Company Overviews of Nike and Reebok Essay

Threat of substitute product is any company can make an athletic shoe. Puma, Adidas, and Reebok all produce athletic shoes and apparel. These companies are Nike’s top competitors. They try to develop alternative brands to eliminate Nike from the market. Nikes utilizes trademarks on nearly all of their products and believe having distinctive marks that are readily identifiable is an important factor in creating a market for their goods. Nike identifies their brands and the company distinguishes their goods from the goods of others. Nike considers NIKE® and Swoosh Design® trademarks to be among their most valuable

The report focuses on the Economic Value Added of Nike Inc. The analysis is conducted through a detailed assessment of the financial statements including income statement, balance sheet, and cash flow. Such financial statements are then applied to derive common-size statements for income statement and balance. The trends and predictions obtained from the common-size statements predict the future economic value. Similarly, the Pro-forma financial statements derived provide vital future economic performances of Nike Inc. According to the regression analysis and the assessment of the common-size and Pro-forma financial statements; Nike Inc. has a growth in revenue and earnings per share. The EVA computed using WACC, Net Operating Profit after Taxes (NOPAT), and Invested Capital is positive (+$391.24); this shows that Nike Inc. is financially stable and will grow in the next three years.

Obviously, there is a big number of driving forces in the athletic footwear industry. Each of these driving forces has different impacts—some of them can have a more considerable effect than others on figuring out how much cross-company differences influence market shares and a number of units sold. The first line of most influential factors includes comparative prices, S/Q ratings, and a number of models offered among the footwear competitors. These three most important competitive forces affect customer decisions of which athletic footwear brand to choose. Furthermore, the decisions of customers whether to purchase one brand or another are also influenced by such forces as advertising, celebrity endorsements, the number of independent retail

Bill Bowerman and Phil Knight first started Nike on January 25th, 1964 but the name started out as Blue Ribbon Sports. They worked for a Japanese shoemaker called Onitsuka Tiger as merchandisers. Eventually Bill and Phil changed the name to Nike on May 30th, 1971. The company name Nike came from the ancient Greek goddess of victory (O’Reilly).

In analyzing the market/industry, the company was able to see some things that helped shape their plan. The first was rivalry among competing sellers. Our analyses indicated that there were 9 companies in the shoe industry that Competitive Shoes considered rivals. These companies were relatively new in the industry and produced the same types of shoes as Competitive Shoes. Due to this fact, they knew that the rivalry would be fierce since Competitive Shoes was going to produce a product that was like theirs, and the difference between the products would diminish as the products of industry rivals became strongly differentiated. This indicated to Competitive Shoes that brand loyalty would be minimal and buyers could easily switch brands at will. Competitive Shoes felt that they could produce the same quality shoes as the high-end producers, while at the same time lowering its production cost and offering the product at a lower price. This would make it easy for buyers to switch brands at will.

Nike is the English version of the name of the Greek goddess Nike, which, according to legend, helped the Greeks to win on the battlefield. The American company Nike has transferred this meaning to their products - shoes, which help to achieve great sporting achievements. History of the brand had started with a search for the founders of the niche of sports footwear in the US market, which was free that time. In the early 60-is of Bill Bowerman and Phil Knight founded the company, the initial capital of it was $ 1,000. Phil Knight decided to develop high quality sports shoes in the United States, produced in Asia and sold in the United States. The company originally existed under the name Blue Ribbon Sports, but in 1971

Companies like Under Armour, Nike and Adidas/Reebok have high threats of substitute´s products. These companies share the sport apparel industry and are vulnerable to competitive pressure from the actions of buyers whenever they view that their products can be substituted for others. The availability of substitutes invites the costumer to compare performance, features, and ease of use as well as price. Under Armour’s major competitors are Nike and Adidas/Reebok because they have a similar or competing product offerings. The top sport apparel brands offer similar products and that is why each one of them needs to keep a high standard and produce good quality products in order for customers to keep buying their product.

The company I am presenting is Nike which was founded in 1965 by the athlete Phil Knight. Nike is a well known brand which is selling its products worldwide and has 36% of the market share.

The threat of substitutes in this industry is high in my opinion. I say this because there are so many companies in the industry that have varying sports apparel, footwear and accessories. Customers can easily substitute one product by using another similar product of another company.

Many of the big established shoe brands have seen consolidation and hence they have become bigger and more powerful in terms of competing with the rest.

The threat of new entrants in the athletic shoe industry is very weak. Currently the market is dominated by three major competitors, and

Phil Knight and his track coach Bill Bowerman founded Blue Ribbon Sports in 1964. The company started as being a distributor of Onituska Tiger athletic shoes which were imported from Japan. In 1971 they broke away from Onituska and created their own of shoes. The company was renamed, Nike. It became the largest worldwide seller of athletic shoes. They branched out and created various products lines; shoes, clothing, sporting goods and digital devices. They used celebrities to promote their products. The first athlete to wear and promote their show was runner Steve Prefontaine. Their now well know swoosh was first seen in the 1972 US Track and Field Trials. Every basketball player in high school wanted a pair of Michael Jordan’s,

1. A decision to retain an in-house arm of agency Weiden & Kennedy by Nike exemplify the concept of organizational design by allowing Nike use the agency’s creative designers to focus solely on Nike work, giving them un-parallel access to executives, researchers and anyone else who might provide Nike advertisers with their next inspiration for marketing greatness before listening to any other organization. Having the agency in the building is having them at their disposal at anytime they need them and also the agency will have to consider them first incase of any new ad or good idea discovered by the agency or when Nike needs to salvage a problem with the help of the agency. Thus, the agency at their finger-tips serves great advantages

Threat of Substitute Products: Atheletic shoes are designed for comfort, fit and personal safety during periods of iintense or increased movement. The existence of close substitute products increases the propensity of consumers to switch to alternatives in reponse to price increases. The availability of substitutes in the athletic shoe industry, invites customers to make price, quality and performance comparisons. If the athletic shoe is used for a specific sports, there maybe relatively few substitutes. If the shoe is used because of comfortability, they are interchangeable with minimal switching cost. This holds true for athletic shoes worn for fashion. Overall the threat of substitute products is moderate and depends on the motivation for purchasing the product. The impact to profit potential is moderate to high.

Mythology to society is just ancient past, but essentially it’s not. It’s thriving and very alive. Take a trip to your local mall and check the footwear department of any sporting store and there you’ll find the goddess. The name Nike characterizes the goddess who exemplified victory on the battlefield. In retrospect, if persons were asked the name Nike, Greek mythology is least expected to arise. The name Nike is now renowned as the most iconic brands around the globe. Though, not many people know the story it all began selling shoes from the trunk of a car. The crazy idea that emanated from Phil Knight that grew to become the global phenomenon today. This study will give insight into the creation, growth, and evolution of Nike.