 40
researchers that work on innovations;
 Intellectual property: third-largest design patent portfolio in the United States.

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 g) Key Activities of Nike
The main key activity of the company is designing and developing the
products. In order to achieve that, other activities are involved, such as research
(about materials, technologies, and trends/behavior) and negotiation with the
suppliers. Additionally, marketing, sales, and advertising are essential for this
business model.
h) Key Partners of Nike
As Nike relies on outsourced contractors to manufacture its articles, these
manufacturers are surely its most important key partners. They are more than 145
footwear factories and over 400 apparel factories, mostly outside the USA.
Besides that, other partners include some universities and institutions in North America,
Europe, and Asia for sports and scientific researches.
i) Cost Structure of Nike
The largest expenses for Nike are the costs of sales (mostly inventory and
warehousing), which account for more than $21 billion per year. Additionally,
around $3 billion is for marketing, including advertising and promotion costs,
sponsorship, media, brand events, and retail brand presentation. Other general and
administrative expenses cost over $500 million a year.
j) Nike Business Model challenges
Competition: Sports articles and apparel market is marked by massive competition, not
only in the USA but all over the globe, both about marketing and supply chain –
because the amount of suppliers for high-quality raw materials is limited. This
competition leads to a great investment in research and development and on marketing
and sales, in order to stand out.
Trends: Nike’s success relies on anticipating customers’ demands. But these changing
preferences are not always easy to predict. So, there is no certainty that every new
product will gain the expected acceptance in the market. Therefore, it requires a great
expenditure in adjusting the mix to keep profitable. Moreover, Nike relies on experts in
several areas in order to produce innovative articles, such as engineers, physiologists,
designers, biochemists, chemists, orthopedists, coaches, etc.
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Global risks: Some global conditions and changes can have either positive or negative
impacts on sales, such as economic crises or recessions (especially in emerging
nations), environmental policies,  trade regulations, data security and privacy, and more.

II. Introduction of chosen product: Nike Air VaporMax 2020 Flyknit

1) Nike’s Products
Nike has a variety of sporting products for everyone. In addition to shoes,
clothes and sports equipment, they also provide watches, apps, backpacks, purses,
wallets, gloves, sunglasses, hair-bands, scarves, belts, etc. Not only does Nike have
a variety of options of products, but Nike also owns Hurley, Converse, and Jordan
brands. By offering more products to more people, in more markets than any other
sports company, they are able to capture a far greater market share of the market
than any other company.
2) Nike’s Products life cycle
The product life cycle is the four main stages through which products move:
introduction, growth, maturity and decline (Lorette, 2016). Below is the product
life cycle for Nike shoes.

