Nike Strategic Fit Analysis

Paper Summary:

The paper discusses an analysis to evaluate three critical issues relative to Nike today. The paper defines "strategic fit" and the concept is used throughout the analysis to indicate the level of alignment between Nike's strategic plans and current strategies. The paper, illustrated with tables, includes a critical evaluation of the extent to which Nike has achieved a strategic fit between its existing strategies and longer-term strategic plans.

Outline:
Executive Summary
A critical evaluation of Nike's ability to achieve Strategic Fit
A Critical Analysis of the Extent to Which the Level of Strategic Fit Achieved by Nike Supports its Competitive Strategies
A Critical Assessment
SWOT Analysis
Strengths
Weaknesses
Opportunities
Threats
Conclusion and Recommendations

From the Paper:

"Nike's current series of strategies are aimed at increasing the companies' global logics' strengths while at the same time refining its strategic vision to capitalize on emerging market opportunities. To be more precise, Nikes' strategies today are focused on making their entire global organization demand-driven, where customers' requirements are accurately communicated to the 50 manufacturing centers globally in addition to the company's vast supply chain. AMR Research (2006) terms this strategy the creation of the Demand Driven Supply Network (DDSN) (O'Marah, Kevin [online].(2004). Aligning strategies to this vision of a synchronized demand chain is the greatest challenge for Nike in attaining strategic fit globally today. Critical aspects of the companies' existing strategy and their relative level of alignment to this strategic vision of having a synchronized demand chain are evaluated in this section of the paper.
The first and most urgent strategy within Nike that needs better alignment to the vision of a synchronized demand chain is a re-vamping of their distribution channels. Globally Nike has exceptionally high quality products, yet their distribution partners are exceptionally weak at managing gross margins. As a result, Nikes' profitability is being directly impacted by the over-distribution in several countries of their shoes, the rise of black-market counterfeit products, and a distribution strategy in the U.S. and Europe that concentrated in market breadth and in-channel market share dominance over margin retention and profitability. To better attain strategic fit from a distribution strategies perspective, the company will need to quit selling through mass merchandisers including Costco, Wal-Mart and comparable discount-centered retailers like these who generate higher gross margins on Nike shoes and associated products than Nike themselves earn on them. In addition to margin deterioration occurring due to choosing distribution partners for breadth of selling versus margin retention, Nike also has now to contend with Wal-Mart attempting to define their product strategies for them. The development of the high-end NikeID.com site, where Nike consumers can build their own customized shoes online, was used by Nike to launch their high-end shoes to avert margin erosion and price pressure from Wal-Mart. While Nike was successful with this Web-only product introduction, this is not a scalable distribution strategy across all product categories, across all geographies the company competes in."

Sample of Sources Used:

• American Marketing Association [online] (2007). MarketingPower.com .Available: http://www.marketingpower.com/mg-dictionary-view3059.php Last Accessed: October 23, 2007
• Jonathan Birchall 2007. Nike to strengthen efforts to combat worker abuse: [LONDON 1ST EDITION]. Financial Times, May 31, http://www.proquest.com (accessed October 24, 2007).
• Chaman L Jain 2004. BENCHMARKING FORECASTING SOFTWARE AND SYSTEMS. The Journal of Business Forecasting Methods & Systems 23, no. 3 (October 1): 13-15. http://www.proquest.com. (accessed October 24, 2007).
• Connor, Timothy. (2002). Nike and Indonesia--Time to End the Race to the
• Bottom. Oxfam Community Aid Abroad.http://www.caa.org.au/campaigns/nike/news/nikeinindonesia.html

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