Some of the cost leadership strategies employed by the company include: 1. Nike’s pricing power gives it a competitive advantage over its peers. Nike implemented a diversification strategy which is a type of corporate-level strategy so as to spread its risk and capitalize on its strengths. As a result, its products have become the favorite of the serious athlete. The primary objective of a firm aiming to attain cost leadership is to become the lowest cost producer in comparison to the competitors. Cost leadership is the main generic strategy that the company has employed for market growth. The operational relatedness between businesses is very high. It uses separate campaign or strategy to cap the market potential of the different segments.Targeting is the important aspect of the marketing strategy, especially when a company is in different businesses. has created a strong brand loyalty and undoubtedly is one of the most loved brands on the planet. According to Kalia… This lesson on Business strategy introduces the idea behind implementing a cost leadership strategy. Michael Porter, believed that the basis for this advantage falls under 3 base strategies of Cost leadership, Differentiation and Focus. Nike had lot of benefits involved behind thisstrategy among them the chief ones were lowest possible labor cost, direct access to the rawmaterial suppliers and low tariff rates. Cost Leadership is the mechanism of establishing a competitive advantage by having the lowest cost of operation in the industry. to create competitive advantages to beat with their rivals. By this strategy companies can low their cost. Nike has set business plans through strate… the potential to be, it's competitive advantage. 5. Haven’t found the relevant content? Its swoosh symbol is easily recognized by everyone. Nike’s differentiation strategy is to establish the company as the standard in athletic wear. It has brought a large range of competitively priced cars to the market. Focus leadership (Segmentation or niche strategy) Cost Leadership. Ranbaxy Laboratories Adidas Previous Close: $78.90 Volume: 26.56K Market Cap: Nike changes of the new lifestyle, such as Porter's generic strategies describe how a company pursues competitive advantage across its chosen market scope. Nike’s Strengths – Internal Strategic Factors. In the Asia Pacific market, some of its leading competitors are Honda and Ford as well as Maruti Suzuki. • Global strategy: addresses the company’s needs to expand its operations outside the home country and compete on a global scale. The competitive strategy that Nike introduced at the end of the 1990's concentrates on honing the focus of our marketing strategies and product offerings through product differentiation. ... average total cost at which a firm can produce any given level of … Thus, Nike’s strategy is an integrated cost leadership and differentiation. In contrast, Nike, Inc. uses the Leader R&D strategy as detailed below. Price leadership is commonly used as a strategy among large corporations. Meanwhile, Nike outsources its manufacturers in the low cost countries to keep a low cost leadership advantage. With the release of Air Max, which emphasized air cushioning in 1987, Nike once again captured consumers with new advertising. The slogan, "There is no finish line," reveals Nike's spirit that there is no permanent winner and only a new game. Developed by Michael Porter, cost leadership is a way of establishing a competitive advantage by keeping costs at the lowest level (Kaliappen & Hilman, 2013) If the cost for Adidas products can be kept lower than those of Nike or its other competitors then it is possible to create a competitive advantage. Nike Product Strategy Analysis 908 Words | 4 Pages. Porters competitive forces model has four generic strategies each of which is enabled by using information technology and systems low cost leadership, product differentiation, focus on market niche, and strengthening customers and supplier intimacy. Nike’s corporate cost leadership strategy includes a moderate level of diversification. Nike has captured approx. Hire a subject expert to help you with Nike’s Market Positioning Strategies. 31% of the global athletic footwear market. Costs need to be managed across the entire chain from the very beginning to the very end. Nike Inc. is a leading global manufacturer and seller of sports shoes, apparel and equipment. By focusing on their product line, they are able to produce high quality products that meet customer expectations. Strategy used. Another marketing strategy for Nike was a prominent campaign. 6 International strategies Nike’s international strategies could be explained as transnational strategies (Figure 1. Definition:Cost leadership is a strategy that companies use to achieve competitive advantage by creating a low-cost-position among its competitors. R&D: Nike does use R&D to further improve their supply chain and manufacturing process, so in that sense, they do employ a cost leadership strategy. 