Contents

1.Introduction........................................................................................................................................2
2.Generic strategies...............................................................................................................................2
2.1 Overall Cost Leadership Strategy:....................................................................................................3
2.2 Differentiation Strategy:..................................................................................................................3
2.3 Focus Strategy:................................................................................................................................3
3.Nike’s cost leadership strategy:..........................................................................................................3
4. Nike’s Differentiation strategy:..........................................................................................................4
5. Nike’s focus strategy:.........................................................................................................................4
6. Conclusion:........................................................................................................................................5
7. Reference:.........................................................................................................................................6

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1.Introduction
Nike,Inc.formerly(1964–78) Blue Ribbon Sports, American
sportswear company headquartered in Beaverton, Oregon. It
was founded in 1964 as Blue Ribbon Sports by Bill
Bowerman, a track-and-field coach at the University of
Oregon, and his former student Phil Knight. They opened
their first retail outlet in 1966 and launched
the Nike brand shoe in 1972. The company was renamed
Nike, Inc., in 1978 and went public two years later. By the
early 21st century, Nike had retail outlets and distributors in more than 170 countries, and its
logo—a curved check mark called the “swoosh”—was recognized throughout the world.

From the late 1980s Nike steadily expanded its business and diversified its product line
through numerous acquisitions, including the shoe companies Cole Haan (1988; sold in 2012)
and Converse, Inc. (2003), the sports-equipment producer Canstar Sports, Inc. (1994; later
called Bauer and sold in 2008), and the athletic apparel and equipment company Umbro
(2008; sold in 2012). In 1996 the company created Nike ACG (“all-conditions gear”), which
markets products for extreme sports such as snowboarding and mountain biking. In the early
21st century Nike began selling sports-technology accessories, including portable heart-rate
monitors and high-altitude wrist compasses.

Part of Nike’s success is owed to endorsements by such athletes as Michael Jordan, Mia

Hamm, Roger Federer, and Tiger Woods. The Nike Town chain stores, the first of which
opened in 1990, pay tribute to these and other company spokespersons while offering
consumers a full range of Nike products. In the 1990s the company’s image briefly suffered
from revelations about poor working conditions in its overseas factories.

2.Generic strategies
Generic strategies as the name suggests are generic in nature and is a way for a company to
pursue its competitive advantage across the market scope of choice. While the advantage can
be in the form of low cost or product differentiation the scope can be broad (Industry-wide)
or narrow (Market Segment).

Keeping in mind these advantages and scope three generic strategies can be made: Overall
Cost Leadership, Differentiation Strategy and Focus Strategy.

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2.1 Overall Cost Leadership Strategy:
This strategy is based on acquiring a high market share by appealing to cost-conscious and
price-sensitive customers. This is achieved by having the lowest price in the targeted
segment, or having the best perceived value for the service or product received compared to
the price charged. To achieve profitability and a high return on investment, the firm needs to
operate at a lower cost than the competitors. The strategy ensures high market share and price
advantage in case of a price war. In order to achieve or successfully implement the cost
leadership strategy the company needs to achieve high utilization, in order to reach
economies of scale so that it has the lowest manufacturing costs possible. Low costs can also
be achieved by having more standardization, better efficiency, more expertise, less
advertising (and administrative) costs and an efficient distribution system to aid the
production.

2.2 Differentiation Strategy:

A differentiation strategy is highly useful when competing in a highly competitive market
and the product and its customers are not price sensitive. Differentiation helps in ensuring
higher profit per unit and building a brand loyalty in the long run. It requires creating a
uniqueness in the product or service that increases its perceived value and causes them to
believe that the product is better than those offered by the competitors. Because of
differentiation the company is able to charge a premium over the standard product ensuring
loyalty and better margins.

