1.

Critically evaluate the manufacturing firms strategy in the international marketplace in terms of new

product offering strategies and business performance

2.

Discuss and analyse the challenges of competitive positioning through new product introduction and

explain how the Product life cycle

provides a framework to analyse product stage and make investment in a

product.

3.

Systematically, identify key stages of the product development process, with

particular emphasis on simultaneous consideration of customer needs, product design, and manufacturing
strategy.

Table of Content
Table of Content.................................................................................................................................................1
Introduction........................................................................................................................................................2
Question 1..........................................................................................................................................................3
Nikes Manufacturing Strategy......................................................................................................................3
Lean Manufacturing Strategy.....................................................................................................................3
Third Party License....................................................................................................................................3
Question 2..........................................................................................................................................................4
The Product Life Cycle..................................................................................................................................4
Development Stage....................................................................................................................................4
Introduction stage.......................................................................................................................................4
Growth Stage..............................................................................................................................................4
Maturity Stage............................................................................................................................................5
Decline stage..............................................................................................................................................5
Development of new products critical factors...............................................................................................5
Measure success of a new product development...........................................................................................5
Challenges of new product development.......................................................................................................6
Question 3..........................................................................................................................................................7
Key stages of the product development process............................................................................................7
References..........................................................................................................................................................9

Introduction
At Nike, we believe it is not enough to adapt to what the future may bring were creating the future we
want to see through sustainable innovation. (Nike Inc., 2016) This statement is attributed to Mark Parker
the CEO and President of Nike Inc. the world leading manufacturer of sports foot wear and apparel. This
case study captures the product development of one of Nikes ace product the Nike Free from its
conceptualization through to its customers.
I will critically look at the manufacturing strategy of Nike Inc. and assess how it is aligned to on of its new
product development in the international marketplace and also discuss and analyse the challenges of
competitive positioning with a new product and how it affects the project life cycle and finally examine the
product development process of Nike in the development of Nike Free Footwear

Question 1
Nike Inc. is a global leader in the sports footwear and apparel industry. It operates in a highly competitive
industry with its major competitors being Adidas. According to (Ozanian, 2015) a Forbes Staff in 2015 Nike
was ranked as the number one most valuable business brand in sports in the world. The success of Nike Inc.
is hinges on the companys mission which is BRING INSPIRATION AND INNOVATION TO EVERY
ATHLETE* IN THE WORLD. *IF YOU HAVE A BODY, YOU ARE AN ATHLETE (Nike Inc., 2016).
This mission enjoins Nike to deliver top class sports footwear and apparels for eight major categories of
sporting areas which makes up to 88% of its revenues including Running, Soccer, Basketball, Mens
Training, Womens Training, Action Sports, Sportswear, Golf and other sporting areas.

Nikes Manufacturing Strategy

Lean Manufacturing Strategy
The largest manufacturer of sportswear and apparels does not own a factory of its own, it however outsource
the manufacturing of its products to third party independent contract manufacturers across the world. As of
the year end of 2015, Nike Inc. was engaging 692 independent factories against 795 in 2013 and had
increased the volumes of the products by 11% (Nike Inc, 2016). This achievement can be traced directly to
its lean manufacturing strategy to leverage on its low cost leadership and waste reduction. Through the lean
manufacturing strategy Nike is able to make additional saving of $0.15 per every unit of product produced.
Form the 2011 Sustainable Business Report, through lean manufacturing strategy, the firms contract
manufacturers have recorded the following gains since 2002 when Lean strategies were adopted:

50% lower defects rates

Between 10% to 20% increase in productivity
40% reduction in lead times
30% reduction in the time required for a new product introduction (Nike Inc., 2012).

Nike Inc. Lean strategy of doing things is pivoted on the people they work with and Lean helps their people
in the following ways:

Leadership: Lean is the motivating factor for factory leaders to achieve simulate business
performance
People: continuous improvement is the goal of every worker
Process: factory processes are predictable and agile in response to customer demand (Abilla, 2014)

Third Party License

Nike apart from its lean manufacturing strategy also gives third party licenses to other companies to
manufacture and sell some of its product lines using the Nike trademark (Soni, 2014).

Question 2
In a hypercompetitive industry like the footwear and apparel industry there is always a drive to improve the
competitive positioning of the firm through low cost strategies, differentiation and product innovation by
leveraging on sustainable success factors that cannot be easily replicated by the completion

The Product Life Cycle

The Product Life Cycle Model is used to detail the evolution of a new product from its development,
introduction through growth, maturity and finally to the point where it decline or eventually die in that order
as illustrated below and how it impacts on the market.

Development Stage
The Development Stage can be one of the most expensive stage of the life of a new product. The success of
the product hinges on this stage since it may be the life line to the survival of the company.

Introduction stage
The Introduction stage is the stage the product has being developed and ready to be commercialized. Depend
on the type of industry and the product a lot may be spent in promotional to make the product known to the
market. A good product that that has the potential to be a cash cow may die prematurely if is not well
introduced into the market.

Growth Stage
Growth Stage is where the firm starts to gain position in the market and attains good profit margins on the
product and can leverage on economics of scale to reduce its manufacturing cost. The sustenance of the
growth is dependent of the level of promotional and marketing activities of the firm.

