Corporate Strategy MCR008 (A)

Assessment 1

Nike

Russell Atenion (1555086)

Lecturer: Dr Frank Alafaci

Introduction

Competitive strategy that can lead to an exceptional advantage is a well considered and
planned long-term strategy in which a corporation examines variables such as costs,
differentiation, focus, and efficiency in order to acquire an advantage over its rival companies
within the same target market and products over time. Strategic branding is also necessary for
a long-lasting source of competitive advantage. Your company's identity and advertising
materials ought to be constructed around it. Limit those that take notice away from the focal
point. It's not very difficult to create one or more sources of competitive advantage, but it does
involve knowledge, the ability to weigh difficult options, and persistence. The outcome, though,
is the distinction between providing something that only adds to the market's noise and
something that sparks curiosity and action.

Background

Nike, Inc. is an American multinational corporation best known for the marketing and
sales of footwear, sports equipment, garments, and related accessories and services. The
company is also actively engaged in research and development in the aforementioned areas. In
1964, Phil Knight and Bill Bowerman co-founded NIKE. Phil Knight, a wealthy businessman
today, began his career as a sports reporter and accountant. Seven years later, in 1971, the
company had grown to fifty employees. The collaboration with the Japanese shoe supplier had
ended and Phil chose a shoe factory in Mexico that had been endorsed by Adidas to
manufacture his shoes.Today Nike operates a total of 1,096 retail stores throughout the entire
world.
The fifty-six-year-old company is the world’s largest athletic shoe manufacturer with an
estimated market share of 28% and EURO 35 billion in revenue for 2019, followed by Adidas
with EURO24 billion according to Statista.

Core Competencies

The primary goal of Nike's present approach is growth. It is concentrated on ensuring

that growth is consumer-focused, expanding market capacity, expanding throughout all of its
geographic areas, and concentrating partnerships that provide customers with a distinctive
experience. Creating sustainability in terms of operations, manufacturing, and innovation is the
goal of the present approach. Innovation is a crucial component of Nike's present strategy since
it guarantees a long-term competitive advantage over its rivals and competing businesses.
Nike's fundamental skills are found in their successful marketing plans and their cutting-edge
product development. These two factors offer a lot of value and advantages to Nike's
customers, are challenging for rivals to copy, and can be effectively applied to the majority of
their products and marketplaces.
Despite not producing any of its own shoes, Nike continues to be the market leader in
terms of sales of athletic footwear and apparel. The success of Nike is greatly dependent on its
marketing plan. Nike is recognised as a premium brand that offers pricey, well-designed goods.
With a marketing plan that emphasises their brand image, Nike entices clients with the
catchphrase "Just Do It" and a distinctive emblem (the Swoosh). Nike partners with well-known
athletes to market their products. Their unique and innovative product design constitutes what
really distinguishes Nike among its rivals. Nike has developed four ground-breaking shoe
support systems that lessen shock, alleviate pressure, provide comfort, as well as safeguard
from hit as a part of its commitment to one of its corporate principles: innovation and
technological advancement. The Nike Air, Nike Air Max, Nike Air Zoom, and Nike Shox are a few
of these breakthroughs in technology. These upgrades assist Nike customers accomplish better
as well as feel more at ease. Nike has additionally established a website that can be customised
digitally. Consumers may customise and buy shoes and sporting accessories on the NIKE ID
website in an engaging and simple manner. The platform transforms the user like an illustrator
by allowing them customise a wide variety of footwear, accessories, and apparel with their
preferred patterns, hues, and textures.

Resource capabilities

Resources owned by a business can be divided into two groups: tangible resources and
intangible resources. The material possessions that make up Nike Nike's tangible resources are
things like land, buildings, machinery, equipment, inventories, and money. The company's
brand identities and goodwill, intellectual property rights, copyrights, trademarks, and special
relationships with supply chain partnerships are all examples of Nike's intangible resources. At
the time, Nike was mostly recognised for its long-distance athletic footwear. Although
everybody was aware of this rookie's incredible skill, Nike was willing to throw all of its cards on
the table and make him a deal that was much more profitable than those pitched by other
sportswear firms like Adidas. Not to mention that Michael Jordan had never even worn a pair of
Nike shoes, but his parents persuaded him to choose the deal over Adidas, starting the iconic
connection between Michael Jordan with Nike. The birth of the Air Jordan is when history
began and these showed the excellent execution of maximising the resources of the entire
company and deriving their exceptional strategies to keep up with their market advantage.

