1. “The success of Nike was strictly fortuitous and had little to do with great
decision making.” Evaluate this statement
It seems that Nike’s success happened by accident rather than design. The popularity and success of Nike since the 1970s over Adidas could be incorrectly attributed to the effective decision making from its management. It is because the company took a relatively short period to gain leadership in the athletic shoe industry through displacing Adidas. Nike, founded by Phil Knight and Bill Bowerman in 1964, had spent most of its start-up years struggling to gain a market share in an industry dominated by Adidas and Reebok. Knight was working during the day as an accountant and as a peddler of their Tiger running shoes. However, the two entrepreneurs developed their own shoe line in 1972 and went ahead to persuade runners to wear Nike in the Olympic trials in Oregon. However, Adidas runners performed better than Nike wearers in the trials. It marked a new point in Nike’s pursuit of success. Bowerman was keen to innovate to make Nike shoes stand out among the rest of the competitors. On a Sunday morning in 1971, Bowerman fashioned the new waffle sole as he was tinkering with a piece of waffle iron. The idea propelled the company to rack up a higher level of sales. The improvement of Nike’s shoes with tiny rubber studs that made them springier than other shoes in the market provided the company’s products with a competitive edge. The company sold shoes worth $14 million in 1976, up from $8.3 million in the previous year.
Nike’s success was not planned. As the company found the winning formula in the waffle sole, the popular sportspersons such as Tiger Woods and Michael Jordan were making their names in their respective fields. Nike, previously known as Blue Ribbon Sports, launched a target line in 1978 and signed Jordan in an endorsement deal. Tiger Woods also won the Masters Golf Tournament while wearing the outstanding swoosh logo of Nike. Surprisingly, it turned out to be the most watched golf tournament in the history of television and a considerable factor in the success of Nike.
2. In recent years Nike has moved strongly to develop markets for running
Shoes in the Far East, particularly in China. Discuss how Nike might go
about stimulating such underdeveloped markets.
Nike inspires growth through targeting specific categories in different geographic locations. It has increasingly focused on establishing itself in the emerging markets. They provide the perfect growth opportunity for the company in the long run. There are several ways that it might go about to stimulate the underdeveloped markets. The first decision that Nike should make is to leverage any international sporting events that may be scheduled in any of such regions. International events such as the Olympics, Fifa World Cup, and Diamond League provide a high opportunity to capture the public’s attention with relatively minimal efforts because the events attract millions of viewers. International events will provide a proper opportunity for Nike to market its brand and improve its market share in emerging markets. China probably holds the key to the company’s future growth due to its rapidly growing economy as well as large population. Therefore, Nike should position its brand strategically to stimulate sales. To achieve such an objective, Nike should focus its assortment with a higher precision on sports and specific products preferred by the Chinese. Several notable athletes have emerged from the Asian region in various sports categories. Athletes such as Yeo Ming, Nomo, and Nakata can be used as target endorsers of Nike shoes after the company understands the preferred product type in such markets.
The third strategy that Nike should use to stimulate the emerging markets is through setting up the distribution centers and increasing its share of marketing capacity. Through increasing its distribution centers and retailers in the emerging markets, it will have an opportunity of selling more athletic shoe products to new customers.
3. How could anyone criticize Fireman for signing up Shaquille O’Neal to a lucrative endorsement contract? Discuss.
Fireman began attacking Nike in the basketball field to destroy its market dominance. He was concerned that Nike’s share in sales of basketball shoes was holding a big lead to Reebok. An opportunity opened up when Michael Jordan decided to retire from basketball. He was arguably the athlete who had propelled Nike to higher heights in the athletic shoe industry through endorsing its products. Therefore, Fireman signed Shaquille O’Neal. Before this decision, Reebok was adamant that it would never use celebrities to endorse its products because they asked for unreasonable prices. However, the decision to sign O’Neal could be criticized from several perspectives. Firstly, the decision to sign Shaquille O’Neal was impulsive. Reebok signed him without conducting a market survey over the way consumers perceived him. The decision to sign him was also not consistent with the company’s policy on using celebrities. He was only appealing mostly to the teenagers who did not have a high purchasing power of the Reebok shoes selling at $130. The company also decided to sell out-of-favor white shoes with a light blue trim when the consumers’ preferences had changed to demand black shoes. The company suffered as its operating costs surged up, owing to the dramatic pursuit of endorsement contracts by celebrities who asked for high sums of money. The aggressive pursuit of Shaq could not stop the fall of sales on Reebok’s shoes in the first six months by 20 percent. Fireman had failed to focus on the long-term growth of Reebok through choosing to single out Nike in the short term without much investment in market research. Therefore, anyone could criticize Fireman for signing Shaq.
4. Do you think the swoosh logo has become too widespread, that it is turning
off many people?
The swoosh logo has been used to market Nike’s brand for a very prolonged period. It is the only logo that customers have come to associate with the company. To say that it is turning off many people would be making an incorrect judgment.
