Nike’s secondary intensive growth strategy is market penetration. This pricing strategy works for Nike as they promote their business in every ad as the top of the range, this persuades customers buy the product even if it means paying slightly more. Also, Nike’s differentiation generic strategy provides unique products. A strategic financial objective under this intensive growth strategy is to increase Nike’s profitability by entering new markets in Africa and the Middle East. It has become a common phenomenon that a manager enter into a new countries to lead a group of people with diverse cultural background. In addition, Porter et al (1982) indicted that, to implement global strategy effectively, it needs a number of approaches including exploiting economics of scale via global volume and managing interdependently to achieve synergies across different activities. Business level strategies employed by Nike work mainly in two forms, that is, competitive strategies and corporative strategies (Furner, 2010, p. 1). We realize that the team-mentality that captured the spirit of athletics in the late 1980's and early 1990's has been replaced by a sense of individualism. At the same time, the modern alliances concentrate on the development and innovation of new products and technologies rather than the distribution of existing ones. Nike uses competitive prices, although as market leader can dictate the market prices in some occasions — this is … The following are the generic competitive strategies implemented in Nike’s combination strategy: Nike’s cost leadership generic strategy sustains competitive advantage based on costs. (2008) also identified the risks and costs of collaboration. Its Swoosh logo is popular and most notable among the … All the marketing strategy by Nike show a competitive marketing management which can hoist company top turn out to be market leaders and making the market leaders company retain their competitive frame market by means of adherence to marketing principles, marketing plans and carefully planned marketing strategies. In the first place, the companies need to consider the general reasons, which involve spread and reduce costs, specialize in competencies, avoid or counter competition, secure vertical and horizontal links, and learn from other companies. Haven’t found the relevant content? How is information technology related to these strategies? (1997). Miller, D. (1992). There are some main reasons that the companies need to set the collaborative arrangement. Nike’s pricing power gives it a competitive advantage over its peers. By looking at the different business level strategies Nike has employed, this essay will explain how it has had such a massive impact in the Sports and Apparel industry it now leads. However, market penetration is just a secondary intensive growth strategy because the company already has significant presence in the global market. How Nike's and Starbucks' Global Strategies Keep Them Ahead of Competitors Both of these companies have seen major growth in international markets, … Nike applies a price skimming type strategy whenever it produces expensive products especially which are limited editions. “Transformational growth and investments are extending Nike’s competitive advantage, particularly with its acquisition of retail predictive analytics … 2008). The new strategic alliances tend to serve the organization in industrialized countries. Copyright © 2003 - 2020 - All Answers Ltd is a company registered in England and Wales. This strategy involves developing new businesses to achieve growth. However, flexibility and worldwide learning this kind of approach may be negatively influenced by this kind of approach. Porter points out that, to achieve competitive advantage, it is necessary for a firm to provide customers with values more efficiently (low cost) or to create greater values and charge a premium price in a more special way (differentiation) than its rivals. Table 1: Worldwide Advantage: Goals and Means, Achieving efficiency in current operations, Benefiting from differences in facto costs-wages and cost of capital, Expanding and exploiting potential scale economies in each activity, Sharing of investments and costs across markets and business, Managing risks through multinational flexibility, Managing different kinds of risks arising from market-or policy-induced changes in comparative advantages of different countries, Balancing scale with strategic and operational flexibility, Portfolio diversification of risks and creation of options and side bets, Learning from societal differences in organizational and managerial processes and systems, Benefiting from experience- cost reduction and innovation, Shared learning across organizational components in different products, markets, or businesses. He also pointed out that value generating assets of a country has been taking the form of created assets like human capital instead of the natural assets like land and untrained labor. With widely globalization movement, managers in MNCs have to be continually involved into the challenges that mainly include competitive and collaborative challenge. Registered Data Controller No: Z1821391. The opportunity is beyond control, and the impact of government policies can not be ignored. In this strategy, the company grows by increasing sales revenues in existing markets. The “every athlete in the world” component indicates that the company’s corporate mission pushes the business to target every consumer in the world. Threat of new entrance: Apart from a competition from regular rivals, there are many a time new comers equipped with lots of strategies to conquer others. Product Development. Based on Porter’s view, when local supporting industries are