Business Level Strategy

Nike's Business Level Strategy

Nike utilizes a differentiation strategy to separate themselves from their competitors. Their apparel and equipment is not the cheapest in their industry, but is of the highest quality. Nike spends millions of dollars on R&D every year to maintain their edge on the market. Through their NikeID feature, customers can create their own cleats and clothes using whatever colors they want. They can even add their names or logos to their creations. Nike has the best athletes in the world. The reputation they have developed is critical to the success of their company. People buy Nike products because Nike is Nike. You hear Nike and you picture Michael Jordan, Derek Jeter, Tiger Woods, etc. Not even the Tiger Woods scandal or Lance Armstrong's doping situation was enough to really affect their brand loyalty in the long run. Because so much of Nike's future success is dependent on the reputation they have developed, Nike must maintain its image as the best sporting goods apparel/equipment in the the world. Nike is in in the maturity stage of the company life cycle. They have expanded into many global markets and must focus on R&D to maintain their advantage.

Nike has developed many different technologies and designs they have patented. Their original "waffle" shoe, their sporting good equipment technologies are covered by utility patets. Most of their apparel is covered by design patents. Also, their extensive marketing campaigns have resulting in many trademarks. The most famous being their swoosh, along with the "Just Do It" slogan."

Intellectual Capital

Nike's Intellectual Capital

Intellectual capital is comprised of both human and social capital. Human capital is the skills and talents of the employees of a company. From Phil Knight's creation of Nike's first shoe, to the empire they have now become, Nike has built its entire brand on the human capital. Nike relies on innovation through its vast research and development operations. Nike has clothing and equipment for nearly any sport or athletic activity. They have developed new technologies for equipment, shoes, and apparel. There's a reason Nike is able to have so many professional athletes endorse their products. These athletes need the best to be the best, and are more than satisfied with Nike's efforts to provide them with state-of-the-art equipment.

This also gets into Nike's social capital. Nike has developed an extensive network of relationships throughout the sporting world. Just think of the number of professional athletes using Nike gear, the universities decked out in Nike apparel, and the number of amateur events Nike sponsors to develop their brand. Nike is able to stay at the top of its industry because its brand recognition, developed through its network throughout the sporting world.

Nike's Internal Environment

Nike's Internal Environment

Nike's Value Chain - What does Nike do that adds value to the company?

Primary Activities - 

• Inbound Logistics and Manufacturing both relate directly to the production of of Nike's various product lines. Nike is able to use its buyer power to reduce production costs.
• Operations and Outbound Logistics - With over $24 billion in revenues in 2012, managing its global operations is a difficult task. However, efficiently managing production and product distribution can save the company a significant amount of money.
• Marketing and Sales - I would argue Nike is one of the best companies as far as their marketing efforts go. They have created a brand that people will pay for. The world best athletes endorse their products, from MJ to Tiger to Derek Jeter. Creating this brand has made Nike one of the most successful companies in the world.

Secondary Activities - 

• Procurement - Nike is able to use its buyer power to reduce production costs. It is also likely that Nike sources product from various suppliers to reduce dependency on any one in particular.
• HR/General Administration - Because Nike is so large, it has its own internal administration divisions, including HR, Accounting, IT, etc.
• R&D - Nike invests a lot in its R&D, from clothing and shoe designs, to equpiment technology. They want to have the best ______ in the world, no matter the sport. It's important to them that Nike athletes (the ones they sponsor) are able to use the best equipment and wear the newest gear.