Nike vs. Reebok

4. Further Research—Gather information on Nike’s recent moves and accomplishments, and those of its rival Adidas. Are both firms following the same strategies and using the same structures to support them? Or, is one doing something quite different from the other? Based on what you learn, what do you predict for the future? Will Nike stay on top, or is Adidas the next industry leader?

Nike was founded by an athlete Phil Knight and a track coach Bill Bowerman in 1964 on a handshake. In addition, Nike is the number 1 contender in athletic footwear industry. Over the years Nike has developed a reputation for providing quality footwear that not only appeal to athletes (prior only male), but that of female customers and children. There were implications that Reebok had an advantage over Nike, somewhere in their success they lost their strategy. However, over time Nike gain a competitive advantage over Reebok, they had conducted research and form a well thought-out plan that gave them a top position with U.S. and foreign markets as far as athletic products (i.e. athletic shoes, clothing), branding (i.e. Swoosh logo and “Just Do It” positioning statement) and sports celebrities (i.e. Michael Jordan, Phil Sampras, Tiger Woods). Nike’s management team was responsible for Nike’s success. Phil Knight, Nike’s CEO was a former excellent marathon runner. He knew what runners wanted in a shoe, so he knew what type of strategy to use as far as shoes and how to make it work; he decided to make products according to the consumer wants and needs. Examples of great decision-making are:

Innovation: In such a mature and competitive industry, continuous innovation is crucial to the success of the company as it gives a unique selling point that rivals do not have. Both product and process innovation are Nike’s

By so doing, Nike is able to create business opportunities and create value for their

The factors that drive Nike’s decision to stick with its current organizational structure include its well-established brand name in the industry. The company positioned itself as a brand

The sportswear industry is growing and becoming more competitive so the will be new producers and entries in the market with new ‘’aces up their sleeves’’. More competition in the market

6). This strategy is a major component of Nike’s business strategic level plan. In applying this strategy, Nike has attained a great deal of consumer insight, which it uses to offer uniquely designed premium products to the athletes. Still on product differentiation, Nike focuses more on research and development at a greater level. These unique features to Nike, have transformed the competition levels in this competitive industry, leading to a trend of a paradigm shift in the market. Most consumers opt for Nike branded sports products and apparels, at the expense of the other brand names.

Nike invested in their brand by getting sports heroes to advertise for their brand such as Michael Jordon, Tiger Woods and the Brazilian football team. This further fuel the products appeal towards the consumers.

The athletic shoe industry is made up of companies that produce footwear for athletic use. This is a strong industry and has been around for over 100 years. The athletic shoe industry is one of the fastest growing footwear industries and have top growing sales compared to other footwear industries (NDP Group, 2016). The key players that currently dominate the market are Nike, Adidas, and Puma (Kates & Bolduc, 2013). This paper will use the porter five forces, industry life cycle, and the key players to understand the industry. Over these years the athletic shoe industry has grown into a competitive market.

Nike’s organizational Form reflects a conglomeration of resources, processes and people around the activities most critical to their target customers in terms of its Value Proposition. It decided therefore to concentrate in depth on the critical activities and competencies rather than increasing the breadth of its

Competition is very fierce due to the number of companies competing for sales. Lots of money goes to marketing and promotions using various channels to reach the young demographic group of consumers who spend the most money on Nike’s products. Growth is slowing down in the athletic footwear industry. But new markets are emerging with high growth rates. These markets include extreme sports market and the corporate merchandise market.

One of Nike’s main opportunities is product development. Developing their product range makes them more competitive and because products tend to go out of fashion quickly, Nike must introduce new products relatively fast because consumer demand the newest and latest products. Increase in internet shopping will no doubt reduce the cost and improve prices making them even more competitive.

The threat of new entrants into the industry is low. The start-up costs are somewhat high, consumer loyalty within the market is moderate and the learning curve is pretty short. The entrance barriers are high in that the capital requirements are high due to up-front advertising and research and development. Also, economies of scale in production will be difficult to reach due to the difficulties of penetrating the market that is dominated by the large five: Nike, Reebok, Coverse, LA Gear, and Stride-Rite. Furthermore, it will be almost impossible to achieve product differentiation in terms of brand identification and product difference, since the "big five" set the trends. Also,

A comprehensive analysis, using market data and market research, allows us to assess all areas affecting Nike’s strategic direction:

Nike, Inc. has been the world’s leading innovator and provider in athletic footwear, apparel, equipment and accessories for 50 years. Their mission has been to bring inspiration and innovation to every athlete in the world; if you have a body, you are an athlete. Arguably one of the most innovative companies in the world, Nike has built its brand into an iconic world-class powerhouse that continues to dominate the market with no signs of slowing up. Nike’s marketing and advertising have been breakthrough, aspirational, and legendary over the years, featuring high-profile athletes and heroes.