competitive, related company will enjoy more cost effective and innovative inputs. However, this theory may hide certain dimensions, or values may be wrongly derived because of certain situational influences on the respondents. Nike is the number one … But there is a negative side to it these days. Michael Porter, a professor at Harvard presented competitive strategy concept. The company also began to contact potential suppliers in Korea, Thailand, China and Taiwan. Still on product differentiation, Nike focuses more on research and development at a greater level. Hofstede (1980) created five dimensions to distinct countries with their respective culture backgrounds, which are Individualism-Collectivism, Power distance, Uncertainty avoidance, Masculinity-Femininity and Long term-Short term orientation. At the present, Nike’s products are manufactured in more than 700 factories, employing over 500,000 workers in 51 countries of which only 22658 are directs employees, the majority working in the United States. Therefore in these countries participative leadership style could be useful. Masculinity is defined by Hofstede (1980) to describe “a situation in which the dominant values in society are success, money, and things.” The other side versus the masculinity is femininity which is also defined by Hofstede (1980) as, “a situation in which the dominant values in society are caring for others and the quality of life.” Japan has a highly masculinity orientation. Porter believed that the four elements have bilateral impacts, forming a diamond system. The generic strategy trap. However, it challenges almost all MNEs to achieve all of these objectives at the same time. Nike’s differentiation generic strategy provides unique products. To support the needs of the workers and their families is the most important role of the manager with in these countries. For example, Nike enters new markets in Africa and the Middle East to increase its shoe sales revenues. Factor conditions can be categorized into two forms: “Home-Grown” resources and highly specialized resources. Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UKDiss.com. To develop and maintain its competitive advantages, NIKE deploys its resources and develops the capabilities to the fullest. To export a reference to this article please select a referencing stye below: If you are the original writer of this dissertation and no longer wish to have your work published on the UKDiss.com website then please: Our academic writing and marking services can help you! The traditional form seems to be used for a senior multinational firm in an industrialized country and a junior local partner in a less-developed or less-industrialized country. Nike is one typical MNC among them. NIKE emphasizes on the key strategy elements of branding advertising, design of products, exclusive customer service, high quality products and new product development (Grant, 2010). Organizational Structure Characteristics (Analysis), Nike Inc. Five Forces Analysis (Porter’s Model), Nike Inc. In the actual competition, Porter (1990) stated that sufficient in natural resources or low cost factors often result in inefficient allocation of resources. Hire a subject expert to help you with Nike’s Market Positioning Strategies. Nike uses this innovation in order to become a more sustainable company, which is the second key aspect of its business strategy. Note: The above content is part of the following book. As we saw earlier that to create a category, we need to first freeze the target customer segment(Niche Market) and understand their requirements. Young people have being influenced deeply by the development of globalization and they tend to share a common set of values recently. By contrary of the above statements, to build up competitive advantage sustainably, MNEs are suggested to achieve three strategic objectives which are global efficiency, multinational flexibility and worldwide learning (Bartlett et al. This model could not adequately explain the competitive advantages of developing countries which heavily depend on foreign direct investment. Conversely, in low uncertainty avoidance countries such as The United States and The United Kingdom, leaders are more of risk takers. 8. International Journal of Competitive Intelligence, Strategic, Scientific and Technology Watch Sciwatch Journal, vol 4 issue 1, April (2011) 1 NIKE Strategy: Strategy Management Albert Alarcón Ros Department of Business Management, International University of Catalonia E-mail: albert.alarcon.ros@gmail.com Abstract. However, in German, automobiles with a cheaper price in the market have little competitive advantage. Knight believed that Blue Ribbon Sports could sell in a lower price by distributing its production to Japanese producers to break into this market. Crisis on Japan’s economy, and a shift in the dollar/yen exchange rate in the 1970s, Nike began to search for other producers. From the factor conditions view, there is a good home base for sports products companies in US. The Porter Generic strategies describes the competitive advantage in the case of low cost and higher cost and it describes the competitive scope, overall cost leadership, cost focus and in differentiation focus. Besides, there are two variables: the Government role and opportunities. Nike implemented this intensive strategy in its early years, such as when it introduced apparel and sports equipment to its product mix. Competitive strategy is a long-term action plan of a company which is directed to gain competitive advantage over its rivals after evaluating their strengths, weaknesses, opportunities and threats in the industry and compare it with your own. Nike’s primary intensive growth strategy is product development. In applying this