Enhancing Practices That Nike Is Pursuing Essay
a) Economies of scale – defined as “reduction in unit costs attributed to a large output” (Hill, Jones & Schilling 2015, p.119). Nike is the single largest producer of athletic footwear and apparel. This allows Nike, through the large scale of outputs, to achieve a large cost advantages over its competition.
b) Learning effects – defined as “cost saving that come from learning by doing” (Hill, Jones & Schilling 2015, p.120). Nike is not a manufacturing company. The whole production of footwear and apparel is outsourced to independent subcontractors in 12 low labour cost countries (Appendix 3: Outsourcing strategy). In 1992 Nike created a Code of Conduct for all outsourced factories and started monitoring production aiming to increase labour productivity.
c) Mass Customization – defined as “the use of flexible manufacturing technology to reconcile two goals that were once thought to be incompatible: low cost and differentiation through product customization” (Hill, Jones & Schilling 2015, p.124). Technology and market constantly change. Nike uses outsourcing to its advantage to allow strategic flexibility, as it is easier and cheaper to change a supply chain than internal processes.
d) Marketing strategy - defined as “the position that a company takes with regard to prising, promotion, advertising, product design, and distribution” (Hill, Jones & Schilling 2015, p.125).
Aggressive marketing is a core…