Nike International Strategies

Currently, Nike is a favourite brand amongst celebrities, customers, professional teams, and athletes because of its international strategies. The company is considered a global quality brand seller that sells designed and expensive products for customers who require the highest quality. The international strategy has no local incorporation which is proved by the fact that the same logo and slogan is used for all international ads. The slogan is “Just do it” while the logo is a “swoosh’’ and are the same globally (Frisch, 2008). Pricing strategy is first-class with Nike making sure that prices are the same everywhere internationally. In addition, products are under the same brand name without any incorporation of local features. Promotion of merchandise is the same in all countries where the products are supplied. In marketing the company seems to present an image that blends themes of empowerment, irreverence, and transcendence all making the “swoosh” associated with sporting culture. Furthermore, it is amongst the few companies that use theories in semiotics, culture, psychology, messages, and culture to promote Nike’s image globally.

Reference:

Frisch, A. (2008). The Story of Nike. Minnesota: Creative Education. Pp. 1-46.

Nike Strategic Alliances

Strategic Alliances

Nike has entered into alliances with independent firms so that they can devote entirely to marketing their brand (Duane et al., 2008). The concept of strategic alliances is also of beneficial to Nike when the company does not have the muscle and brand to infiltrate certain unrelated markets. Nike’s strategic alliance with apple was one such instance where the company managed to infiltrate in the music world while also apple benefiting to infiltrate in the sports market. Nike has also leveraged its core competencies—product design, marketing, and distribution—that are the foundation of domestic success through forming a strategic alliance with strategic partners in Asia who supply and manufacture merchandise. In order to boost its online marketing strategy, Nike also formed an alliance with SINA a leading Chinese firm in marketing. Both companies—SINA-NIKE— leverage SINA’s three main business lines—SINA.net, SINA online, and SINA.com to provide the latest interactive news on stars and competition, sports team content, and fashion and sports gear.

Reference: Duane, R., I., Hoskisson, R., E. & Hitt, A., M. (2008). Understanding Business Strategy: Concepts and Cases. Ohio: Cengage Learning. Pp. 173-176.

Nike Implementing Corporate Diversification

Nike has employed creative marketing and advertisement platforms in building brand awareness and equity of its diversified products. For instance, the company uses Tiger Woods a skilled golfer to build its line of golf products. It further employs professionals in various departments that include distribution, marketing, finance, product management, research and design, information technology, and product development so as to sensitize the market of its diversified products (Slack & Milena, 2005). Nike also operates an internship program every summer lasting for three months giving students an insight on the diverse brands. Other avenues Nike accomplishes diversification strategy is through mergers, joint ventures, takeovers, and acquisitions. The company also has an R&D unit called the innovation kitchen located in the main parent company in Oregon, to enable it to continue producing unique products such as the cushioning system in shoes.

Reference:

Slack, T. & Milena, M., P. (2005). Understanding Sport Organisations: The Application of Organisation Theory (2^nd ed.). Illinois: Human Kinetics. Pp. 113-116.

Nike Diversification Strategies

Nike implemented a diversification strategy which is a type of corporate-level strategy so as to spread its risk and capitalize on its strengths. In this strategy a company ventures into related or unrelated product lines so as to boost revenue or expand (Marca, 2001). The specific diversification strategy that Nike has ventured into related (concentric) where it decided to add beach-style sport clothing (Hurley) as a business line. Another instance is when Nike acquired Bauer so as to venture into the hockey market that was formerly dominated by Bauer. Other top selling product categories of Nike as a result of diversification are shoes for women and children, basketball, and cross training. The objective for diversification in terms of products and operations is to reduce the company’s dependence on the swoosh brand. Generally, characteristics of related diversification strategy call for the acquired investment to have some relationship to the existing business which is similar to what is happening at Nike.

