Vertical and Horizontal Boundaries Firm Analysis of Nike

Vertical and Horizontal Boundaries Firm Analysis of Nike
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Vertical and Horizontal Boundaries Firm Analysis of Nike
Nike's horizontal boundary refers to the products the company sells and the quantities of each product. Nike offers a wide range of products, including apparel, footwear, and equipment. As a result, Nike has a broad product catalog that allows it to tap into numerous niches and gain a competitive advantage (Jiang, 2019). The company also sells a variety of quantities of each product, making it accessible to a wide range of consumers. For instance, its limited series sneakers are available in very small quantities, while its other sneakers are available in large quantities (Strähle & Kriegel, 2017). Nike's horizontal boundary allows it to appeal to various consumers and generate a high degree of customer loyalty. Furthermore, Nike's horizontal boundary allows the company to experiment with new products and formats without affecting its core business. This flexibility is critical because it allows Nike to respond to changes in the marketplace and remain competitive.
According to Wang and Chen (2018), a firm's horizontal boundary allows it to target a specific market and generate high revenue. Nike's horizontal boundary is significant because it allows the company to generate a wide range of products and quantities. More importantly, it allows the company to scope new market opportunities and products (Jiang, 2019). This flexibility is critical because it allows Nike to stay ahead of the competition and react quickly to changes in the marketplace (Kammerer et al., 2020). Nike's horizontal boundary also allows the company to identify scale economies and realize cost savings. For instance, Nike can produce its products in large quantities and enjoy economies of scale. This is a key competitive advantage because it allows Nike to sell its products at a lower price point.
On the other hand, Nike's vertical boundary includes the company's decision to outsource the production of its products to third-party manufacturers. According to Deng and Xu (2022), Nike has outsourced the production of its products to countries like Indonesia, China, and Vietnam for many years, which has helped Nike stay competitive in the global marketplace. Outsourcing allows Nike to maintain a high level of quality and customization for its products while also saving on costs. Nike has been able to use its outsourcing strategy to achieve a high level of profitability. According to Wang and Chen (2018), vertical boundaries can exacerbate costs and lead to inefficiencies within the firm. For instance, making everythi...