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Diploma in Business
Unit Number and Title
Unit 1 Business Environment
The two companies chosen are Nike and Oxfam.
Type of firm
Nike is multinational company of Unites States. Its headquarters is in Oregon. It manufactures designs apparels, shoes, and other sports equipment and accessories. It is one of the most valued sports brand across the globe. It sells its products in many nations and operates on a national level. It is a profit making business and is a listed firm in USA. Thus it is in the manufacturing business and it provides one of best sports apparels, shoes and equipment. It tries to manufacture the best sports apparel which can help the people and athletes in improving their performance.
Type of firm
Nike is a public listed firm on NASDAQ and thus have many shareholders. Institutions form the major shareholders and own the firm. Their stake is approximately 83.76%. Top five institutions having stake are Vanguard Group, FMR LLC, State Street Corp, Capital Research and Bank of New York Mellon Group (About Nike, 2014)
Oxfam is a non-profit organization working across the globe. It is a confederation of seventeen firm across the globe and it has centres in 94 nations.
Its main is to help people poverty and other injustice being faced by them. It aims that people exercise their rights. They work on different campaigns; like public education, assisting people in calamities and disasters. Their main aim is that people should not live in poverty and there should be more equitable world.
There are four main areas in which Oxfam works which are helping in crisis, gender equality, economic justice and essential services.
This firm is not owned by any institution and many international organizations have their stake in this firm. Each country has its own Oxfam centre and they operate out of it. They work on the funds received by them (About us, Oxfam, 2014).
Stakeholders or firms affected by the decisions of the firm or are related to the firm are known as the stakeholders. These individuals or firm either decision making for the firm or are affected by the decisions taken by the firm. They work closely or are associated with the firm in any manner. For any important decision made it affects their working or the way they conduct their activities.
For Nike stakeholders are the investors, management of the firm, employees of the firm, customers of the firm, debtors on the firm, suppliers of the firm. Lastly the potential investors of the firm also form important stakeholders (About Nike, 2014)
Want to increase their return and wealth
Management of the firm
Increase the revenues and increase the size of firm. Maximize shareholder wealth.
Employees of firm
Wants firm to grow which can help them grow
Want good services from firm
Want firm good health so that firm can pay their debt
For Oxfam the main stakeholders are the organizations which form the organizations, People who are getting help from the firm, people who contribute to the firm and also the people or firm against which the firm is going to take action.
Organizations who form Oxfam
Want to serve the people
Want firm to bring change in society
People forming the organization
Want that big corporations do not take advantage of the firm
Firm or people against which firm fight cases
They will have to fight the case which firm decides against.
Thus for both the firms the stakeholders is totally different. Since their operating model is completely different, the way stakeholders react and are formed is also different.
For Nike there is a management which has been appointed by shareholders and Board of directors. Nike is public listed firm and hence the major shareholders say is taken into account. Thus after shareholders the management has the main say in the working of the firm. CEO of the firm is at the top and the rest of the management and its employees are below. Board of directors monitors the activities of the management and raises issues if there is any decision which does not seem right to them. Institutions form the major shareholders of the firm and thus they also have their say in choosing of the management.
Oxfam is an international organization and is formed through many organizations. There is no central power of Oxfam which controls all their activities. In each country they have their centres and each centres works on the issues relevant for the nation. Funds raised for a cause in one nation can be given to another nations. Thus the centres work in tandem to get the work done however there is no central power which has the say or has the major investment in Oxfam, It is the collective decision of the individuals.
Nike being a large firm require large capital from the public and hence public listing is important for the firm to raise capital for the firm and have other sources of capital. For a firm being public listed helps to get capital and thus expand their business. Using this structure the firm can invest the capital in capex and increase their operations. Thus such structure helps the firm achieve their objectives and having wide operations.
For Oxfam, there is a lot of responsibility and trust associated with the firm and hence there should not be a single individual driving the decision of the firm as it can be misused. Its headquarters for Britain are located in Cowley.
Since not there is collective decision of the firm involved with Oxfam one can be make sensible decisions which are informed and which are beneficial to the society and devoid of any selfish intentions.
Thus for both the firm the structures are important and gives them the balance to be successful.
Nike has been in this since long and has been one of the most successful brands in sport across the globe. Since it is demand driven industry its revenues are largely dependent on the economy of the countries where is operates. Since sports apparel and footwear do not form essential goods people spend on them when they higher disposable income and this happens when the economy of country is doing well. Thus the factors like GDP of the nation, unemployment levels, inflation are the three main economic factors which can affect the growth of the company. Increasing GDP and lower unemployment levels are good for the firm as people will spend more however reverses is true for the firm. During the period of early 2000 when the economy of UK was doing well, Nike saw good increase in the revenues of the firm from nation. However in the recent years when the economy is not doing well the sales have been muted for the firm (Noakes, 2012).
Oxfam performance does not depend on the macro economic factors, it depends on the donations received by the firm. Since it is a non-profit organization there are no revenues to compare, however one compare the donations received by the firm and the number of campaigns undertaken by the firm in the respective nation.
For Nike political stability of the nations where it operates is important as stable governments tend to provide better business environment. Countries with better economies tend to spend of sports apparel. If the economy is poor like Africa then the firm products may not sell as people may be spending on essential goods rather than sports. Technology plays an important role as they need to come out with new products which can improve the performance and experience of the athletes. Legal factors also play an important as the firm need to avoid legal issues if it wants to start businesses in new nations and setup factories. If the nation does not allow much investment in the nation then the firm may not be able to do that(Piskorski & Johnson, 2012).