a) The first stage: Introduction 

With a team of more than 40 academic professionals with doctorates in
every single sector of product development including mechanical engineering,
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 kinesiology and mathematics, Nike is able to innovate in ways that cannot be
replicated anywhere else. 
When a product was released (introduction stage), Nike invested in heavy
advertisements such as commercial posters in magazines, television
advertisements, billboards and at various stores. Their purpose is to build up
awareness to create a desire and demand for the shoes that is at the highest just as
the shoes are being released. Due to Nike's efforts in advertising, public relations,
and marketing (which most likely involves considerable financial implementation);
profits are expected to start downbeat or worse.  
b) The second stage: Growth 
As the Nike shoes surpasses certain initial difficulties, the next phase shift in
the product life-cycle is made: the growing stage. As the removable massaging
insole’s sales grow, Nike Inc. must gradually incorporate new product features and
develop more channels of distribution for the product.
From heavy and far-reaching promotional campaigns, Nike Inc. must
transfer its attention to further marketing strategy and product improvement. As
Kotler explains, the rationale behind this is that: “Sales rise much faster than
promotional expenditures, causing a welcome decline in the promotion-sales ratio”
(Kotler et al. , 2006, p. 337). With growing reception via sales, recognition, and
overall brand awareness, Nike Inc. must react by preparing innovative ideas and
strategies—moving “from product awareness advertising to product preference
advertising”.
c) The third stage: Maturity 
At this stage, Nike Inc. further manifests and generates even more buzz and
sales growth in the sports footwear, competition picks up and thickens among the
segments, especially when the said growth stabilizes. 
Nike Inc. should strongly consider amplifying promotions that still focus on
its consumer, trade, and also advertising. Being innovators of the said technology,
Nike Inc. Must stress why customers should choose its product despite the eventual
offerings that the competition will make available.
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 Moreover, focus on product development and innovation could and should
substantially exceed expectation and competition—stretching and touching on
quality and performance improvement. With this, research and development should
be given significant boosts. Nike Inc. can also consider offering altering pricing
strategy and stressing the product features and benefits apart from others. 
d) The fourth stage: Decline
Anticipating all these even before product sales grow at a steady, already-
calculated rate for the industry players are quick to react must be foreseen by the
company with regard to its product. If and when the maturity stage spirals down to
the final chapter, decline stage, these are indications of which should be taken note
by Nike Inc. 
Being that the sales decrease could be identified from anything to be an
unhurried dwindling or a rapid downward whirlwind, Nike Inc. must determine
when to slowly trim down costs, both in terms of production and promotion, in
attempt to maintain sales ratios. If the new technology summarizes only to be a
bigger headache than something that can be revitalized, Nike Inc. has the option of
opting to phase out the product completely.
3) Nike Air VaporMax 2020 Flyknit
As we know, Nike focuses on the athlete’s shoes, apparels and equipment.
But now the global trends are leading toward fashion and personality. Nike is
constantly being innovative with the development of their shoes. Designed with
sustainability in mind, the Nike Air VaporMax 2020 Flyknit is made from at least
50% recycled content by weight. That’s lot of trash! As part of Nike’s journey
towards lowering our impact, it is discovering new ways to put its waste to good
use. By utilizing leftover materials, recycled polyester, recycled foam, and a Nike
Air sole made from at least 75% recycled TPU, the VaproMax 2020 Flyknit marks
the next step towards its ultimate goal of zero carbon and zero waste.

II.

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B. Motivation to Establish a Global Supply Chain for Nike Air Vapromax 2020
I. Revenue

The total revenue of Nike witnessed over 34 billion US dollars in 2017 and
37,4 billion US dollars in 2020. Nike just need only first 7 months in 2021 to get
the amounted in revenue to about 44.54 billion U.S. dollars, which increased 19%
compared to the last year.

We can see that NA is the biggest market share of Nike, which represent 41%
of total revenue in 2021.

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 Nike promotes sales growth across all continents of the world, and the
records are very impressive:
 The proportion of revenue in APLA had slightly increased about 6% in 2021, while
in the biggest market, NA, the number was higher by over 18% compared to 2020.
 In Greater China and EMEA, the revenue had a remarkable change by over 24% and
22% higher than 2020, respectively.
II. Benefit of global supply chain
 Cost reduction: reduce producing cost of nike vapromax 2020 ⇒  lower operation
cost, higher net profit
 Improve quality: Incoporating the best technology à Flykit technology, Greener
Nitrogen (putting the actual air in Air),Air-Sole, Reclycle rubber,..
 Increase customer satisfaction: Serve the customer the best shoes that they want at
any where are easier for customers to shop.
 Competitive leverage: Operate more than 1000 retail stores worldwide in 2021→
Nike Vapromax 2020 is easier to sell to customers.
 ESG model company: Eco friendly product→ Nike is more known as a company
that not only cares about the product, customer, but also about the enviromental.
 Enterprise resource planning (ERP): Effective demand forecasting and lean
inventory; Risk Management; Automation and Accessibility.

