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Nike Global Stargeies

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Submitted By Naina123
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One strategic growth strategy that Nike implemented was the company’s heavy investment into the 2008 Beijing Olympics. The strategic consideration that drove the decision was to customize offerings in each country market to match the tastes and preferences of local buyers. The primary purpose was to gain more access to new customers. Nike is a 50 year old company and this wasn’t the first time they set foot in China as a retailer, but they wanted to make further progress in their penetration of the Chinese market. Their short-term goal is to have annual revenues from China reach $4 billion in sales. Their investment in marketing and endorsements related to the 2008 Beijing Olympics was $150 million. Part of this cost included sponsoring the Chinese teams. There were 28 different sports in the Olympics, and Nike sponsored the Chinese teams in 22 of them. That is a significant percentage. The global strategy it applied was to form partners with Chinese manufacturing companies to manufacture the goods. All of Nike’s production comes from the 785 contract factories it has all over the world, including China. The modes of market entry it used would be a “Transnational Strategy” because with the games, Nike also opened up Nike Stores that offered products in athletic areas most popular with the local population. They also opened up “Super Stores” with similar product listing of that of the U.S. market. Prices were also scaled down to local currency rates to match the competitors pricing and the local population affordability. The complicating factors the company faced were competition from its biggest rival, Adidas. Adidas spent $40 million more than Nike on the 2008 Beijing Olympics. Adidas also edged Nike by signing endorsement deals with the Chinese athletes that ensured that if any of them were to win a medal, upon receiving the medal, they would be dressed in Adidas gear. Another strategic growth strategy that Nike implemented was the company’s heavy investment into the 2014 FIFA World Cup in Brazil. The strategic consideration that drove the decision was to customize offerings in each country market to match the tastes and preferences of local buyers. The reason why Nike wanted to increase their presence and popularity in Brazil was to gain access to new customers. Nike is trying to take over the number one soccer retailer position from Adidas and Brazil with Nike coming in second at $1.9 billion in revenue for the full year 2013, behind Adidas at $2.4 billion. Nike decided to sponsor 10 different teams in the World cup, which includes the U.S. and Brazil, the host country. Nike also led Adidas in endorsement signings of major soccer figures, including Portugal’s Cristiano Ronaldo, Brazil’s Neymar, and Gerard Pique from Spain. Nike also launched unique marketing campaigns leading up to the world cup that promoted excitement about for Nike and the world cup. Every three months, Nike would have a soccer-related, new products release to stir excitement. With this, Nike had to revamp its shipping logistics in a large-country such as Brazil. To have frequent product releases would mean frequent and timely shipping would be needed. “Nike partnered with the shipping company DHL Supply Chain to implement an integrated logistics program in Brazil. DHL responds dynamically to order requests from Nike using sophisticated order management and fulfillment systems and processes, integrated route and shipment planning, and delivery service management.” (http://www.inboundlogistics.com/cms/article/beating-the-odds-in-latin-america/) I would say that the global strategy Nike applied was “Partnering – forming strategic alliances or joint ventures with foreign companies because it would not have been able to meet its product delivery goals without forming a partnership with DHL Supply Chain. They used a “Transnational Strategy” because they included both global elements and local elements in their approach to the World Cup. The world cup is a global event, so branding and commercials had to be relevant to all audiences, however, their emphasis on their soccer line as the primary product category available in Brazil, is evident of their “act-local” approach, as well as their unique DHL partnership within Brazil. Prices were also scaled down to local currency rates to match the competitors pricing and the local population affordability. Again, the complicating factors did the company faced were from its main rival Adidas. Adidas created the “Brazuca” official soccer ball of the 2008 FIFA World Cup, and were the official sponsors of the event as well. As was stated before, Nike is a 50 year old company and in addition to sponsoring the 2008 Olympics and the 2014 World Cup, Nike has made efforts in the past 5 years, to ensure that its global expansion become stagnant, and doesn’t contract. This is possible when a global, multi-national company can receive complaints, from local companies in countries that it has entered, of price dumping. According to the 2013 shareholder’s report Nike states that “We monitor protectionist trends and developments throughout the world that may materially impact our industry and engage in administrative and judicial processes to mitigate trade restrictions. In Brazil, we are actively monitoring for dumping investigations against products from China and other countries that may result in additional anti-dumping measures and could affect our industry. We are also monitoring for and advocating against other impediments that may increase customs clearance times for imports of footwear, apparel and equipment.” This may not be considered an “improvement” of its international market, but for a company of Nike’s size, holding on to current business in international markets is just as important.

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