Nike Five Forces Analysis & Nike SWOT Analysis Sample Paper

Nike is an international leader in sportswear retail. It is a flagship brand responsible for developing many technologies in the footwear industry nowadays. While its primary market is North America, where Nike is an absolute leader, it is also present in the Western European market, where the UK holds the largest share of 15%. However, the UK market’s share of Nike is inferior to that of Adidas. While this gap is being narrowed, there is insufficient progress in obtaining a sustainable competitive advantage.

The following report aims to analyze the key microeconomic factors of the footwear market in the UK and suggest a strategy that would allow Nike to create a sustainable competitive advantage over other brands in the segment. The Nike five forces analysis and a SWOT analysis of Nike were conducted to assess the athletic footwear market in the UK. As a result, we could see the key factors under each force and conclude the state of competition within this sector. Besides Nike Porter’s Five Forces and SWOT analyses, it was necessary to conduct an audit of the company’s competencies and assets. The whole study refers to reputable sources on relevant topics.

đź“Ť Introduction

To develop and implement a successful business strategy, the company management must have an understanding of the factors that influence its performance. One of the most common tools used to gain insight into the conditions of the industry is Porter’s Five Forces model. The offers an overview of potential barriers and risks which will likely be faced by the company and therefore need to be acknowledged (Wordington & Britton 2015).

đź“Š Nike Five Forces Analysis

Bargaining Power of Suppliers

Nike’s main product line is athletic footwear and sportswear, with athletic apparel and accessories occupying a small share of operations (Nike 2016). Importantly, the production of both sportswear and accessories is performed by third-party contractors in developing countries such as Indonesia, China, and Vietnam (Sicat 2013). These contractors usually deal with a cheap labor force which is widely available in the mentioned locations. Therefore, suppliers of the workforce are numerous and diverse, and, therefore, constitute weak bargaining power. Next, the production is diversified to the degree where none of the factories involved in the cycle is responsible for more than 8% of the total production amount (Nike 2016). This allows us to qualify the size of individual suppliers as small, which also suggests weak bargaining power. Finally, the major share of raw materials required for footwear production consists of a variety of synthetic materials and industrial chemicals widely available on the market (Sicat 2013). Since the availability of materials is high, the bargaining power of the overall supply is weak. Therefore, suppliers have the least influential role in Nike’s position on the market.

Bargaining Power of Buyers

Nike is one of the few major athletic footwear brands in the UK, along with Adidas, Converse, Reebok, Asics, and Puma (Statista 2016). Most of them offer products of comparable quality with similar prices. As a result, customers have an opportunity to switch to other products. This fact suggests moderate to the strong power of suppliers. In addition, the average price of Nike’s product is relatively high, which further strengthens the power of buyers. However, a recent report issued by Nike’s management suggests that such a conclusion is not universally applicable. According to it, an insignificant rise in the price of Nike’s footwear resulted in an almost equal rise in revenues (Nike 2016). Such a result suggests that buyers are not very price-sensitive, which undermines our previous assumption and brings the power of buyers down to moderate. This conclusion can be further strengthened by the recent analysis of the sportswear market in the UK, which indicates a rise in popularity of both athletic footwear and athleisure products that are directed at less professional athletes (Euromonitor International 2016). The trend is predicted to continue for at least five more years, which correlates with the assumption that buyers are a moderate force.

Threat of New Entrants

The production of footwear of quality comparable to Nike’s requires significant capital investments. These include the purchase of equipment, acquisition of property, and funding of research and development operations. This means that few companies have sufficient resources to enter Nike’s market segment. The threat of new entrants is further weakened by the factor of economies of scale. For instance, the high-profit margin characteristic for the current footwear market is possible largely due to the use of labor from developing countries, which is hard to obtain without a developed infrastructure and global-scale partnerships. Next, Nike, similarly to its closest competitors, is a well-established and recognized brand (Dougherty 2016). Creating and sustaining a brand of equal scale would require significant resources. Finally, Nike’s marketing campaign created a powerful message of a lifestyle associated with the brand. Most customers choose Nike despite the fact that the competing products are almost identical in physical characteristics (Dougherty 2016). This fact indicates high product differentiation. The combination of these factors suggests that the threat of new entrants is moderate to low.