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C. DRIVE AFFECTING THE DECISION OF FIRMS IN IMPLEMENTING
THE FUNCTION OF SUPPLY CHAIN 
I. Market globalization drivers
Nike’s geographic market consists of major markets throughout the globe.
Until 2009 Nike’s geographical markets consisted of the United States, Asia-
Pacific, Americas and an area comprising of Europe, Middle East and Africa.
However in March 2009, Nike announced its plan to reorganize its global business
in order to bring goods closer to the markets and in turn consumers as well as to
reduce management overlap. Following this plan Nike then decided to develop its
market share in North America, Western Europe, Eastern/Central Europe, Greater
China, Japan and Emerging Markets.
II. Cost globalization drivers
Considering Nike’s value chain, there are 3 activities that increase cost:
inbound logistics, manufacturing, outbound logistics.  
1) Inbound logistics 
Nike has a global procurement team to manage the procurement part of its
supply chain management. It includes selecting and contacting the right suppliers
for the right goods and services. In the recent years, it has seriously focused on
sustainability and in this regard is working to reduce its environmental impact. Its
suppliers are now fewer in number and the ones who remain are committed to
Nike’s standards of quality and sustainability. Its sourcing strategy gives priority to
the suppliers who are willing to go beyond the minimum standards and can follow
the rules related to sustainability strictly. At Nike, nearly all of its products are
made by independent contractors. Currently, there are 567 factories across 42
countries where Nike products are manufactured. The focus throughout these
manufacturing facilities remains on transparency, quality and sustainability and it
is why only the most responsible ones get to be a part of its supply chain. Products
sourced from these suppliers are sent to various markets through the regional
offices and distribution centers of Nike.
2) Manufacturing
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 Nike is a global firm and as such has a large and global infrastructure
composed of its offices, retail stores and distribution and logistics centers. This
large infrastructure also helps it manage its global presence well. It is
headquartered in a state of art building with a lake and several other extraordinary
facilities for its staff.
3) Outbound logistics
Outbound logistics are a very critical part of Nike’s value chain. There are
more than 500 factories making Nike products in 42 countries. The products
shipped from these manufacturers to the Nike Distribution centers have to be sent
to the retail stores for sales. Nike has used a chain of regional distribution centers
to cater to the needs of its retail stores so that customers do not have to wait long
for a new product after its release. An efficient distribution system helps manage
timely delivery and shipments too. In 2015, it opened its largest distribution center
in Tennessee. The Memphis, Tennessee based distribution system holds footwear,
apparel and equipment of Nike and Jordan brands which are distributed to the
individual and wholesale customers as well as Nike’s own retail stores. Its
European logistics campus is located in Belgium which enables the management of
a faster and smarter supply chain.
III. Government globalization drivers
1) Policies and regulations

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 The ongoing trade war between China and America has resulted in an
increase of Nike's product price for American consumers. This is the consequence
of Trump's action on raising import tariffs on China products from 10% to 25%.
Four years and a new president later, U.S. tariffs on Chinese products remain. One
interesting fact  we should remember is Nike outsources its manufacturing and
China is the home land of roughly 23% of Nike footwear and about 27% of its
apparel manufacturer (in 2019). So in this case, Nike may reduce the cost of
production but can seem to lose its competitiveness in terms of price in the home
market. 
2) Emerging market 
As a globalization-oriented company, Nike is extending its markets by
focusing more on the emerging markets. From the graph belows, Nike is one of the
leading apparel & footwear companies with a growth value of 4 billion US dollar
from 2011 to 2016. 

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 Coming back to the case of trade war between China and America, while the
respective governments of the U.S. and China may be at odds with each other,
Chinese consumers haven’t given up their loyalty to the Nike brand. In its 2019
earnings report, Nike reported better-than-expected sales, largely driven by China.
Revenue from Greater China grew 22%, more than three times faster than the
company's overall 7% gain in sales in the latest quarter, according to the Wall
Street Journal. 
IV.

