Business model innovation is one of the most daunting types of innovation that helps an organization to understand the need for change. The processes that have undergone optimization to make an organization a success are the most likely targets seen for transformation. The organization that has been selected for the purpose of this assignment is NIKE, the organization started off as a small unit that functioned from the back of a car trunk. It was founded by Phil Knight and Bill Bowerman in the year1964 on January 25th. At present the organization has it presence all over the world and is one of the largest sellers for athletic footwear and clothes (Nike News, 2017). Thus making the organization an ideal choice for analyzing the business model of innovation.
Nikes mission statement is “To bring inspiration and innovation to every athlete in the world”. The success that the organization has earned over the years to make it the top name in the sports industry is due to the focus it has laid on innovation, collaboration, transparency and advocacy. The concept of innovation has always been Nikes main business philosophy and the first ever breath through made was the innovation of the waffle designed sole (Lebron, 2010). The organizations long term goal is to manufacture products that are used making the least possible materials. To aid the business model innovation Nike has come up with the innovation lab to deliver sustainable solutions. Nike has a corporate culture that is mainly characterized by team spirit and the loyalty of the workers. The headquarter is called a campus rather than calling it an office, the workers are known as players while the supervisors are called as coaches. There are five main points that Nike has followed to become a success that comprises of Initiation , Ideation, Integration and Implementation. Innovation required teamwork and here at Nike the teams provide a suitable structure for the implementation of ideas and pilot testing of their products. The competitive strategy that has been adopted by the organization is product differentiation; the organization has stuck to producing athletic footwear that is above the competitors in the markets. All theory products are made using the latest technologies and reaching out to a larger targeted market (Ozanian, 2017). The firm has implemented price leadership so that they can be in the lower price segment without compromising on the quality of their products. Thereby enabling them to gain a better hold of the market shares. Communication has a pivotal role to play in the success of the organization; Nike encourages a free environment where all the workers have the permission to voice their views and opinions. Commitment of the top management also has an intrinsic role to play; the style of leadership used by the management of the organization makes use of a team management method. Where all the members combine their knowledge and experience to take the company forward as this leadership styles helps in building relationships that are based upon mutual respect and trust.
The CAGE framework has been developed by Pankaj Ghemawat so that business organizations could conduct an evaluation of the countries as per the distance that existed between them. Distance is mainly defined to comprise of the cultural distances between the two countries, the administrative distances, the geographic distances and the economic distances (Ghemawat, 2015). This framework helps in analyzing distance and provides various routes to understand the opportunities that are available and the associated risks with them. The organization that has been selected for the purpose of this paper is Starbucks Corporation. One of the most prominent names in the food industry all over the world, it is an organization synonymous to the best coffee experience.
Starbucks has become a globally known brand that has its presence in more than 60 countries with 18,000 stores (Horwitz, 2017). The organization has a very dominant place in the industry. It has made use of the CAGE framework extensively to globally expand thereby allowing the common man to have a gourmet coffee experience. The organization has a turnover of over 30 $ billion and is indicative of the fact that it works in an industry that is mature and has revenues that are stable in nature (Gronwald, 2017). Starbucks decided to enter the Chinese market and it should have certainly failed as China is a country where the main beverage of choice is tea. However the firm has its presence in 48 countries with a total of 2600 stores. Starbucks came to china in the year 1999 and since the Chinese had a palette for tea the organization decided to bring forth a coffee experience for the middle class where they could interact with their friends over a coffee. Thus creating a demand in the market. Starbucks made use of a smart marketing strategy where it used their culture of tea drinking as their main pawn. It hence capitalized on this culture by the introduction of a green tea coffee that turned things in their favor. The consumers gradually developed a liking for Starbucks and it was imperative to their success. The main marketing strategy employed by the organization is to provide its consumers with an experience to remember; hence attention is paid to their interiors with comfortable seating and latest music thereby helping it to develop an edge above the rest in the market. The brand has cut across the cultural distances by sending its baristas from markets that were already established to new ones to initiate the Starbucks culture (Chiu, 2012). The company also has a local menu with traditional Chinese beverage options as well due to its extensive consumer profiling so that it can provide the customer with a fine experience of the cultures of both west and east. The organization has been able to overcome the administrative distances by hiring local workers to understand the needs of the consumers and to overcome language barriers as well. Economically the organization has worked around its pricing issue of its beverages so that it suits the middle class segment of China (Butch, 2017). It is imperative that an organization adapts its business processes in accordance to the local market so that it can be a success on the global platform.
Butch, T. (2017). How Does Starbucks Succeed in China?. [online] The Diplomat. Available at: http://thediplomat.com/2016/07/how-does-starbucks-succeed-in-china/ [Accessed 19 Aug. 2017].
Chiu, C. (2012). Culture and Consumer Behavior. Foundations and Trends® in Marketing, 7(2), pp.109-179.
Ghemawat, P. (2015). From International Business to Intranational Business. Emerging Economies and Multinational Enterprises, pp.5-28.
Gronwald, K. (2017). Intercultural Competencies. Global Communication and Collaboration, pp.51-66.
Horwitz, J. (2017). Starbucks is opening more than a store a day in China and only plans to get faster there. [online] Quartz. Available at: https://qz.com/943502/in-china-theres-starbucks-and-then-theres-everything-else/ [Accessed 19 Aug. 2017].
Lebron, W. (2010). The Best Fashionable Nike Shoes – Nike Air Rift. SSRN Electronic Journal.
Nike News. (2017). Top Things to Know About Sustainable Innovation at Nike. [online] Available at: http://news.nike.com/news/sustainable-innovation [Accessed 19 Aug. 2017].
Ozanian, M. (2017). How Nike's marketing strategies helped it become a global brand. [online] Businesstoday.in. Available at: http://www.businesstoday.in/magazine/lbs-case-study/nike-marketing-strategies-global-brand/story/207237.html [Accessed 19 Aug. 2017].
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