Business level strategies: Nike

Business level strategies deal with an organization, its commerce, and its relationship with customers and other companies. At the business level, an organization focuses on building a value offer that attracts customers while remaining profitable as well. A number of decisions made at this level facilitate business to challenge its competitors and effectively place itself in the local and global markets. Organization principles, pricing techniques, and competitors’ advantages play key roles at the business level of strategy.

Differentiation tactic focuses on developing a distinctive product or an insight into the unique manufacture of goods that consumers are ready to pay a premium for. If a company is not receiving the best price for its products, it is not a differentiator. Companies looking to pursue a differentiation approach should try to enhance and develop its capital to support consumer receptiveness, superiority, and modernization. Costs are significant to the differentiator because it is likely that the costs of producing unique products will be higher than the premium that customers are ready to pay for it.

Nike applies a differentiation business-level approach. It provides products of high quality at suitable prices. The reputation of Nike Corporation is that it produces a wide range of sports products and is a diversified manufacturer. This generates the value that individuals are seeking in their sporting product requirements. Individuals will pay the variation in cost just to get Nike sign on their accessories and clothing. Premium price products give customers a chance to appear as superstars of each type of sport by wearing similar clothes that superstars put on. Diversification is the solution that ensures the rate of consumption that Nike wishes its consumers to have. It provides an association with customers in order to create a lasting relationship and ensure product reliability.

The company divides its products in various ways. It produces sports products and accessories for different categories of consumers: men, women, and kids. Each section is vigilantly scrutinized based on sociological needs, design preference, and physical capabilities. In conjunction with the business-level approach, it must be stated that Nike uses corporate level approach to maintain the differentiation of its manufactured goods. Products generate value and boost consumer contentment. Nike manufactures products for all types of key sports: basketball, running, golf, tennis, soccer, baseball, bicycling, football, wrestling, cheerleading, volleyball, hiking, fencing, and aquatic activities among others. Such a broad diversity of products is an effort of Nike to augment relationship dimension. Nike continually searches for what might be added to the present a range of manufactured goods to boost consumer contentment and reinforce relations between clients and the company.

The main benefit of manufacturing several product lines is decreasing threats. In such a multiproduct collection, if the produce is not booming, there are several other goods to recompense this threat. In addition to simply providing differentiated products, Nike adds worth the chance for customization.

Nike designs the majority of its footwear for sports use. Nevertheless, with the purpose to diversify its goods, a big proportion of its goods come from the sales of apparel, accessories, and footwear for both leisure and casual purposes. The company targets customers, who can pay for higher-priced goods compared to the goods that are priced according to the cost-leadership approach. The key motive to pay higher prices is the brand name itself and all apparent advantages that are strongly associated with wearing Nike.

The low-cost approach focuses on lowering the expenses, and not essentially on having the least price in the market. A company trying to grasp low-cost tactic ought to emphasize resources that ease competence. Nike Company has effectively realized a low-cost position and has ensured the lowest costs in relation to its competitors. The company can use this situation to reduce its costs, expand market sales and win market share from competitors or maintain its prices at the current market level and generate comparatively more revenue per unit. The major initiative is that prices and costs are independent options, and this approach is focused on cost.

The corporate level approach is concerned with the business as a whole. It scrutinizes what business deals with and establishes command decisions, counting whether the commerce should expand into diverse fields, build up particular joint ventures with other companies, or leave product lines at the back. A number of corporate-level decisions consider investors, who own the corporation. Shareholder prospects and demands have a powerful influence on the corporate level compared to any other level. Strategy on return streams and financial support are frequently created at the corporate level.

The corporate level approach is at the uppermost level of tactical decision-making. It involves actions concerning objectives of the company’s achievements, distribution of resources, and harmonization of tactics of various Strategic Business Units for maximum performance. The executive of the corporation makes such decisions. The temperament of tactical decisions seems to be value-oriented, theoretical, and less solid than decisions at functional and business levels.

The corporate-level approach focuses on the ability of the company to aim at certain businesses that capitalize on long-run productivity of the business. Nike is able to uphold its long-run success and even keep on growing within its production because it has deep knowledge about the products it manufactures and also innovates and improves its products.

Diversification is a key device of corporate-level strategy. There are several levels of diversification. Products of Nike Company are the distinctive instance moderate-high, connected constrained diversification. This implies that approximately 70 percent of returns come from key business areas. All businesses share technological, distribution, and product linkages (Davit, 2011). Nike has its chief products that bring the largest share of the revenue. However, there are many diverse goods, which amount to about 35 percent of the corporation’s revenue. For leading and trivial goods, the company uses the same channels of distribution, technical and other resources. Nike upholds customary and non-traditional channels of distribution in over 100 nations targeting its principal market areas: Europe, Asia Pacific, the United States, and the Americas.

In addition to product diversification, Nike should also focus on supply chain and manufacturing diversification. Worldwide economic uncertainties and crises augmented the significance of such diversification. Nike greatly relies on strategic outsourcing. Nearly all footwear goods are manufactured outside the United States of America. There were seven major suppliers contracted outside the United States that produced Nike’s branded sportswear in 2003. In the fiscal year 2003, only around 1 percent of the total Nike brand apparels were produced in the United State. Independent contractors situated in 35 nations produced the rest. Such manufacturing approach enabled Nike to get the finest deals and reduce risks.

