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Running Head: STRATEGIC MANAGEMENT 1

Strategic Management

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Nike’s core competence

Nike was founded by Phil Knight and Bill Bowerman in 1964 with an initial idea of

producing sports shoes. The success of Nike can be attributed to the desire of its core founder,

Coach Bowerman, who was interested in providing his athletes with better sports gears giving

them a competitive edge. Nike utilized its marketing strategy through is a core competence of

creating heroes. This aspect means that the major focus of Nike is to harmonize its available

skills and resources in providing possible access in various markets to make it distinguishable

among other players. Besides, the core competence of Nike is its major business aspect while

other functions such as manufacturing and retailing are not strategic and are normally

outsourced.

Nike built its core competence through identification of extraordinary athletes who could

guarantee success despite the odds; identify them before their talents are explored, engage them

in a contract, and create the products which are linked to the athlete’s area of specialization. To

achieve their core competence, Nike would promote its products, through the signed athlete and

the sponsored team which would consequently contribute to the relative increase in the value of

the product as perceived by the potential customers compared with its rivals. When the brand,

Nike Air, became famous, the company was able to capture over 50 percent of the market share,

and a year later it was able to sign the greatest basketball player.

Despite all this achievement Nike was very keen and followed the VRIO attributes in its

conducts. In the journey of securing its competitive advantage, Nike maintains valuable product

and approach that has been the leading brand in sports wares. By selecting to providing sports

shoes for the athletes makes this product is valuable all over the world. Nike’s products are

imperfectly imitable by using the waffle-type sole that is lighter than the traditional shoes and

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has a better traction. Besides, the company has been able to achieve the VRIO attributes by

having a rare product that provides unbeatable completion in the market. Finally, Nike’s

products are organized to capture the value. Comparing with its competitors, Nike produced

higher proceeds of $30 billion, Adidas revenue was $19, and Armour had only $3 which

indicates the great capture of value and success of Nikes products.

Nike’s Approach might turn to weakness

Nike’s unique competitiveness in sports market has enabled it to dominate games after

the other creating a strong perceived value to its customer. By concentrating of the athletes

whose seem to have a promising future, Nike has been able to provide differentiated products

comparing with competitors. Although these strategies and core competence have gained Nike

much competitive advantage, the main strength that it has concentrated on has caused it loss the

customer loyalty. In most of the cases when engaging and interacting with its heroes, the latter

have been associated with misconduct and immorality that has turned on the public outcry. In

most instances, Nike’s stars are accused of bribery scandals, animal cruelty, money laundry, and

rape charges.

Despite the fact that these scandals from its heroes, much has not happened so as to affect

the brand of Nike significantly. Over the years, Nike has and still is the market leader of sports

shoes and apparel industry with a market share of 60%. Due to the strong impression on the

brand values and customer loyalty, the tipping point of Nike has not occurred yet. The

company’s reputation has been saved by the increasing marketing campaigns that Nike has

engaged in drawing the public attention to winning records of it heroes rather than to the

negative practices that the “heroes” are engaged in. However, due to continuous engagement

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with these heroes the company is slowly losing the grips of the market due to the increase in

competition that requires a company’s operations to be all round.

Recommendation for Nike

Despite the quick and massive achievement through signing the athletes, Nike should

have adopted a strategy that can assure the compliance of the heroes to a certain policy and code

of conduct during the contract term. First, I would have recommended Phil to sign in heroes who

don’t have criminal records. It is evidence that Nike was still sponsoring Kobe Bryant despite the

fact that he had just been cleared of the allegation of rape charges. This move does not guarantee

that the athlete sponsored will reform which threatens the company image in case the same

behavior is repeated in future.

To achieve this objected, the company should have required it heroes to present a

clearance evidence that they have not been involved in any criminal activity for the past five

years. Secondly, I would have recommended the company to sign a code of conduct form with

the sponsored athlete to ensure they do not violate the terms of the agreement at a future date.

This arrangement would work as a compensation claim in case an athlete destroy Nike’s image.

Finally, I would have recommended Nike to sign with teams rather than individual athletes.

Signing teams would ensure the company is hedged against any misconduct of the ‘heroes’ by

referring the team manager to take actions for the misconduct.

The competency of creating heroes could be reframed to “the competency of nurturing

talents.” This competency would seek to identify young gifted athletes who have a success

record. By concentrating on this competence, the company would gain a more competitive

advantage since the highest population in the world market for Nike products comprises over

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50% of youths. By securing their talents, more perception would be created to associate the

brand with sustainable future sports that care for the young generation.

If I were the Nike’s competitors

Despite the stability of Nike Company, the current predicament presents a major weak

point that can easily be explored by a competitor. Owing to the ongoing traction about the

involvement with “criminal heroes,” the popularity of the Nike is at stake since the society feels

that Nike protects most of this criminal. In an interview with Oprah Winfrey, Knight (co-founder

of Nike) was seen to want to sponsor Armstrong again despite admitting to doping. As a

competitor of Nike, I would take this opportunity to campaign my brand sighting that I would

support all the athletes with a clean record of behavior. By airing such a strong stand against

doping and other athletics-related misconducts, I would assure the public of my willingness to

help fight crime.

In a constantly changing market perception and competition, the apparent vulnerability of

Nike’s situation can present a real opportunity for its competitors. Looking at the number of

years Adidas has been in the market, this would be the golden opportunity to thrive and do away

with Nike once and for all. Given that the products offered by Adidas are a perfect substitute of

those provided by Nike, I would use this chance to drive Nike out of the market by instilling a

strong support to moral uprightness of the athletes and the general society.

At this turbulence time for Nike, I would conduct a counter campaign that does not only

focus on heroes but also the young generation that is upcoming in the athletics industry. By

doing this, I would be assured of sufficient support and endorsement by most of sports teams and

association. Interestingly, superstars and athletics heroes are not the only effective personalities

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to use to create a good impression of the product being sold. I would also seek to use team

leaders and coaches and various team mentors as they possess a very high impact on how sports

products are viewed.

To leverage this situation, as a competitor, I would use various tools of marketing my

products to gain acceptance over Nike. First, I would seek to strictly scrutinize athletes before

providing incentives to them to avoid being a victim of the same situation. I doing this my core

competence would be “promoting talents through athletics” which would apparently have a far-

reaching acceptance from both athletes and non-athletes in the market. Finally, my marketing

campaign would be based an extended coverage leave alone media and athletic celebrities. I

would identify specifically talented youths and organize local and international matches for both

sports and athletics and crown the occasion with my brand. By composing a winning team, the

prospective customer would feel to want being associated with my product of the “winning

team.”

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Reference

Rothaermel, F. T. (2015). Strategic management SECOND EDITION.

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