Case study-Nike Case Analysis
Number of pages: 2 pages/double spaced (550 words)
PowerPoint slides: 0
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Number of source/references: 1
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Please DO NOT use any external source. JUST the case provided.
Answer questions below.
1. What were Nike’s key sources of competitive advantage relative to Adidas that allowed it to overtake Adidas to become the worldwide leader in athletic shoes?
2. Estimate the magnitude of the cost advantage that accrued to Nike from producing in countries like Indonesia and China versus Adidas, which produced primarily in Germany.
3. How would you characterize the core resources and capabilities of Nike?
4. What prevents Nike’s subcontractors from entering the U.S. market to compete with them?
Nike
Sourcing and Strategy in AthleticFootwear
Nike Inc. is the world market share leader in athletic footwear, with 44 percent of the world
market, compared to only 30 percent for Adidas / Reebok (see Exhibit 1). The Nike brand alone
is valued at $10.7 billion – t he most valuable brand among sports businesses. Many high-profile
athletes and sport s tea m s around the world are sponsored by Nike, with endorsers donning
the highly recognized ” swoosh” logo and the trademark “Just Do It.” But Nike wasn’t always
the world leader. In fact, when Nike launched its first product in 1972, Adidas was the
worldwide leader in athletic footwear sales, and Converse’ was the most recognized US
athletic footwear brand. Adidas, the German shoe and sports apparel giant, was known for
making high-performance shoes and held the dominant market share position. Adidas could
not have imagined that, by 1992, Oregon-based upstart Nike would overtake it as the world’s
leading athletic footwear company. Moreover, Nike didn’t just surpass Adidas in market share.
It also consistently generated profitability ratios that were 50-100 percent higher than Adidas
(see Exhibit 2 and Exhibit 3 for selected financial data). For example, in 2010, Nike’s operating
profits-to-sales ratio was 10.1percent compared to 6.7 percent for Adidas _ /
How did Nike, a small startup, leap past Adidas and Converse to emerge as t