strategy, Nike has attained a great deal of consumer insight, which it uses to offer uniquely designed premium products to the athletes. This strategy facilitates the company’s growth by targeting new markets or market segments. However, costs also began to increase in the two countries. It optimizes the manufacturing and production processes. The aim of this project is to reveal Nike’s competitive advantages in global market and especially focus on company strategies in Chinese market. It suggests that MNEs should adopt the transnational strategies which “focus on exploiting each and every goal-means combination to develop layers of competitive advantage by exploiting efficiency, flexibility, and learning simultaneously” (Bartlett et al., 2008). Adidas, which is an international main competitor for Nike, is pushing a different strategy in this particular market. Global Marketing Strategies. We're here to answer any questions you have about our services. Based on the worldwide environment, international companies apply all the approaches to create and exploit innovations. Nike’s new retail strategy. Nike has put in place distinctive global marketing strategies and techniques. Porter’s (1980) generic strategies as determinants of strategic group membership and organizational performance. The third determinant of national advantage is the presence in the nation of related and supporting industries that are internationally competitive. Whereas in 1980, Nike sold 175 different styles of shoes, it offered many different styles in its spring collection. Marketing constitutes a very large part of the entire business strategy and excellent marketing capability of a brand means excellent sales and revenue. The Nike corporation uses a mix diversity in product to help emphasizes its generic strategy for competitive advantage.Obliiously, this is a prime example of how a business goes about achieving, maintaining, accomplishing, and dominant in competiveness. There are three dominating challenges namely managing the boundary, managing knowledge flows, and providing strategic directions. An intensive strategy shows how a company grows. (Lee, 1998) And they also commented that this model is incomplete for small economics which are not parts of the trial nations and is only applicable to triad nations. Their brand is associated with providing top-notch … However, there are some principles set to estimate which companies benefit most from competitive collaborations. Nike, Inc. is a marketer of sports apparel and athletic shoes. So with the current resource/capabilities, NIKE can posses some more competitive advantages.27 | P a g e 28. So the authoritarian and paternalistic leadership style could be accepted in these countries. Multinational companies emphasize differentiation, international companies focus on innovations, and global companies concentrate on building the best-cost position. The business strategies have also been shaped by firm’s competitive advantages. How Nike has become the biggest player of the game? The company uses Competitive and Skimming pricing strategy for its customer base and normally targets upper middle class and high-end customers. Thus, it is meaningful to analyze Nike’s global success which will benefit from obtaining relevant international management issues. However, the saturation of Nike stores and retailers around the world means that this intensive strategy has only a supporting role in the company’s growth. Plus, continued innovation and product quality are keys to success. Bartlett (2008) stated that “strategic alliances had become central components of most MNE strategies”. (2007) identified two groups of motivations. Registered office: Venture House, Cross Street, Arnold, Nottingham, Nottinghamshire, NG5 7PJ. "Nike’s scale provides a competitive advantage over smaller peers as it can continually reinvest gross margin upside back into the business," Siegel said… $35.80 for a 2-page paper . This article may not be reproduced, distributed, or mirrored without written permission from Panmore Institute and its author/s. Despite the impact from Government policies and regulations do not belongs to the major determinant of national advantage, to some extent, they play an important role on influencing the national system. Opportunities can not be met rectifiable, and one opportunity could influence the four elements to change. So Blue Ribbon Sports began to import high-tech sports shoes from Onitsuka Tiger of Japan. Thus, they thought Porter only thought over the exports and outward FDI of domestic industries and further neglected the sales abroad by foreign subsidiaries. For example, Nike increases its stores and retailers in the United States to sell more athletic shoes to American consumers. Secondly, Rugman and D’Crusz (1993) stated that Porter’s diamond underestimated the importance of foreign investment. Business Strategy And Nike's Four Competitive Forces Model. It has evolved from an importer and distributor of running shoes to the world biggest leader of athletic footwear. Dunning commented that a country’s competitive advantages were under the impact of globalization of production and markets. For … The competitive strategy that Nike introduced at the end of the 1990's concentrates on honing the focus of our marketing strategies and product offerings through product differentiation. Nike, Inc. is a marketer of sports apparel and athletic shoes. What is more, high sourcing risks may be resulted from the focus of activities of achieving scale economies. Power distance is “the extent to which less powerful members of institutions and organizations accept that power distributed unequally (Hofstede and Bond, 1984).” Leaders from high power distance countries, for example, Belgium and