Reference:

Marca, T., L. (2001). How to Think Like the World’s Greatest Marketing Minds. New York: McGraw-Hill. Pp. 26-34

Nike Vertical Integration Strategies

Nike uses vertical integration strategy which is a form of a relationship oriented approach in coming up with effective and efficient ways of managing its supply chain. This is achieved through forming alliances and relationships rather than using pricing strategy with an aim of purchasing stuff as cheap as possible (Frisch, 2008). The company has managed to maintain its relationship with contract manufacturers for its foot-ware by having different types of suppliers. The strategy is used in pricing its commodities where they have participants at different channel levels so that they could control costs and influence practices of pricing. For example, there are tier 1 suppliers and tier 2 suppliers where the former are firms with a stronger relationship with Nike who act as more of a strategic alliance than having a pure contractual relationship with Nike. Tier 2 suppliers are associated with pricing and may be managed by tier 1 firms or more closely related firms.

Reference:

Frisch, A. (2008). The Story of Nike. Minnesota: Creative Education. Pp. 1-46.

Tacit Collusion: Cooperation to Reduce Competition

Nike, one of the oligopolistic firms in the sports-wear industry has managed to conspire with Adidas to reduce the risks attached to competition more so in price competition. The company arrived at this common policy with Adidas without formal agreement to control prices in trainers (Duane et al. 2008). This agreement has ensured that when Nike raises or lowers prices of its merchandise other players in the industry will follow hence showing an evidence of the company being a price leader in Trainers. Tacit collusion is illegal in most countries but in counties like UK, Nike employs it so as to: get around the normal supply and demand of commodities, not to engage in price cutting, and not to engage in excess advertisement or other forms of competition.

Reference:

Duane, R., I., Hoskisson, R., E. & Hitt, A., M. (2008). Understanding Business Strategy: Concepts and Cases. Ohio: Cengage Learning. Pp. 173-176

Flexibility: Real Option Analysis under Risk and Uncertainty

Nike has gained manufacturing flexibility through outsourcing strategy which is also referred to ‘Real Option Analysis.’ The reasons for outsourcing its operations are to achieve larger out-put, incur less labour costs, and gain more control in the manufacturing process (Hill & Jones, 2010). Therefore, the strategy has enabled the company to be more flexible and willing to implement changes in design specifications on request from dealers. Nike implements real option analysis through subcontracting of merchandise manufacturing from cheaper sources, sourcing innovations from external design houses, and licensing of Nike’s clothing to other firms. A consequence of the strategy is that Nike has a low cost manufacturing base that is coupled with a wide distribution network hence control of risk and uncertainty. The cheap sources where the company obtains its supplies are in Asian countries such as Thailand, Japan, and China all having low labour costs.

Reference:

Hill, C. & Jones, G. (2010). Strategic Management Theory: An Integrated Approach. Ohio: Cengage Learning. Pp. 200-203

Nike's Differentiation Strategy

Differentiation strategy by Nike is used to gain market share advantage in the broad foot ware market. Aside from foot wear, the company boasts of products such as clothing, equipment, and even accessories. The strategy is achieved by producing consumer goods and services that customers perceive to be of high quality or have added unique features. This has been achieved by the company innovating state of the art athletic shoes that are publicized through dramatic “guerrilla” marketing (Marca, 2001). Marketing of the different products is designed to coerce customers that Nike’s shoes are not only superior but also a high fashion statement which is a necessary part of a lifestyle based on athletic or sporting interests. The company has also differentiated itself by using highflyers that are best used in distinguishing sporting disciplines hence enabling the company reach its target market, for instance, the Brazilian national soccer team or even Michael Jordan.

Reference:

Marca, T., L. (2001). How to Think Like the World’s Greatest Marketing Minds. New York: McGraw-Hill. Pp. 26-34

Nike Product Differentiation

Nike designs, develops, and markets high quality footwear, apparel, equipment, and accessory products. Nike is the largest seller of athletic footwear and athletic apparel in the world. They have been around for many years and have developed themselves as the most popular brand name in the sportswear industry. The company sells its products to approximately nineteen-thousand retail accounts in the United States and through a mix of independent distributors and licensees in approximately one hundred and forty countries around the world.

