Final answer:
Nike's competitive advantage over Adidas was attributed to effective outsourcing, focus on core products like athletic footwear and apparel, and fostering partnerships with subcontractors. These strategies enabled Nike to maintain low production costs and offer competitive pricing while growing its brand.
Step-by-step explanation:
The question explores the key sources of competitive advantage that allowed Nike to surpass Adidas as the worldwide leader in athletic shoes. Some of Nike's strengths include strategic outsourcing, focus on core products, and effective marketing and branding. Specifically, Nike leveraged the benefits of manufacturing in regions such as Dongguan, known for its high production of athletic shoes and low labor costs. By outsourcing production and paying workers more than the next-best alternative, Nike was able to maintain competitive prices without compromising on profitability. Adidas, on the other hand, faced challenges due to higher labor costs, which significantly impacted their cost structure.
Furthermore, Nike's focus on athletic footwear and apparel allowed them to specialize and innovate within these categories, generating a strong brand identity and loyalty. Additionally, Nike's relationships with subcontractors developed into partnerships, which meant that subcontractors were aligned with Nike's goals rather than being seen as competitors. This collaboration may have contributed to efficiency and product quality enhancements that bolstered Nike's market position. Nike's production model and cost structure, similar to that of Amazon's, played a crucial role in undercutting competitors' prices, ultimately leading to its success in the athletic footwear market.