Strength And Weaknesses Of Nike

Nike, Inc. is an American multinational corporation that is engaged in the design, development and worldwide marketing and selling of footwear, apparel, equipment, accessories and services. The company is headquartered near Beaverton, Oregon, in the Portland metropolitan area. It is the world 's leading supplier of athletic shoes and apparel and a major manufacturer of sports equipment, with revenue in excess of US$24.1 billion in its fiscal year 2012 (ending May 31, 2012). As of 2012, it employed more than 44,000 people worldwide. The brand alone is valued at $10.7 Billion making it the most valuable brand among sports businesses. Nike and Precision Castparts are the only Fortune

There is intense competition faced by Nike. Their competitors are Adidas, Reebok, Puma, and so forth, whilst competition is tighter with the coming of Adidas. More, the product line is slightly different between Nike and Adidas.

(Philip Kotler and Gary Arms Strong, 2012) The pricing of this company is designed to be competitive to other fashion shoes manufacturers such as Adidas and Puma. This company charges a high prices for its high quality product it provide and because of its famous brand. The pricing of this company is based on the basis of premium segment as their target customers. Nike as a brand that targeted high income customer. This company make use of vertical integration in pricing in which they own participants to take part in more than one channel level

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.

The sales of Nike products in America are consisted of the main part with the percent of 34%, and in Europe, Middle East and Africa, the sales are 29% of the whole one. As to the first pair of Nike shoes; it is the track running shoe. Shoes win about 53.7% of the total profits for Nike Company. Nike products cover a large range of sports areas and this makes Nike Company compete against many companies like New Balance, Reebok, Puma, and Adidas. And the most powerful rival can be Adidas whose profits of sports area attain to $13 billion. The marketing strategy can be seen as a key factor for Nike Company to achieve the big success. Nike is seen as an excellent brand which offers creative and well-designed sports apparel. Nike Company makes its products gain great popularity through the way of cooperating with the famous athletes, professional sports teams and college athletic

There is strong competition from Adidas, Under Armour, Reebok, and Puma with all companies vying for market share. There is a high dependence on the footwear part of the business along with the threat of counterfeit products. There is always the possibility of consumers no longer paying the high premium prices that Nike charges for their products. Finally there are image issues and issues concerning the high costs of advertising that need to be resolved.

Since its creation, Nike has proven itself as a popular brand and it has created niches by selling products such as footwear, apparels and various types of sports equipment. This paper will attempt to trace the product development of Nike shoes from its origins in conception and design to the manufacturing and production process located in contract factories in developing countries to advertising and marketing of Nike as a cultural commodity and finally, the retailing of the footwear around the world.

The organization is also known to not use the American workforce but to outsource production to other countries. According to an article dated 2007, Nike had suppliers in 51 countries across the world (LOCKE, FEI & BRAUSE, 2007). Nike is subject to ethical concerns because they are a well-known organization that produces

Nike, and other similar firms, does not lower their prices for fear of a price war. Instead they advertise heavily and have regular promotions. Nike has the upper hand in advertising because of their endless athlete and celebrity endorsements. Even though they might lose money in the short run from their heavy promotions, they earn it back exponentially from the sales. People wait in line for hours every time a new style of Air Jordan basketball shoes is released. This type of popularity and demand is the product of the heavy advertising.

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.

Indonesia is one of many countries around the world that is home to numerous Nike factories.

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.

Because Nike is able to more efficiently produce its product and reduce costs due to outsourcing, it can more competitively price its products. This enables Nike

Nike does all of their manufacturing in developing or under-developed countries. Because the labor there is cheaper than the ones in developed countries, Nike employs people at a rate that can barely sustain their daily needs. Nike is taking advantage of the cheap labor cost in these countries to gain more profit. First of all, they are using children that are well below the working age to work in huge factories. Secondly, most workers are working in sweatshop conditions, meaning, they are being abused of their human rights because they are working in such unsafe conditions. Finally, the wages that they are earning are very low. According to Daily Mail, “Nike admits that such abuse has occurred among the contractors that make its hip high-tops but says there was little it could do to stop it…. Some workers interviewed by the AP in March and April described

A huge weakness Nike has had in the past is bad publicity. They failed to see problems in relation to their labor and factory conditions. In 1996, Nike was accused of using child labor to produce soccer balls in Pakistan. Many people began to boycott a lot of their products as a result of this. This isn’t the first time Nike has used the benefits of cheap production in other countries. There have also been rumors of this happening in Indonesia, Vietnam, and China. Pakistan was just the first time it was brought to light due to a magazine picture in Life magazine. Also, maybe a great business move, but it turns some people off on the product because Nike doesn’t employ Americans to manufacture because of the high costs. According to Ted Studies, Nike will set up in Third World countries and will leave to migrate to another once standard of living becomes too high to make manufacturing profitable. Another weakness for Nike is that they charge a lot compared to their competitors, which means they have to depend more on the quality of the product. However, this eliminates some of the market. The weakness of not having any physical stores results in retailer stores pushing for a lower wholesale price in order to keep prices low for their customers. Nike could counter this if they would build their own stores, but maybe the loss on their products in the retailer stores is lower than paying labor and overhead in their own stores. Another problem Nike