Week 8 - Flexibility: Real Options Analysis Under Risk and Uncertainty

Options.  Options.  And MORE Options.  Nike is abound with options.

One of the smartest, in my opinion, routes Nike has taken with regards to options is the availability of choices in each segment of business.  Although they are known as starting out at a running company, they have quickly (relatively speaking) become a supplier of all athletic products ranging from Women's Training, Soccer, Football, etc.  One of the reasons Nike has been able to be successful with the multitude of products and lines is really in part due to the organizational structure they live and breath by.  It's a matrix organization that creates synergies and leverages the company-wide assets.

Nike's ability to quickly change, react to a market pressure across all of the lines of business is also another unique challenge.  In order for all lines of business to be profitable, Nike is challenged to ensure they can quickly make a modification to ensure they are offering what their consumers want.  And, by the way, one of Nike's co-founder's, Bill Bowerman, stated many years ago, "If you have a body, you are an athlete".  A statement of this magnitude requires great flexibility to quickly change directions if need be at a given time.  If you think about the various seasons and the athletic or sporting activities associated, there's quite a bit to keep on track and remain new and innovative.

Overall, it would seem Nike has sustained a competitive advantage by being so flexible with their product lines and offerings.  By taking advantage and capitalizing on that strength, Nike is able to continue being the leader in the athletic apparel, footwear and equipment industry.  The environment they foster within the company is one of team work, key learning's, and constant drive to offer new and exciting products.

Week 7 - Differentiation Strategies

According to our latest chapter text, we have learned that implementing a product differentiation strategy is not as easy as one might think.  On first thought, one might think pick a product, make it different, slap a higher price tag on it and bam! you have product differentiation.  Well, turns out it is more complicated than that, and guess what else?  Nike has really cracked the nut on that....

First, yes of course Nike has easily (or presumably) replicated products.  Shoes, apparel and equipment can be made, and is made even in some of the very same factories, across several companies.  Very light soccer shoes, for example, are made both by Nike and Adidas.  Both have certain features that are of specific and unique to different football players.  However, that said, Nike has more than just a lightweight soccer boot, they have a special technology called Flywire built into their boot.  This is just an example of how slight differences in technologies can sway what or which type of cleat a soccer player might choose based solely on their own preferences.

What makes Nike even more unique is how they've cracked the code on how to manage through implementing a differentiation strategy.  As noted, there are some natural rubs in the organization when implementing or utilizing this type of strategy.

Beginning with coordination of teams, Nike does this exceedingly well.  There is a definite sense of individual idea creation and category success, but always an underlying sense of team success is utmost importance.  Next, there is some sense of chaos and at the end of the day, some groups (finance/accounting) might wonder how that just all happened, there is a major sense of collaboration pulling it all together.

Another aspect that Nike has down pat is respecting the past, but always looking at the future.  I've never experienced such a great value or presence of where it all started, but where it needed to go.  Employees take pride in their employee number, which the lower the number the longer the employee.

Nike is a great example to many of our texts call-out's to potential pitfalls from an organizational structure.  In my opinion, Nike is a great case study on how to go about setting up for success across those potential issues.

Week 6 - Cost Leadership

Nike's cost leadership position is not something that defines them.  Nike is known for world class, best in industry athletic apparel that comes with a premium price.  In a sense, they are the opposite or perfect example of what a cost leader equates to in the footwear, apparel and equipment arena.

In my opinion, I would argue that Nike does employ some cost leadership strategies by developing and maintaining long term, high volume product creation relationships around the globe to ensure they are continuously recognizing economies of scale.  Nike's ever-increasing orders to factories that have built long, sustainable relationships with Nike, will be able to continue to decrease the cost of the products created.  The less turnover in factory relationships Nike has, the more stable and efficient the products can be produced.

However, on another note, Nike implements a matrix organizational structure which does not exactly lined them up for a cost leadership strategy.  Most groups within the organization work cross functionally with many stakeholders, with many layers of staff working upward, across and down to ensure all areas of business are represented.  They operate like a well oiled machine with company-wide participation.

Again, on the flip side, Nike's compensation structure does motivate employees (at every single level in the organization) to think about top and bottom line.  All employees are bonus eligible, and all have the same ultimate goal that does promote efficiency and savings where they can be had across the company.  Employees are encouraged to think outside of the box and find better, faster ways to accomplish activities which would lend more to a cost leadership strategy.  But, all in all, Nike's product is premium...  better quality, better performance, elite.

Week 5 - Resource Based Strengths & Weaknesses

What I am assessing from our current chapter in analyzing an organization's strengths and weakness in direct relation to the resources available or unique to said organization.  Below is the VRIO Framework map.

When I think about Nike's greatest resource or capability, I immediately go to their corporate belief system that is ingrained in everyone.  Nike employee numbers are hard to come by; the competition is fierce.  Why?  Why do Nike employees (specifically at WHQ) become so insanely loyal especially in this day and age where loyalty to an employer is so rare?  I believe it is due to Nike's core belief that their employees are their greatest asset.  While the pay is par, sometimes even low as compared to other companies in a particular area, but the non monetary benefits are phenomenal.  On top of that, the most senior leaders believe everyone is a part of the success.  That's pretty unique, based on my personal experiences.    