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V. Competitive globalization drivers
1) Market competition 

Nike market share dominance (Adidas includes Reebok business) in 2016

The USA's sport product industry is highly concentrated. From the pie chart
above, Nike, Adidas and Skechers are the major operations in this industry.
Notable that Nike it is that it dominates and adopts more than half of the market
share. The intensive competition leads to the improvement of product's quality to
some extent. But over the last decade, saturation of this industry has become a
push factor that encourages operators to pay more attention to the oversea market. 
2) Entry Competition
Nike's competitive advantage over other brands in the athletic footwear and
apparel industry is shown through their differentiation and diversity.
a) Innovation 
Nike has a unique competitive advantage which is the Nike Sport Research
Laboratory (NSRL). Nike is known as the best sports company because they have
great technology and equipment to boost performance. In basketball shoes, Nike
provides cushion and lightweight materials to accommodate the sport. 

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 Adapting to an eco-friendly orientation, Nike has put sustainability in mind
when designing its shoes by utilizing leftover materials, recycled polyester,
recycled foam, and recycled TPU. Nike’s goal is to create shoes that lessens the
impact on the environment while not obstructing the athletes to release their fullest
potential with the shoe. 
b) Diversity
Not only does Nike have a variety of options of products, but Nike also owns
Hurley, Converse, and Jordan brands. By offering more products to more people,
in more markets than any other sports company, they are able to capture a far
greater market share of the market than any other company.
c) Product quality
Most Nike shoe models are made out of a lightweight, breathable
combination of plastic, ethylene-vinyl acetate (EVA foam) and mesh fabric. Which
provide the consumers with the most lightweight shoes and absolute comfort
experiences. 
d) Marketing
Marketing is also a major strength of Nike and offers it a unique advantage in
the global athletic wear market. Nike is known globally for its unique marketing
strategy and techniques. Apart from its Swoosh logo which can be identified easily
from among the crowd of brands, there are several things outstanding about its
marketing. It uses a mix of traditional and modern methods and tools for
marketing. Its retail and distribution network as well as its commerce channel also
acts as a marketing channel. The brand engages its customer through inshore and
online promotional. However, when it comes to marketing very few are as
excellent as Nike. Especially, in terms of video marketing, Nike likes to connect
with its customers’ emotions. Its promotional videos are less about product
promotions and meant more to strike an emotional connection. Nike believes in the
spirit of sports and how it connects people worldwide. It engages and encourages
sports lovers through promotional videos.

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 D. PRESENT AND ANALYSE THE GLOBAL SUPPLY CHAIN
MANAGEMENT ACTIVITIES OF ENTERPRISES
I. Overview
Nike is known for its excellent product quality, innovative product designs
and unique marketing style. The brand has maintained a strong supply chain
network. The main support for its global business empire is the brand's
international supply chain network, located mainly in Asia. Its supply chain model
has evolved a lot in this decade. Brands have become more cautious about their
environmental footprint, product quality, and customer service. Its supply chain
plays an important role in all three areas. Overall, Nike has managed a smart,
efficient and agile supply chain.
II. Analysis
1) Purchasing
a) Demand planning
Nike depended on its use of radio-frequency identification (RFID) technology,
which uses tiny radio parts embedded in tags to automatically identify and track all its
footwear and most of its apparel.
Nike manages demand for its products using a futures program that requires retailers
of Nike products to order 80% of their inventory six months in advance for guaranteed
delivery. 
ØThat’s where the scale competitive advantage comes from in their supply chain
because they will be able to forecast demand, get the right inventory in the right places to
get it to consumers quickly both for themselves and maybe even over time, that’s an
added benefit for their strategic wholesale partners.
b) Global sourcing and procurement
The key principles behind Nike’s supply chain are outsourcing and
diversification. Nike contracts 100% of its manufacturing for footwear and apparel
out to independent suppliers. 
Nike uses the form of outsourcing under the buy-and-sell model, which
means that the factory will order production materials by itself. Nike will keep a
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 list of material suppliers to manage quality and price, After the production contract
is completed, Nike will pay according to the price of production costs and
processing remuneration to the manufacturing company. After that, the product
will be transferred to Nike company, from where Nike will carry out the process of
distributing and selling products.
It was one of the earliest multinationals to adopt this approach. Thanks to
effective management, Nike’s supply chain team quickly learned to manage the
additional logistical complexity involved in this outsourcing and have seen
significant cost savings over the years as a result. Outsourcing is inherently a risky
approach, but by extensively diversifying its supplier base, Nike successfully
mitigated this risk from the beginning. 
In 2019, Nike’s footwear components were supplied by 112 different
factories in 12 countries. Four leading contract manufacturers accounted for 61%
of the company’s footwear production, but no factory accounting for more than 9%
of branded footwear. 
Most of the Nike brand footwear production took place in Vietnam, China,
and Indonesia. Together, the three countries accounted for 49%, 23%, and 21% of
Nike brand footwear, respectively. 
334 factories in 36 countries produced Nike brand apparel in 2019. Most of
them took place in China, Vietnam, and Thailand. Together, the three countries
accounted for 27%, 22%, and 10% of Nike’s apparel production during the year.
Top five apparel manufacturers together accounted for 49% of the company’s
apparel production in 2019. 
The reasons:
 Labour costs in the US are much higher.
 The cost of production for labour manufacturing is lower than in the US.
 Cost of shipping goods has dropped, because of the improved efficiencies in
shipping technologies.
 Overhead reduction, which is what every profit making company will look to
achieve.
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  Organisations are able to concentrate their efforts in their core competencies like
marketing, designing and new product development thus creating competitive advantage.
ØAlmost activities are outsourced but not being overly reliant on any one site means
Nike is less vulnerable to unpredictable occurrences, such as accidents and extreme
weather events.
2) Market channels
a) Customer value-creating global processes

