Strategic Management and Strategic Competitiveness

Nike, Inc.

Strategic Management and Strategic Competitiveness

Bill Bowerman was an esteemed track and field coach for the University of Oregon in the 1950's. He searched for ways to give his athletes a competitive advantage over opponents by testing different track surfaces, re-hydration drinks and running shoes. Phil Knight, a middle-distance runner, met Bowerman while he was student at the University of Oregon in 1955. "Before there was the Swoosh, before there was Nike, there were two visionary men who pioneered a revolution in athletic footwear that redefined the industry." In January, 1964, Bowerman and Knight formed the Blue Ribbon Sports Company with only a handshake and a pledge of $500 each. In the 1970's, they renamed their company, Nike after the Greek Goddess of Victory, and developed the brand mark that is internationally known today as the "Swoosh" logo (NIKE, Inc. History and heritage, 2013). Nike has expanded from making shoes in the United States to having contract manufacturers in six geographies: Eastern/Central Europe, Western Europe, North America, Japan, Greater China, and Emerging Markets. Nike, Inc., the world's leading supplier of athletic shoes and sportswear, is a global enterprise that is headquartered in the United States in Beaverton, Oregon. Its core product is footwear, but it also provides products and equipment for many sports and fitness activities.

1. Assess how globalization and technology changes have impacted the corporation you researched.

Nike's products are known throughout the world and are in high demand in most countries. Its core product, footwear, and an array of sports and fitness products are manufactured in factories around the globe. Nike does not have any manufacturing factories in the United States nor does it not own any global factories which produce its products, but because Nike products are the only ones reproduced in these factories, they are known as "Nike Factories". Nike is a worldwide global corporation that has its products manufactured through contracts in places like Asia, China, and Vietnam (Nike Company Statistics, 2012). Their world headquarters in Oregon and these world-wide factories are able to communicate through the technology of teleconferencing and by having remote meeting. This is a modern technology that has reduced the amount of travel for employees, and has made a successful expansion throughout the world possible (NIKE, Inc., 2013).

2. Apply the industrial organization model and the resource-based model to determine how your corporation could earn above average returns.

Nike's industrial organization strategy has helped the company to evolve into a great multinational enterprise. Under the industrial organization model, Bowerman and Knight would have studied the eternal environment of the athletics industry and who their competitors within this industry were and formulated a strategy that would potentially produce above-average returns. To implement this strategy, they would have then acquired the assets and skills needed and realized what their strengths were (Hitt, Ireland, & Hoskisson, 2013). Most athletes and children are familiar with and prefer the Nike brand. Nike earns above average returns because the company aligned its products with the wants and needs of its target market. Nike targets athletes more than any other group, even though it also targets the youth who have embraced the hip hop culture. These shoes come in every color imaginable and many different styles. Nike's main competitors are Adidas AG, PUMA SE, and New Balance Athletic Shoe (Nike Company Statistics, 2012). By using the industrial organization model, Nike was able to keep its competition small, created entry barriers against new competition and was able to determine new developments of its competitors. By using this strategy, Nike has been able to remain the dominant company in the athletic shoes and sportswear industry.

According to our text, the resource-based view (RBV) model specifies a firm's strategy internally to earn above-average returns based on its unique resources and capabilities. Under the resource-based model, Bowerman and Knight would have identified its resources and compared its strengths and weaknesses to its competitors. The knowledge of its owners about what makes a running shoe better would have been applied. Nike would have gathered a competitive advantage because their shoes increased the speed of runners. The Nike brand has gained credibility by differentiating itself from its competitors through the sale of innovative and high quality products. Initially, Nike only made athletic shoes, but branched over to athletic wear and equipment. From the beginning, Nike made a decision that its capabilities would be to design its products, not to manufacture them. Nike uses contract factories for manufacturing its products. This strategy helped Nike to earn superior returns. Nike acquired various resources and utilized them to achieve unique proficiency (Hitt, et al, 2013).