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Subcontractors are important to Nike; without them, Nike would have to pay a lot more in producing Nike's shoes. However, subcontractors can become a problem when they decide to use the information and capabilities they have learned to sell their own version of essentially the same product. To combat this, Nike has set up various ways to stop its subcontractors from making and selling their own shoes on the market.

One way that Nike accomplishes this is its ability to change suppliers on the fly. That way, they can always choose the supplier with the lowest cost. (Dyer et al., 2022, pg. 123) This stops the suppliers from getting too familiar with Nike's shoes to the point where they may decide to make shoes themselves using whatever design information they do have. It also limits supplier bargaining power. To go along with changing suppliers, Nike also changes the design of its shoes annually, meaning that if subcontractors were to try to make and sell their own shoes, they would start making shoes that have old designs and technology. (Dyer et al., 2022, pg. 126) These outdated shoes are probably not shoes people would choose, especially when trendy customers can get the newest designs and technology that is in style at the current time.

Next is: "Nike also writes contracts with suppliers that prohibit them from making shoes based on Nike's designs or intellectual property." (Dyer et al., 2022, pg. 126) This way, the subcontractors are obligated to not use Nike's designs or it will be considered a breach of contract and that would be devastating for the subcontractors.

Finally, one thing that Nike has that these subcontractors do not is a supreme brand image. (Dyer et al., 2022, pg. 126) The company is liked across the globe with its shoes being a symbol of status. I'm not saying that they couldn't, but many of these subcontractors would have an incredibly hard time rising up in brand awareness to the point where they can effectively compete with Nike. Not to mention all of the other competitors that the subcontractors would have to go through as well, such as Adidas. These are all ways Nike is able to stop subcontractors from entering the shoe market.

References:

Dyer, J. H., Godfrey, P., Jensen, R., Bryce, D. (2022). Strategic Management: Concepts and Cases (4th Edition). Wiley