Business Growth - Exploring Growth Outside The Core
Golf ranks as one of the most brutal and demanding markets in the sports business. So, despite its fabled swoosh, Nike was regarded as an amateur when it decided in 1995 to branch out from shoes to golf apparel, balls, and equipment. Four years later, however, Nike had scored priceless marketing victories - not once, but three times running.
First, the British Open champ wore Nike's golf shoes in 1999. Next, Tiger Woods switched from Titliest golf balls, the leading brand, to Nike golf balls in 2000. And, finally, David Duval won his first major tournament just after switching to Nike golf clubs in 2001.
Nike's entry into the golf market appeared to be the business equivalent of sinking three successive holes in one. But those who had followed the company closely over the previous decade were not surprised. They recognized the formula that Nike has applied and adapted successfully in a series of entries into sports markets - from jogging to volleyball to tennis to basketball to soccer. Nike begins by establishing a leading position in athletic shoes in the target market.
Next, Nike launches a clothing line endorsed by the sport's top athletes - like Tiger Woods, whose $100 million deal in 1996 gave Nike the visibility it needed to get traction in golf apparel and accessories. Expanding into new categories allows the company to forge new distribution channels and lock in suppliers. Then it starts to feed higher-margin equipment into the market - irons first, in the case of golf clubs, and subsequently drivers. In the final step, Nike moves beyond the U.S. market to global distribution.
This formula, we would argue, is the reason that Nike pulled away from Reebok as leader in the sporting goods industry. In 1987, Nike's operating profits were $164 million to Reebok's $309 million, and Nike's market valuation was half the size of Reebok's. By 2002, Nike had grown its profits to $1.1 billion, while Reebok's had declined to $247 million.
Both companies had started out in the same business with the same manufacturing technology and comparable brand names. Yet Nike found a formula for growth that is used successfully again and again, while Reebok seemed to pursue a different source of growth every year with uneven results.
To learn more about how to sustain profitable growth, we recently conducted a five-year study of corporate growth involving 1,850 companies. We tracked specific growth moves and linked them back to individual company performance. Our research yielded two major conclusions. One was that most sustained, profitable growth comes when a company pushes out the boundaries of its core business into an adjacent space. We identified six types of adjacencies, ranging from adjacent links in the value chain to adjacent customers to adjacent geographies.
"Growth Outside the Core", Chris Zook, James Allen, Harvard Business Review, December 2003.
Related Tags: busin, christophe sevrain, cjps enterprises, medical device manufacturing, new technology medical device
Melih ("may-lee") Oztalay, CEOSmartFinds Internet MarketingWeb: www.cjps-enterprises.comEMail: melih@hsfideas.comAt CJPS Enterprises, we specialize in execution. Getting things done. Our approach is designed to give your company an unfair advantage.
Your Article Search Directory : Find in ArticlesRecent articles in this category:
- 5 Reasons That a Restaurant Should Use a Restaurant Recruiter
Have you ever noticed how many restaurants pop-up over time but then disappear just as quickly? Runn - Does Money Motivate?
Some say money can't buy happiness, but data shows that for those who can barely pay the monthly bil - Because Workforce Friendly Policies Payoff
Employer-sponsored wellness programs are becoming more popular as companies strive to maintain a hea - EAP Value
Life would be simpler if we could set aside our personal issues and emotional baggage when the workd - Hiring an Expert SEO Company to Improve Your Online Business
Search Engine Optimization or SEO Services are used to make your website or online business popular - Why Safety Training at Workplace is Important
Safety training at workplace should be one of the top priorities of your business. An effective safe - Team Building: Brain and Sweat to Attain Company's Central Goal
Are you one of those employees branded ineffective and unproductive? Reasons might be the sense of d - Security Alarm System
It is a must that houses and offices install a security alarm when we speak about safety reasons. Se - Workplace Safety Tips
When we speak of safety based on books, its importance is next to food. It is essential to all indiv - The Benefits Of Lease-to-own Properties
One of the hit real estate investments today is to buy properties that will later be put up as "leas
Most viewed articles in this category:
- A Map Mural for Your Business
Yay! That retail store you've been planning has finally opened its doors and you are officially in b - Attracting Customers Through An Improved Shopping Experience
So many new shopping malls and supermarkets are put up every year. Many more are already in business - "To Oz!": Leading a Resilient-High Achievement Organization
One of my favorite movies is "The Wizard of Oz" based on the book by Frank Baum. The story is about - 5 Critical Items Never to be Included in Cost Benefit Analysis
When dealing with decisions using Cost Benefit Analysis techniques it is very important to follow th - Collaboration and Change
I’m an expert on change and leadership, but my most popular speaking topic this past year, and - Workplace Gap
In your workplace, are you a manager with a smart group of people and they aren't responsive to your - Leadership - The Proper Relationship with Subordinates
In the army, "the men" are kept separated from those known as "the officers." This comes from the id - The 10 Most Asked Questions of Cost Benefit Analysis
When dealing with decisions using Cost Benefit techniques it is very important to follow the proven - Cubicle Space Planning
Space planning is an essential element of any project and efficient planning serves the dual purpose - Why Passenger Surveys are a Transport Operators Best Friend
Public transport operators who already use passenger surveys may not fully appreciate the multiple b