Strategic Choice and Evaluation Paper: Nike, Inc.

S. Washington

Strategic Choice and Evaluation Paper: Nike, Inc.

February 13, 2012

STR/581

Nike Incorporated has been a leader in the sports footwear, apparel, and equipment industry. Nike has built a strong brand by memorable marketing campaigns and product differentiation. Nike is a high quality company with solid business fundamentals and long-term growth potential. Good strategic choices have played a part in the company's success. Choices are the center of a company's strategy formulation. When companies are faced with situations that require decisions, management must ensure they select the best options that will be beneficial for the company. Strategic choices involve identifying, evaluating, selecting, and implementing the best option. A good strategic choice will provide direction for the company.

This paper will evaluate alternative's Nike must consider to realize growth, identify the best value discipline, generic strategy, and grand strategy for the company, and recommend a strategy or combination of strategies Nike should implement.

Nike's business model is based on a matrix structure. The matrix structure permits a more efficient exchange of information among team members and increases cooperation. Nike's business model includes the company's Corporate Responsibility team, the Lean, Energy, and Compliance team, and their suppliers. This business model is called Sustainable Business and Innovation (SB&I). Nike restructured their business model, so the company can be prepared for the future. Nike is focused on aligning the company's greatest strengths to determine their competitive advantage and their biggest opportunities to determine new opportunities for profit and growth. SB&I's vision for is "to help NIKE, Inc. and its consumers thrive in a sustainable economy where people, profit and planet are in balance. To do this, SB&I will:

1. Innovate to deliver enterprise-level sustainability solutions.

2. Integrate sustainability into the heart of the NIKE, Inc. business model.

3. Mobilize key constituents (civil society, employees, consumers, government and industry) to partner in scaling solutions" (Corporate Responsibility Report, 2009, p. 24).

Generic Strategies

A generic strategy is an approach to strategic planning that can be adopted by any company to obtain a sustainable competitive advantage. "Generic strategies is the core idea about how a firm can best compete in the marketplace" (Pearce & Robinson, 2011, p. 183). Generic strategies include low-cost leadership, differentiation, and focus. Nike falls into the differentiation strategy category. The differentiation strategy involves making products different and more attractive from the company's competitors. Nike has been successful because their brand management and marketing strategies have built a loyal customer base. Nike offers quality products that many customers perceive to be better and different from their competitors. These unique attributes are valued by customers. Nike's marketing and advertising campaigns have also played a huge role with differentiating their products and increasing brand recognition. By sponsoring celebrity athletes and athletic teams, Nike has built a successful company that produces brand name products known by millions of people around the world.

Value Discipline

An alternative approach to using generic strategies is the use of value disciplines. Value disciplines are based on the belief by Michael Treacy and Fred Wiersema "that strategies must center on delivering superior customer value through one of the three value disciplines: operational excellence, customer intimacy or product leadership" (Pearce & Robinson, 2011, p. 185). Nike has excelled at product leadership in the sports footwear category. Nike's success is based on the company's ability to recognize new ideas, develop the ideas quickly, and consistently improve the ideas, so that the products meet customer needs. This value discipline has made Nike a key player in the sports footwear industry.

Grand Strategies

"Grand strategies, sometimes called master or business strategies provide direction for strategic actions. They are the basis of coordinated and sustained efforts directed toward achieving long-term business objectives" (Pearce & Robinson, 2011, p. 187). Nike uses two of the 15 grand strategies: product development and innovation. Nike's core business function is product development. Innovation enables the company to grow in the market. According to Nike, Inc. 2011, "Our goal is to carry on his legacy of innovative thinking, whether to develop products that help athletes of every level of ability reach their potential, or to create business opportunities that set Nike apart from the competition and provide value for our shareholders" (Nike, Inc.). One way Nike has been successful with innovation is with the creation of NIKEiD and NIKEiD studios.