Nike always strives to develop products according to the innovative needs of

the market to ensure customers are satisfied with what they expect. Besides, Nike
builds a connection channel and interacting with regular customers.
Example: Some people will order online, receive products in stores; or buy at
the store, receive the product at home; Buy at this store, receive products from
another store, etc. To achieve synchronization when using omnichannel retail, Nike
has used the following software: 
 Central warehouse/vendor management system . The inventory system describes the
availability of goods in stock. 
 Website for order processing/delivery of appropriate line items to the right stores. 
 Personalized CRM to detect past purchases. 
 POS on mobile, in-store 
b) Distribution network
Nike employs both direct and indirect channels of distributions, which means they
use both decentralized and centralized distribution networks. The direct channels include
the fully owned distribution subsidiaries and retail outlets. Indirect channels include
independent distributors and other licensed agents.
Nike goes for short distribution channels consisting of not more than two
intermediaries. Through its subsidiaries and retail outlets it is able to deal directly with
consumers.
c) International market entry modes

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 Entry modes are used in Nike are exporting, licensing, joint ventures and
wholly-owned subsidiaries. Nike uses brand licensing beingthe biggest mode of
entry and also expanding their market and target audienceto people who enjoys
shopping for fashionable apparel in sites like Lazada. Nike organisational structure
adopts a centralised global standardizing strategy as they expand their good
globally and operate their overseas operations from their headquarters. This not
only helps Nike to expand their business but all reduce cost by avoiding activity
duplication and miscommunication. This organisation structure will help Nike
improve profits overall. Possible improvements for the Nike inc.
d) Going global online
Nike allows customer to search for, order, pay for, and get after-sales service
for products on its website. Customers can buy goods directly on the website
nike.com as long as they have an international payment card. It coverages to 80
countries and territories VISA. Nike also does business on platforms like Ebay,
Amazon…
e) Place and the other three Ps (marketing mix)
 Place
This element of the marketing mix strategy outlines the locations where the
company's products are sold, accessed, or distributed. Nike Group sells its shoes,
clothing and sports equipment through a large number of stores worldwide. For
example, these products are available at large retail stores. The following locations
form Nike's distribution strategy, which is sorted by how important:
 Retail Store
 Nike Online Store
 Niketown reseller (owned by the company)
Retail stores are the most important places where Nike products are sold
because these locations are strategically located and easily accessible to customers.
These retailers include large companies like Walmart, as well as local and small
regional stores.
 Product
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 These output products are called product mixes. Nike's growth comes with
changes in its product complex. For example, businesses continue to invest in
research and development to produce new products and advanced versions of
existing products.
 Promotion
The company uses promotional tactics to reach target customers and convince
them to buy products. The following are Nike's advertising activities, arranged
according to its importance:
 Advertise
 Personal sales
 Direct marketing
 Sales promotion
 Public relations
 Price
The following pricing strategy is applied in the Nike Inc.:
 Value-based pricing strategy
 Special pricing strategy
When using a value-based pricing strategy, Nike considers consumer
perceptions of the value of its products. This value is used to determine the
maximum price that consumers are willing to pay for the company's sneakers,
clothing, and equipment.
3) Logistics
Nike has a pre-ordering program for order and inventory management. It's
not effective. The long lead times to Nike's order or inventory policy creates a
major loophole for demand management. The lead time for Nike's orders to its
manufacturers is about four months. In addition, Nike pre-ordered four months ago
because the manufacturer could not meet the demand. In the long run, skewed
forecasts and unmet demand will add massive shifts to Nike's supply chain.
a) Order processing and Inventory

