DIVERSIFICATION AND THE MULTI-BUSINESS COMPANY

    Nike’s vision statement of: “To experience the emotion of competition, winning, and crushing competitors” to learn that Nike’s grand plan extends far beyond running shoes and athletic wear.   1) Can such expansion of a firm’s business definition go too far? Even in Levitt’s day, it was questionable whether, for instance, a railroad company really had the expertise to run an airline. Looking at Nike today, what businesses do you think are viable expansion opportunities? Justify your choices; in doing so, explain how, in terms of strategic fit, these expansions would benefit Nike. 2) Identify, and describe at least three (3) examples of strategic fit that Nike currently exhibits among its multiple divisions. Defend your reasoning. 3) Which, if any, of Nike’s business units could be considered cash hogs? Explain. Which, if any, of Nike’s business units could be considered cash cows? Explain. 4) Firms can often benefit from diversification into multiple product and service categories, because this strategy can help to create economies of scope. However, over-diversification can potentially damage a company’s image and bottom line. Be a devil’s advocate (one who argues an opposing viewpoint to test the decision) by cautioning Nike about the dangers of overdiversification. Provide all of the rationale necessary, including an example of another company that overreached and suffered because of over-diversification, so that you can be very persuasive in your recommendations to the Nike strategic leaders.