Nike Cost Advantage Essay

As a part of the strategic management process, one must develop a business level strategy. These are the actions that firms must take to achieve competitive advantage. All of these action and such are known as sources of cost advantage or can be under another source known as product differentiation. Sources of cost advantage falls under 6 key categories. These categories are economies of scale, competitor’s diseconomies of scale, learning curve economies, differential low-cost access to productive inputs, technology independent of scale, and policy choices. Although there are 6 categories, a firm does not need to have possible sources of cost advantages under every category. Firstly, economies of scale, means the quantity of a product is increase for a lower price than if there were fewer. Nike sells in more than 170 countries. This means they have to produce quantity beyond the amount companies that only sell in America would. Which also means bigger income for the company. This mitigates risks among individual companies. Another source of cost advantage would be the size of the company. Not only does Nike have stores of their own, Nike’s products are sold in other department stores …show more content…
This is pretty simple, as it means firms get more efficient as they are more experienced and learn more. Nike has gained experience with their clothes and shoes so they got smarter and started making products that help with the condition of the weather. For example, Nike has clothes that keep you cool in the heath or warm in the cold. Nike has also built up their name and been around so long that they have earned the right to sell their shoes for over $100. Even though their shoes cost hardly anything to make this company is allowed to sell their product for expensive prices and it still be social acceptable with people that will still buy these products. The extra revue is put to use to make more products, as well as innovate to newer