Week 8 Assignment 3
Ebony Reid
Strayer University
BUS499 Business Administration Capstone
Dr. Grizzell, Dr. Gardner
August 25, 2019
Introduction
By deciding on the business or corporate level strategy to settle on, a company makes an excellent decision given that it can set the tone for its success. In most cases, companies hire a manager to determine the strategy that suits their company best while there are companies who seek to improve their operations. Furthermore, it is vital that the company knows the competition in place as it settles for a strategy to ensure that it equips itself in a manner that will trigger success (1). Based on what the competitors are doing, it is easy to figure out the strategies that fit best for a corporation. After figuring out the strategy to set on, the company can move on to build a successful future and survive in the market for a long time.
Business level strategies
Having a well-structured business-level strategy play a vital role for any corporation and is critical since to keep an organization flowing successfully. Nike has settled on a direct business strategy and has precise objectives that it seeks to achieve. Innovation is key is how Nike is run as the company ensure that its products are up to date to ensure that the company is more sustainable. The company understands how the constrained natural and human resources in the world today affects its operation and has decided to do something about it by ensuring that it fully engage in innovation (2). Nike understands that the competition cost when it comes to resources will go up as the funds continue diminishing and have therefore coupled its operation with emerging trends where it seeks to push to be near different markets while also changing labor markets as a way of creating business growth for the future (1).
Nike has settled on differentiation business-level strategy via product innovation, as well as technology development. The company has been able to differentiate itself from its competitors and has successfully built a sharp brand image which helps it to transform its fortunes. Nike has unique features of products and ensures that the products undergo rapid innovation (2). I believe that differentiation is the most important business level strategy for the company and it is a right choice since Nike's customers are ready to pay for the higher-end prices charged by the company for its goods since they see value and uniqueness in the products. The company ensures that its customers anticipate the arrival of new products and available to test them because they are unique and way above other products in the market today. Furthermore, through increased focus on a differentiation strategy, Nike has continued to invest in research and development to always have an edge compared to their competition (2). The company can patent most of its products and materials, aiding them to come up with the sustainable competitive advantage that they seek to achieve.
Corporate-level strategies
The corporate level strategy entails ensuring that a company makes the best choices given that they directly affect the company. A company needs to settle on a specific corporate-level strategy to implement in its operation, which will be essential for its success. Nike's corporate strategy mostly entail the products' diversification. Nike's products represent moderate-high diversification, which shows that over 50 percent of its revenue comes from key business fields (3).
Furthermore, every business is operating under Nike share product, distribution, and technological connection. In addition to the diversification of products, the company has also engaged in supply chain and manufacturing diversification. The company is highly dependent on strategic outsourcing with almost all footwear produced outside the U.S (3). Nike has independent contractors in nearly 35 countries with over 99 percent of the supply coming from companies based in different countries, including China, Indonesia, Thailand, and Vietnam. With such manufacturing strategies, the company for a long time gotten best deals at a reduced risk.
For Nike, the primary product that yields the most significant income share in apparel and shoes. When dealing with minor products, Nike employs similar resources, distribution channels, and technology, while their key product emphasis is athletic footwear mostly designed for leisure and sport uses. The company needs to pay close attention to supply and manufacturing chain diversification mainly due to the recent global economic crisis as well as uncertainties which have increased the need for diversification to lower risks and ensure that there are better deals avails. Supplier diversification is also key for the company to ensure its success, especially on a global scale. By creating a broad base of suppliers, Nike can be able to come up with the revenues it is aiming to achieve. Nike still has both traditional and non-traditional distribution channels in its primary markets in the U.S., Europe, the Americas, and Asia Pacific (3). Nike utilizes close to 20,000 retailers, factory stores as well as internet-based Web sites to sell its leisure and sports products. As described in the company's annual rapport, the key product focus for Nike is athletic footwear made for specific sports use. The company is also involved in the selling of athletic apparel, which carries the same trademarks as most of their footwear lines. In addition to these components, the company also sells different equipment under its brand name that includes bats, eyewear, skates, timepieces, and other equipment meant for sports events. Moreover, the company utilizes several wholly-owned affiliates to sell other merchandise such as Nike Team Sports and Nike IHM Inc. with a more extensive supplier base, Nike has successfully created a strong presence in all the markets where it functions as well as a recognizable brand name thus increasing its credibility (3).
