Nike's Strategic Alliances

A big part of Nike's corporate strategy is their alignment with outside agencies in cooperating to develop, manufacture, and sale their products.  This practice is known as strategic alliances.  There are three categories of strategic alliances - nonequity alliances, equity alliances, and joint ventures - and Nike implements them all.

Most notably, Nike has entered into a nonequity alliance with Apple to meld sports with music and thus created the "Nike+ iPod" line of products.  Both companies utilize their areas of expertise and popularity to capture new markets and industries.  They share their unique resources and capabilities to create a cooperative competitive advantage that capitalizes on their differences in an innovative and profitable way.  Examples of this partnership can be seen with the Nike+iPod Sport Kit that wirelessly connects a removable "chip" in a person's Nike shoes with their iPod to allow a them to track their pace and workout audibly through the music player while working out.  Another example of Nike reaching into the technological realm is their partnership with Dutch-satellite navigation company TomTom and their creation of a line of GPS-enabled sports watches, Nike+ SportWatch GPS.

Nike also has many equity alliances with overseas partners, in particularly within their product design, distribution, manufacturing, and marketing processes.  Nike is a large global supplier of athletic textiles and outsources much of their supply chain as a result.  To that extent, Nike uses partners abroad to afford lower-cost entry into new, emerging markets, to manage new marketplaces and their uncertainties, and afford them the flexibility to exit declining markets as they see fit.  Nike coordinates efforts with these firms to appease local tastes (for example in Hong Kong, Malaysia, and Yugoslavia), use advanced production technologies (in Japan, Taiwan, and South Korea), and take advantage of lower cost suppliers (China, Philippines, and Thailand).  Most of these areas have strict governmental regulations toward foreign companies, so these partnerships are vital to Nike's global successes.

Aligning with another firm to create a totally new entity, a joint venture, is an area Nike has been a part of before too.  An example is Nike's joint venture with Royal Philips Electronics (the largest European maker of consumer electronics) to create the aptly named entity "Nike-Philips".  Combining both of their skills and abilities in a single firm, Nike-Philips creates "compact, lightweight, stylish MP3, FM, and CD players that leave you free to jump and run while listening to great tunes".  Both firms benefit from the agreement as Nike entered into new markets whereas Philips established a American connection for its products.