Threat of Substitutes

The sportswear market in the UK has a number of products that can serve as substitutes for Nike. These can be broken down into two broad categories: products that are oriented on performance and athleisure goods – sportswear for occasional athletes and for casual use (Euromonitor International 2016). The former is offered by Nike’s competitors (most prominently, Adidas), and has near-identical relative price and performance characteristics. Besides, the switching cost related to this category is low. Therefore, the threat of substitutes is moderate to high. The performance category also includes less recognizable brands, brands that do not emphasize appearance, and copycat businesses. The latter two create a real threat since their quality is considered sufficient for the majority of users while their price is considerably lower. Therefore, the availability, performance, and switching cost of substitutes create a strong threat for Nike.

Competitive Rivalry

The UK market is densely populated with brands offering athletic sportswear. However, the industry is dominated by few large brands. The latest report by Euromonitor International (2016) indicates that Nike and Adidas are two leaders, accounting for 29 and 24 percent share of the market, respectively. The next closest competitor, Converse, occupies a significantly smaller share of 8%, followed by Reebok, Puma, and Asics (Euromonitor International 2016). Therefore, while two major players exist in the market, their collective share does not allow us to categorize the situation as a duopoly. However, it is consistent with oligopoly, with a four-firm concentration ratio of 67% (Statista 2016). This conclusion is consistent with other features of the UK market, such as high barriers to entry, comparatively similar pricing decisions, the prominent role of branding in consumer behavior, and product differentiation discussed above (Wordington & Britton 2015). It should also be mentioned that the industry has a high ratio of variable to fixed costs, mainly due to the dependence on raw materials. Finally, the steady growth of the UK sportswear market which is expected to continue through 2021 suggests high market penetration and saturation by the leading brands. Considering all of the above, the competitive rivalry in the UK sportswear market is a strong force.

Reflective Account

While completing my report on five forces, I was able to make several observations. First, I noticed that the five forces model gives a good overview of the macro-environment which allows forming a strategy with regard to potential threats and expected barriers. However, I also noticed that Porter’s model does not cover the entire picture and several aspects of the market that need to be acknowledged can be left outside its scope. The most prominent example of this is the role of product differentiation which, in the case of Nike, decreases price elasticity to the point where the overall increase in price does not cause the decline in revenues despite the availability of substitutes. Another observation is related to the dynamics of business. I noticed that despite the low threat of new entrants there is at least one example of the successful entry (Under Armour) which seems to defy the results of the analysis. Therefore, it is possible that the five forces model does not offer means of assessing the weight of the factors – only their presence.

đź’° Nike Audit: Competencies & Assets

The analysis of the firm’s assets and competencies is crucial for obtaining information on its strengths and incorporating them in the development of business strategy (Wordington & Britton 2015). The resource-based audit tool which gives an overview of tangible and intangible resources, accompanied by value chain analysis, is the most comprehensive way of assessment.

Nike Assets: Tangible Resources

Nike is an international company that currently operates primarily in North America, Western Europe, China, Japan, and Eastern Europe. Its physical assets include land, buildings (e.g. stores, factories, research centers), machinery, production equipment, dedicated software, and construction (Stock Analysis on Net 2016). The analysis of the assets indicates a steady growth in all of the said fields, with notable exceptions in machinery, equipment, construction, and leasehold improvements. These areas displayed a brief decline in 2015 compared to 2014, but all four increased the following year, exceeding the 2014 level (Stock Analysis on Net 2016).

The financial assets display the same tendency, with the steady rise in revenues for the last five years and an increase of return of investment by 4% in 2015 (Nike 2016). To successfully operate on an international scale, the company also employs an efficient distribution network, as well as a supply chain to minimize labor expenses and gain access to inexpensive materials from developing countries. Finally, Nike holds rights for a number of patents on materials, patterns, footwear components, and training methods and programs (Nike 2016). In addition, the company holds a number of contracts for cooperation with renowned athletes and publicity persons who promote their brand. To conclude, Nike demonstrates a robust tangible resource base which increases relatively steadily over the years.

