Management Information Systems: Nike Inc and Kiwi Company - Case Study Example

Name: University: Course: Tutor: Date: Management Information Systems Introduction According to Porter (p.124) Value chain refers to a collection of activities performed by a particular firm that operates in a specific market or rather industry, aimed at delivering valuable service or product in that certain market. Different business entities will exercise value chain in order to gain increased returns as well as provide quality goods and services to a specific market or to the end user (consumers). This concept of value chain was included in the competitive strategies paradigm as early as 1979. It is from Porter’s work that GVCs (global value chains) came into existence during the late 1990s. Emergence of these global value chains acted as a catalyst, accelerating change in international trade and investment. Companies practicing value chain in their business operations are in a competitive position and they can expand their business through FDI (foreign direct investment). Organizations induce MIS (management information systems) in their business activities to make value chain a success. MIS(s) is computer system that managers use for managing since they provide them with necessary information for managerial activities (Laudon 168). This essay seeks to explore how different companies have employed value chain and Porter’s Five Forces in their business operations in gaining competitive advantage in the global market. Brief description of two the targeted firms Company 1: Nike Inc. Nike, Inc. is a multinational corporation based in America that deals in designing, developing, manufacturing as well as worldwide selling and marketing of footwear, equipment, apparel, accessories and services (Gertner 2). This company is headquartered in Beaverton, Oregon and was founded by Phil knight and Bill Bowerman in1964, bearing the company name Blue Ribbon Sports. This company officially changed its name to Nike Inc. in 1971. This firm operates in the sports industry, whereby it provides athletic apparel and shoes. It manufactures sports equipment and based on current financial position, the company had an excess in revenue of US$24.1 billion in the fiscal year ending in 31st May, 2012. This shows how Nike Inc. has hit the sports industry and captured a larger market share compared to other firms in that same industry. The company has employed 48,000+ people on worldwide basis as of 2012. Considering the $ 10.7 billion brand value, Nike company has the most valuable and recognized brand among the sports business. This company has 800+ retail stores worldwide and an e-commerce site for selling its products. Nike Company is headed by William D. Perez who is the CEO and the president. The administration of this company is through centrally established control, where the various retail stores across the world have their own offices which are answerable to the top office at the headquarters (GERE 46). Managers from these retail stores represent the overall authority of the Nike’s president and whatever they do has to be in line with the set rules and regulations of the company. Retail stores managers are held responsible for anything that takes place within their stores and are answerable to the top office in Oregon. Managers here have been guided by a well established MIS in their decision making. Through the e-commerce system, managers gather required information about their products marketing, thus being in a position to make sane business decisions that are goal-oriented. Company 2: Kiwi (shoe polish) company Kiwi Company has been in existence since 1906 and its first product was sold in Australia. The word Kiwi has been used as a shoe polish brand name besides being the company’s name. Statistics show that by 2005 kiwi shoe polish had been sold in 180+ countries (Kronick 3). This company’s product has been dominant in United States and United Kingdom, where it has captured two-thirds market share. This company is owned by S. C. Johnson. Talking of holding two-thirds of the market simply implies that this company has captured 53% of the market share in this shoe polish industry. Considering this huge share, the company enjoys economy of scale and competitive advantage within the market segment it operates in. This company is also guided by a MIS in its operations. It is from this MIS platform that its regional managers are able to strategize on their operations since the relevant information about the market is made available for decision making. Their autonomous MIS makes this company more competitive and unique from business rivals. As pointed out by Parker (pp. 1-188), Kiwi Company has various sub-branches in the different countries under which the business operations are managed and controlled on behalf of the top office. Like the Nike Inc., the administration or rather management frame work of this company is somehow similar to that exercised in Nike Company. This is seen where the managers heading the offices in those various countries act under the legal mandate of the top office and they have to report back to it. This kind of management authority is centrally administered with top manager, the director of the company, supervising the company business from one point which is the top office. Orders will be relayed and implemented in this company in all the country-based offices through the leadership of locally appointed managers. This means the job procedures and regulations are universal and every manager controlling any regional established office is guided by the same rules and regulation as the rest of the managers. The company has locally established stores in every country it has invested in, thus being able to market its products efficiently. Value chain and Porters’ five forces to sustainability and competitiveness Tallon (p.42) argues that Value chain has been largely facilitated by Porter’s five forces of competition, especially in Nike Inc. and Kiwi (shoe polish) Company. Nike Company has exercised value chain in its primary operations. Cross border value chain has been prevailing in this company, where its various primary activities such as designing, branding, development, assembling, production of parts, and marketing are done in different countries globally. Based on Porter’s ‘threat of new market entrants’ force, Nike and Kiwi companies have been able to strategize on their activities to be unique and competitive. As this force put it clear to existing firms, profitable markets with high returns will always attract as many new firms as possible. Therefore, the