Describe Nike’s competitive strategy using Porter’s framework.
Based on the Porter’s framework, Nike uses cost leadership strategy, namely low-cost strategy (Slide 33). Cost leadership means the ability of the organization to develop, produce and sell products of comparable quality but at a lower cost than competitors (David, 2014). Striving to be the manufacturer with the lowest costs in the industry is an effective way of competition in the standardized goods and services markets, where the majority of customers are sensitive to price (perfect competition, homogeneous oligopoly, etc.) (Slide 38). The aim of this strategy is to ensure sustainable competitive advantages in costs and obtain greater profits (Hollensen, 2014).
What competitive advantages do you think Nike has? Have its resources, capabilities, or core competencies contributed to its competitive advantage? Explain.
Nike’s competitive advantages include its famous slogan and logo, its reputation as number one athletic apparel company, low costs, and effective marketing. Due to company’s far-looking leadership and the absence of fear to follow the industry leader, it became possible to earn worldwide reputation (David, 2014). This company knows that a well-organized marketing will be more effective than the most promising advertising campaign (Slide 16).
Nike is one of the leading manufacturers of sports products. Since it has already collided with the competition in this segment of the market at the stage of its inception over 50 years ago, and could thus become one of the leaders in it, then it only confirms its art of competition (David, 2014). Nike relates to organic institutions and its marketing and HR departments greatly contribute to the company’s success (Slide 11). Since the company has to deal with a complex and dynamic environment, constantly changing environment, the decentralization of power is necessary for it for quick decision-making, for the greater manifestation of employee initiative that promotes rapid adaptability to the production environment (Hollensen, 2014).
What do you think Nike has to do to maintain its strong competitive position?
In order to maintain its strong competitive position, Nike should use the opportunity to develop the retail network, expanding the range (product development) and winning new segments (market penetration) (Slides 16, 17 and 19). This will help it to strengthen its position in the market and make the product more affordable for consumers.
References
David, F. R. (2014). Strategic Management: A Competitive Advantage Approach, Concepts & Cases. Upper Saddle River: Pearson.
Hollensen, S. (2014). Marketing Management: A Relationship Approach, 3rd ed. New York: Pearson.
