Nike Case Study
Corporate Strategy
Over the past two decades, there has been a movement from a “standardized” to a “flexible” economy. Whereas, mass consumption for a standardized good was once preferred, there is now a greater demand for niche products. Having a rigid corporate organization used to be the norm, where now it is common to have a flexible organization, that incorporates subcontracting.
The athletic footwear industry has benefited greatly from this economic shift. It is an example of a new, highly volatile, competitive market. The changes that occurred in the footwear industry are:
• Footwear production has grown rapidly
• The many different styles of shoes have created an explosion in intense competition and market volatility among brands.
• In order to be successful, a company must be innovative and have rapid turn-around of design and production.
• Producers must have output and design flexibility
• Producers must protect proprietary information and technology, and still remain to be organizationally flexible.
The main reason why Nike has succeeded in competing in the footwear industry for as long as they have is because they remain flexible in a volatile market by using subcontracting relationships overseas in low labor-cost countries. (8)
Another reason why Nike has continued to be a strong competitor is based on their product differentiation. Although they started out by only producing and selling athletic shoes, their product line now consists of a wide range of clothing, equipment and accessories. They also design products for a variety of sports, ranging from running to golf to aquatic activities.
Successful differentiation allows a firm to: (10)
• Command a premium price for its product, and/or
• Increase unit sales, and/or
• Gain buyer loyalty to its brand.
SWOT Analysis
Part of doing a strategic analysis of Nike is...
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