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 Nike's inventory management system is based on long-term future forecasts.
Nike has instituted a “future” program that rewards retailers with substantial
discounts if they order six months in advance. Nike uses these orders as the basis
for global demand. This demand information is used to set production levels at
various levels of Nike's worldwide production sites. Manufacturers will produce
required quantities of goods and distribute them to retailers within a month of
expected delivery.
Nike accepts all future orders without considering their production capacity
and the promise of delivery within one month of the order. Nike tries to work
around this loophole by placing orders from manufacturers up to 55% to achieve
expected stock levels, before any order demand information is available, and
sometimes up to four months after receipt. They then add to production when
information about future orders becomes available. However, if there was a
stockpile of excess product produced before demand was known, then Nike would
have to pay for the goods in whole or in part, although not demand.
b) Transportation

More than a million people are employed by suppliers, carriers, retailers and
other business partners, engaged in worldwide manufacturing, distribution and
sales. Nike has a history of making a difference from the competition by its
innovative strategies, breakthrough product innovation and marketing, especially
its effective international distribution policy and among the world's leading
strengths. gender. Nike's distribution channel model is famous for the direct and
strict management and control of the company's distribution network. From
analyzing the environment of the global market, along with the goal of becoming a
sustainable development corporation in the world.
In addition to its network of suppliers, Nike also has an efficient distribution
system to serve individual customer needs truly faster. It has established a smarter
logistics and distribution network that makes shipping faster and responds faster to
customer needs.

