Ch 10

Being a company that is continually seeking out sources of competitive advantages, Nike has historically implored merger and acquisition strategies when the proper alliances present themselves.  The main reason Nike implements these plans is to ultimately create economic value in its exploitation of the competitive opportunities that a target firm creates for the company, which in turn increase the economic profits for its shareholders.  Nike also implements this strategy to gain market power in product markets and to take advantage of the potential above-normal profits a merger and acquisition can create.

Currently, Nike owns four key subsidiaries (Cole Haan, Hurley, Converse, and Umbro) but I would not be surprised if Nike continues expanding on their merger and acquisition/diversification strategy.  With reported free cash flows increasing substantially over the past decade (from $575.5 million in 2001 to $4.5 billion in 2011: an appreciation of about 680%), Nike has an awful lot of reserves at its disposal for future merger and acquisition plans.