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Nike Case Solution
| Solution Id | Length | Case Author | Case Publisher |
|---|---|---|---|
| 2106 | 1073 Words (6 Pages) |
A Word File
Nike has marketed its products through celebrity endorsements. These celebrities are athletes from different sports segments, which shows that they consider themselves being in the sports industry and have not limited it to the product offerings (Crispigny, 2020). Nike also spends on student innovative programs, which help children to realize their dreams in the future. This shows that Nike is not only investing in sports but in the dreams of young people (Nike, 2020a). Nike’s tagline of just do it is also not related to sports, but rather related to attempting to achieve what people dream, not even attaining. Therefore, Nike has positioned itself as a brand that is not only associated with winning and success but in the struggle of attaining (Aziz, 2018).
Following questions are answered in this case study solution
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Identify and describe at least three (3) examples of strategic fit that Nike currently exhibits among its multiple divisions. Defend your reasoning.
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Which of Nike’s business units could be considered cash hogs? Explain. Which of Nike’s business units could be considered cash cows? Explain.
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The coronavirus crisis has upended many companies and industries. Identify and describe an example of a firm that has diversified its offerings as a result of the COVID-19 pandemic; indicate the company’s original primary focus and how the company’s strategy changed or broadened as a result of the novel coronavirus. Going forward for Nike, what do you believe constitute viable opportunities for expansion through diversification resulting from the COVID- 19 pandemic? Justify your choices; in doing so, explain how, in terms of strategic fit, these expansions would benefit Nike.
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Firms can often benefit from diversification into multiple product and service categories, because this strategy can help to create economies of scope. However, over-diversification can potentially damage a company’s image and bottom line. Be a devil’s advocate (one who argues an opposing viewpoint to test the decision) by cautioning Nike about the dangers of over- diversification. Provide all of the rationale necessary, including an example of another company that overreached and suffered because of over-diversification, so that you can be very persuasive in your recommendations to the Nike strategic leaders. In general, how has the COVID-19 pandemic affected the manner in which firms should consider diversification efforts?
Case Analysis for Nike
2. Which of Nike’s business units could be considered cash hogs? Explain. Which of Nike’s business units could be considered cash cows? Explain.
Nike’s athletic footwear category has been a cash cow for Nike. This is because this category has given Nike year-on-year growth in sales as well as revenues. As for the 2019 annual report, the company reported an increase of 11% profit in the footwear category (Nike, 2019). In 2017, Nike reported a 16% decline in sales of converse shoes. (Nike, 2017). In 2019, there was no revenue growth reported. The sales growth was reported by 3%, which was a result of a double-digit growth in Asia, which offset the decline in Europe and the US (Nike, 2019).
3. The coronavirus crisis has upended many companies and industries. Identify and describe an example of a firm that has diversified its offerings as a result of the COVID-19 pandemic; indicate the company’s original primary focus and how the company’s strategy changed or broadened as a result of the novel coronavirus. Going forward for Nike, what do you believe constitute viable opportunities for expansion through diversification resulting from the COVID- 19 pandemic? Justify your choices; in doing so, explain how, in terms of strategic fit, these expansions would benefit Nike.
INEOS is a leading chemical company headquartered in the UK. The company previously had a B2B business model with chemicals provided to different industries for their production. Their business customers included the pharmaceutical industry, the automotive industry, and the plastics industry. During the COVID-19, INEOS changed its business model to incorporate direct customer sales of hand sanitizers. In a few months, the company opened up four production facilities for hand sanitizers in different countries. Their main target audience was hospital staff who were facing a shortage of hand sanitizers (INEOS, 2020).
Nike has been manufacturing PPEs including, full face shields, air-purifying respirator, and lenses to protect against the virus. Furthermore, this equipment was provided to healthcare providers and hospitals in the USA (Nike, 2020b). Nike can play its role in introducing ways to resume sports since many tournaments were canceled because of COVID-19. This strategic diversification could include Nike investing in R&D for the PPEs that can be worn by athletes. This is because face masks cannot be worn during play because it poses a risk of suffocation and obstruction of oxygen. Therefore, while this would be different than what Nike has done in the past, it will be in favor of sports, the industry that Nike operates in (Red, 2020).
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