VRIO Analysis of Nike

The Nike is exposed to, as well as has ownership of different resources. The Nike uses these resources for meeting its goals, as well as for developing and expanding different growth opportunities. The VRIO analysis is used by the Nike for assessing and evaluating these resources to help leadership and management to identify different strengths and weaknesses, and work towards using the same to enhance the business standing and proposition (Knott, 2015).

VRIO importance

More importantly, the VRIO analysis is used by the Nike to evaluate and identify the different competitive advantages that different resources can offer. In doing so, the Nike is able to identify resources that offer a long-term sustainable competitive advantage, and work towards building the same for increased opportunities (Chatzoglou, Chatzoudes, Sarigiannidis, & Theriou, 2018). Nike VRIO analysis is a strategic tool that allows the Nike to identify resources that offer a temporary competitive advantage – allowing the company to strategize tactics to then turn these into factors of long-term competitiveness.

The VRIO analysis largely assesses resources as being Valuable, rare, inimitable, and organized.

Valuable

Resources are valuable if they allow the Nike to enhance its efficiency and effectiveness through facilitating strategy implementation and realization. Moreover, resources are also valuable if they allow the Nike to successfully manage the threats it is exposed to, and capitalize on different opportunities through helping build internal strengths, and manage weaknesses appropriately (Lasserre, 2017). Some examples of valuable resources for Nike include the following:

Strong global presence

The Nike has a presence across various international locations and countries. The Nike has expanded its manufacturing operations across different countries in Asia and Europe. The Nike uses these manufacturing sites as central supply locations and hubs for different regions as well (Abratt & Bendixen, 2018).

Branch network

The Nike has a strong branch and store network across different regions in various international locations – including the UK, USA, China, and Australia, and across Europe. The Nike has developed its store network in locations that offer the company high visibility, and promise a high customer footfall (Baines, Fill, & Rosengren, 2017).

Supply chain management

Owing to the global presence, and international operations, the Nike also has an internally managed supply chain network. The supply chain network ensures consistently high quality, and timely manufacture and delivery of the products offered by the Nike to retailers, distributors, as well as end consumers (Chernev, 2018).

Risk management

The Nike has developed an internal means and system for identifying, managing, and mitigating environmental risks and threats. These risks include fluctuation in prices of raw materials, as well as political instability in regions where it operates. The internal risk management system for Nike comprises of continuous observation of the environment, and development of proactive strategies, as well as training of its personnel for responding to the same (Deepak & Jeyakumar, 2019).

Technological advancement

The Nike makes use of technological advancement for achieving economies of scale. The presence across various global locations has allowed the Nike to develop a seamless technological infrastructure for knowledge sharing. Nike is also able to implement processes of improvement internally (Iacobucci, 2021).

Use of AI

The Nike also makes use of AI for improving internal efficiencies and processes as well as for improving the consumer experience. The use of AI internally has allowed the Nike to reduce the error rates, and improve logistic management, for example.

User experience

The Nike focuses on enhancing the user experience for maintaining loyalty. The use of AI especially has allowed the company to improve the user experience through providing 24/7 customer support, as well as developing relevant purchase prompts for consumers based on their browsing histories (Sahaf, 2019).

Customer service

The customer service offered by Nike is an important and valuable resource that helps the company differentiate its offerings from that of the competition. The Nike offers 24/7 online support to consumers, and has a team of trained personnel for providing customer services on physical locations (Gillespie & Swan, 2021).

Research and development

The Nike makes a substantial investment in research and development. The research and development allows the Nike to stay updated with the market and consumer trends – thereby allowing the Nike to tailor its offerings and marketing efforts accordingly. The research and development also allows the Nike to improve its production processes, and improve efficiency levels continuously (Grewal & Levy, 2021).

Product offering

The Nike focuses on maintaining consistent quality for its product offerings. Moreover, the Nike also ensures that the product offerings meet the consumer needs and demands. For this purpose, it engages in the localization of its product offerings across different regions and locations (Abratt & Bendixen, 2018).

Financial resources

The financial resources and capability at the Nike allows minimum dependence on debt. The Nike has a higher dependence on equity for expansion and development purposes. This ensures lower vulnerability of the company, and gives the Nike increased freedom and independence for pursuing business objectives and goals (Groucutt & Hopkins, 2015).

Marketing activities

The Nike engages in marketing activities for appealing to its target audience across different countries and regions. The marketing communication is tailored to take into account different cultural considerations across these locations and regions. Moreover, the Nike ensures to appeal to the functional as well as emotional fronts of the consumers - using insights from its research and development activities (Kotler & Keller, 2021).

Rare

Rare resources for the Nike are those which are not easily and readily available for the competing players. These resources are rare for the Nike because of the firm’s unique position and access to the resources – which is otherwise difficult and challenging to acquire. This makes rare resources cost-intensive for other organizations (Phillips & Moutinho, 2018).