As I break down Nike's employee structure in the VRIO framework, here's where I see it:

Nike Employees as a Competitive Advantage
VRIO Analysis
Valuable - Yes
Rare  - Yes
Costly to Imitate - Yes
Exploited by Org - Yes

By assessing their employee structure, I believe they very much value their employee resources, as well as a create the rarity in the belief structure of employees as part of something big.  I also believe this is very difficult and challenging, as well as expensive for other organizations to imitate.  Nike takes great steps to ensure they are fostering the right environment and culture for employees to continue to embrace and "drink the kool-aid" so-to-speak.

To me, it's an amazingly interesting way to look at what makes a company tick.  How does Nike continue to blow out their business?  How is it being sustained?  What's the secret sauce?  Hard to say for sure, but I do believe one key component is the value they have and see in their employee resource.

Week 4 - Evaluating Environmental Opportunities

One of the first sentences in our book talks about examining threats can be turned into opportunities, which I have ALWAYS thought in a similar fashion when analyzing any company in SWOT fashion or Porter's 5 Forces....

Nike has abundant opportunities to win it, even as competitors come out and compete for business.  This might sound odd, but sometimes I do believe companies need threats to drive innovation; need pressure to develop differentiation.  Also, while this might sound silly as well, but what fun is it to play baseball or soccer, OR FOOTBALL by yourself?  It's not.  You make better plays, someone pitches a ball, you develop strategies based on your opponent's position and moves.  Threats ARE opportunities.

I think this is possibly why Nike plays it so well.  Their people know all about threats and opportunities instinctively as most employees are incredibly passionate about sports.  Any kind of sports or game.  From my perspective, even when I see a personal struggle commercial for Nike, it still translates to an internal business threat of becoming complacent.  Nike's external threats such as UA, adi, and Lululemon are threats they combat by innovating and answering the customer calls to action with products offered.  The natural rivalry position Nike has with other sports apparel and equipment companies are opportunities to bring something unique and different to the same customer base.

I do see threats as opportunities...  across all industries.  This seems logical to try and neutralize a threat by seeing it as an opportunity and seizing that opportunity.

Week 3- Nike's Environmental Threats

Week 3 - Evaluating Environmental Threats

Nike's greatest offense is their great defense in the marketplace.  The world of sports, in any capacity, is competitive.  Athletic apparel, footwear and equipment channels of Nike are right up there in the arena of competitive.  Nike's closet competition is adi (Adidas) and Under Armour, Puma and other big brands, but that doesn't mean Nike can sit back and only strategize against just those entities.  Nike must remain vigilant against other, seemingly smaller brands that might crop up and out.

How might they combat against current and potential competitors?  By staying ahead of their game, innovations, first to launch lines, and continuous pulse on the consumer demands.  Nike's very well aware of their target market needs, and most importantly, wants.  They continue to evolve, in fact one of their 10 Maxims (or core beliefs) is to "Evolve Immediately".  The employees at every level of the "game" are always evolving immediately.  They push grassroots marketing, in which turn grants them direct access to the "field".

According to our textbook, one of the potential threats to an industry is directly related to the consumer buying power.  I believe this to be true, and time and again, we see in many industries the awesome power consumers hold.  In Nike's case, it would seem to me they take that power their consumers hold, and listen very carefully.  By focusing always on what their consumers want, they are rewarded with win after win in the athletic industry.

Week 2 -Nike's Competitive Advantage

Week 2 - Nike's Competitive Advantage

We've all heard the slogan, "Just Do It" and most all of us have heard the cool start up story about Bill Bowerman creating the first waffle sole for better comfort and performance using his wife's waffle iron in the kitchen.  What is so amazing to me about Nike's history is how so much of it lives and breathes today at their world headquarters, in Beaverton, Oregon.

What's truly amazing is the longevity of Nike's competitive advantage over say, Under Armour or adidas.  As noted in our textbook, there was a study performed on what types of industries or product segments were more likely to sustain a competitive advantage over the long haul several factors included, "industries that (1) are informationally complex, (2) require customers to know a great deal in order to use an industry’s products, (3) require a great deal of research and development, and (4) have significant economies of scale are more like to have sustained competitive advantages compared to firms that operate in industries without these attributes."

Barney, Jay B. (2014-01-17). Gaining and Sustaining Competitive Advantage (4th Edition) (Page 17). Prentice Hall. Kindle Edition. 

Personally, I would not identify Nike with many of the above factors, but what I would attribute Nike's sustained competitive advantage is their ability innovate and continue to create more significant economic value or perceived value.  One strong driver is their Branding; Nike continues to actively seek and market their innovative brands to a younger, diverse crowd across several sports categories where they gain brand loyalty.  There are many items that go into Nike's mix such as most every sport imaginable, as well as each gender and even age brackets.  The product assortment is vast and far reaching, but by specifically targeting the younger consumer, I believe Nike is able to "capture" that brand loyalty at a very early stage that can carry-on for many years.

Overall, Nike is committed to bringing innovative, highly functional sportswear and equipment with the under current mantra of "if you have a body, you are an athlete" (Bill Bowerman), which I believe resonates with the masses.