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Nike’s Core Competency
Team innovIIXrs
Morgan McGrath Pam Barrington
Jason Cumiford Dan Hockaday
Tran Pham
BMBA-523
Pacific Lutheran University
2.29.16
1.0 Executive Summary
Nike’s Core Competency
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1.1 Background & Issues
Today, not only do firms need to keep up with the innovative environment, the passage of time
has long urged them to find ways setting itself from the threats of rivalry. Besides a thorough
understanding of the external environment, regarding to industry structure, competitive forces,
and strategic groups, firms also need to evaluate its strengths and weaknesses (Rothaermel, 2015,
p.99). This knowledge should help them to sustain its position within the industry as well as
make a crucial impact on its success. Born roughly twenty years after Adidas, once was the
world’s largest athletic shoe company, Nike has now made its way to own 60 percent market
share, leading the athletic shoe and apparel industry (Adidas Group History; Rothaermel, 2015,
p.97). Nike’s achievement represents the idea of excelling a strong marketing strategy by
mythicizing the everyman. However, the firm also faces a challenge when several of its product
representatives committed wrongdoing acts, crimes, and scandals. In order to sustain its success,
Nike needs to take some suggestive actions to keep its true value and avoid failures. In this case
write-up, team InnovIIXrs will analyze the importance of identifying core competencies in firms’
success as well as a set of recommendations for Nike to stay in the game.
1.2 Analysis
Firm’s managers often evaluate a set of competitive advantage, such as capabilities, core
competencies, and activities based on the VRIO framework to evaluate its position in the
industry. This framework includes a comprehensive assessment answering to a set of questions
in regard to valuable, rare, costly to imitate, and organized to capture value. Managers would use
this information to make a decision “upon formulating and implementing strategy” (Rothaermel,
2015, p.105). In addition, another concept that managers often deploy to determine its strengths
and weaknesses is SWOT analysis. This tool helps managers to estimate the firm’s present value
as well as predict the future prospects. Although SWOT analysis can act as an instrument
delivering a strong internal analysis, firms’ strengths could also be weaknesses, and opportunities
could sometimes create threats (Rothaermel, 2015, p.119).Thus, along with implementation of
SWOT analysis, a thoughtful strategic alternative is also crucial to managers.
1.3 Conclusion
By understanding the position within the athletic shoes and apparel industry, strategically, Nike
has differentiated itself from other competitors through a well-analysis of value and cost
(Rothaermel, 2015, p.98). Nike’s success strongly explains the importance of core competencies,
internally making up a company’s competitive advantage. However, there are also negativity in
every strategies, in this case, the stars’ scandals and crimes often push Nike’s marketing strategy
off track. In order to sustain its competitive advantage, team InnovIIXrs suggests that Nike
should follow the redefining of heroes guiding policy. This policy would ensure that Nike can
keep up with the innovative environment, its industry rivalry, as well as create a strong
emotional brand attachment backed up its strong customer base.
Nike’s Core Competency
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TABLE OF CONTENTS
1.0 Executive Summary…………………………………………………………………..……….2
1.1 Background & Issues…………………………………………………………..………2
1.2 Analysis……………………………………………….…………………………………2
1.3 Conclusion……………………………………………………………………………..2
2.0 Introduction…………………………………………………………………………………….4
2.1 Case Background ……..……………………………………………………………….4
2.2 Diagnose the Problem……………………………..…………………………………..5
2.3 Analysis……………………………………………………………………….………..5
3.0 Case Questions…………………………………………………………………….…………11
3.1 Question #1…………………………………………………………………………..11
3.2 Question #2…………………………………………………………………………..12
3.3 Question #3…………………………………………………………………………..12
3.4 Question #4…………………………………………………………………………..13
4.0 Recommendations………………………………………………………………….………..13
4.1 Guiding Policy #1……………………………………………………………………13
4.2 Guiding Policy #2……………………………………………………………………14
5.0 Managerial Implications……………………………………………………………………..16
6.0 Case Update………………………………………………………………………………….17
7.0 References..………………………………………………………………………………….19
Nike’s Core Competency
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2.0 Introduction
2.1 Case Background
“Just do it.” Everyone knows this saying, and the symbol that goes along with it. Nike
has created brand recognition and has been able to gain and sustain competitive advantage. But
how did Nike get there? How are they able to sustain their competitive advantage? What
strategic moves allowed them to get there?
Nike has come a long way since its beginnings. The company was founded by Bill
Bowerman and Phil Knight in 1964 and was originally named Blue Ribbon Sports. The company
was renamed in 1971, and the infamous “swoosh” was created by a Portland State University
student. Bowerman was a true innovator by consistently seeking ways to enhance running
performance. Knight was completing his MBA at Stanford and wrote a paper about how to
disrupt the (at the time) leading shoe maker Adidas. In 1971, the company hired a Seattle
advertising agency which helped create the first “brand ad” called “There is no finish line” where
no Nike products were shown. By 1979, Nike had captured more than 50 percent market share
for running shoes in the US and a year later the company went public.
Through the 1990’s and 2000’s Nike sponsored superstars in a variety of sports. This
closely held sponsorship led to the idea of “creating heroes.” Nike picked many superstar
athletes that challenged the odds of success through defeating cancer and coming from
disadvantaged backgrounds. This strategic alignment and core competency allowed Nike to be
very successful, but the strategy also has many risks. Some of Nike’s “heroes” have “fallen”
through wrongdoings or crimes. Will Nike’s alignment of creating heros and then falling heros
cause Nike’s brand to fail?
Nike’s Core Competency
2.2 Diagnose the Problem
Nike has focused on sponsoring many sport superstars and was able to endorse a variety
of athletes in a wide range of sports. This closely held sponsorship led to the idea of “creating
heroes.” Many of the athletes that Nike sponsored were athletes that had defeated the odds of
failure- from defeating cancer to coming from a disadvantaged background. The problem with
this idea of “creating heroes” is that it is a slippery slope. What happens when you mythicize the
everyman? Everyone is human and flawed. When Nike’s heroes are unmasked as cheaters,
criminals, or frauds the company has to attempt to sidestep or anticipate the backlash and the
affect it could have on the brand. Nike has placed too many eggs in the hero’s basket which
could eventually reach the tipping point of being associated with too many fallen heroes.
2.3 Analysis
