Nike’s Business Level Strategy |
Case Study Assignment #2 |
Andreea Mosailov |
Case study assignment # 2
Nike’s Business Level Strategies, P 142/3
1. What business level Strategies is Nike pursuing?
One of the strategies utilized by Nike in the past was the focused strategy; the company concentrated on producing basketball and track shoes but after its sales began to fall, Nike realized that targeting one small market segment is not enough in expanding its market share so the company started to create new lines of shoes for golf, tennis, soccer, rollerblading, cricket etc.
In the process of increasing its market power, Nike ...view middle of the document...
Nike mainly uses celebrities athletes like Michael Jordan, Serena Williams or Tiger Woods. To do the marketing of its brands, Nike has focused on marketing as a part of its business strategy to the highest extent.
Nike is pursuing a cost leadership strategy through outsourcing. In today’s global environment one of the most viable strategies is outsourcing. Through that, Nike gained efficiency in the form of shifting risk, lowering wages and reducing capital requirements. In using outsourcing strategy Nike has a big power over its suppliers and makes most of its profit from countries like China, Indonesia, and Vietnam but it also has factories in South Korea, Italy and Taiwan etc; with 600 contract factories that employ more than 800.000 people the outsourcing capability and supplier relations helped Nike to make huge savings in their costs.
Nike is also using its research and development department to design shoes that can substantially reduce the manufacturing cost.
2. How Nike business-level strategies changed the nature of Adidas, Puma?
Nike’s product differentiation is a major component of its business-level strategy. To offer a great design, high quality products to its customers, the company focuses technology on a great level. This strategy changed the competition level in the footwear industry. As the brand name of Nike has become a leading one, other companies like Adidas or Puma are also focusing on brand development to cope up with the increasing level of competition. Branding has become a very important factor of success in this industry due to such product differentiation. In this regard, Nike communicates a provocative, aggressive winner attitude which can be related to the American sport attitude-“You don’t win the silver, you lose the gold!” This is all about being on the first place, proactive, combatant. Their images associated with sport leaders like Michael Jordan or Tiger Woods suggest performance, victory and excellence-“just do it!”
Adidas is a sport brand with a European attitude that translates into style, authenticity and conviction. Their advertising uses images of relaxed and confident athletes like Ilie Nastase (the Romanian tennis player that was first associated with the brand in Adidas advertising) or David Beckam –“Nothing is impossible”. Both Nike and Adidas are targeting the same customer but with a different attitude. This differentiation is based on the differences between American and European culture.
Living at the intersection of fashion and function, Puma’s identity has become synonymous with sport-lifestyle and trendsetting youth. The company provides individuality to both its own brand and those of its consumers. Puma’s distinctive brand was represented by Pelé, Johan Cruijff, Enzo Francescoli, Diego Maradona and Lothar Matthäus.
As Nike deals in large range of shoe styles and specializes in soccer, tennis...