For Oxfam political factors are very important as sometimes it may be fighting against the policies of government and hence it needs political stability of the government to exist in the nation. Firm works for economically backward society and hence economy of the nation plays important role. If the economy is less developed there would be more work for the firm. Social factors play an important role as the way wealth is distribute and people treated in a society will determine their rights and role of the firm. Technology can be used by the firm to come out with new solutions and connect with people. Lastly legal factors are important as the firm will use legal options to fight and also need legal support to survive in the nation (Fitzpatrick, 2014).
For Nike one of the major stakeholders is customers. Customers need good quality of products from Nike. Nike has strong competitors like Puma, Adidas. Hence the firm needs to come out with good products. If other firms manufacture better products then the firm will face decreasing sales. Thus the customer feedback is significant for firm decision. Another stakeholder important are the investors. Investors need good return on equity and hence they seek answers from the management on the performance of the firm. Thus their say has important role in the management decisions and also their selection (Maguire, Potts & Fletcher, 2012)
For Oxfam the shareholders who matter are the people for whom they serve. Their fight is against the poverty and their main stakeholders are the people. Thus on their conditions their action will be decided. Else their shareholders are the press and the media who will report their activities and thus the firm will know whether their action have any positive effect on the society. Lastly the people who have opened their centres in each of the country and the representatives of the international organization also play an important role in the decision making of the firm and they are the most important stakeholders for the firm (Carr, A. U. S. T. I. N., 2013).
For Nike one of the major conditions was the 2008 crisis when the sales of the firm declined and thus the firm was faced with decreasing sales. Firm however focused on its core area, tried to come up with new and better products and when the economy revived they again saw increase in sales. Nike is one of the most trusted global brands and hence the firm needs to constantly work on improving the performance of the goods (Lund-Thomsen & Coe, 2013).
For Oxfam there have been a lot of controversies regarding their activities. One of the major controversy was regarding Starbucks. Starbucks has blocked three Ethiopian coffee beans thereby denying them the revenues. Starbucks used their position to undue influence the national coffee associated to block the beans. However there were lot of controversies regarding this issue and the motives of Oxfam were questioned. Also there were cases when Oxfam was accused of asking of commercial favour from the bananas of Dole. They were accused that they backed the rival producer and thus were fighting against them (About us, Oxfam, 2014).
Nike has expanded its reach to various countries. Its main source for new revenue growth has been emerging markets. With the government becoming more stable and the government making their norms areeasier for free trade it has become easier for the firms to do business Due to the easing legal factors and businesses polices Nike has been able to perform well over the years and expanded its market across the globe. Thus due to strong political influence and freeing of markets by the emerging economies Nike has been able to increase its growth in the revenue (Rangan, Chase & Karim, 2012).
Oxfam has gained a considerable popularity and has strong presence in many countries. It is trying to deal with social factors and with increasing awareness among people due to technology it has been able to spread its agenda to the people. With the increased usage of the social media there has been constant increase in the communication with the people and hence it becomes easy for the organization to get information and also communicate to the people about the crisis. In the latest development the firm is fighting against the Taliban actions of the peace which are threatening the rights of woman. Also Oxfam has taken up many issues and they have used strong legal actions against them. If laws are not strong in the nation then it can be become difficult for the firm to conduct the business (Ellis, 2011).
The chosen business strategy is Nike. Investors form important stakeholder for the firm. Due to demand from investors to have high return firm has invested a lot into new technology and coming up with new products. Also the firm had to venture out and invest in new markets like the emerging economies. Customers who are also important stakeholders are also demanding new and better products. So the firm has to invest in new technology and come out with products that are better than their competitors and also give a better experience to the customers. Thus Nike has come out with good products like better running shoes, better apparels for the sportspersons which help them perform better in their lives (Peretti & Micheletti, 2011)
People have become more conscious about their health and focusing on their health. As a result people are playing more sports and thus there are chances of increase in the sales of the firm. Also Nike has advertised itself better. Thus there is more visibility of the brand and people are trying to buy the best apparels and other equipment. Thus there is high probability of increased sales. In addition to this with emerging markets waking up to these brands and these firms penetrating more in the market they can get increased sales for the firm.
In above section different aspects for Nike and Oxfam have been analysed. Stakeholders play an important role in the decisions of the firm. Also social and legal factors play an important role in the firm performance. Nike has performed well over the period and has tried to accustom itself to these factors. Oxfam too has grown over the period used various technologies and different mediums to expand its reach.
About Nike, 2014. Retrieved on 17th November 2014 from https://secure-nikeplus.nike.com/plus/
About us, Oxfam, 2014 Retrieved on 17th November 2014 http://www.oxfam.org/en/our-purpose-and-beliefs
Ellis, P. D. (2011). Social ties and international entrepreneurship: Opportunities and constraints affecting firm internationalization. Journal of International Business Studies, 42(1), 99-127.
Maguire, B., Potts, J., & Fletcher, S. (2012). The role of stakeholders in the marine planning process—Stakeholder analysis within the Solent, United Kingdom. Marine Policy, 36(1), 246-257.
Somasundaram, J., Howard, P., & Reed, R. (2013). Customer retention: a case study of stakeholder analysis in higher education.
Green, D. (2012). From poverty to power: How active citizens and effective states can change the world. Oxfam.
Fitzpatrick, C. (2014). UK: Oxfam reveals link between flooding and deprivation.
Carr, A. U. S. T. I. N. (2013). Nike: The No. 1 Most Innovative Company of 2013.Fast Company.
Peretti, J., & Micheletti, M. (2011). The Nike sweatshop email: Political consumerism, internet, and culture jamming. Politics, Products, and Markets. Exploring Political Consumerism Past and Present. New Brunswick, 127-142.
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