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 Nike has six primary distribution centers in the US. Notably, four are located
in Memphis, Tennessee. Among those four, two are owned and two are leased. The
other two are located in Indianapolis, Indiana, and Dayton, Tennessee. Third-party
logistics providers run these two distribution centers. Also, Nike-branded apparel
and equipment products ship from a distribution center in Foothill Ranch,
California. The company had 67 distribution centers outside the US at the end of
the fiscal year 2019. Distribution centers act as logistics hubs and more. In addition
to receiving and managing orders provided by Nike, distribution centers either take
on the role of logistics or associate with large logistics and transportation
companies such as UPS, Mearsk. Since then, Nike products have been distributed
to all parts of the world.
Nike has long-term contracts with global logistics companies. This is a
company that has many contracts with Vietnamese companies. Nike is using two
companies, Maersk Logistics and APL Logistics, to provide logistics services.
They may make available Nike-specific information, at any time, at any Nike
website. They can also capture and can draw any kind of report regarding their
orders that have been and will be made by the above companies. This will help
Nike calculate good forecasts, control inventory, promptly respond to customer
requests at optimal costs. At the same time, Nike uses warehouses near urban areas
with fast order processing speed, combined with a complex delivery system right
in the city, helping customers get the products they want at the fastest speed.
c) Packaging
Nike strives to remain modern and convenient. Their packaging and design
are catered to active and sporty youth. They tend to use warm colors like orange,
brown, black and different versions of white. In recent times, they have focused a
lot on the orange background. Their box focuses on a minimalist style that
showcases a shoe's key features and basic color patterns.
d) The combination of warehousing and materials handling
Warehousing: Despite the traditional centralized model, Nike still has
satellite centers. In this new distribution model, inventory will be managed through
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 both central warehouses and via satellites. This process is mainly used in logistics
in Europe, organizing operations for each market channel.
Materials handling:
 The sorting process begins with the boxes being unloaded from trucks in the
receiving area and then stacked on pallets.
 The pallets are then moved into the warehouse area with very narrow shelves and
aisles to save space.
 The tool to arrange the shipping of the containers can depend on each batch of
goods:
 The entire container for the shipment is delivered to the shipping sorter .
 Cartons with items placed in full-case lots go to the pre-sorting area.
 Containers of items will be reconciled into mixed shipments sent to the
warehouse.
 Items from crates are placed on storage shelves from which individual items are
picked and placed into plastic containers. The conveyor transports boxes, containing
individual items, which are then consolidated and manually placed into the cross-belt pre-
sorter.
 The final sorter automatically dispenses individual items into specially designed
troughs. The troughs feature increased split after delivery of a complete batch, thus
separating it for packing into a single carton. The carton is then pushed onto a roller
conveyor for transfer to the transport sorter.
e) Cross-docking
The distribution system of Nike in Europe is thus based on a centralized
configuration with the goods passing through the ELC also reaching parts of the Middle
East and Africa. While Nike operates the ELC in Laakdal, distribution centers of large
customers (such as Footlocker and Decathlon) are acting as some sort of ‘external’ RDCs
which mainly involve cross-docking. By changing from 32 decentralized DCs prior to
1994 to 1 EDC, Nike realized big savings on inventory costs and close-outs after each
season. The savings on warehousing and transportation costs were more limited. While

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deciding whether to build one centralized distribution center, Nike took into account a
trade-off between the product life cycle and demand variability. With a short product life
cycle and high demand variability, it is better to have one centralized distribution center.
If the product life cycle is long and demand is stable, the company can decentralize its
products at low risk. The main logistics characteristics of Nike apparel and footwear are a
short product life cycle (typically three months due to seasonality), unpredictable
customer demand, a high product profit margin, and a distribution focus on service. The
strong seasonality and high demand variability were strong incentives for Nike to build
one centralized distribution center at Laakdal.
Nike is well known for the direct management and control of the company's
Nike.com distribution network. From analyzing the environment of the global
market, along with the goal of becoming a sustainable corporation in the world,
Nike uses two forms of market penetration: Contract Manufacturing and Direct
Import. Nike combines two forms of market penetration together as follows:
 For the cross-country channel: Currently, Nike employs approximately 612
contract manufacturing companies globally to manufacture products under Nike's
direction. The finished products are shipped to 17 distribution centers. From these
distribution centers, on demand or from orders placed 5-6 months in advance under
the pre-order policy, a large volume of Nike products will be exported directly to
more than 679 retail stores worldwide and to consumers.
 For a country's domestic channel: Domestic retailers will source goods from Nike
contract companies in that country or from distribution centers in that country. In
addition, customers can buy products through e-commerce channel nike.com in
their country. The form of e-commerce is only available in 23 major countries such
as the US, UK, Australia, France, etc.
More than one million people are employed by suppliers, transporters,
retailers and other business partners involved in manufacturing, distribution and
sales worldwide. Nike has a history of making a difference from the competition
with its innovative strategies, breakthrough product advancements and marketing,
especially an effective international distribution policy and one of the strongest
21
 brands. top of the world. Nike's distribution scale model is famous for its direct and
strict management and control of the company's distribution network.
4) Operation
a) Product design
Nike's product development process is different from that of its competitors
since the company has always been aiming to continuously improve. Its high
design is supported by the company's strategy of always improving the
relationships established with suppliers so that they can improve their
manufacturing processes. 
For Nike to get new shoes to market, the whole process can take 15-18
months from the time a product is designed for final distribution to retailers. In
addition, predictions from retailers as well as Nike are essential for establishing
production volumes. Typically a pair of Nike shoes typically have a market life of
3-6 months before the product can be replaced with other model.
b) Product manufacturing
The shoe industry, as explained by Mongelluzzo, is characterized by vertical
disintegration as well as a high degree of subcontracting. The company like Nike,
no longer produce goods and instead outsource all production functions from
partners abroad and especially in China. The main advantage of outsourcing is that
companies can focus their efforts in their core competencies such as marketing,
designing and developing new products thus create competitive advantage.
On the other hand, the main disadvantage of outsourcing is that companies
often have to wait a long time for delivery because the products have to be shipped
from abroad. The benefits gained from outsourcing often go hand in hand with
increased difficulty in organizing and monitoring products as well as the working
conditions of workers in manufacturing plants.
Argues that the majority of the company's production and distribution is done
in Asia with China providing more than 40% of Nike's US market. To ensure that
the partners they choose are effective, Nike focuses on choosing the right partners.

