Question

What were Nike's key sources of competitive advantage relative to Adidas that allowed it to take over Adidas to become the worldwide leader in athletic shoes? When answering this question, include an estimation the magnitude of cost advantage that accrued to Nike from producing in countries like Indonesia and China versus Adidas, which primarily produced in Germany.

Answer 1

NIKE:

It is one of the most loved brand in the world particularly US with over 1180 direct company retail stores. This company has an execllant brand image among the yousters who are in sports field. Under NIKE there are other sports brands like CONVERSE and HURLEY, which is also pretty famous. The company is very strong in innovation and marketing,previous 5 year sales is the testimonial for it because it has high financial performance over the years.

COMPETITIVE ADVANTAGE:

a) INNOVATION and DESIGNS:

Nike has lots of innovative designs in its collection. Innovation is connected with its business strategy. Company spends billions of money to bring innovation in the products which is an important competitive advantage among rivals. Designs are also very much attractive to the younger generation, this is because they design there products according to the customers chanaging taste.

b) INTERNATIONAL PRESENCE:

Eventhough ADIDAS also has a strong global presence, NIKE has an added advantage in it. That is because of its great supply chain management and reach of distributors. It has 1180 direct stores globally with 392 in the US market. NIKE also run a digital platform called "NIKE DIRECT" which enable customers to order it on conveyance of customer.

c) CUSTOMER BASE:

Because the company has a strong marketing and supply chain management and distribution network, this company has strong customer support than any other sports brands. Style, design,quality,product innovation has helped the company to develop a strong base on customers.

d) RANGE OF PRODUCTS:

NIKE successfully maintained in bringing different range of products in the market in which ADIDAS has failed. That is they have products in running, NIKE basketball, THE JORDAN brand, football(soccer), training and sports wear. A large product range help a company to get lots of customers. Despite the above brands, NIKE has CONVERSE and HURLEY which target on a particular customer.

e) COST ADVANTAGE:

NIKE manufacture most of the products through outsourcing to a country which labour is very cheap. That is, most of the NIKE companies manufacturing units are situvated on countries like indonesia and china. This strategy helps the company to get a huge reduction in the manufacturing cost. Therefore the company can actually reap huge profits with their brand name. Whearas for adidas this advantage is not there because most of the manufacturing are primarly happens in germany.