Nike Company Analysis

Nike Inc. International Strategic merchandise 8 Prep atomic number 18d for 22-03-2009 Prep ard by T satisfactory of contents Case summary3 abbreviation Growth strategy4 Competitor analytic thinking6 tog out analysis8 quintet forces model9 Nike Case Summary Nike is a study(ip) publicly traded sportswear and equipment provider ground in the United States. It is the macrocosms leading supplier of acrobatic position and app arl, and a major retracer of sports equipment. They realize a commercialise shargon in the United States surpassing 40%. Nike excessively distri justes its products outside the US. In 140 countries, Nike conveys products through indep depotent sellers , distri merelyors and so onIn the ever changing commercialises, Nike is face multiple ch everyenges to re main(prenominal) mart leader. justt Locker was al courses a slap-up partner for Nike. introduction Locker, as the worlds largest footwear retailer, was an perfect way for Nike to distribute and introduce their current products. nevertheless Foot Locker postulates to meet consumer demands. So Foot Locker said that they would sign up the more expensive Nike slips, and focus on more mid setd clothes. This caused a break in the close relationship between Nike and Foot Locker. Nike is basic anyy a distributor. They do non become their products by themselves.Nikes products ar fabricate by third parties. So the main focus at Nike is on R and merchandising. Innovation, and making the consumer actu aloney want the product is key for Nike. Nike products are manufactured in Southeast Asia. The producer of Nike products are independent contractors where Nike does non deliver all of. The main reason wherefore Nike products are manufactured in these countries is because of the low earningss. low-pitched cost labor satisfyingly profits the crude permissiveness on their products. These low wage countries had some signifi squeeze outt d testifysides, thought .When the operative conditions, as well as allegations of call out and harassment became public (d matchless by militants) Nike suffered austere bad publicity. For a smart set that intemperately relies on merchandising and PR, this is a serious problem. dapple Nike tried to neglect these allegations, activist continued to blame Nike. Because the focus at Nike is heavy at marketing and R, Nike forever tries to create the right mountain chain for the consumer. They do this by incessantly innovating ( such(prenominal) as the Nike+ series), and attaching historied sports players to the bell ringer. Players such as Tiger Woods, Roger Federer and Wayne Rooney.The cobblers last years Nike sees that oppositions is catching up and in several segments demand is decreasing. While these are all external meanss that influence the company, Nike dust stable in terms of sales, flagrant margin and operating profit (increased to 10,2 share in 2002, from 9,3 percent in 2001). While Nike r emains to sustain positive numbers, the sedulousness branch is hard to predict. While, for good example, women perfunctory tennis footwear sees an explosive growth, premium priced acrobatic shoes is clearly declining. as well as competition is not standing still. The main competitors of Nike are New equilibrise, Adidas, and Reebok.New residual is a company focused on gymnastic sports. They operate in the market segments of racecourse, move , tennis basketball etc. along with this, New Balance expanded their physical object market by acquiring Dunham Bootmakers. With this they were nowadays in addition on the market of clear such as hiking, boat shoes and sandals. an another(prenominal)(prenominal) acquisition of New Balance took place in 2001 with PF Flyers which gave them acces to the fooling market. Another competitor, Adidas, is the worlds number cardinal on footwear and apparel worldwide. Adidas is real much comparable to Nike. With last end technology, and g rievous sponsors.The last of the very important competitors is Reebok. Reebok is the largest growing company. The company changed of strategy when they got the goop NFL deal and stated sponsoring the in-field gear of NBA teams. The challenge for Nike is to remain ahead of the competition, continue to be in advance(p) and make sure their characterisation hold ups on top. Analysis Nike and its subsidiaries are selling an extensive line of sports products throughout the world. Nike is competing in the market with Adidas, Reebok, New Balance and many other disfigurements. pic Growth dodge Nike operates in several market segments. within these segments Nike is always looking for ways to grow. Nike is an outside(a) company that makes sure they asshole sell their products in the best possible way. That is why Nike today has several distinct retail possibilities such as Nike factory outlets, Nike stores and others. In April 2002 Nike acquired the Hurley International and gained acce ss to the market segment for surfing, skateboarding and other youth life style extreme sports. Nike was already selling varied products under tell on names such as Bauer. besides still Nikes core business was athletic ladder shoes.But growth in sales in 2003 was not very large. hardly the women tennis insouciant footwear was experiencing signifi providet growth. But this was due to the fact that the perfunctory lifestyle segment was gaining commonity at that moment. So Nike decided to shift some of its main focus to other markets in the casual market. The casual market is the market with the roughly potential growth according to analysts, but weak growth in equipment (basketball , running etc). The growth in the casual market takes place in the non-performance segment. Thus Nike has to conciliate to the fact that Nike can also be seen as a fashion object. at present Nike is still the company with the about market share not only in the US, but also world(a)ly. And with ma king innovations in the consumer market, Nike was able to increase the market share. An example is the argument-Jordan shoe line which became extremely popular. Nike should await focused in analyzing the changing demands of consumers in order to maintain the market share. The Air Jordan shoe line were very popular, but when Jordan retired Nike should be ready to come up with a successor. Also, the company should not be afraid to shift to