Nike Competencies: Intangible Resources

The two biggest areas of Nike’s competencies in the field of intangible resources are innovation and reputation. The company employs a prominent research and development department which constantly works on the design and development of know-how to improve the characteristics of its footwear. Nike also establishes reliable communication channels to ensure the reception of positive feedback and timely detection of design flaws. The main product lines are updated on an annual basis to guarantee the best athletic performance. The latest addition to the innovative practices is the introduction of the customization option on their direct-to-customer distribution channel (Nike 2016). The improvements in manufacturing efficiency are also possible due to the implementation of hi-end manufacturing equipment and the increasing role of automatization.

The company’s reputation is maintained primarily through close collaboration with sports stars and celebrities. In addition, Nike remains a certified partner of many official sports events, which establishes trustworthiness and professionalism and contributes to the recognition of the brand. Besides, Nike makes a visible effort in reaching out to the customer, which is a highly valued trait in the contemporary information-rich business environment. Finally, the competencies of human resources employed by Nike must be considered as an important component of the firm’s intangible resources. In addition to the employees directly involved in the production, marketing, and distribution, human resources include skilled trainers, designers, physicians, and psychologists, which contribute to the resulting quality of the final product. The company constantly reviews the level of employee proficiency and provides opportunities for training and development to maintain a high degree of competence.

Nike’s value chain presents the greatest opportunity for value creation on operations and marketing stages. The former involves the development of innovative designs which combine excellent characteristics with prominent and recognizable appearance. The latter secures a broad customer base that consists primarily of non-professional athletes who occasionally engage in sports and view it as a lifestyle. The weight of the marketing stage is so significant that its influence can be traced among non-athletic brands such as Next who modify their product lines to meet the demand (Euromonitor International 2016). This allows Nike to greatly diversify their target audience, which can be confirmed by the growing popularity of athleisure products among women (Euromonitor International 2016). Inbound logistics play a somewhat lesser role, but still present opportunities for increasing profit margin, mostly due to heavy reliance on developing countries. Outbound logistics, sales, and service stages possess fairly moderate value creation capacity.

Reflective Account

In the process of preparing the analysis of competencies, I was able to detect one important point. While marketing is commonly referred to as the reason for the company’s success, the role of innovation can be traced throughout the value chain. If not backed by a decent level of product quality and sustainable business practices, marketing effort will be eventually rendered useless. Therefore, I can conclude that value in the case of Nike is sustained (rather than generated) by exceptional marketing decisions.

đź“‹ Nike SWOT Analysis

Before any recommendations can be formulated on the preferred strategy, it is necessary to identify the strengths, opportunities, weaknesses, and threats in a clear and concise way (Wordington & Britton 2015). SWOT analysis is a technique that can be used for gaining an overview of these factors.

Nike Strengths

  • Reliable physical resource base evenly distributed across the world;
  • Closely maintained and updated quality of products;
  • Established and up-to-date R&D department;
  • Long history on the market resulting in strong brand recognition;
  • Use of innovative technologies throughout the value chain;
  • Versatile marketing strategies;
  • Partnerships with celebrities, athletes, and publicity persons;
  • Robust distribution chain;
  • Established communication channels with retailers and end-users.

Nike Weaknesses

  • Strong dependence on retail distribution channels;
  • Highly competitive market with one formidable opponent (Adidas);
  • Relatively high price;
  • An increasing number of international operations regulations;
  • Dependence on the income of the target audience.

Nike Opportunities

  • Possibility to expand into untapped markets (e.g. India);
  • The increasing popularity of active sports as an essential component of well-being and lifestyle;
  • The growing role of the direct-to-customer model;
  • Production and distribution chain’s capacity for improvement via automatization and optimization of the processes;
  • Predicted expansion of the sportswear market in the UK.

Nike Threats

  • The emergence of highly flexible new entrants who leverage opportunities of the contemporary market undetected by the Five Forces model (e.g. Under Armour);
  • Impact of large-scale economic crises;
  • Currency fluctuations;
  • Further improvements of counterfeit products and copycat businesses.

