Evaluating Nike's Strengths and Weaknesses: The Resource-Based View

VRIO Framework of Nike

In determining the true resource-based, internal sources of Nike’s competitive advantages, a VRIO Framework is necessary. By singling out those internal resources that are heterogeneous (difference between Nike’s resources and the competitions) and immobile (the competition’s ability to mimic Nike’s resources), we can see where Nike’s true strengths and weaknesses lie.

Value – Does Nike’s resources and capabilities enable the firm to respond to environmental threats or opportunities? Yes, Nike has been the global leader of the athletic textile industry for some time, garnering much experience and know-how along the way. The massive vertically integrated nature of Nike, from research and development to the manufactured finished product, has allowed them to pursue totally new markets in a first mover fashion (casual clothing fashion lines like the Cole Haan) or enter established markets and ward off competition threats with their market leader superiority (Nike Dri-Fit sweat wicking material versus Under Armour Charged Cotton sweat wicking material). By utilizing their knowledge base, Nike can use their resources and capabilities to exploit numerous market opportunities.

 

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Rarity – Are Nike’s resources currently controlled by only a small number of competing firms? Yes, Nike’s ability to invent and reinvent their entire product list for the better is unmatched in the industry. Granted others might be able to gain temporary competitive advantages due to a micro-focused view on one particular market segment (for example CCM hockey equipment), but Nike’s resources and capabilities allow it to move swiftly to either copy or make better that original company’s attempt at competitive parity (Nike-Bauer hockey equipment merger).

Imitability – Do firms without a resource face a cost disadvantage in obtaining or developing Nike’s resources? Yes, the ingenuity of Nike’s products involves tried and true knowledge developed through the extensive research and development labs housed within the company that is expensive to duplicate. Even if a competitor does successfully imitate Nike, they then have to fight the market perceptual dominance that Nike has over its customers within its market. The Swoosh is all powerful within the market and therefore unique in its industry. 

Organization – Are Nike’s other policies and procedures organized to support the exploitation of its valuable, rare, and costly-to-imitate resources? Most definitely. Nike’s leadership has organized the company in such a way that its innovative nature consistently produces sustaining profitable results within the market. Being ahead of the curve of the athletic footwear market some 50 years ago gave it a foothold into not only shoes, but all things athletic. Sustained competitive advantages will continue as long as Nike continues on this path.

In conclusion, it is apparent that Nike has a sustained competitive advantage. The distinctive competence within Nike’s resources and capabilities allow it to be risky and innovative but at the same time remain profitable with current and traditional offerings. Unless extreme unanticipated changes within its market occur, Nike will be a market leader from now and into the future.