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 Nike's production system is divided into three main parts: development partners,
volume manufacturers, and resources.
c) Lean manufacturing
The fashion industry typically has short product cycles, high demand and
high fluctuating procurement levels. These characteristics have led to the
requirement for short delivery times as well as flexible supply chains. In contrast,
pre-existing global outsourcing often has a long delivery time as products that have
to be shipped via sea often take a long time. Nike adopts a subcontracting process
that allows a high degree of dynamism to be able to supply the market and a
flexible production system according to demand and allows production to be
transferred from abroad from one country to another.
 Several years ago, Nike introduced a new supply chain that used a just-in-
time approach to facilitate faster deliveries for customers in Europe and the US.
From the above, it is clear that Nike's distribution plays a very important role in the
success of the company. It can be argued that responsible distribution balances
supply and demand throughout the year, protecting the company's operations
against any uncertainty as products may be kept for some time indoor warehouses
as well as ensuring that large-scale production is run efficiently when the company
is able to transport large volumes of products across oceans.

E.

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F. RECOMMENDATION
I. Global
Promote on social media platforms like Facebook, Instagram, Tiktok,.. and
focus more on content to make interesting ads. In a globalized world, digital
technologies change markets, and sustainability is becoming a key factor. Also, in
recent years, the trend of using social networks and online shopping has become
very popular. In the future, it will increase many times more than it is now.
Therefore, Nike should expand more digital campaigns on social networking sites
and develop online sales market channels.
Promote research: Focus on analyzing where the vulnerabilities in the supply
chain are localized and concentrate the production in these countries
Nike should have the idea of diversifying products more to meet customers'
needs
Nike should apply 4D technology to help users experience products online
and help them choose the right one that fits the customers’ interests. Therefore,
they will increase the experiment for customers and increase the customers’
satisfaction.
II. Vietnam
More diversified products, especially about price because Vn is still a country
with low-medium income so selling high price shoes is still a big problem.
Focus on labor force because Vn is a labor intensive country, Nike should
push up and use this condition to get lower cost.

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 REFERENCES
1. Tomas Hult, David Closs, and David Frayer (2014), McGraw-Hill Education
eBooks
2. Abhijeet Pratap (July 6, 2021). Nike Sources of Competitive Advantage. Retrieved
10/04/2021, from https://notesmatic.com/nike-sources-of-competitive-advantage/
3. Ben Davis (May 11, 2021). What makes Nike different from its competitors?.
Retrieved 10/04/2021, from https://www.mvorganizing.org/what-makes-nike-
different-from-its-competitors/
4. Mathew Johnston ( September 26, 2019). How Nike is Winning the U.S.–China
Trade War. Retrieved 10/04/2021, from https://www.investopedia.com/how-nike-
is-winning-the-u-s-china-trade-war-4771408
5. Sara Hsu (March 03, 2021). The US-China Trade War Is Still Happening.
Retrieved 10/04/2021, from https://thediplomat.com/2021/03/the-us-china-trade-
war-is-still-happening/

 
 

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