🚀 Nike Competitive Advantage Strategy

Considering the information above, Nike needs to sustain and increase its profit margin by investing in developing countries. The investment must cover the company’s existing assets and new market coverage. The former can be achieved in a number of ways. First, it is necessary to improve the working conditions of the labor force by providing fair compensation practices. Simultaneously, the target country’s infrastructure should be enhanced by appropriate corporate social responsibility policies. Such a move will stabilize Nike’s existing position on the global scale and eliminate unexpected setbacks. More importantly, it will increase employee satisfaction, which will lead to improved organizational performance. The improvements should be communicated to stakeholders, which is expected to contribute to Nike’s corporate image and win the loyalty of customers in the UK and other major markets. The said CSR policies are to address environmental issues, which are currently under rigorous control and can backfire if left unaddressed. Another area which can be improved is the modernization of production accompanied by proper staff training. While initially expensive, it will lead to improved cost-efficiency in the long run, and secure sustainable competitive advantage.

The proposed strategy will result in the elimination of threats associated with the involvement of developing countries and lead to a decrease in production costs. The latter is especially important for the UK market where Nike closely competes with Adidas. The said improvements will eventually allow price adjustments without the decline of profit margin and create a sustainable competitive advantage. In addition, the emphasis on environmentally-friendly and ethical practices aligns well with the interests of the current target audience, especially those who choose Nike products as a way to communicate their preferred lifestyle. Therefore, the strategy will result in greater market coverage and a long-term increase in customer loyalty.

Reflective Account

In the course of conducting the SWOT analysis, I initially noticed that the current strategy employed by Nike already takes advantage of its biggest strengths. At the same time, the direction made by the company did not mitigate most of the indicated risks. Admittedly, the suggested strategy requires considerable resource allocation and does not lead to short-term improvements. On the other hand, it holds great capacity for increasing competitive advantage in the long run and therefore is recommended for reaching a sustainable result.

↪️ Porter’s 5 Forces Footwear Industry – Conclusion

By conducting the analysis of the footwear market in the UK, I was able to identify the strengths of Nike which can be used to leverage its competitive advantage. By employing the suggested strategy, the company is expected to achieve an advantage over Adidas in the long run and outperform it in sales and market coverage. More importantly, the strategy will allow it to eliminate at least some of the threats identified in the SWOT analysis and contribute to the well-being of the involved stakeholders, further boosting its reputation, and match its supply with the expected demand created by the predicted growth of the footwear market.

đź”— Reference List

Dougherty, T 2016, NIKE brand and the secrets to differentiation, Web.

Euromonitor International 2016, Sportswear in the United Kingdom.

Nike 2016, Form 10-K.

Research and Markets 2015, Footwear market – European industry analysis, size, share, growth, trends, and forecast 2015-2021.

Sicat, G 2013, Nike in Indonesia – employing more than a hundred thousand workers.

Statista 2016, Sports shoes & trainer brands ranked by number of consumers in the United Kingdom (UK) in 2015 (in 1,000).

Stock Analysis on Net 2016, Analysis of property, plant and equipment.

Wordington, I & Britton, C 2015, The business environment, Prentice Hall, Harlow.

Hyde Park Art Center’s Organizational Analysis

A Brief Description of the Organization

Founded in 1939, Hyde Park Art Center promotes contemporary visual art in Chicago. The Center brings “artists and communities together to support creativity in art” (Hyde Park Art Center, 2016, p. para. 1).

Mandate

“Connecting the public to Chicago art and artists while supporting artists’ ability to take risks – the Art Center fosters creativity through making, learning about, seeing, and discussing art—all under one roof” (Hyde Park Art Center, 2016)

Mission Statement

“To engage diverse audiences in the work of Chicago’s artists, the Art Center makes space for transparent interaction with art and the artistic process, inspiring creative exploration and encouraging exchange between audiences and artists” (Hyde Park Art Center, 2016)

Vision Statement

The Hyde Park Art Center does not have a clearly stated vision statement.

Goals

“As Chicago’s only visual arts organization dedicated to ensuring that Chicago is a place where artists can practice and flourish, the Art Center continues to sustain this foundational spirit” (Hyde Park Art Center, 2016)

Values

The Hyde Park Art Center does not expressly state these values, but they can be derived from various statements presented by the organization.