existing firms will either shape up to withstand the competition or ship-out of the market. Existing incumbents or monopolies may lower down the entry rates of new firms, otherwise the abnormal profit levels will definitely trend towards zero and this poses a threat to value chain progress. Considering the Kiwi and Nike Company, these companies have been able to overcome this new entrants’ threat through their product differentiation strategies (Kumar 548). Kiwi product brand name has made marketing easier since people would want to know more about this name of a flightless bird. This makes the business operate on a more competitive scope. Nike Company is very well known through its product differentiation, where it takes full responsibility of designing its products with unique features such as the air-cushioned sole and single wrap-around piece (Prashad 65). This makes Nike’s product very unique from those of rivals, thus a customer is able to distinguish such original quality products. It is from this notion of product differentiation that customers get used to companies’ products and increase their loyalty. Providing differentiated products add on to the value chain of these two companies. This is because the end user is getting a high value product. Hence, new entrants’ threat is minimal since customers will not change their buying pattern in relation to their loyalty. Also, existence of entry barriers (high entry barriers and low exit barriers) and government policies may regulate the new entrants’ threat. Hence, Nike and Kiwi companies have prevailed in the global market based on their product differentiation that provides a competitive position for them. As Rice (p.382) argues, most businesses align themselves in such a way to ‘threat of product or services substitutability’. This is another competitive force by Porter, which basically involves rival firms producing homogenous products. This creates a room for product substitutability since the products are almost similar and offer same or rather increased satisfaction to the consumer. Taking an example of substituting traditional phone with advanced VoIP phone, this clearly illustrates how product substitutability can lead to elimination of business rivals’ competition. Nike Inc. and Kiwi Company are faced with such problem of product substitutability from its competitors like Adidas and Puma. However, these companies have been able to overcome this through offering quality differentiated products and consumer friendly prices. Also, the buyers’ loyalty help in fighting this product substitutability threat, where consumers propensity to substitute turns out to be very low. Hence, value chain prevails at all levels of production of these companies’ products. As Marketing (p.22) puts it clear that precisely in all marketing environment the firms are faced with ‘bargaining power of suppliers ’. In retaliating to this force, Nike Inc. has distributed its manufacturing activities to different firms. Therefore, in case of any input price hiking, the firm has an alternative of switching to other potential material provider. Paying employees well and presence of input substitutes wears off this threat of suppliers bargaining power. Kiwi Company has been able to overcome suppliers’ power by offering good payment in exchange for the input factor. Hence, the company value chain trails down from manufacturing stage up to the last stage of consumption. The other force is the ‘customers bargaining power’. If the business sets up and implements a customer loyalty program, then the pressure is reduced since customers have been used to a certain price pattern for the company’s products. Also, the loyalty makes them trust the company and any changes n price if any, the customers will not complain since the company is always acting for greater good of all. Hence, retain a value chain since consumers stick to their product. Nike Inc. and Kiwi companies have been dominant in all the markets they operate in. The ‘intensity of competitive rivalry’ force has been countered through various business strategies (Magretta pp.1-6). The use of value chain by these two companies has enabled them gain competitive advantage over their competitors in the respective industries they operate in. Based on MIS of these companies, they have been able to develop online marketing platforms as well as offline marketing channels. Like the Nike Company, it has been able to embrace the latest technology in its manufacturing process such as waffle tread pattern and single wrap-around piece. Kiwi being the single shoe polish provider in most of the countries it operates in, this has created monopoly dominance in the market, making competition low. Therefore, these companies have differentiated their products and services, thus eliminating the intensity of competitive rivalry. The combination of product differentiation and technology embracement has made these two companies successful in their area of expertise. Conclusion Value chain in Nike Inc. and Kiwi Company has prevailed since time in memorial and has made these two firms secure a competitive position in their respective industries. As the analysis of Porter’s five forces of competition show, different firms are able to build their competitive business strategies from these forces. This is because the forces pressure the firms to either shape up or ship-out of the market. Hence, firms will have no choice but formulate strategies that will make them acquire competitive advantage. MIS(s) has enabled these firms’ managers in making sound business decisions that integrate their operation effectively into the global market. It is from these management information systems that these firms have gained BI (business intelligence) in its operations. BI guides the firms in analyzing voluminous data easily and quickly so as to make decisions. Nike and Kiwi companies have exhibited a well developed BI since they have been successful in their business operations. Works cited "Kiwi." Marketing (00253650) (2012): 22. Business Source Complete. Web. 13 Feb. 2014. GERE, GARY. "Global Value Chains And International Competition." Antitrust Bulletin 56.1 (2011): 37-64. Academic Search Complete. Web. 13 Feb. 2014. Gertner, Moryosseff Iris. "The Value Chain And Value Creation." Advances In Management 6.10 (2013): 1-4. Business Source Complete. Web. 13 Feb. 2014. Kronick, Dorothy. "A New Low For Fakes: Shoe Polish." Crain's Chicago Business 27.23 (2004): 3. Small Business Reference Center. Web. 12 Feb. 2014. Kumar Das, Malay, and Prashant Saiwan. 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