Posted: March 24th, 2023
Nike, Inc. uses business and corporate-level strategies in describing and projecting its intention to develop a sustainable competitive edge in the global market. The strategies alter the nature of competition in various sectors and pave the way for continued development in the quality and cost of products. Nike has adopted an effective approach to drive the firm to productivity in the sporting products market. The company uses strategies at the competitive and corporative levels to market its high-end products in the international market (Porteous & Rammohan, 2013). At the business level, Nike uses differentiation strategies to gain a competitive edge and increase its profits. At the corporate level, the firm has focused on diversification to achieve its organizational objectives. Although other methods are available for the firm, the two approaches are strategic for the company to communicate value and attract customers while building brand loyalty.
Analysis of Nike’s Business-Level Strategies
Nike uses a business-level strategy similar to a differentiation approach to target the global market. The company has differentiated itself from competitors using technology development, innovation, and high-quality products. The company should continue using the approach, not only to remain competitive but also to build a brand image. The strategy plays a vital role in selling the company’s expensive products to the high-end market. Differentiation and high-quality products make it possible for the company to get more sales revenue and profits since customers are willing to pay high prices for quality goods (Porteous & Rammohan, 2013) Through personalization procedures such as NikeID and college sponsorships, the company has attracted the attention of its target clients by focusing on their specialized needs.
Nike targets a broad market, including shoes, clothing, and sporting equipment, making it challenging to adopt a more streamlined strategy. Additionally, the company sells to a global clientele, which means that the management has to use an effective strategy to effectively market and sell to the full range of client base. One of the ways used by the company to achieve its objective is focusing on non-price attributes such as “swoosh” and the “Just Do It” slogan, which add value to its products (Pandey, 2017). The firm promotes athletes who use the brand to create a lasting image of the company’s sporting products such as shoes and shirts. The athletes who benefit from the sponsorship have improved the value of Nike by creating their reputation around the products.
The most effective market-level strategy for Nike is differentiation, which enables the company to maintain a leading position in the competitive global market. The strategy is effective in reaching the broad client base by communicating a higher value than offered by the competitors. The company should continue using the differentiation strategy to increase customer loyalty. The management should invest in research and development to understand the different segments to target through its “fancy” products for men, women, and children (Pandey, 2017). The market-level strategies used by Nike have enhanced its leading market position since customers are attracted by its superior attributes, including better quality than what is offered in the same market.
Analysis of Nike’s Corporate-Level Strategies
Besides differentiation aspect used by Nike as a market-level strategy, the management has adopted diversification as a corporate-level strategy. The approach plays a vital role in supporting the differentiation strategy to increase the value and improve customer satisfaction. The company produces sporting footwear, apparel, and accessories for every major sporting event and all sports, including running, tennis, basketball, baseball, wrestling, volleyball, cheerleading, hiking, and fencing among other activities. The diversification strategy enhances the market share of the company, and hence, increases its revenue and profitability (Pandey, 2017). Additionally, the company uses the approach to improve its market “affiliation” dimension and keeps on looking for what it could add to the present product line to target more customers. The strategy has been effective in strengthening the connection between the company and its customers.
The company uses a diversification strategy but sharing the innovative product line to reduce the cost of delivering its diverse products to the market. The approach that the company uses is a typical example of a moderate-high, related constrained diversification. Consequently, more than 50 percent of the firm’s revenue emanates from significant business areas since the company shares product, technology, and distribution processes (Porteous & Rammohan, 2013). For instance, the shoe and apparel market is the leading share of income for Nike. The strategy has also played an essential role in increasing Nike’s revenue. The focus for the company is on athletic footwear targeted to particular sports or for leisure. Besides, the firm supplements its income by producing and marketing apparel and accessories.
Diversification is the most effective corporate-level strategy for the company because it reduces the risk involved in focusing on a single market or segment. If one of the product portfolios performs dismally, the company can take advantage of the other products to remain profitable. Furthermore, the company is capable of adding value through customization by offering differentiated products. Through product and supplier diversification, Nike can get attractive deals and reduce risk in the global market (Pandey, 2017). Creating diversity has allowed the company to remain productive in the highly competitive global market. Indeed, the process has enabled the firm to target customers in the worldwide scale by creating a broad base of products to generate revenue from diverse sources.