The swoosh logo is unique and simple. It appeals to many consumers because it is highly distinctive and conspicuous. Knight had his doubts when he began to wonder at the possibility that the logo had become very pervasive to the point of becoming a hindrance to the company. However, the swoosh is still one of the most recognizable and popular logos across the world. It has continued to make Nike a highly valued and successful brand. Nike should be applauded for the creation, protection, and maintenance of the brand. Branding is probably the most critical aspect of a company’s identity. Through building one, a company is committed to creating value to ensure its products are visible and desirable. Nike has achieved such objectives by relying on the swoosh logo for many decades. Consumers might believe that the logo is worshiped as both an art and an iconic symbol because it defines victory, courage, and, most importantly, athleticism. The advertising campaign has established it as a logo that showcases athletic excellence through targeting the top-athletes as its endorser. It also symbolizes a spirit of determination that resonates well with consumers. It has maintained the company’s visibility in the industry and continued to reflect the key aspects that many people strive for in their daily lives such as winning. The image should not be thought as being extremely pervasive because the ideologies it represents will never change.
5. Given that all decision makers will sometimes make bad calls, how might
the batting averages of correct decisions be improved? Can they really
The ineffective judgments are widespread in the business industry. Decision makers can make incorrect choices in the pursuit of success. However, such occurrences can be minimized effectively. To improve on the batting averages of correct decisions, the management should ensure that it plans well in advance through conducting market research in order it to make the well-informed decisions. The future may not be predicted, but planning can increase the opportunities of making the reasonable decisions that will influence organizational productivity. Specifically, market research provides crucial information to decision-makers in order them to assume the well-planned course of actions as well as backup contingencies in the case the unexpected happens. For a company such as Nike, market research would help to identify new services and anticipate market changes. It could also assist the company in maintaining its competitive edge while monitoring the dynamics of the industry. Most importantly, market research would inform the company whether a certain idea would be viable before spending resources on a failing project.
Decision makers may make mistakes when pursuing organizational success. However, it is possible to improve the batting averages of correct decisions through bouncing back strongly. Consistency ensures there is progress. It means that mistakes are not repeated. As for Nike, it should invest in improving knowledge management in order business tools such as market research to be conducted from an informed perspective. It will reduce the risk of making bad calls. The company can also focus on technology that facilitates monitoring and evaluation of plans. It will help it to respond timely to correct mistakes before they affect business performance. Therefore, it is possible to correct unsupported decisions.
6. Do you think the athletic goods industry has limited potential? Or is it still
a growth industry? State your opinions and rationale.
I think the athletic goods industry is still a growth industry and has a serious potential for growth through diversification and a concentration strategy. It is through innovation of new products and development of existing ones. The key aspect is understanding customers and the businesses environment as well .Everyday people develop new needs and it is upon such companies to quickly recognize needs and respond to them. Nike has maintained its competitiveness through emphasis on product mix diversity meaning diversity is the biggest strategy for growth. Nike diversification strategy in 1993 is an example of the way an athletic company can take over market dominance through selling various kinds of goods. That time Nike was still lagging behinds other athletic goods company like Reebok but they started producing and selling other kinds of goods including outdoor footwear, apparel lines like uniforms, college football and basketball teams pants and jerseys and even gold clothing and equipment. The general public also started demanding such products and the sales grew. By the end of 1995, Nikes sales exceeded Rebook’s by 38 percent and by 1999, sales grew to 213%. Diversification boosted its growth and it is still a strategy that makes it competitive until today. Any athletic goods company can grow by identifying unexplored markets and new demands created every day. In the past, it was outdoor foot wear that dominated the market, tomorrow will be something else. Diversification should go hand in hand with concentration strategy developing the new products and expanding their geographic markets to ensure the products dominate. It is through modifying the product and developing new distribution channels to reach the adjacent markets. Like any other industry, the goods athletic industry has a high potential for growth if the companies remain strategic.
7. Is there a danger in catering too much to major customers? Discuss.
There is no danger in catering too much to major customers. In fact, it is an ideal strategy for building a proper relationship such that cooperation and mutual interest is enhanced. It does not mean that other customers’ needs should not be satisfied, but higher efforts should be directed to the larger customers to ensure they are maintained. Strategic planning on the relationship with major customers was one factor that contributed to the success of Nike over Rebook; thus, meaning success can be cultivated from minor but important decisions like relationship building. Major customers create a company’s growth foundation, and if in any way they feel unsatisfied, they shift to the competitor and your business feels the shake. If customers are provided with high-quality service, they will have no reason to go and will always come back because they feel appreciated and recognized other than going to a new company and start creating a relationship all over again. In order to achieve success, total customer focus is required. No business will want to put additional efforts finding customers and losing them quickly due to unsatisfied needs and especially the big customers. Nike has always been observing the consumer to sharpen their focus and drives their growth and has cultivated success out of it. Catering too much to major customers is the key to customer retention. It creates a culture of serving such customers which permeate throughout the organization. Hence when everyone in the organization understands that pleasing customers is connected to business’ success, he/she takes the initiative, and a superior customer experience is created.
8. Do you think Nike could have achieved its present success without
the unique but simple swoosh logo? What do you think of the inverted V
slash logo of Reebok? How would you evaluate it against Nike’s swoosh?
The visual images like logos are compelling and are easier to remember thus a way of building brand identity for the business. Spending more time and money to create a better visual representation for the brand is even more critical. I do not think Nike would have achieved its present success with its previous simple swoosh logo. It is because the unique present logo better represents its brand and the present market. Changing the logo was going by the trend such that each generation’s changing demands are met. If Nike maintained the swoosh logo, although still recognized, it would be probably less effective at this point through been too pervasive that it turns off somebody. Modifying and redefining the logo is one way of keeping people look up to something for its newness to incorporate something