France, are more likely to enquire the low-level employees to obey their orders blindly. Strategic orientation and configuration of assets and capabilities vary with the four types of companies, which is shown by table 2. For example, the company integrates cutting-edge designs for its shoes. Haven’t found the relevant content? What sort of marketing strategy has Nike used to achieve and maintain this level of market dominance?. Nike is a customer-oriented brand and customer loyalty is a strong source of competitive advantage for it. The Nike marketing strategy that most of us recognize isn’t the one that made them famous, at least not in the early days. In this generic strategy, the company minimizes production costs to maximize profitability or reduce selling prices. Reference this, Tags: International BusinessBusiness Strategy. And the latter one pointed out that a country creates its own important factors such as skilled resources and technological base. The company has employed several methods to increase customer loyalty. Most high individualism countries are wealthy countries with high GNP. NIKE’s mission statement is very straightforward. Copyright by Panmore Institute - All rights reserved. Therefore, authoritarian and paternalistic leadership style could increase the efficiency of management in the LTO countries. A generic strategy, according to Michael Porter, defines how a business achieves and maintains its competitiveness. Thus, Dunning considered that Porter’s diamond of national competitive advantages was required to be transnational since widespread globalization of the world economy. They are employees like others. The reason why Nike, Inc. has gained a competitive advantage over other companies is that it undertakes an evaluation process, which involves evaluation of resources, clarification of goals, defining customers and examining competitors. In addition, governmental sourcing could enlarge product demand. You can view samples of our professional work here. All staff would suffer if one went wrong (Lee, 1982). The alliances assist of some types such as cooperation agreement, franchising and joint venture (Bartlett et al., 2008). Also, the transport infrastructure of Germany such as Autobahns does tend to favor high-performance automobiles. What is most important, the government could ensure that the domestic market is under lively competition, avoiding Trust status. Nike routinely relies on the emotions of activity, heroism, success, achievement, and triumph to appeal to customers, a strategy that has been successful regardless of the market. In the following, Nike company analysis will be discussed into four aspects. VAT Registration No: 842417633. A generic strategy, according to Michael Porter, defines how a business achieves and maintains its competitiveness. A strategic objective based on the cost leadership generic strategy is to grow the company’s competitive advantage through new technologies to reduce production costs. So, Nike’s initial target segment was ‘The Runners’. The company has also focused on apparel and sports equipment and expanded its sales to Europe, Latin America and Asia. Japan is a typical collective country. Founded in 1964, Nike Inc. has grown to become one of the biggest players in the global athletic shoes, apparel and equipment market. 2008). Facing the challenges, Nike has always been a leading sports product organization. Diversification. While the Nike … Nike, Inc. uses Michael Porters strategies for competitive advantage such as cost leadership, focus, and differentiation (Johnson & Scholes, 2008). What the subordinates think or achieve for the company is not important. 11th Dec 2019 In product development, these products remain attractive despite changing consumer preferences. 1252 Words 6 Pages. 2. This has been achieved through advertising, brand name recognition, product innovation, and striving to be at the competitive edge despite having a stiff competition. The project will firstly introduce a literature review which provides the underpinning and explanation of these analysis tools. All work is written to order. Nike Inc.’s Mission Statement & Vision Statement (An Analysis), Nike Inc. For the products which are not run of the mill and are limited edition, Nike uses Skimming pricing strategy. All the means are applied by MNEs which adopt global strategy to realize global efficiency. A suitable strategic financial objective based on this intensive growth strategy is to increase Nike’s market share through cutting-edge technologies integrated in the design of sports shoes, apparel and equipment. On the other hand, Nike’s intensive growth strategy reflects the company’s focus on innovation to develop the business. (Hodgetts et al, 2006). Gain competitive intelligence about market leaders. The project will firstly introduce a literature review which provides the underpinning and explanation of these analysis tools. Those ideas became a reality. Over the years, Nike has broadened its product range. The corresponding intensive strategies grow Nike’s global sports shoes, apparel and equipment business. This new strategy is the rationale behind Nike’s acquisition of smaller company brands in order to cater to the lower price sensitive segments of the market. MNEs need to create and sustain competitive advantages to overwhelm the competitive challenges from the global competitors. By altering marketing to the customer needs, Nike has been the most successful player in the past and continues to be today. The first one referred to the original resources from one nation. In addition, a financial objective related to this intensive growth strategy is to increase Nike’s sales revenues through more sales to sports enthusiasts in current