  • Inspires
  • Creativity
  • Professionalism
  • Inclusivity
  • Involvement
  • Outreach

Tasks

  • High-quality arts education, supporting individual and community development
  • Exhibitions
  • Provides a platform for international, national, and local artists
  • Professional development for working artists
  • Teaching artists
  • Provides art courses
  • Provides a platform and space for artists, community members, and peer organizations
  • Make a donation appeal
  • Exhibitions and events
  • Proudly lists all sponsors
  • Support for artists, including a limited amount of financial aid
  • A functional board of directors
  • Get involved
  • Volunteer positions
  • Internship opportunities

Staff Positions and Volunteer Positions

For staff Administration

  • Administration
  • Executive Director
  • Deputy director
  • Marketing and communication
  • Director of development
  • Development associate
  • Finance and operations

Education

  • Director of education
  • Teens program
  • Outreach programs
  • Director of schools and studios

Exhibitions

  • Director of exhibitions and residency programs
  • Residency and special projects manager
  • Residency coordinator
  • Preparator and installation technician
  • Facilities manager

Interns

  • Curatorial fellow
  • Administration intern
  • Education assistant
  • Leadership fellow
  • Education curatorial intern

Teaching Artists

Columbia MFA

For volunteers

Education

Exhibition

  • Opening receptions
  • Installation/de-installation
  • Artist and curator talks
  • Open studios

Special events/other

  • Festivals and community events
  • Welcome desk
  • Office and administration
  • Tuition exchange

All Sources of Funding

The Center generally relies on three sources of funding supported by hundreds of contributors, including anonymous donors.

  • Donations
  • Grants
  • Fundraising through events

Two Fundraising Events

  1. The Center hosted a special event dubbed 2016 Gala to raise funds through ticket sales for various events in honor of Theaster Gates and Linda Johnson Rice.
  2. The Center conducts an annual Holiday Art Sale to raise funds by retaining 25% of the proceeds from the sales to support education and studio programs.

The Board of Directors

  1. Chair- Richard Wright
  2. Vice-Chair – Julie Guida
  3. Secretary – Janis Kanter
  4. Treasurer – Justine Jentes
  5. Other members – Dawoud Bey
  6. Martha Clinton
  7. Louis D’Angelo
  8. Erika Dudley
  9. Lawrence J. Furnstahl
  10. Theaster Gates
  11. De
  12. idre Gray
  13. Diane Jackman
  14. Kineret Jaffe
  15. Lisa Kornick
  16. Edward G. Lance IV
  17. Trinita Logue
  18. Lauren Moltz
  19. John Oxtoby
  20. Yumi Ross
  21. Jason Saul
  22. Robert Sullivan
  23. Michelle Ha Tucker
  24. Angela Williams Walker
  25. Linda Warren
  26. Amanda Williams

Sustaining Board

  1. Tim Brown
  2. Sonya Malinda
  3. Sandra Perlow
  4. Melissa Weber
  5. Karen Wilson

Hyde Park Art Center does not define how the board members or directors are chosen, but membership for the public is open to all under various categories defined by contribution levels.

The Committee

  • Hyde Park Art Center’s Exhibitions Committee chaired by Dawoud Bey
  • Supported by Huey Copeland, Kelly Kaczynski, Sze Lin Pang, Jason Salavon
  • Members
  • Art Center staff members: Allison Peters Quinn, Peter Reese, and Kate Lorenz

Interaction

Presently, the committee gets more than 100 artist nominations submitted by faculty artists and curators in Chicago and then reviews these submissions. The committee thoroughly assesses and narrows down to few artists who are selected for a final shortlist for a subsequent inclusion of their work in the exhibition.

The Chair of the Board guides the relationship between the committee and staff, and volunteers. The committee strives to create a stronger tie with the staff and volunteers to ensure that the committee’s roles support and complement the Center. Hence, no competition is expected. While the committee serves at the request of the Chair, committed members and specialists are expected to make up the committee to enhance governance of the Center and offer support to volunteers and staff.

