Nike Has Achieved Economies Of Scale

940 Words Apr 7th, 2016 4 Pages
subsidies. With such a grand scale of suppliers, Nike has achieved economies of scale. Nike ensures that their suppliers perform at the most competitive levels by implementing a performance measurement system known as the Manufacturing Index (MI). (Appendix) This index monitors quality, cost, delivery time and sustainability, and is frequently monitored each period. Suppliers who fall below a certain threshold – which they call the bronze level – have their contracts nullified.

Quality: Nike’s places strong emphasis on the quality of their products by reinforcing their tight measurement on their supplier’s performance. The company has long been known for their superior quality, reliability, and excellent designs. Furthermore, they capitalized on their high quality by investing heavily in marketing initiatives to increase brand loyalty and strengthen consumer confidence, which ultimately increases the consumer utility of their products. Creating a team of Nike Scientists devoted to continuously improving the quality of their products was only one part of their strategy. They also invested heavily in a quality control system known as the InfinityQS, which helps them identify areas of issue and monitor the overall quality of their products. (InfinityQS)

Innovation: In such a mature and competitive industry, continuous innovation is crucial to the success of the company as it gives a unique selling point that rivals do not have. Both product and process innovation are Nike’s…
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