Strategic Case Analysis
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Solved Case #2: Should Nike embrace
Costco?
Nike loves to JUST DO IT. To counter the competition
from Adidas, who recently acquired Reebok, Nike would
like to sell low-priced shoes through Costco and other
whole-sellers in US and Europe, just like Adidas does.
Some executives within Nike think that it will dilute the
Nike brand, if they go through these discount whole-
sellers. Other executives think that it will boost revenue
and profits for years to come. Will this move dilute the
Nike brand? Should they shake hands with Costco and
other discount whole-sellers? What do you think?
Solution
(Note: The client's / interviewer's words are in italics, and the
consultant's words are in bold.)
Consultant: How strong is the Nike brand in Europe vis-à-
vis Adidas?
Client: Wow, I love the way you have jumped right into the
cesspool. Let’s keep the focus on the worldwide footwear
market. Adidas, now also in possession of Reebok, is a
stronger brand in terms of market reach. Out of the total
market they control together, Adidas-Reebok owns 55% and
Nike owns 45% in Europe. Together, they control 75% of the
footwear market in Europe. Does that answer your question?
Consultant: Yes, it does. I know that Nike is a stronger
brand in US, I was just curious to find out who was
stronger in Europe, considering Adidas’ European roots.
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