2.3 Focus Strategy:

It focuses on a narrow segment and tries to achieve cost advantage or differentiation within
the segment. It focuses on particular needs of a segment and appropriately gets its name
accordingly. Due to a focused segment the company gets a high customer loyalty but due to
low volumes the companies have lower bargaining power hence higher costs. Companies in
this segment due to their understanding of the customers is able to create a broad range of
products to satisfy their customers.

3.Nike’s cost leadership strategy:

Nike’s cost leadership generic strategy sustains competitive advantage based on costs. In this
generic strategy, the company minimizes production costs to maximize profitability or reduce
selling prices. In the late 1990s, Nike reduced costs and the selling prices of its athletic shoes
and other products.

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The strategy of Nike is to control the marginal customer accounts, reduction of input costs
and tight control of labor costs, lower distribution costs. Nike uses overseas manufacturing
factories in Taiwan, Korea, China, Indonesia and Vietnam to cut production costs.
Disadvantage of the cost leadership strategy is lower customer loyalty, the reputation of the
company may also result in the producing low quality of the product and rebrand itself with a
good reputation with leadership. Moreover, in terms of cutting production cost, Nike is less
efficient than Adidas, its main competitor because Adidas concentrates most on cost
leadership strategy and has better cost advantage over Nike. Nike’s products often have
higher price than Adidas’s, that can drive it to failure in price competition. The availability of
other options in the athletic wear department gives customers the opportunity to select a
product based on price rather than options. For the cost-conscious customer, the choice will
almost always be a company other than Nike.

4. Nike’s Differentiation strategy:

Nike follows differentiation strategy. The athletic apparel market is one that is competitive
and highly dynamic. Products must be distinct, bleeding edge and top-of-line for any firm to
have a chance at grabbing a hold of any competitive advantage more less sustaining one.
Nike, being the world leader in this market, takes these customer perceptions to heart and
continually produces products that separate itself from the pack. Therefore, the generic
business strategy of Nike is a product differentiation strategy. As realized that their creative
nature definitely makes benefit over the long run, Nike emphasizes on the key strategy
elements such as advertising, the design of products, customer services, high quality products
and new product development. Product differentiation helps the company to increase its
profit through the sales of different product lines and to avoid risks if any product fails thank
to profit from other sources that can compensate for this loss. Nike differentiates its products
in a variety of ways. Firstly, it manufactures sport goods for 3 different segments of people:
men, women and children. Each of these segments is analyzed based on a lot of criteria such
as needs, physiology, design preferences and trend of choices. Therefore, there are a variety
of choices of products for any gender at any age in which people can find what is suitable for
them and even their whole family.

5. Nike’s focus strategy:

The positioning of Nike along with the consolidated business strategy is differentiation as the
competitive advantage that Nike possesses are based on the products differences from that of

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competitors’ and the competitive scope of Nike is focused on a broad target. The
differentiated positioning of the organization allows Nike to attract number of customers
towards the unique qualities of the products sold by the organization. This, in turn, allows the
organization to gain and maintain competitive advantages over the other organizations
operating in the same industry. The differentiated position of Nike also helps it to strengthen
the brand image of the organization and allow the organization to be considered as a
responsible entity in the corresponding societies of operation.

6. Conclusion:
Nike is the world’s largest sports shoe and apparel brand of which has focused on product
innovation and marketing for growth. Its excellent marketing capabilities have helped it
outshine among the crowd of brands. Nike’s e-commerce websites are now active in 45
countries. However, despite its international growth the brand depends heavily on US market
for revenue and income. A stronger US dollar and regulatory pressures are some of the most
important threats before Nike. Competitive pressures against the brand have also kept
growing.  To retain its growth rate, the brand must retain focused on product innovation and
marketing. It can also try backward integration since it is heavily dependent on independent
manufacturers down its supply chain.  Apart from these things Nike must focus on the
customer experience in its stores and on its websites to improve it using modern technologies
like AI.

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7. Reference:
panmore.com/nike-inc-generic-strategy-intensive-growth-strategies
https://seeklogo.com/vector-logo/99478/nike