Porter's Five Forces Analysis: Nike

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

In the last couple of years Nike’s sales have decreased which were targeted at 15-19 year olds. This problem has caused Nike to lose customers which means a loss in sales/ profits. Over the past few months competitors have been raising their strategies to bring in customers in which increases their profits. This is having a negative effect on Nike, if Nike carry on the way

Nike is the leading and yet renowned supplier of athletic apparel and shoes. The company controls close to 33% of the global athletic shoe market (Dogiamis & Vijayashanker,2009).Nike was founded by Bill Power and Phil Knight in 1962 as a Blue Ribbon Support and then was later on renamed to Nike in the year 1968 (Patrow,2003).The company supplies very high quality product in close to 100 countries with major markets being located in the U.S,U,K, Asia Pacific as well as in the Americas. The company has managed to attain its lead and legendary position via the application of innovative and yet attractive product design which is backed by quality production as well as well crafted marketing strategies.

In 1962, Blue Ribbons Sports was established by Bill Bowerman & Philip Knight, became Nike, Inc. on May 30,1972. Nike, Inc. established the Nike swoosh logo and the “Just Do It” trademark. Nike. Inc., is one of the largest publicly traded sportswear, athletic shoes & apparel company with revenues of $19 billion in 2010 (3). NIKE, Inc. headquartered is located in Beaverton, Oregon. NIKE, Inc. sells merchandises through distributors, licensees, and subsidiaries in 120 countries globally. NIKE, Inc. has experienced generous amount of financial and marketing success since the 1960s (Wokutch, 2008). This why I chose Nike Inc., (NYSE: NKE) because of the substantial growth throughout the years.

As the brand name of Nike continue to soar, other companies in the industry; learning from the success Nike has experienced, start focusing more on brand development to keep up with the increasing levels of competition. These companies resort to brand maintenance, which has become the main target in this industry due to product differentiation made by Nike. Nike, being market-advantaged, produces an extensive range of products, through which it gains a balanced level of profits. This has influenced rival companies to initiate a new range of products in their businesses too. Previously these companies had high risks of failing in business, if their single products did not appeal to the market. Due to the impact of Nike’s business strategy, the other companies are also enlarging their product range,

Introduction Originally founded by Phil Knight and Bill Bowerman, Nike is now the market leader in the manufacturing of sportswear and gear and enjoys possessing more than 47% of the market share across the globe. Nike's mission is to bring inspiration and innovation to every athlete (Nike Inc., 2015). According to them, you are an athlete if you possess a body. The company has over 600 shops around the world and has offices situated in 43 countries outside the United States. Most of its factories are located in Southeast Asia, including China, Indonesia, Taiwan, India, Vietnam, Thailand, Philippines, Pakistan, and Malaysia.

However, there also have been other executives who have helped the organization to still leading the market. For many years, although Nike has had a lot of competitors, they have managed to control the market share in an excellent way. Under Armour for example, is a direct competitor of Nike and even though is newer company than Nike, they have shown to be a strong competitor. Also, Under Armour has been able to make presence in some of the biggest sports name, their brand has grown and their style clothing is distinct and unique. Apart from Under Armour, Reebok is another brand that is a direct competitor of Nike. Many brands actually struggle to be on top for Nike, but because of the efforts, talent and undeniable innovation, Nike will be ahead of them for years to

Nike, Adidas and Under Armour are the largest brands in the athletic/sportswear monopolistic market. As of 2015, Nike’s revenue was $30.1 billion, the revenue of Adidas was $4.57 billion, while Under Armour’s revenue was $3.96 billion. Though all of the companies are large, Nike has a little more than 60% of the brand share dollars as compared to Adidas’ 11% and Under Armour’s 7% (Figure 1). Nike has some major strategies that

As Nike is an international company that has their product selling worldwide, they have countless of competitors, including many domestic local firm. However, not all of these companies have the power to compete with Nike, only a few international companies are Nike¡¦s major competitors, for instance, Adidas and Reebok.

Nike has seldom manufactured products own premises, except their air bladders. The shoes are manufactured through outsourcing and alliances with other companies. A successful company like Nike formed its organization on the customer values that have the MOST impact on the consumers mind – Design/R&D, Marketing and Distribution. Even though manufacturing is a vital function to perform, Nike realized that there were other ways to go about this function and thereby save both cost and maintain its focus on the critical customer value areas.

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.

The sportswear industry is very price sensitive and most competitors prices are about the same. Nike sells its products in Nike shops and the selling of its products direct to the consumers conflicts with other resellers of the brand. Most of Nike’s earnings are derived from selling into retailers.

In order to properly discuss Nike’s issues, it is important to first look at the apparel industry and the economy as a whole to determine how Nike compares to it. The apparel industry, more specifically the athletic apparel market, is a very dynamic industry to be in. Because of

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.

Nike’s management understands how important a relevant strategy is in the global environment, as Don Blair, Nike’s CFO, stated “...we are refocusing our efforts, increasing our investments in innovation, using our voice for stronger advocacy and looking at how we incubate new, scalable business models that enable us to thrive in a sustainable economy.”