Maturity Stage
At the Maturity Stage the firm would have peaked and its main activity is to maintain its market share by
further or continuous price leadership and consolidation its position with product differentiation to remain
relevant in the market. There may be stiff competition of other products to capture a share of the market that
it holds. This may lead to reduction in market share and profit margins

Decline stage
The Decline stage may see the further fall in market shares and decline in profits and eventually to the total
withdrawal of the product form the market. However this stage may present other opportunities for the firm
to exploit example is focusing on new cheaper markets which hitherto the profits margins may not have
justified making investments in those markets (Living Better Media, 2016).

Development of new products critical factors

In order to achieve the development of the new product the critical factors that are needed is as follows in
decreasing order of importance:

The product must be of a superior value and of high quality, meeting and possibility exceeding users
needs and expectation with a competitive price commensurate to its performance and characteristics
that can be easily explained.
Conducting a thorough preliminary market studies
Conducting preliminary technical assessment, concept development and testing
Have a dedicated and committed team lead by a proactive leader
Ensuring that the firm does not run from medium risk levels at the inception
Technical assessment, product development internal product testing, trails production and start up
Rely on Research and development as the major driver for customer/product synergy
Concentrate efforts on doing a quality at the initial stages of predevelopment
Leveraging on core competency to

Measure success of a new product development

According to (Cooper & Kleinschmidt, 2000) the measure success of a new product development is
evaluated by

High market share

Profitability
Fast time to market
Technical success
Ability to reduce cycle time
Improvement in efficiency
Opening of new windows of opportunity
5

Challenges of new product development

Not withstand the above, the competitive position of a firm is influence by a lot of factors but not limited to
the underlisted especially with the introduction of a new product.

Global Perspective- the global nature of the market poses a big challenge to the development of new
product, where the firm may not be able to effective assess the real competition or even what the firm
may be think as a new product has being produced at another part of the globe.
Meeting the customers real need It is import to ascertain that the new product is actually meeting
the need of the customer. The global
Time the time for a new product to be introduced can be very crucial to the success or failure of a
product. Where the new product may have a low switching cost, delaying in the introduction of the
product can lead to serious loses in revenues and even market share.
Price The pricing strategy of a new product can pose a challenge for the firm. In the event where
the new product is coming to compete with an existing product with a bigger market share, the firm
may run the risk of under-pricing to enter the market but may lead to losses in revenue especially if
the new product is not able to penetrate the market as anticipated.
Technology Technology advancement in todays world is the game changer therefore a firm may
find that the time and effort that they may have invested in a particular technology has become
obsolete just at the brink of its introduction which leads to a lot of uncertainty which can cause the
delay of the new product or a total abandonment of the new product introduction.
Distribution Channels The question of reliability of old distribution channels being appropriate for
the distribution of a new product may arise due to uncertainty of those channels whether selling the
new product will be worth the time, space and resources.
Change aversion More people not want to change from what they know and are comfortable with
and especially when the new product comes with a technology that is not known and tested over
time. This can lead to total rejection of the product or a very slow acceptance rate.

It is important to note that for a firms product to be developed and successfully introduced and grow on the
market and maintain a peak sales or performance it must continually seek customer feedback for continues
improvement of the product else the decline and may eventually die.

Question 3
Key stages of the product development process
The key stages of the product development process is as follows

It is important to think of the process as being iterative or cyclical especially stages one to five.
In the case study Nike Inc.
At the Idea Generation stage anticipated the need for a shoe which had a
cushioning system which lasted longer than foam, reduced shock and distributed pressure
(www.afrbiz.com.au, 2016)

References
Abilla, P., 2014. Nike Lean Manufacturing: An Example of Good Policy Deployment. [Online] Available at:
http://www.shmula.com/nike-lean-manufacturing-example-good-policy-deployment/13755/#fn-13755-1
[Accessed 5 August 2016].
Cooper, R. & Kleinschmidt, E.J., 2000. New Product Performance: What distinguishes the star products.
Australian Journal of Management, 25(1), pp.17-45.
Living Better Media, 2016. Product Life Cycle Stages. [Online] Available at: productlifecyclestages.com
[Accessed 3 August 2016].
Nike Inc., 2012. NIKE, INC. FY10/11 Sustainable Business Performance Summary. Business Report. Nike
Inc.
Nike Inc., 2016. About Nike. [Online] Available at: http://about.nike.com/ [Accessed 4 August 2o16].
Nike Inc., 2016. About Nike - Sustainable InnovationNike News - Sustainable Innovation. [Online] Available
at: http://about.nike.com/pages/sustainable-innovation [Accessed 3 August 2016].
Nike Inc, 2016. SUSTAINABLE BUSINESS REPORT. Business Report. Nike Inc.
Ozanian, M., 2015. The Forbes Fab 40: The World's Most Valuable Sports Brands 2015. [Online] Available
at: http://www.forbes.com/sites/mikeozanian/2015/10/22/the-forbes-fab-40-the-most-valuable-brands-insports-2015/#6cd2047d2e2a [Accessed 4 August 2016].
Soni, P., 2014. An Overview Of NIKEs Supply Chain And Manufacturing Strategies. [Online] Available at:
http://marketrealist.com/2014/12/overview-nikes-supply-chain-manufacturing-strategies/ [Accessed 3
August 2016].
www.afrbiz.com.au, 2016. Nike: Product development from concept to customer. [Online] Available at:
http://www.afrbiz.com.au/case-studies/nike-developing-nike-free.html?print=1&tmpl=component [Accessed
2 August 2016].