NIKE

QUESTION 1:
Nike did not invest much in advertisement, but it focused its budget into
multimillion-dollar deals with sport superstars who embodied an unlikely success
story. For example, in 1984 Nike signed a deal with Michael Jordan, who did not
make the varsity team in high school and later became the greatest basketball
player of all time. This type of strategy obeys the VRIO analysis and offers Nike
a huge competitive advantage: the value of a shoe designed by a sport superstar
is perceived as higher by the customer, it is rare to find and hard to imitate such
strategy because talents like Michael Jordan are very scarce and the management
of Nike organized its resources and capabilities in order to capture long-term
value.
QUESTION 2:
Since Nike invests in people, sometimes, these same people make
mistakes and the bad publicity they bring to themselves it is reflected
into Nike. Some of the athletes Nike endorsed saw a continuous
support from the firm even in tough times (for example, Kobe
Bryant was accused of rape but Nike still supported him), some saw
their contract shred to pieces (an example is Michael Vick, superstar
QB who suffered a felony conviction and Nike terminated his
contract).
QUESTION 3:
Since the “creating heroes” became the identity of Nike, as an improvement
Nike could expand its “hero roster” if the management doesn’t focus only on
sports but expands their interest in other fields such as the music side or the
upcoming esports scene. They already initiated a collaboration with the rap
superstar Travis Scott, a collaboration which increased the value of Nike’s
products. Generally speaking, Nike should not steer away from their typical
sport-related heroes, but, if the invest in other fields, they definitely have the
possibility to earn significant a market share, more than what they have now.
QUESTION 4:
The biggest vulnerability of Nike is also their biggest strength as we
mentioned: heroes and their stories. When a scandal reaches a
celebrity, the bad PR follows the individual and everything attached to
his person. Even though I do not think it is legal, competitors maybe
should finance the bad PR and mine Nike’s credibility. On the other
hand, competitors should differentiate themselves from Nike: for
example, they could focus on the performance aspect of their products
and make them better than Nike’s ones.