The Center can still establish other committees, but the number should be restricted based on the number of staff, volunteers, interns, and resource limitations. Thus, an executive committee made up of the Board officers and other directors can help the Center to handle delicate issues and financial affairs. The executive committee should also focus on the recruitment of board members, nominating committee members, reviewing the board structure, and promote learning opportunities for the board. The Center also requires a fundraising committee to handle issues related to philanthropy and grants. Further, it should have an ad hoc committee to evaluate the progress of other committees, results, and enhance transparency at the Center.

Innovative Ways to Utilize All Volunteers and Staff

For increasing attendance, staff and volunteers would research for available mailing lists for associations and organizations who could benefit from the Center through exposure. Additionally, staff and volunteers can create a publicity stunt to increase pre-event exposure and attract media attention. Finally, staff and volunteers can initiate partnership opportunities with other organizations and business leagues for attendance and mailing lists.

Staff and volunteers can enhance affinity to the Center by creating local awareness of the organization (Rehnborg, 2009). They would identify specific individuals who need to get involved by reviewing potential participants and partners; recruiting participants and members from diverse backgrounds and viewpoints; reviewing representation from different sectors of the community, and create an environment that allows a greater diversity of people and organizations to participate. They can also reach out to potential beneficiaries and contributors; develop a plan for engaging new generations of people and organizations; and finally, review previous practices for necessary adjustments.

Staff and volunteers ensure increased funding by utilizing new online fundraising techniques, such as Web optimization of the Center’s Web site so that donors can easily find it. Every special event held at the Center should provide an opportunity for fundraising and sales of artworks.

Expanding Outreach

The Center can enhance its outreach to the government by presenting policy papers that promote arts in Chicago. It should also align its strategic goals with government policy efforts in attempts to promote arts and creativity.

The Center should also assess representation across various sectors to determine specific business entities that should be involved but are currently not. They can create a partnership and mutual relations that focus on promotions and support.

The media can significantly assist the Center by working together to promote events. In this case, the Center must ensure that it creates events associated with a publicity stunt to attract media attention. The media, for instance, local dailies and magazines can help the Center to identify other related organizations or potential partners in specific areas.

New audiences are critical for the sustainability of the Center. The Center should create conditions that promote diversity to encourage minorities to participate by communicating messages that appeal to target audiences. It should focus on identifying potential beneficiaries of the Center from new generations through evaluating changing practices and future developments of the Center and communities.

Rewarding and Retaining Volunteers, Board, and Staff

Volunteers and board members are motivated by similar factors that motivate other employees. That is, the Center should focus on rewarding, appreciating, and recognizing all staff, board members, and volunteers. During interviews, potential employees, volunteers, and board members should be evaluated for specific roles and their fit with organizational culture and vision. The Center should provide support, training, and development for all personnel. Opportunities to acquire new skills, overcome challenges, and advance change will enhance satisfaction and involvement among all personnel.

Rewards and praise should be innovative, including monetary, open recognition, excellence service awards, complimentary training opportunities, open communication, one-on-one engagement with volunteers, employees, and board members to discuss their ideas and methods to enhance their inputs. Certificates of recognition, promotion for employees, and moral supports could help to retain personnel. Further, a well-defined career path and personal development also help in employee retention.

Advocacy

The center should develop political relationships by working with lawmakers who are influential on arts policy and budget, and members of special-interest groups where the arts intersect with other policy issues. The Center should also develop an alliance and grassroots advocacy to advance an active and informed network of art advocates for grassroots awareness. Besides, it should also take part in a statewide alliance of advocates to promote public support for arts. Communication with other arts advocates should be clear to ensure that the Center is current about state and federal laws that affect arts (National Assembly of State Arts Agencies, n.d).

Strategic Analysis for the Center (SWOT)

Strengths

  • More than 70 years of experience
  • Strong, hundreds of donors and supporters
  • Strong links with communities
  • Strong leadership, a board of directors, internship, and volunteer programs
  • Creates multiple opportunities for artists
  • A knowledge-sharing community
  • A stronger resource center for arts and culture
  • Has nurtured good relations with stakeholders

Weaknesses

  • Challenges with sustained marketing activities
  • More physical space may be required to accommodate current and future needs
  • A need for a broader membership engagement from communities, interns, volunteers, and lawmakers
  • Currently operating with few committees to support staff, the board, and volunteers
  • Few sources of funds