other markets.The casual non-performance market is clearly growing, and in the athletic market (Nikes core business) growth is clearly declining. Internally, Nike should keep their focus on marketing and R, which is their strength. Nike does not produce its profess products. Nike clearly made some mistakes in the past by hiring independent contractors they have no influence oer. pic Nike has clearly suffered with the image of sweatshops in Southeast Asian countries. Because Nike does not produce the products by their own factories, they heavily rely on the image consumer has of the company.R is also a heavy factor for Nike. Nike is the global leader on the market, but they have to come up with constant new ideas product development and maintaining a proud level of research in the desires of the consumer, Heinz will maintain successful. Competitor Analysis The market where Nike in is operating is utmost competitive. The athletic footwear, apparel and equipment segments are intensely competitive all around the world. of import competitors are the German-based Adidas, New Balance acrobatic Shoe Inc and REEBOK. Adidas-Salamon AGThe well cognize three stripes Adidas is popular all around the world. Just the like Nike, is Adidas producing all kind of products, most of them related to sports. Adidas is one of the largest competitors in the industriousness. One of the flagships of Adidas is still the old-style sneakers (See picture). Also Adidas is working with sport stars in their marketing campaigns, in order to increase br and awareness and revenues. In 2002, this lead to an overall market share of 11% and global sales with a revenue of about $7 billion. REEBOKIn comparison with Nike and Adidas is REEBOK also producing casual array. With the brands Greg Norman, Rockport and Ralph Lauren, the company is selling casual clothes. Since 2000, the company is competing again with Nike. With the return of capital of Minnesota Fireman, operating activities increased and Reebok was able to contest again. The companys marketing calculate for 2003 was reported to be $40 million. A high percentage of this amount is dismission to the basketball world. Reebok is sponsoring a lot of teams in the NBA in order to create brand awareness. Since 2005, Reebok is part of Adidas.New Balance acrobatic Shoes For many years this company was working with the same shoe outlets. The shoe outlets were successful, but New Balance cute more. consequently the company decided in 2000 to include independently owned retail stores . In this stores, more products could be sold. By the end of 2002, New Balance was distributing their products to over 90 independent retail stores. With this new corporate strategy, the company was able to increase sales with 25% in 2001 and 2002. SWOT Analysis Nike Strenghts Brand awareness Nike is the most well known sports brand in the world.Everyone knows the Nike logo (the Swoosh) and the brand is popular because of its premium eccentric, design and image. crossway arena The company is offering many products on the market and hence can fence in many segments. Because of the global market, Nike can produce on economies of scale. Nike does not own any factories, but chooses the cheapest location to produce (almost always Asia). When a cheaper location is found, Nike can easily switch because it does not own the factory. Research & development Nike is famous because of the tight-laced design, and innovative products.Because the company is producing many products, a high amou nt of R is invested. But this money is worth it. Nike is always able to come up with innovative designs of clothes and products. Weaknesses Production circumstances Because of negative publicity, a lot of people nowadays retainer Nike with bad working conditions for the people who manufacture the products. Child labor, unhealthy factories and dangerous work, all contributed to this image what some people have from Nike. The ethical responsibilities from Nike are important in order to create brand loyalty.Opportunities Product development Coming up with innovative products can be really profitable. Or producing so called high profit margin products like watches and sunglasses. Threats Competition The market where Nike is in operating is very competitive. Especially the shoe market, has a lot of competition. Therefore Nike should stay focused on innovation, price/ hold dear ratio, marketing and customer service. Economic speckle Most of Nikes products are high priced then comparabl e products. This mainly because of the brand image.When there is a recession, consumers are more persuaded to buy cheaper, comparable products from a different producer. 5-Forces Model pic The power of suppliers is low. For most products, Nike is apply simple raw materials. These materials are functional with many suppliers. Also Nike is famous for surrogate its production many times. Nike produces the products, where it is the cheapest. pic The power of customers is also low. Because most of the sales are B2C, the buyers cannot sharpen and have low power. Only flagellum is that customers, can easily switch to other (comparable) products. pic The threat of new fledgelings is low to moderate. The market is high competitive and dominated by a few large players. runner of all, a high amount of investment is required. It is not cheap to produce such a high quantity of shoes, like Nike is doing. Next to this, the costs for R and marketing are extremely high. Therefore we can conc lude, that a possible new entrant must possess over a lot of capital, patience and qualities. pic The threat of substitutes is medium. Although the shimmy costs for consumers are not there, Nike is noticing high brand loyalty.This is mainly because of the brand image, quality and with the shoes, the level of comfort. But consumers are price sensitive and are seek for high value with their sports clothes and related products. In times of economic recession, consumers are seeking for ways in order to make unnecessary money. This can be, searching for alternative brands. Therefore Nike must closely the monitor the consumer market and the domestic economy. pic The rivalry in the industry is high. Exit barriers are quite high, therefore the same players are already for a long time competing in the market. merchandise Share 2008