SUBSTAINABLE COMPETITIVE ADVANTAGE

The competitive advantages of Nike in its market

Nike Inc. is an American multinational company that engages in design development and sale of footwear and apparel and other accessories that relates to sports. Today, Nike holds a competitive advantage which it seeks to use to dominate the market.

Mourdoukoutas, (2014) observes that Nike has held various competitive advantages. For instance, in 2014, Nikes earnings rose by 20% despite the market becoming more competitive. Nike engages the following competitive advantages: the first is branding. Nikes invests in creating a strong image among its customers, especially the teenagers. Secondly, Nike enjoys the economy of scale which puts it at a level almost twice its closest competitor, Adidas. Thirdly, Nike has innovation advantage which involves customization feature, through their NikeID to provide tailor made and Bespoke products for their clients.

Sustainable competitive advantage of Nike its market

According to Mourdoukoutas, (2014), Nike today enjoys the innovative sustainable competitive advantage through its NikeID feature which allows for bespoke and customer tailored products. Through this platform, customers have had products like Nike Air Jordan Retro XI Sneakers, which adds an aura to their products.

The role technology and innovation currently play in Nike’s sustainable competitive advantage

Technology and innovation play a major role in Nike’s competitive advantage. As such, Nike has engaged in the production of technologically advanced products that are fashionable to enable them to achieve their shareholder value and corporate objectives. Nike works with other athletes to get endorsements for its iconic swoosh.  The products like Jordan Classics that are exclusive to Nike’s stores put a high value on their brands. Similarly, the perception and aura that comes with Nike’s technology give it a competitive advantage over its immediate competitor Adidas and other companies like Reebok (Mourdoukoutas, 2014).

In 2012, Nike introduced the FlyKnit technology in the production of shoes which involved a shoe upper with a single piece of thread.  The result has been an introduction of fabrics with variations for featherweight. The distinct new feature with modern technology provides products unique to Nike, which stir up the consumers’ emotions and seduces their fantasy.

The company has employed top technology innovators and engages quality materials that jeep its products competitive and reduces its production cost. The technological innovations have enabled Nike to rule over its competitors like Adidas and Reebok earning it an exclusive customer loyalty.

Nike’s competitive advantage: SWOT Analysis

Nike today enjoys a bright business outlook with favorable demands for its footwear and apparels. The main drivers of Nike’s good performance can be seen in lifestyle running and basketball men and women apparels. To date, Nike still leads in the sale of footwear and apparels in the world (Dalavagas, 2015).

Strengths

Nike enjoys a strong global brand. The swoosh logo gives Nike an aura that is recognized throughout the world (Dalavagas, 2015). The partnership with Michael Jordan too has improved its sales by great margins. It use of iconic brand has been instrumental in allowing continued success over the past decades.

Secondly, low-cost manufacturing strategy that has seen Nike manufacture its products from the countries outside the US like Indonesia and China where production cost is lower has been a boon. As a result, Nike has been able to continuously boost the bottom line.

Nike has taken seriously research in the design development of its products. Thus, technology and innovation have become a strong feature of its design and development enabling Nike to compete strongly with other players like Adidas and Reebok (Dalavagas, 2015).

Weaknesses:

In the recent past, Nike has faced intense criticism over its work conditions and labor practices. There has been an ongoing perception about its over 1 million workers poor labor conditions. Also, an issue facing the company is low wage rate, and some of its branches are yet to meet Nike’s standards.  The implication has been a hurt image of Nike. Besides, Nike commands a premium on its products which makes them highly priced. The products are therefore sold at a higher cost than most of its competitors which cut down on its customer base (Dalavagas, 2015).

Opportunities:

Nike has focused on Research and Development, which puts it at the forefront of innovation. Even though FuelBrand technology as an innovative product did not get a good reception, the company still has an eye on the big market. Nike has an emerging market in China where it has had a growth of up to 9% in sales. With more opportunities to realign its portfolio to favor the Chinese culture and taste, Nike has immense opportunities in the East (Dalavagas, 2015).

Threats

Nike faces a high competition from other manufactures like Adidas and Reebok. The industry that these organizations are involved is a very competitive on. Most of the companies are diversifying their products to introduce leisure and athletic products. They include Under Armor and also Lululemon (Dalavagas, 2015). With the rapid growth in technology, Nike stands a chance to face intense competition from other players in the industry.

Further, currency volatility has a great potential of affecting Nikes performance. Nike produces most of its products outside the US, which expose it to significant currency fluctuation.

Recommendations:

  • Nike should consider cost reduction approaches to increase their market size and grow its overall income.
  • Nike should consider selling its products in Dollars through the online platforms to reduce the effect of the foreign currency fluctuation.
  • Finally, Nike can improve on technology through research and development to find cheaper ways of product manufacturing so as to lower its products cost.
Get a 10 % discount on an order above $ 100
Use the following coupon code :
SKYSAVE