Threats

  • Financial support from donors, anonymous contributors, and other supporters is not always guaranteed
  • Local engagement and purchase
  • Recruitment and retention of the best talents and board members
  • Volunteers seek to experience and skills from the Center rather than provide the same
  • Marketing and promotional challenges
  • A lack of a clear strategic plan
  • Possible changes in regulations – 501(c)3 for tax exemption

Opportunities

  • More fundraising opportunities using new technologies
  • Art promotion beyond local communities through media, advertisement, brochures, and other events
  • Partnership with other related organizations
  • Increase volunteer involvement
  • Revamp special events for fundraising
  • Advocacy opportunities

The Business Environment for Not-for-profit Center Compared with For-Profit Organization

The most important element of consideration between a for-profit organization and a not-for-profit organization is the reason for their existence. The Center operates in an environment in which profit is not an important issue, but it rather focuses on serving communities and humanity. Conversely, traditional for-profit organizations are aggressive in their attempts to generate more profits for entrepreneurs, shareholders, and to cover costs of operations. A not-for-profit organization channels its resources in supporting the art center and artists while for-profit organizations are concerned with developing the best products and services to meet the diverse needs of consumers.

The Center almost entirely depends on donations and grants from organizations, individuals, and the government. For-profit organizations, on the other hand, depend on sales revenues, which generate incomes. Additionally, they also work with creditors and suppliers to fund some investments. The Center is required to use donor funds to meet the needs of the art community and benefit other stakeholders, but traditional for-profit firms use their incomes as they may deem fit.

The Center is registered for income tax exemption under the tax code 501(c)3. Conversely, for-profit organizations are expected to meet all tax obligations due to the state and federal governments. Moreover, donors also receive tax incentives on the amount donated. Further, directors are not liable for any debts.

In the recent past, many nonprofit organizations have focused on new models and marketing strategies to sustain their operations while for-profit firms concentrate on corporate social responsibility to support communities (Singh & Mofokeng, 2014; Clark, 2012).

For-profit organizations and not-for-profit organizations also differ in human resource practices. All workers in profit-oriented have salaried employees with few unpaid interns, but the Center has a considerable number of interns, volunteers, and permanent staff.

Good Events

Enhanced community engagement will ensure that the Center can activate all its facilities throughout the year to change Chicago as a city in which arts exposure transforms lives and improves the well-being of residents.

Major improvements can assist the Center to introduce new technologies and green building initiatives to enhance sustainable practices while protecting the environment. These are considered capital improvements, which can position the Center as the future of arts in Chicago.

The Center also requires more robust endowment funds to lessen massive dependence on short-term sources of funds. Reliable funds will ensure optimal support for artists.

Bad Events

Some bad events that can ruin the Center include some observed scandals in the art world. They include controversial exhibitions, record-breaking auctions, and violent cases by artists (Cascone, 2015). For instance, in the recent past, a photographer claimed that he attained a new record for the most expensive photograph globally at $6.5 million. This announcement led to skepticism and confusion among art lovers and critics. Art Basel Miami Beach witnessed the most shocking incident after a man attacked a woman. This vicious crime damaged the reputation of the Beach. Finally, sexual imagery also stirs the art world.

References

Cascone, S. (2015). The 18 most appalling international art world scandals of 2015. Huffington Post. Web.

Clark, W. (2012). Introducing strategic thinking into a non-profit organization to develop alternative income streams. Journal of Practical Consulting, 4(1), 32-42.

Hyde Park Art Center. (2016). About Hyde Park Art Center. Web.

National Assembly of State Arts Agencies. (n.d). Arts advocacy checklist for arts organizations and advocates. Web.

Rehnborg, S. J. (2009). Strategic volunteer engagement: A guide for nonprofit and public sector leaders. Texas: RGK Center for Philanthropy & Community Service.

Singh, S., & Mofokeng, M.-A. (2014). Analysis of what makes a nonprofit organization sustainable: Specific reference to revenue diversification. Interdisciplinary Journal of Contemporary Research in Business, 6(4), 393-429.