Suppliers’ diversity is an extremely significant part of a thriving business, and because the clientele of Nike Company is global, the company wants to have an as broad base of contractors as possible to significantly and actively reflect the countries in which it functions. Nike greatly depends on its contractor relations to aid the company to attain creative and inventive solutions, comprehend its commerce, and assist it to get to its objectives. In addition to such a varied and large supplier base, Nike is capable to have a sturdy existence in the market it operates. It has a concrete brand name that is identified globally with burly reliability.

Corporate and business levels of this approach are strongly linked. Corporate-level decisions logically influence business approach, particularly when corporate level approach generates returns objectives or makes decisions concerning business areas of expertise. In a number of cases, persons who take business-level and corporate-level approaches are similar. This is mainly true in small businesses. However, even in bigger companies, those on corporate boards are always in control of business operations.

Athletic apparel, equipment, and footwear industry are intensely competitive in the US and on a global basis. Nike competes globally with a considerable number of leisure and athletic shoe companies, leisure and athletic clothing companies, sports kit companies, and big companies having diverse lines of sporty and leisure time apparel, equipment, and shoes. Intense competition and quick transformations in technology and customer-first choice in the market for sporty and leisure apparel, athletic equipment, and footwear constitute major risk factors for its operations.

Nike is the primary supplier of athletic footwear and attire in the globe. Performance and consistency of footwear, clothing, and athletic kits, new line expansion, cost, product uniqueness through promotion and advertisement, and consumer shore up and service are significant features of rivalry in the sports shoe, attire and kit industries. To help market its products, the company concludes contracts with famous and prominent athletes, teams, colleges, sports leagues, and coaches to promote the brand and increase the use of the company’s products. Nike also actively participates in sponsoring sports clinics and events.

The sports footwear industry is gradually becoming a worldwide oligopoly. There are several barriers to entry preventing new competitors from capturing a considerable share of the global market. Nike can benefit from economies of scale, which produce cost advantages over all-new rivals. Athletic footwear nowadays is extremely technical. Exceedingly big resources investments are necessary for new companies to enter the athletic footwear industry, carry out research, and plan to create fashionable athletic footwear.

Nike has integrated upright incorporation into its corporate-level strategy. It also opened price-cut factory channel stores in countryside areas and stores for town shopping. Big sports companies make use of economies of scale by spending millions on product promotions and marketing by disseminating high cost over yearly sales. Competitive promotional campaigns turn its goods into domestic names making it difficult for new companies to compete.

The financial system experienced an upward trend. This has been interpreted as an upward trend in sportswear and kit segments of customer products industry. Existing venture drivers comprise sturdy brand identification, products and differentiation, and increased market share of Nike Company. These have translated in augmented income for the last three quarters, and a lot of valuation of the company is founded on likely future augments in income for future quarters and years.

In contrast to various companies that stay lethargic in an inactive economy, Nike appears able to overcome these barriers and still achieve high earnings and forward bonuses to shareholders. It also adopts innovative thoughts through the use of broad research, technology, and growth. The company carries on endeavoring into a novel, but similar fields by applying key administration strategies to its advantage. These advantages have demonstrated to be flourishing in the past.

Nike’s modesty drives the corporation to the peak of its industry while upholding an aggressive edge and superior product quality at reasonable prices. Olympic game is an event that demonstrates the customer’s need to be sporty but also loyal. These boosts in optimistic feelings eventually translate into hold up for Nike that supports a big number of sports teams and sportsmen. Children, mostly teens, are the most active consumers lately. They demand the newest products and fashions offered by the Nike Company. Nike has also benefited from its initial mover position by constantly being inventive and benefiting from every opportunity that appears.

Therefore, the mission of Nike is to increase motivation and bring novelty to all athletes in the globe. It also aims to uphold a competitive advantage over Reebok Company. This is because Nike produces goods for such a variety of sports that the company faces competition from each sport and sport style brand. However, Nike had no direct competitors since there was no brand that could directly compete with the variety of sport and non-sport gear until Reebok came into existence. Nike can uphold competitive advantage over Reebok through technology innovation, attempts to determine new trends in fashion, be superior in serving their regular consumers, and always fulfill the needs of the youth. Involvement in research and development that is more definite is a big benefit as Nike will have to essentially discover physiological needs of athletes and remodel product designs in accordance to those desires and perhaps have a helpful collection of dimension and scrutiny tools.

In the majority of its business functions, Nike has taken appropriate approaches in marketing its products and athletic footwear goods internationally as Nike brought motivation and novelty to athletes globally and it believes that everybody is an athlete. Being a high profile sportswear company, Nike constantly tries to keep itself at the front position of manufactured goods novelty and design as it is involved in extensive development and research globally. Nike developed tactical market promotion campaigns as it hopes to convey the message that Nike Free is not intended to substitute athletic performance footwear but to be a significant part of the training, thus recuperating performance.