Continuing, consumers around the world have become very loyal to Nike’s products and services. One of the main reasons why Nike has become so successful is because their consumers are extremely loyal. For a while now Nike has been doing a terrific job sponsoring and doing endorsements deals with megastar athletes. Some of the megastar athletes which have had a tremendous impact on Nike are Michael Jordan, Mia Hamm, Venus Williams, and newly acquired Tiger Woods. This company has been around a long time and has also sponsored some of the greatest recent sporting events. Nike is very familiar with the NBA, sponsoring all-star games as well as regular season games.

Like many companies Nike wants to have a global presence in the marketplace for selling its apparel goods. Nike has to choice a corporate-level strategy first and then determine which business level strategy for the market is best. Nike can choose a business level strategy based on if it has a different product then others, is a cost leader, has differentiation; is a focused cost leader, has focused differentiation or integrated cost leadership/differentiation.

Read More at: http://www.exampleessays.com/viewpaper/78496.html.

Nike Cost Leadership

Nike’s corporate cost leadership strategy includes a moderate level of diversification. The operational relatedness between businesses is very high. They share most information and technology needed to succeed. Nike falls into the category of related constrained, since less than seventy percent of revenue comes from a dominant business and all businesses share product, technological and distribution linkages. Nike’s diversification is related because the firm builds upon or extends its core competency and resources/capabilities to create value. Also, economies of scope are incorporated. For example, Cole Haan line of luxury footwear and Bauer hockey utilize cost savings from capabilities and competencies that were developed in one of its businesses, Nike, and used in the others. Nike expects activity sharing among units to result in increased strategic competitiveness and improved financial returns, which it has seen. Moreover, intangible resources are difficult for competitors to imitate and/or understand. This allows the other businesses to gain an advantage immediately over competitors.

Another firm that has pursued an effective combination strategy is Nike. When customer preferences moved to wide-legged jeans and cargo pants, Nike's market share slipped. Competitors such as Adidas offered less expensive shoes and undercut Nike's price. Nike achieved the turn-around by cutting costs and developing new, distinctive products. Nike reduced costs by cutting some of its endorsements. Company research suggested the endorsement by the Italian soccer team, for example, was not achieving the desired results. Michael Jordan and a few other "big name" endorsers were retained while others, such as the Italian soccer team, were eliminated, resulting in savings estimated at over $100 million.

Read more: http://www.referenceforbusiness.com/management/Ex-Gov/Generic-Competitive-Strategies.html#ixzz1EKZzpz1p

Evaluating Nike’s Strengths and Weaknesses

Strengths

Nike is a very competitive organization. Phil Knight (Founder and CEO) is often quoted as saying that 'Business is war without bullets.' Nike has a healthy dislike of its competitors. At the Atlanta Olympics, Reebok went to the expense of sponsoring the games. Nike did not. However Nike sponsored the top athletes and gained valuable coverage.

Nike has no factories. It does not tie up cash in buildings and manufacturing workers. This makes a very lean organization. Nike is strong at research and development, as is evidenced by its evolving and innovative product range. They then manufacture wherever they can produce high quality product at the lowest possible price. If prices rise, and products can be made more cheaply elsewhere (to the same or better specification), Nike will move production.

Weaknesses

• The organization does have a diversified range of sports products. However, the income of the business is still heavily dependent upon its share of the footwear market. This may leave it vulnerable if for any reason its market share erodes.
• The retail sector is very price sensitive. Nike does have its own retailer in Nike Town. However, most of its income is derived from selling into retailers. Retailers tend to offer a very similar experience to the consumer. Can you tell one sports retailer from another? So margins tend to get squeezed as retailers try to pass some of the low price competition pressure onto Nike.

Opportunities

• Product development offers Nike many opportunities. The brand is fiercely defended by its owners whom truly believe that Nike is not a fashion brand. However, like it or not, consumers that wear Nike product do not always buy it to participate in sport. Some would argue that in youth culture especially, Nike is a fashion brand. This creates its own opportunities, since product could become unfashionable before it wears out i.e. consumers need to replace shoes.
• There is also the opportunity to develop products such as sport wear, sunglasses and jewelry. Such high value items do tend to have associated with them, high profits.
• The business could also be developed internationally, building upon its strong global brand recognition. There are many markets that have the disposable income to spend on high value sports goods. For example, emerging markets such as China and India have a new richer generation of consumers. There are also global marketing events that can be utilized to support the brand such as the World Cup (soccer) and The Olympics.