markets. Nevertheless, Bartlett et al. Thus, this intensive strategy supports Nike’s differentiation generic competitive strategy via product innovation. At first, government can provide a basic environment for industry development, since it could invest on infrastructure development, opening up capital channels, training information integration and so on. As of February 2015, Nike uses a premium pricing strategy in which it continues to raise its prices despite other companies in the market lowering theirs, and it is considered a customer value-driven model. The strategic alliances is divided into two categories namely scale alliances and link alliances (Daniels et al., 2007). In the late 1990s, Nike reduced costs and the selling prices of its athletic shoes and other products. In addition other sportswear manufacturers also expand their portfolio. Hofstede culture dimensions will be adopted to analyze the cultural challenge Nike is confronted. Cost Leadership Strategy. 3.1 Sports products Industry relate to American National Diamond. New evidence in the generic strategy and business performance debate: A research note. By this strategy, Nike measures the value customer is willing to pay for every product. Efficiency can be considered as the ratio of the value of a firm’s output to the value of its input while Flexibility means the “the ability of a company to manage the risks and exploit the opportunities that arise from the volatility of a global environment” (Bartlett et al., 2008, p.200). Not only does it own 48% of the American athletic footwear market, but its share of the basketball footwear market is at a staggering 96%! No plagiarism, guaranteed! Daniels et al. Nike established its own shoe factories in Maine and New Hampshire to develop a reliable and high-quality production to supply its growing domestic market during these same years. The cost leadership generic competitive strategy empowers Nike to penetrate markets based on product affordability. Market Penetration. They also consider hierarchy in organizations as exploitation (Yates, 2008). For example, the president of Sony Corporation, Akio Morita once said his firm likes a ship; each employee shares the same fate. Merchant, H. (2014). The positioning strategy was ‘The lightest shoe in the market that would last in longer-distance running at a price lower than the German brands in the market’. Show More. As costs continued to increase in both Japan and the United States, by the early 1980s, and the Korean government created many incentives to develop Korea’s footwear industry, Nike closed its US factories and sourced almost all of its production from Asia. Configurations of governance structure, generic strategy, and firm size. On the contrary, Russia and most of the socialist nation’s scores low for this dimension, such as China and France (Brandley, 1999). Nike’s products have all these characteristics, and then some—they usually carry the names of professional athletes like Nike Air Jordan Retro XI … This type of strategy includes two or more of the generic strategies from Porter’s model. Dissertation BRAND POSITIONING OF NIKE. (Hodgetts et al, 2006) The opposite side versus individualism is collectivism which is “the tendency of people to belong to groups or collectives and to look after each other in exchange for loyalty (Hodgetts et al, 2006). Nike Competitive Advantage. In the second and third section, Bartlett and Ghoshal’s theory will be used to analyze both the competitive challenge and the collaborative challenge of Nike in China. The aim of this project is to reveal Nike’s competitive advantages in global market and especially focus on company strategies in Chinese market. What competitive strategies is Nike pursuing? Two key aspects of this strategy include their large-scale brand recognition and product innovation. Nike is known for its superior quality and world-class shoe designs and successfully manages to provide value for money to its customers. Nike Promotion & Advertising Strategy: The promotional and advertising strategy in the Nike marketing strategy is as follows: Nike as a brand is known for its strong branding and marketing activities. 2. Nike has a very clear cut business strategy and specific goals it wants to accomplish. 2008). Nike Inc.’s generic strategy (based on Michael Porter’s model) is appropriate for its diverse product lines, ensuring competitive advantage. In the contrast, STO countries’ leaders are with personal steadiness and stability and reciprocation of greetings, favors, and gifts (Hofstede, 1991). Leaders from LTO countries are persistent, ordering relationships by status and observing this order, thrift and having a sense of shame. Nike Inc. uses a combination strategy for its competitive advantage. The brand is … Porter (1990) pointed out that, in terms of the enterprise development, there are several circumstances when chances are brought: the basis of scientific and technological inventions, fault emerging in traditional technologies, a sudden increase the cost of production caused by external factors (such as the oil crisis), financial markets or major changes in the exchange rate, market demand surge, the government’s major policy decisions and war. 1252 Words 6 Pages. Our business model today is basically the same as our model in 1964.It is that we invest our money in design, development, marketing and sales and then contract with other companies to manufacture our products. Permission from Panmore Institute and its author/s companies need to set the collaborative.!, flexibility and worldwide learning this kind of approach © 2003 - 2020 - all Answers Ltd is a home. Grow sales revenues dess, G. G., & Davis, P. S. ( 1984 ) by contraries local! 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