NIKE

Why is Nike an interesting organization?

Nike is an interesting organization because it has been able to make the transition from a traditional footware manufacturer to a knowledge based organization in which the value is added at a pre-production level (R&D and design) and at a post-production level (marketing, distribution, sales and merchandising). This has been achieved by the extensive use of information technology to innovate in the design phase, outsource the manufacturing and coordinate the best available suppliers. Very recently, Nike has taken another step in the control of its entire value chain by entering the retailing business: the company has started to open proprietary stores in main US cities (the first one in New York) with a first-class deployment of in-store multimedia in the promotion of their products.

Relevant Background

Nike is the market leader in athletic shoes and one of the strongest players in the apparel and accessory products industry. The company sells its products to more than 15,000 retailers in the US and in more tan 125 countries around the world. From the early 1980s, Nike has focused on the addition of value for end users in the pre-production level (R&D and design) and the post-production level (marketing, distribution, sales and, recently, merchandising). The company completely outsources its production to "production partners" abroad, who are categorized acording to their level of integration with the other operations of the company. The policies that sustain and constantly develop the extensive outsourcing and partnership programs rely on:

• Treating partners as true partners, by keeping Nike personnel on site at all key manufacturer facilities, providing partners with stable financing through on-time payment of bills and by exchanging extensive information among other actions.
• Participating in the manufacturing process. Nike "expatriates" become permanent personnel in each factory acting as a link with corporate R&D, quality assurance and product development.
• Running joint investments and developments. Despite the basic research is conducted at Nike's headquarter, the development of new products is shared with the production partners.

Nike's headquarters, located in Beaverton, Oregon, acts primarily as a design, coordination and marketing interface center, comprising within the "marketing" label both marketing, sales and more recently retail distribution based on the opening of its own stores. Both design and marketing are considered the core competences of the firm and thus kept in house. This two, coupled with the advertising run by Wieden & Kennedy are providing the firm its competitive advantage in the market place.

The company expects to add to its core competencies the retail distribution one and with that goal has endeavoured an ambitious program of own-stores opening, heavily supported with Nike's parafernalia of sport stars and multimedia demonstrations.

Value proposition

The value proposition for the consumers is based on a technicaly superior product, made of the best materials and with the latest technologies availables, positioned as the most fashionable in the industry and endorsed by top athletes and sport stars.

Sustainability

Nike's value proposition for consumers is revealing successful in an industry clearly marketing and image driven. The company recognizes that nowadays Image is the driver of the business and that is one of the reasons why they sign millionaire contracts to gain and retain sport stars. Morevover, the opening and operation of their own stores represents an additional step in this direction.

I believe that Nike's core competencies of design and marketing can be matched by competitors, but they are building a strong advantage in the image field. In addition, the company has proven its success in identifying new competencies and building them over time, the next one being their own retailing operations, once again heavily supported by the use of information technology (multimedia applications).