Competitive environment
A company must come up with the best innovative ideas to design products, thus helping it remain competitive in the industry for the longest time possible. Having been in operation for over 50 years, Nike has come up with different strategies that enable it to remain successful in the highly competitive apparel business environment (4). The company has to deal with old companies that are already in the industry as well as new that might threaten its operations in the industry. Nike is among the main companies in the Industry with Adidas and Under Armor as its main competitors based on the number of sales and the control of the market at the moment.
Formerly referred to as Dassler Brother Shoes, Adidas is a manufacturer, marketer, and design of accessories, shoes, and clothing as well as a critical competition to Nike over the years. The company acquired Reebok in 2005 for 3.8 billion dollars after which it posed a great chance of competing with Nike, especially in North America. Today, Adidas group is made up of three subsidiaries, which are TaylorMade, Reebok, and Runtastic (4). Currently, Adidas value is $14.3 billion with its revenue amounting to 21.218 billion. Due to its innovative ideas as well as product diversification, Adidas has remained as the key challenges and competitor to Nike which has, in turn, forced both companies to continue developing their products to ensure that they have a competitive edge in the current market. Another critical competitor to Nike is Under Armour. Founded by Kevin Plank in 1996, the company manufactures sports footwear, apparels, and casual clothing while it is also engaged in developing, marketing and distributing different product lines across the globe. The company's products are used by all levels of professional players and college and also general customers who are attracted to active lifestyles. Under Armour made $5 billion revenue as well as a market capitalization of $7.7 billion (4). Both Under Armour and Adidas have gained progressive ground over Nike in the last few years while Nike earning per share growth has remained stuck, thus indicating slow-moving of merchandise at Nike.
All in all, due to its increasingly good laid down revenue sources, the annual company revenues are still ahead of Adidas and Under Armour. At Under Armour, competition and growth are interconnected while just like Nike, innovation is key, thus ensuring that the company remains competitive in the current market (4). The three companies seek to stay one step ahead of each other and to gain market share in the process and are always striving to better themselves in every way possible to stay ahead of the competition.
Market cycles
I believe that my choice in the above question would remain the same, whether in fast cycle or slow cycle market. Slow cycle markets can describe those in which the competitive advantages of the company are shielded from imitation over long periods, especially where reproduction is expensive. Fast cycle, on the other hand, entails changing the rates of competitive speed in different markets based on the responses and actions of the competitors in a particular market. As long as Nike continues to focus on creating high-end products that are highly innovative and eye-catching to the customers, it will remain competitive in its environment (4). The company will continue producing new and improved products to keep up with its competitors as well as focus on what the customers want to ensure that their products are consistent and quality. Customers choose Nike's products since it is what they want, especially since the products are entirely unique compared to what the other competitors are currently offering. By releasing high quality and diversified products, it is easy for Nike to remain competitive and remain at the forefront compared to other companies.
Sources
1. Hill, C. W., & Jones, G. R. (2011). Essentials of strategic management. Nelson Education.
2. Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2016). Strategic management: Concepts and Cases: Competitiveness and globalization. Cengage Learning.
3. Furrer, O. (2010). Corporate level strategy: Theory and applications. Routledge.
4. Mahdi, H. A. A., Abbas, M., Mazar, T. I., & George, S. (2015). A Comparative Analysis of Strategies and Business Models of Nike, Inc. and Adidas Group with special reference to Competitive Advantage in the context of a Dynamic and Competitive Environment. International Journal of Business Management and Economic Research, 6(3), 167-177.
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