Contemporary Issues in Global Business Management An analysis the business strategy of Nike Incorporation

Contemporary Issues in Global Business Management An analysis the business strategy of Nike Incorporation Introduction Nike Incorporation has been successful in designing, developing and marketing diverse products such as apparels, footwear and other accessories. In its operation, the firm contracts manufacturing of most of its products to firms which are located overseas. This has enabled the firm to attain a high bargaining power over its suppliers (Lussier Kimball, 2009, p. 90).Advertising We will write a custom report sample on Contemporary Issues in Global Business Management: An analysis the business strategy of Nike Incorporation specifically for you for only $16.05 $11/page Learn More The firm has effectively positioned itself in marketing its products on a global scale. In the United States, the firm has established a strong distribution network through a number of retail outlets. For example, the firm runs approximately 20,000 retail accounts around the 110 countries in which it operates. Most of the firm’s products such as bags, bats, gloves, sports wear and other sports equipment are marketed under the Nike brand name. Nikes success can be attributed to its efficiency in implementing its internationalization strategy. Findings of a study of 132 organizations conducted by Veronica Wong and Professor Peter Doyle in 1998 revealed that marketing is one of the core drivers in the performance of business entities (Blythe, Coxhead, Lashwood, Partridge, Reed Simms, n.d, p.23). The American Marketing Association (AMA) defines marketing as the process which involves a number of elements such as planning, execution, promotion, pricing and distribution of the ideas conceived. Marketing is made up of a number of components such as product development. In addition, marketing must ensure that the businesses’ and customers’ needs are met. Finally, marketing must result into creation of value between the two parties (the business and the customer). Marketing is therefore considered to be a highly invaluable business activ ity (Kaser Oelkers, 2007, p.4).This paper is aimed at illustrating the various marketing strategies adopted by Nike Incorporation. Industry analysis The United States apparels industry is relatively large. In addition, the industry is in its maturity stage which is evident by the slow growth rate and a high level of fragmentation. Demand for apparels in the US is satisfied by both domestic and international markets. Similarly, the US footwear industry has experienced a significant growth over the past few years as a result of growth in demand.Advertising Looking for report on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More This has led into the industry reaching its maturity stage. In addition, the market has become very saturated. One of the reasons to explain this is the rise in intensity of competition. Some of the firm’s core competitors include the recently formed Addidas-Reebok merger, PUMA, Under Armour, Fila and New Balance Athletic. All these firms specialize in the production of sportswear. The global apparel and footwear market has become flooded with various sportswear brands. This has culminated into an increment in the consumer bargaining power. Consumers can easily switch from one product to another (Lussier Kimball, 2009, p. 90). However, the firm’s current strategy has enabled it to attain an effective market position. The firm has been able to create a relatively high level of customer loyalty. As a result, Nike Incorporation continues to lead in the footwear and apparel industry. In an effort to enhance its competitiveness, Nike Incorporation management team diversified its operations into the golf industry. This was achieved through the signing Tiger Woods who is a renowned golf personality as its spokesperson (Lussier Kimball, 2009, p.92). Competitive advantage Attaining competitive advantage is one of the ways through which a firm can be able to succe ed in the long term as a going concern entity. According to Lussier and Kimball (2009, p.93), competitive advantage entails how a firm delivers unique value to its customers. In addition, competitive advantage is aimed at making a firm distinct from its competitors by enhancing its core competency. According to Porter (1998, p.70), there are three main strategies which a firm can incorporate in order to attain competitive advantage. These strategies include cost leadership, differentiation and focus strategy. Cost leadership entails ensuring that a firm becomes the leader with regard to low cost production. As a result, the firm is able to attain price competiveness by selling its products or services at a low price point compared to its competitors. On the other hand, differentiation entails production of unique products which are highly appreciated by the customers.Advertising We will write a custom report sample on Contemporary Issues in Global Business Management: An ana lysis the business strategy of Nike Incorporation specifically for you for only $16.05 $11/page Learn More There are various aspects which a firm can incorporate in an effort to differentiate its products. These include the product, sales, image, distribution and marketing. Focus strategy entails a firm being committed to be the best with regard to a particular product segment. Over the years it has been in operation, Nike’s Incorporation management teams have appreciated the importance of developing the firm’s competitive advantage. In order to achieve this, the management team incorporated the concept of product differentiation. The resultant effect is that the firm has managed to develop strong brand recognition by ensuring development of high quality products. In addition, the firm has a strong research and development team which ensures that the products developed meet the market demand. Product differentiation is achieved through effective desig ning such as by ensuring that the products such as the shoes are of different color. The high quality of the firm’s products has enhanced its reputation on a global scale. As a result, Nike as a brand name and the Swoosh logo has increasingly been recognized as status symbols globally. As a result, the firm has been able to increase its sales significantly (Porter, 1998,p. 72). The table below illustrates a competitive profile matrix comparing the firm’s competitiveness with some of its core competitors on the basis of quality of its product, marketing strength and price. A weighted scale of 10 is used. Critical success Nike Under Addidas- factor Armour Reebok Quality 5 5 5 Marketing 2.5 2 2 Price 2.25 2 2.25 Total 9.75 9 9.25 From the table above, it is evident that the Addidas-Reebok merger is likely to pose a threat to the firm’s competitive advantage. This arises from the fact that the merger has culminated into creation of a relatively strong competitor. In an effort to remain competitive, the firm’s management team has incorporated the concept of continuous product improvement. To be effective, Nike Incorporation conducts continuous market research in so as to develop a product which meets the customers’ requirements. In addition, the firm has incorporated emerging technologies in an effort to improve the quality of its