Marketing, Sponsorship And Fundraising Activities

Please list 8 possible reasons a company might want to sponsor an event or an organization

The major reasons why companies sponsor events or organizations include:

  1. To benefit from continued media coverage and exposure.
  2. To increase the perceived brand image (Lynn, 2011).
  3. Ensure the brand is recognized by more people.
  4. To target a specific market segment.
  5. Interact with potential business partners and customers.
  6. Sponsorship supports the firm’s corporate social responsibility (CSR) strategy.
  7. Sponsorship is cheaper than adverts and campaigns.
  8. To approach can augment a firm’s marketing strategy.

What is the difference between philanthropy and sponsorship? What is in-kind sponsorship? Provide examples.

Philanthropy refers to “any donation to a specific event or cause” (Kotler & Keller, 2011, p. 58). Companies engage in philanthropy to portray goodwill without expecting anything in return (Martisiute, Vilutyte, & Grundey, 2010). A good example is when a firm decides to provide free education to underprivileged children in a specific society. On the other hand, sponsorship is the provision of financial resources to support a specific project. However, the practice is aimed at pursuing specific organizational objectives. For instance, Coca-Cola is known to sponsor a wide range of sporting activities in an attempt to maximize its marketing strategy.

Karadeniz (2009) defines “in-cash sponsorship as the transfer of specific assets or donations to a non-profit agency” (p. 102). For example, an organization might decide to support a social welfare campaign by providing free transportation to different participants. This initiative has the potential to support the organization’s approach to CSR.

Describe the difference between “paid” marketing and “earned” marketing. Provide examples

Marketers can use a wide range of initiatives to support their brands. Paid marketing focuses on the best measures to ensure more people are informed about the brand. For example, companies can use the advertising platforms used by social media platforms such as Facebook and MySpace to boost their websites. This approach has the potential to maximize traffic and eventually result in new conversations (Twarowska & Kakol, 2013). On the other hand, earned marketing occurs when third parties recommend specific brands or reviews. Such “reviews and recommendations can result in viral tendencies” (Lieb & Owyang, 2012, p. 4). A good example is when a Search Engine displays specific websites that deliver the targeted information. That being the case, firms should ensure the content strategy (or product) should be of the best quality. This approach will inform more people about the targeted products and eventually maximize sales.

List 10 different possible fundraising activities any arts organization could choose to hold (from a potential list of many thousands). If it is a concept that is widely understood (like “bake sale”) no explanation is necessary.

Arts organizations can consider one of the following fundraising activities:

  1. Art fundraising: Artists can be encouraged to attend a festival and pay a small amount to participate.
  2. Running the race: A race can be considered whereby the targeted individuals are charged a small fee (Lynn, 2011).
  3. Party: This event can be fixed during a specific holiday. Donations will then be received from different participants.
  4. Craft sales: Members of the art organization can be empowered to design and market different works of art.
  5. Art show: The organization can organize a show whereby the attendees might be required to pay a small fee.
  6. Scavenger hunt: The targeted participants will be encouraged to present their donations.
  7. Trivia night: The organization can use the event to obtain donations from different well-wishers.
  8. Comedy night: This event can be hosted in a restaurant whereby a small admission fee is charged.
  9. Auction: Several artifacts obtained from different sponsors can be auctioned to raise funds.
  10. Carnival: This event is characterized by different games. Community members can be involved and encouraged to support the organization.

References

Karadeniz, M. (2009). Product positioning strategy in marketing management. Journal of Naval Science and Engineering, 5(1), 98-110.

Kotler, P., & Keller, K. (2011). Marketing management. Upper-Saddle River, NJ: Prentice Hall.

Lieb, R., & Owyang, J. (2012). The converged media imperative: How brands must combine paid, owned, and earned media. Altimeter, 1(1), 1-26.

Lynn, M. (2011). Segmenting and targeting your market: strategies and limitations. The Scholarly Commons, 1(1), 1-14.

Martisiute, S., Vilutyte, G., & Grundey, D. (2010). Product or brand? How interrelationship between customer satisfaction and customer loyalty work. European Journal of Interdisciplinary Studies, 2(1), 5-15.

Twarowska, K., & Kakol, M. (2013). International business strategy: Reasons and forms of expansion into foreign markets. Management, Knowledge and Learning, 1(1), 1005-1011.

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