Stakeholder management at Nike Inc.

Stakeholder Management

Nike Inc. (NYSE: NKE) is a marketer of athletic footwear and apparel based in suburban Portland, Oregon. As a large and diversified company, Nike has a wide range of stakeholders, both internal and external. Key internal stakeholders include the shareholders, management, in-house employees, and endorsers. External stakeholders include suppliers, the employees of suppliers, customers, wholesale and retail channels, competitors, the community and governments. This paper will examine the degree to which Nike meets the needs of these stakeholders. Nike is a good example of a company that believes that success is equated with meeting the needs of its stakeholders.

Internal stakeholders

The most important internal stakeholder of Nike is the shareholders. Executives and managers are agents of the shareholders, and work to meet their needs. Nike's shareholders expect a strong return on their investment, in particular in relation to competitors in the industry. Nike's returns come in two forms -- the dividend and the appreciation of the company's share value. The dividend is $1.08, which delivers a yield of 1.32% on the current stock price. The stock price has experienced steady appreciation over the past several years. In November 2005, Nike traded at $42.65. Today, despite two years of economic recession and stagnation, Nike trades at $81.82. This performance comes as the direct result of steadily increasing sales. Even when sales slumped in 2009, profits continued to improve. The company's balance sheet shows a steady improvement in the value of the firm's equity, meaning that Nike is meeting the expectations of its shareholders (MSN Moneycentral, 2010).

Executives and management comprise another class of internal stakeholders at Nike. The company provides a stimulating work environment for managerial talent, brought about by the company's number one position in the market and a philosophy that emphasizes creativity and self-actualization. The company's executive compensation is considered low by the standards of a company its size, so the company focuses on attracting executive and managerial talent through opportunity and work environment (Back, 2002).

Non-managerial employees are another key internal stakeholder at Nike. The company, in an effort to improve outcomes for non-managerial employees, has initiated worker surveys to determine the needs of those workers and the degree to which the company meets them. In the most recent survey, the company scored well on a number of measures relating the supervisors, training and fringe benefits. The company scored more poorly with respect to compensation, worker-management communication and living conditions/food, a concern for Asian workers for whom the company provides such benefits (Nikebiz.com, 2010). That Nike is able to measure the needs of its workers and focus its efforts on meeting those needs is an important component of the company meeting its obligations to this critical internal stakeholder group.

Celebrity endorsers are another internal stakeholder. These athletes enter into lucrative contracts with Nike and this constitutes a mutual relationship. Both parties are expected to live up to the terms of the contract. The athletes expect support, payment and for Nike to continue to cultivate a positive image among consumers. That Nike is able to build a roster of the world's most popular elite athletes is indicative of the company's ability to meet the needs of this shareholder group, especially given the high level of competition in the athletic apparel endorsement market.

Conclusion

In general, Nike performs well with respect to meeting the needs of its stakeholders. The world's most respected companies, the most successful and the largest tend to become that way by understanding and meeting stakeholder needs. To an extent, these needs are often supportive of each other rather than being mutually exclusive. Shareholders have seen their needs met by Nike on the basis of strong financial performance even in the face of adverse economic conditions. Yet this performance derives from a number of decisions that the company has made over years with respect to its treatment of athlete endorsers, supporting its channels and addressing potential ethical breaches in its supply chain.

The company does score slightly below the industry average with respect to customer satisfaction, and has for many years. But this is a rare instance of Nike underperforming with respect to the needs of a key stakeholder. The evidence suggests that the company's success owes largely to its ability to meet the needs of nearly all of its other key stakeholders. To the extent that Nike continues to meet the needs of its stakeholders, it can expect to see continued success. If the company can improve its customer satisfaction rating, even greater success can be expected.

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