footwear, apparel and other equipments. The management team has also appreciated the importance of creating effective market awareness. One of the ways through which the firm achieves this is by integration of creative marketing campaigns. For example, the firm’s advertisements are a part of the pop culture.Advertising Looking for report on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Its campaigns feature prominent personalities such as Michael Jordan, Bo Jackson and Tiger Woods (Robert, Lussier and Kimball, 2009, p. 92). Through these strategies, the firm has managed to develop a strong competitive advantage thus being effectively positioned in the market. Pestle Analysis In order to determine the existing market potential, it is vital for Nike Incorporation to consider evaluating macro environmental factors. One of the ways through which the management can achieve this is by conducting a PESTLE analysis (Worthington Britton, 2006). Political Analysis According to Campbell and Craig (2005, p.123), the actions taken by the political institutions through formulation and implementation of various policies can have significant effect on the operation of businesses. In an effort to ensure continued economic growth, the US government has relentlessly ensured that there is a stable political environment. The US government has formulated policies which enable Nike Inc orporation to effectively produce and market its products. One of the ways through which the US government supports Nike Incorporation is by ensuring stable macro economic environment by advocating low interest rates, creating an environment which promote international competitiveness through an effective and efficient tax system and ensuring currency stability. This has culminated into formation of a foundation conducive to Nike’s growth. In addition, the US government is committed at forming trading blocs with neighboring countries through economic integration. Some of the countries the US is considering include South Korea, Panama and Colombia. The economic integration is aimed at boosting the country’s apparel and footwear industry. Economic Analysis Over the past few years, the US has experienced a relatively high rate of economic growth. This led to an increment in the citizens’ disposable income and hence their purchasing power. However, the occurrence of the 2007 economic recession adversely affected the country’s rate of economic growth. The recession affected various economic sectors including the apparels and footwear industry. In an effort to minimize the effects of the recession, organizations adopted various strategies such as laying of public relation campaigns which the firm utilizes include organizing fashion shows which are aimed at displaying the latest product offering. The firm’s decision to incorporate celebrities such as Tiger Woods has also played a significant role towards improvement of the brand’s value. In addition, endorsement of the firm’s brand by celebrities has also contributed towards creation of brand loyalty. For example, by wearing the firms’ clothes and designs, a firm’s brand can be improved significantly. This arises from the fact that consumers intend to associate themselves with successful individuals. In addition, firm also uses celebrities in their advert isement campaigns such as when promoting a specific product. Considering the intensity of competition, Nike Incorporation has adopted emerging Information Communication Technologies (ICT). The core objective is to enhance increase the firm’s market share by increasing their market share. The firm has achieved this through incorporation of ecommerce. In marketing its products, the firm is increasingly utilizing the internet. Some of the internet technologies which the firm has incorporated include use of emerging social networking tools such as You Tube, wikis, blogs and Face book. Distribution strategy Product distribution is vital in a firm’s effort to ensure that it succeeds in the market (Kurtz, Mackenzie Snow, 2009, p. 57). A firm’s distribution strategy should ensure that the product can be easily accessed in the market. In marketing its products in the global market, Nike Incorporation has adopted a comprehensive product distribution strategy. The firm di stributes its product to large retailers such as supermarkets in the countries in which it operates. Supermarkets form one of the largest points through which the firm distributes its products. In addition the firm has established a number of distribution centers which ensure that the supermarkets are effectively stocked. The firm has also implemented a computerized point of sales program which enables the firm to track movement of inventories in the various distribution outlets. As a result, the firm is able to restock the stores more effectively. The role of marketing strategy Through its differentiation strategy, Nike Incorporation is able to able to position itself more effectively in the market. According to Lussier and Kimball (2009, p.90), attaining an effective market position is one of the defensive strategies that a firm can utilize. The firm’s Swoosh mark is one of the core selling features. This means that there is a high probability of the firm improving its sale s revenue and hence its profitability level. In addition, adoption of the differentiation strategy will contribute towards the firm’s product being unique. The uniqueness of the firm’s products will contribute towards a large number of consumers considering purchasing the products relative to those of the competitors. In addition, product differentiation will enable the firm to address the diverse market needs (Morrison, 2006, p. 65). Through its market research activities, the firm will be able to undertake effective product development. In addition, the firm will be able to develop a high level of customer satisfaction by integrating the customers’ needs in the process of developing new products. This illustrates that there is a high probability of the firm increasing the size of its global market share. For differentiation strategy to be well undertaken, the firm will be required to conduct continuous market research (Brooks, Weatherston Wilkinson, 2004, p.5 4). This means that the firm will be able to understand the changes in the global market. The resultant effect is that the management team will be effective in the planning process hence its ability to address future changes. In addition, product differentiation strategy will enable the firm to target the market more effectively. Conclusion From the analysis above, it is evident that Nike Incorporation has been very successful. This has resulted from its efficiency in formulating and implementing operational strategies. Additionally, the external environment has also provided an environment conducive for Nike’s operation. To be successful in the long term, Nike Incorporation should continuously adopt global strategies in its operations. This will contribute towards the firm attaining a high market share and at the same time retain its leadership. However, the firm’s management team should act locally in the various markets it penetrates. This will contribute towards th e firm’s products being widely accepted in the market. Reference List Baron, D.P., 2005. 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