Reference: http://www.marketingteacher.com/swot/nike-swot.html

Nike: Evaluating Environmental Opportunities

Nike’s management analyzes its internal environment and makes decisions based on that analysis. Because of Nike’s marketing research, the company has decided to revamp its apparel division to be more fashion savvy. As a result of product and pricing research, Nike has decided to continue to focus on the high end market while increasing its market share in the middle and low price ranges in an attempt to broaden Nike’s product spectrum.

Nike thoroughly examines and compares the aforementioned performance standards to the actual results that have occurred as a result of implementing strategies to meet or exceed performance standards. These standards are important to Nike as a comparison of past performance to present performance as well as in Nike’s attempt to forecast future results in these areas.

Nike utilizes innovation to produce top quality athletic footwear and apparel. As a result of devoting vast resources to the research and development of its products, Nike has captured the largest market share in the athletic footwear and apparel industry and continues to be the leader of quality products.  Nike’s top management’s leadership style can be characterized by the team management approach. Top management consists of a committed group of executives all bringing together vast experience and knowledge. The group is team oriented, but is capable and does work independently recognizing the common stake that each places in Nike. This style of leadership leads to relationships of trust and respect. The company culture lends a hand to the fact that top management’s teamwork style has spread throughout the organization.

A comprehensive establishment of profitability standards has assisted Nike in the evaluation of individual performance as well as a comparison to other competitors. Nike utilizes standards such as net profit, earnings per share, return on investment, return on equity, sales growth and asset growth. Performance standards are also established and checked regularly. Some of the areas in which the company has established standards are productivity of productions sites, competitive position in the United States relative to the global market, technological leadership in comparison to competitors and overall social responsibility and the public’s perception.


http://condor.depaul.edu/aalmaney/StrategicAnalysisofNike.htm

Nike's Environmental Threats

Nike, Inc. is an incorporated company that designs, develops and markets worldwide athletic footwear, apparel, equipment and accessories. Nike employs both traditional and non-traditional distribution channels in almost 200 countries with primary market regions in the United States, Europe, Asia Pacific, and the Americas. Nike has some 20,000 retailers worldwide including Nike factory stores, Nike stores, Nike Towns, Cole Haan stores, and Web sites which sell Nike's sports and leisure products. Nike accounts for 33% of the global market share in the athletic footwear industry.

The government must create economic policies that will foster the growth of businesses. Nike, fortunately, has been helped by the US policies which enable it to advance its products. The support accorded to Nike by the US government, particularly in the general macroeconomic stability, low interest rates, stable currency conditions and the international competitiveness of the tax system, form the foundation critical to Nike’s growth. In economy, the biggest threat for Nike would be economic recession. During recession, Nike’s growth will be adversely affected. The US economy is experiencing a downturn right now. Consumer purchases are slowing down. Currently, Nike's feeling the pinch of the economic recession. The Asian economic crisis also affects Nike since its goods are manufactured in Asia. The labor costs and material prices are going up.

Nike's growth is not just affected by the local economy but also in the international economy. A weak Euro and an Asian recession could mean weak sales for Nike. The overall results in the sales generated by Nike in athletic footwear, however, remained stable. The global market makes up for the variances in sales particularly between peak and lean seasons. People are more health conscious nowadays. Diet and health are getting more prominence. Consequently, more and more people are joining fitness clubs. There is an accompanying demand for fitness products particularly exercise apparel, shoes and equipment. Nike is at the forefront of this surge in demand as people are looking for sports shoes, apparel and equipment.

Nike, however, failed to foresee problems brought about by a sweatshop expose pertaining to labor and factory conditions at production locations in Asia. This caused bad publicity and declining sales as society and consumers demand more socially responsible companies. Nike uses IT in its marketing information systems very effectively. Nike applies marketing information systems to the economics of innovation, segmentation and differentiation for most of its businesses. Nike’s leadership status owes in large part to the use of extremely valuable Information Technology, and applying it to every aspect of the product from development to distribution.