Manufacturing and distribution licenses

Nike has gained special licensing permissions for manufacturing and distribution in various regions ad countries – some of which are more remote and stringent towards international firms. The Nike has been able to do so based on its strong team of lawyers and policy interpreters, as well as because of the goodwill it has developed over the years (Kotler & Keller, 2021).

Access to raw materials

Nike has access to different raw materials that support its quality maintenance of product offerings. The access to raw materials for the Nike is largely based on the company’s unique position and its investments in research and development. Both of these have allowed the Nike to substantially develop its capabilities (Buchanan & Huczynski, 2019).

Equipment

The Nike has access to world-class equipment. This equipment and technology is not readily and easily available to its competing players. The Nike has access to this equipment for increasing efficiency, and improving economies of scale based on its vast operations, and partnerships with various regional governments (McShane & Glinow, 2017).

Intellectual property

The Nike has multiple policies regarding intellectual property, and thoroughly implements policies and regulations regarding the same internally. In addition, the company also follows external regulations for intellectual property protection. This allows the Nike to sustain its creativity and successfully continue to experiment with new product ideas (Chernev, 2018).

Patents

The Nike has different patents registered under its name. This is done by the Nike to safeguard its innovative capacities, and maintain regulated intellectual property rights. This helps the Nike stay ahead of the competition, and secure new technology and ideas to maintain the first mover, and unique competitive advantage over other players (Wunder, 2019).

Sustainable manufacturing

Based on its unique environment for development and innovation, as well as because of its engagement with advanced technology and equipment, the Nike has developed processes for successful sustainable manufacturing. This resource allows the company to appeal to green consumers, and at the same time, maintain higher internal efficiencies and profitability (Tonelli & Cristoni, 2018).

Eco-packaging

The Nike is also successfully engaging with, and producing eco-based packaging. This resource is important for the Nike, and allows it to improve its processes as well as brand perception. Competing players do not have access to the needed intellectual property, ideas, or machines to successfully, and efficiently apply this to their internal business processes and offerings (Tonelli & Cristoni, 2018).

Inimitable

Inimitable resources for the Nike are those which are hard and costly to copy and imitate by other players, and competitive rivals in the industry. Inimitable resources offer a long-term competitive advantage to Nike. Nike has different resources that are hard to imitate, or are perfectly inimitable largely because of factors of historical context; and unique historical conditions; causal ambiguity, and/or social complexity (Stead & Stead, 2014).

For Nike, a number of resources are inimitable because of their uniqueness to the company itself. These include:

Organizational culture

The organizational culture is unique to the Nike – developed through the Nike’s core values and beliefs, as well as its structure and managing style. The culture of the Nike leads to improved employee performance, and facilitates organizational success (Abbas, 2017).

HRM policies and activities

The Nike has also built a strong HRM department internally which supports the business, and its strategies. This support is extended through various HRM functions such as hiring, and training activities and opportunities. These activities are aligned with the business goals and strategic direction for ensuring high organizational performance, and the right talent match for the Nike (Mariappanadar, 2019).

Compensation Framework

The Nike also has a unique compensation system to support internal activities and functions. The compensation system is rooted in employee motivation and needs. The Nike invests in understanding the needs of the employees, and then designs rewards accordingly- linking them with the job responsibilities and tasks (Mariappanadar, 2019; DuBrin, 2013).

Brand equity

The Nike has developed strong brand equity over time. The Nike has successfully, and continually delivered on its brand promise by providing high quality offerings. This has allowed the buildup of consumer trust as well as positive brand perception leading to higher brand equity for Nike (Kotler & Keller, 2021).

Brand loyalty

The Nike has a high brand loyalty. Based on its offerings, quick customer service, and after-sales service, the Nike has developed a high brand loyalty amongst customers. These customers conduct repeat purchases of the Nike’s offerings and products because of higher satisfaction levels (Baines, Fill, & Rosengren, 2017).

Brand awareness

The marketing activities of the Nike are carefully tailored and targeted, and based on the emotional appeal that the company provides in its offerings to the customers. This in turn leads to a positive buzz. The viral buzz, as well as positive marketing efforts, have led to high brand awareness for the Nike amongst not only its own target customers, but also amongst secondary groups (Sahaf, 2019).

Goodwill

Nike has continually delivered on its promise, and has thus developed a positive brand perception. As a result of this, the Nike has built positive goodwill over the years. This goodwill allows the Nike to confidently launch new products in the market that consumers readily accept and consume (Grewal & Levy, 2021).

Innovation

The Nike continually engages in innovation and creativity as well. The company has a team for business development that engages in the process of new product design and development. The Nike also invests in the creative development of its employees for facilitating and encouraging new idea generation, and emphasizes on employee empowerment for the same purpose (McShane & Glinow, 2017).

