Nike's Diversification Strategy

Nike is definitely a diversified company.  Their product offerings encompass virtually any sports' needs in apparel, equipment, and shoes.  Be it baseball or badminton, Nike has all the bases covered.  


Not only is Nike's product mix diversified, their actual total product offerings come from many other clothing-related linked firms that provide valuable economies of scope to exploit in the market.  Companies such as Cole Haan (a luxury brand that provides high-quality men's and women's clothing and accessories) and Hurley (a youth lifestyle brand that provides clothing and accessories geared to the surfing and skateboarding demographic) are examples of Nike's related diversification.  All of these companies under Nike's guidance can be termed relatedly constrained as corporate management only pursues industries that share numerous resource and capability requirements (such as technological and distribution linkages) within Nike's original corporate edict and can be linked easily linked by such.  Nike uses their diversification to spread out risk and to capitalize on potential profitable opportunities.

Cole Haan's Wingtip Oxfords with Nike's Lunalron  Cushion 

Being a huge global outsourcer, Nike also implements supplier diversification across the globe.  Nike uses manufacturers in as many as 35 different companies (the far east region primarily: China, Indonesia, Thailand, and Vietnam) to produce its product lines.  This gives Nike the flexibility to move into emerging markets as they see fit.  The financial economies of scope are realized through this flexibility by reducing risk and providing tax benefits that afford Nike even greater potential economic margins.  


By diversifying itself along these lines, Nike has created a sustainable corporate strategy that will lead to profits for all of its stakeholders now and into the future.