Analysis of Nike’s Competitive Environment
Nike operates in a highly competitive global environment. The company’s competitors are catching up with the athletic apparel giant in the market, suggesting the need to change its business approach to maintain the edge over the rivals. Nike is one of the three leading companies in the sports footwear market, the other two being Adidas and Reebok (Pandey, 2017). The three firms use effective marketing strategies in appealing to their customers. Adidas has been gaining pace and almost marching Nike in connecting with customers in the market. A comparison between the two companies reveals some benefits of the strategies of one business over the other.
Adidas is the leading competitor of Nike and has some strategic advantages over the company. Adidas has been strategically placed to compete with Nike using a unique approach to marketing. The company operates at two levels; as the Adidas brand and a Reebok’s subsidiary. The strategy creates a reliable valuation of the company, allowing it to compete effectively with Nike (Mahdi, Abbas, Mazar, & George, 2015). Furthermore, the approach enables the firm to access a broader global market in the sportswear sector. Adidas is also gaining ground in the apparel and clothing sector, to compete successfully with Nike. Consequently, Nike’s management team should remain proactive in the market to stay competitive and maintain an edge over Adidas and other competitors.
Nonetheless, a comparative analysis of the two companies reveals that Nike’s strategy remains more effective compared Adidas’ approach. Using differentiation to create diversification for the brand and its products has enabled Nike to stay relevant in the market and attract customers to its premium-priced quality products (Mahdi, Abbas, Mazar, & George, 2015). Nike has maintained a global revenue of 33 billion dollars being the leader in the market. In addition, the company has 27 billion dollars in brand valuation (Pandey, 2017). The footwear aspect of the company remains at the maximum because of its vast distribution network and promotion strategies, such as sponsorship of famous athletes and global sporting events (Pandey, 2017). Consequently, Nike is still the most active firm in the sportswear market globally. However, the company should innovate to remain competitive and avoid being overtaken by the competitors.
Competitive Advantage in Slow-Cycle and Fast-Cycle Markets
Competitive advantage in slow-cycle and fast-cycle markets differs. In slow-cycle markets, competitive advantage depends on a unique strategy that is difficult for competitors to copy or replicate. The strategy is sustainable if competitors cannot understand or copy it for their operations (Bower & Hout, 2018). Hence, Nike remains the most active company based on this source of competitive advantage. The company has protected, maintained, and extended the proprietary competitive advantage to all its global operations. The firm’s strategic position is difficult-to-understand and costly-to-imitate due to its exceptional historical reality, innovative product, and marketing methods. Nike has maintained a unique approach to the sportswear market that has maintained its leadership position in the competitive global market. The company has maintained competitiveness in the slow-paced market by taking time to develop products innovatively and taking time to build a brand image.
However, in fast-cycle markets, Adidas would be more effective compared to Nike due to its dependence on innovation as the leading force for growth. For example, Adidas’ management has realized the importance of working as a subsidiary of Reebok to compete with the fast-paced market. In the high-velocity environment, the administration is under pressure to decide and place itself strategically to compete successfully with other leading companies in the same market (Bower & Hout, 2018). Besides operating as the Adidas brand, the company has partnered with another leader in the market to remain relevant to the customers. The company has also focused on integrative decision-making to decrease risk in the market, including reducing market share as other competitors enter the market. Innovation is the most effective strategy compared to others to gain a sustainable competitive advantage for the company.
Nike is one of the leading companies in the sportswear market across the world. The company has remained competitive in the market by focusing on exceptional strategies at the business and corporate levels. The effective business-level strategy used by Nike is a differentiation that has allowed the company to target a broad market with its diverse products. Consequently, the firm has managed to remain famous among its customers despite expensive products that create value for the company due to their superior quality. At the corporate-level, Nike uses a diversification strategy that has enabled the company to target a diverse market. The management has differentiated its products to include footwear, clothing, accessory, and apparel. Although Adidas is one of the main competitors of Nike, the gap has been closing between the two rivals due to competitive strategies. However, Nike remains the market leader based on its ability to focus on the slow-cycle markets by creating an exceptional plan and taking time to build it. With effective management, the company will remain competitive and a leader in the market.
Place an order in 3 easy steps. Takes less than 5 mins.