Saturday, April 9, 2011

Cooperation Strategy of Nike

           To achieve successful growth, companies use three means of cooperative strategy – internal development, mergers and acquisitions and cooperation. Nike uses all of the mentioned approaches. In previous blogs I was discussing internal development and acquisition strategy. It is interesting to define cooperative strategy of Nike. Strategic alliance is primary source of business and corporate level cooperation strategy of Nike. There are 3 types of strategic alliances – joint venture, equity strategic alliance and nonequity strategic alliance. Nike successfully exploits all three types of strategy.
            The example of joint venture alliance is deal according to which new audio sport producer company was established. In 2002, “Royal Philips Electronics, Europe's largest maker of consumer electronics, and Nike, the world's leading maker of athletic shoes, said today that they had signed an agreement to develop audio sports products”(The new York Times) Using advantage of joint venture, Nike managed to establish new dimension of its product while cooperating with Philips and sharing entrepreneurial  risks with the partner.
            Nike also uses nonequity strategic cooperation with Apple. “NEW YORK—May 23, 2006—Nike and Apple today announced a partnership bringing the worlds of sports and music together like never before with the launch of innovative Nike+iPod products. The first product developed through this partnership is the Nike+iPod Sport Kit, a wireless system that allows Nike+ footwear to talk with your iPod nano to connect you to the ultimate personal running and workout experience”( As a result, companies share their unique resources and capabilities to create cooperative competitive advantage.
Nike Inc. has equity strategic alliances, each of them bordering on multiple locations around the world; Nike's factory locations are divided across the overseas based on the technological achievements of those chosen facilities. South Korea, Japan, Taiwan, Hong Kong, Philippines, Thailand, China, Malaysia, Indonesia, Yugoslavia are important destinations. Nike coordinates efforts in designing shoes using technology in countries such as South Korea, Japan, Taiwan, and Hong Kong (producing 10,000 pairs of shoes per day) while less developed countries such as Malaysia, Indonesia, Thailand, and Philippines produce the generic casual line of shoes. Most of above mentioned destinations have strict governmental regulations requiring to have local partner when starting new plant. For example Chinese government requires that government owns certain percentage share in new business. Consequently major plants of Nike are either entirely outsourced or established on the bases of equity strategic alliance.

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