2. Nike creates new shoes and apparel that feature radical new technologies. Table of Contents *Nike Introduction *Products: *Corporate Level Strategy of Nike *Porter’s Five Forces for Nike *Ansoff Matrix of NIKE *Business Level Strategy *Nike’s Generic Strategy (Porter’s Model) *Functional level strateg Porters 5 Generic Strategies. This has greatly helped the managers to lay a plan for the organization and take it where they want it to be. They share most information and technology needed to succeed. In June 2017, Nike outlined a new strategy to drive growth into the coming decade, which it called Consumer Direct Offense. i) Cost leadership Strategy- A firm which finds and exploits all sources of cost advantage and aims at becoming a lot cost producer in the industry is said to pursue a sustainable cost leadership strategy. Show More. The company’s attempt to sub contract Asian contractors wasbased on the strategy to master cost leadership. The management employs strategic management components such as vision, environmental analysis, strategy creation, strategy implementation, and strategy assessment (Nike, Inc., 2009). Cost Leadership. Nike uses psychographic segmentation variables to make its offerings more attractive to the target customers. From saved costs through their cost leadership strategy, Nike uses their budget on developing innovative and unique products as … Business Strategy And Nike's Four Competitive Forces Model. Some companies use “Overall Cost Leadership” to increase profit by reducing costs and increase market share by lowering price. In other words, it’s a company’s ability to maintain lower prices than its competitors by increasing productivity and efficiency, eliminating waste, or controlling costs. It is important to note however that keeping costs at the lowest level possible is not such an easy task. Hope you will enjoy the video! 1252 Words 6 Pages. Nike spends more than most companies in the industry on R&D in order to differentiate its athletic shoes from its competitors in terms of performance. To ensure success, Nikes managers must continually examine and improve strategies and approaches used in the 10 strategic decision areas of operations management. This another key business strategy of Nike. In this strategy a company ventures into related or unrelated product lines so as to boost revenue or expand (Marca, 2001). Some companies use “Overall Cost Leadership” to increase profit by reducing costs and increase market share by lowering price. The second strategy is Nike’s premium pricing strategy (Best cost provider strategy) which targets the customers who develop a special kind of intimacy with the product that ultimately leads to the development of loyalty. Strong Brand Awareness – Nike is one of the most recognizable brands in the world as its name alone is memorable, easy to pronounce, and very unique. The company’s pricing power is supported through premium innovation and a … We realize that the team-mentality that captured the spirit of athletics in the late 1980's and early 1990's has been replaced by a sense of individualism. This strategy is especially beneficial in a market where the price is an important factor. Being present in footwear, sports equipment, clothing and many others Nike uses differentiated targeting strategy.Produc… Some companies use “Focus Strategies” to select a group of market and tailor its strategy to serve that group. Nike’s cost leadership strategy is also used to build lasting customer relations and develop brand loyalty by providing rewards for premium customers. These areas pertain to the main decisions in managing streamlined oper… This market position is partly a result of effective and efficient operations management (OM). They do not employ that strategy in product R&D. Academia.edu is a platform for academics to share research papers. Nike launched its first ad campaign in 1976. Strategic management is a technique that Nike, Inc. has been able to apply to determine how it is performing in its current position and how its future should be. Although the firm currently does not give much emphasis to the strategy, it was particularly critical during its earlier days. And company can maximize its profit and Nike planned well its strategy to position itself there in ASIA by implementing master cost leadership strategy. NIKE stays competitive due to its cost leadership, product differentiation, and industry segment management. By this NIKE earned so much profit by lowering labor cost, direct access to the suppliers and by its low tariff rates. NIKE is applying this strategy to its Acquiring quality … This is usually achieved by large scale production which enables the firm to attain economies of scale or by innovating the production process. This new strategy is the rationale behind Nike’s acquisition of smaller company brands in order to cater to the lower price sensitive segments of the market. Firstly, the cost leadership strategy can be applied when the price competition among rival sellers is especially strong. 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