Nike’s management analyzes its internal environment and makes decisions based on that analysis. Because of Nike’s marketing research, the company has decided to revamp its apparel division to be more fashion savvy. As a result of product and pricing research, Nike has decided to continue to focus on the high end market while increasing its market share in the middle and low price ranges in an attempt to broaden Nike’s product spectrum. Nike’s failure to foresee problems in relation to labor and factory conditions at production locations has resulted in bad publicity and declining sales as society and consumers call for more "socially responsible" companies.
Read more at Suite101: Marketing Audit of Nike's Strategies: PEST Analysis of Nike http://www.suite101.com/content/marketing-audit-of-nikes-strategies-a94402#ixzz1CMrBs0D7

Nike's Performance and Competitive Advantage

On March 17, 2010 (BUSINESS WIRE)--NIKE, Inc. (NYSE:NKE) reported financial results for its fiscal 2010 third quarter ended February 28, 2010. Third quarter revenues increased 7 percent, from $4.4 billion last year to $4.7 billion in the current year. Excluding changes in currency exchange rates, net revenue was up 2 percent compared to the same quarter last year.

"We had a great quarter," said Mark Parker, NIKE, Inc. President and Chief Executive Officer. "Today’s results reinforce our belief that when we connect with consumers in deep and meaningful ways from product concepts to how they experience our brands, we win in the marketplace and drive sustainable, profitable growth."

Third quarter net income was $496 million or $1.01 per diluted share, compared to $244 million or $0.50 per diluted share in the same period last year. Results from last year included a $241 million, after-tax non-cash charge related to the impairment of goodwill, intangible and other assets of the Company’s Umbro subsidiary.

Nike is a very competitive organization. Phil Knight (Founder and CEO) is often quoted as saying that 'Business is war without bullets.' Nike has a healthy dislike of is competitors. At the Atlanta Olympics, Reebok went to the expense of sponsoring the games. Nike did not. However Nike sponsored the top athletes and gained valuable coverage.

Nike has no factories. It does not tie up cash in buildings and manufacturing workers. This makes a very lean organization. Nike is strong at research and development, as is evidenced by its evolving and innovative product range. They then manufacture wherever they can produce high quality product at the lowest possible price. If prices rise, and products can be made more cheaply elsewhere (to the same or better specification), Nike will move production.

Nike is a global brand. It is the number one sports brand in the World. Its famous 'Swoosh' is instantly recognisable, and Phil Knight even has it tattooed on his ankle.

Nike’s History

Nike was started in 1958 by Phil Knight, a track runner. His idea was to create a good American running shoe. Phil Knight and his coach designed a running shoe, and had a shoe manufacturer create it. Then called Blue Ribbon Sports, Knight changed the name to Nike after the Greek goddess of victory, and the swoosh logo was added. Then, in 1972, four of the top seven Olympic marathon runners were wearing Nike shoes, persuaded by Knight and Bowerman. Running was increasingly popular, and after the next design of the waffle running shoe, Nike increased profits considerably. Then, after running became less popular, Nike shifted its products to conform to the newest rage in fitness, and continued doing so. Then, when Nike created basketball shoes, they began to profit enormously. Using Michael Jordan to advertise, they quickly made it to the top with their Air Jordan’s.

NIKE, Inc. based near Beaverton, Oregon, is the world's leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities. Wholly-owned Nike subsidiaries include Cole Haan, which designs, markets and distributes luxury shoes, handbags, accessories and coats; Converse Inc., which designs, markets and distributes athletic footwear, apparel and accessories; Hurley International LLC, which designs, markets and distributes action sports and youth lifestyle footwear, apparel and accessories; and Umbro Ltd., a leading United Kingdom-based global football (soccer) brand.

Mission "To Bring Inspiration and innovation to every athlete in the world."

Slogan: "Just Do It"

University of Memphis MGMT 7160

This the final class of my MBA Program. I have enjoyed this online experience and have met some great people. I look forward to sharing my thoughts and experiences in this course and responding to your individual blogs. I am excited to work with my team members Rhamy, Michael, Scott and Ashley.

Information on my chosen company to follow.......