Nike’s Core Competency:

The Risky Business of Fairy Tales

Joelle PanganibanBA 190 - Strategic Management

University of the PhilippinesProf. Mita Angela M. Dimalanta

• Performance• Authenticity• Sustainability

Mission• To bring inspiration and innovation to every

athlete in the world

Vision

Core Values

• To help NIKE, Inc. and our consumers thrive in a sustainable economy where people, profit and planet are in balance

Facts• Founders: Coach Bill Bowerman & Phil Knight

• Nike: the Greek goddess of victory

• Established: 1964

• Differentiation of company’s available Products: Waffle-type soles

• Marketing Style: 1 athlete endorser from the different sport disciplines

• Main Idea of Endorsements: “Create heroes”

Questions

1. The case indicates that Nike’s core competency is to create heroes. What does this mean? How did Nike build its core competency? Does it obey VRIO attributes?

Creating Heroes

Despite:1. Scandals2. Controversies3. Personal Problems

Athletes who have succeeded against all odds

In order to: 1. Inspire2. Innovate3. Develop

Athletes

• Create heroes by showing their consumers that their endorsers are human and are like everyone else.

• Nike chooses athletes who have gone through a lot but have been able to rise up from their problems.

Creating HeroesAthletes who have succeeded against all odds

Valuable Rare Costly to Imitate

Organized to Capture Value

Sustained Competitive Advantage

Competitive Disadvantage

Competitive Parity

Temporary Competitive Advantage

Temporary Competitive Advantage

YES YES YES YES

NO NO NO NO

VRIO ATTRIBUTES

Example: Athlete: Kobe BryantValuable: YesRare: YesCostly to Imitate: Yes

Organized to Capture Value: YesAnswer: Sustained Competitive Advantage

Questions

2. What would it take for Nike’s approach to turn from a strength into a weakness? Did this tipping point already occur? Why or why not?

Strength to Weakness

• Nike’s campaign for creating heroes can become a weakness during times when their chosen athletes face scandals, controversies and personal problems.

1. Tiger Woods • Surrounded by adultery controversies • Nike dropped their contract with Woods• After 4 years, Nike renewed their contract with Woods

2. Lance Armstrong• Involved in a doping scandal in 2012 • Nike dropped its contract with Armstrong • Nike does not support athletes who cheat to win • Nike embraces the idea of fair play and winning because of

hard work

Strength to Weakness• The tipping point occurred:

Four consecutive years of continued scandals brought about by their athletes

Nike’s Solution: continued faith in their athletes and their core competency of “Creating Heroes”

Nike gave second chances to their athletes to show that they stick with them through thick and thin.

Questions

3. What recommendations would you have for Phil Knight and Nike? Can you identify a way to “reframe” the competency of creating heroes? Or a new way to think of heroes that would continue to build the brand?

Recommendations• Continue “Creating Heroes” • Continue to bring inspiration and innovation to every

athlete in the world • Continue to create heroes in regular individuals.

Reframing Core Competencies• Choose their athletes thoroughly

Do background checks Nike will not be easily shaken when scandals and

controversies arise with their athlete endorsers.

Questions

4. If you are a competitor of Nike, how could you exploit Nike’s apparent vulnerability? Provide a set of concrete recommendations.

Nike’s Competitors• Capture the market where they do not have

endorsers• Create products and innovations that would allow

them to capture market share• Enter a market where their share is not as strong as it

supposed to be Adidas’ strategy to enter the casual wear market

gave them a competitive advantage over Nike Adidas is known to have bigger market share and

Nike is having a hard time penetrating it

References