VRIO ANALYSIS FRAMEWORK

The table shows the competitive advantage of Nike being analysed using the VRIO model

Porter’s Five Forces

 Suppliers have weak financial standing, are dispersed globally, and are minor in
comparison to Nike. Due to the abundance of inexpensive labour and surplus raw resources in
Asia, a significant portion of Nike's supply chain is located there. Following that, Nike is
emphasising quality as well as product innovation to better serve the needs of the younger
generation. To keep them, they also create better client experiences. The global market for
sportswear and shoes also has a sizable number of brands that are active both domestically and
abroad. Specifically, it is extremely challenging to develop a market-leading brand with little
expenditure as companies move to a smaller and local level. The cost of creating a significant
brand is really high.

Outcomes

Nike's success is the result of strong business and marketing techniques, as well as some
excellent sources of sustained competitive advantage, primarily its global presence. While the
market as a whole and its customers have a very high level of faith in their brand image and
intellectual rights. However, compared to its rivals, Nike enjoys greater consumer loyalty
because of the high degree of happiness it generates. The brand's superior supply chain
management is a fundamental contributor to its competitive edge.
Adidas - Rival Firm

Adolf "Adi" Dassler started Adidas in Herzogenaurach, Germany, in 1949, and it has
since grown to become one of the most well-known clothing companies in the country that
produces and distributes sportswear. The initials "Adi" and the name of the company's founder,
Adolf, are the source of the name adidas. Through its e-commerce store, more than a thousand
retail locations, multiple franchisees, and other outlets, Adidas manufactures and sells athletic
wear, sneakers, running shoes, bags, accessories like watches and sunglasses, and so on.
Sportswear manufacturer Adidas has a strong sense of brand identification, state-of-the-art
goods, and a sizable global presence. The company has been in existence for more than 70
years and has built a solid reputation for effectiveness, excellence, and innovation. Coal, oil, and
all other materials are owned by the corporation. Additionally, Adidas currently has more than
50,000 workers working for them globally. In the assembly line for bulk products, CNC machines
are utilised. CAM is available through the efforts of the research departments for producing
cutting-edge designs. The primary plants are situated in Germany, Portland, China, and
Vietnam. Adidas's intangible assets include its patents, alliances, sponsorships, and
collaborations with institutions. With its high performance, market orientation, technological
development, and brand commitment, Adidas established the high value anticipated by
customers thanks to the encouragement and application of a spirit of continuous and apprised
technological innovation and excellence.

Nike vs. Adidas

 No matter where we are from, the majority of us are drawn to these companies for
sports accessories like footwear and more. In comparison to Adidas, Nike undoubtedly has an
advantage. In terms of sportswear, the former holds 50% of the market. Michael Jordan's
endorsement and other potent celebrity sponsorships help Nike surpass Adidas, its German
rival in terms of market share, sales, and profitability. Despite having a far smaller market share
than Nike, the latter is generally regarded for its quality and durability by its customer
base.Both of the companies are well-known and provide high-quality goods. In the end, it is up
to the individual to choose a brand that suits their own needs for how they perform, comfort,
and style.

Conclusion

By essence, the decision between Adidas and Nike is a matter of personal taste since
each person will have a different opinion on which brand is superior. Business innovation and
performance are further mediators in the connection between business strategies and
competitive advantages. These findings demonstrate the value of performance and innovation
in enhancing competitive advantage.

Bibliography

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Birch, R 2019, Adidas: A strategic audit, Commons at University of Nebraska - Lincoln, Nebraska.

Edwards, Z 2018, ‘VRIO Analysis of Nike’, viewed 21 May 2020, https://www.case48.com/vrio-

analysis/12698-NikeShoes

MBA Skool Team 2023, Competitive Strategy - Meaning, Importance, Types & Example, viewed
31 March 2023, https://www.mbaskool.com/business-concepts/marketing-and-strategy-
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UTA, I 2020, ‘The story behind the brand: Nike’, Brand Minds Blog, viewed 31 May 2023,
https://brandminds.com/the-story-behind-the-brand-nike/