Organizational leadership

The Nike has a supportive leadership. The leadership style at Nike is participative which encourages discussion, and creates trust and a positive work environment. In addition, the leadership at Nike is transparent and accessible, and works closely to improve and build the organizational culture through promoting core beliefs and values (Schein, 2010).

Employee commitment

The employees at the Nike display high levels of job satisfaction. This is because the Nike continually engages the employees with challenging tasks, trainings for personal and professional development, as well as motivational work responsibilities and teamwork. This results in increased levels of job satisfaction amongst employees of Nike, leading in turn to high levels of employee commitment (Mariappanadar, 2019).

Branding activities

The Nike invests in branding activities for building its brand as well as a positive consumer perception. These branding activities for the Nike involve not only the marketing communications, but also the development of a suitable marketing mix for the company. The branding activities help the Nike increase brand awareness, as well as increase its reach and penetration amongst the target audience (Iacobucci, 2021).

Organized

The Nike is able to capitalize on different opportunities based on the various resources available to it through being organized. This factor of the strategic framework evaluates and assesses how organized and structured the Nike is. The factor also reviews how the Nike is able to benefit from the various resources that are available to it towards building sustainable competitive advantage (Chatzoglou, Chatzoudes, Sarigiannidis, & Theriou, 2018; Stead & Stead, 2014). This part of the strategic framework for the Nike allows it to identify and examine different resources it has closely to be able to optimally benefit from them.

Physical infrastructure

One of the best ways through which the Nike is able to capitalize on the various internal and external opportunities is through the development of its physical infrastructure. The infrastructure of the Nike allows it to develop economies of scale as well as enhance its various manufacturing and operational processes (Buchanan & Huczynski, 2019).

Technological infrastructure

The technological infrastructure of the Nike allows it to benefit from the latest technological trends such as the inclusion of artificial intelligence and automation in its operational processes and schedules. The technological infrastructure has facilitated the Nike to improve its production and efficiency rates as well as reduce its errors. The technological infrastructure also led the Nike to benefit from potential advancements such as social media marketing and e-commerce (DuBrin, 2013).

Network support

The Nike is able to further benefit from consuming of various resources available through the presence of a strong internal network. This network includes not only the physical and technological infrastructure but also the organizational network and alignment of operations locally and globally. This coordination and network allows the Nike to realize its strategic goals (Phillips & Moutinho, 2018).

Training and development

As the Nike is exposed to new resources and builds on old resources, it is important to update the skills of the employees. The Nike continually invests in the training and development of its labor force. This ensures that the Nike stays ahead of the competition.

The Nike maintains frequent internal training and development opportunities to help the growth of employees and improve their performance (Mariappanadar, 2019; Stead & Stead, 2014).

International Exposure

The growth and expansion of the Nike and its business along international fronts have given it considerable exposure to understand different cultural requirements and operational details. This exposure is important for the Nike to allocate resources accordingly towards different regions and production sites; and manage them in the most efficient and effective manner possible (Kotler & Keller, 2021).

International learning

The international exposure that the Nike also enables increased sharing of knowledge across borders. This knowledge sharing and knowledge development allows continuous learning internally for the Nike. This learning then helps the Nike to work towards to the development of strategic structures within the organization as well as design more sophisticated management styles and tools to improve the management of resources (Daneshmandnia, 2019).

Organizational hierarchy

Optimization of the resources available to the Nike is because the organization has a flatter hierarchy which leads to easier access to the leadership and quicker decision-making processes. This enables higher employee empowerment and participation as well as leads to increased organizational commitment and responsibility (Deepak & Jeyakumar, 2019).

Supportive leadership

The leadership of the Nike is largely supportive and ensures the development of the management team and the employees. The support of the leadership within the Nike allows space for quicker decisions as well as makes room for capitalizing on the opportunities and mitigating risks accordingly. This in turn allows for improved Resource management and optimization (Schein, 2010).

Effective change management processes

The Nike engages all employees in the change management process and ensures that there is transparent communication regarding the need as well as the implementation of the same. This allows the Nike to manage resources more effectively as well as build on other resources to help the company achieve its strategic and business objectives and goals (Pollack & Pollack, 2015).

Conclusion

The VRIO assessment is an important strategic tool that allows the Nike to identify various resources which can lead to different forms of competitive advantages. The VRIO assessment and model allows the Nike to identify resources that can be used for developing sustainable competitive advantage over the long term as well as allows the Nike to invest in, and build other resources for the same purpose.

In addition, the strategic tool allows managers of the company to identify resources which can lead to competitive disadvantage. As such the VRIO assessment is an important source of resource evaluation as well as identification of the same.

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