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Nike Competitive Analysis

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Rebecca Sonek

on 14 May 2015

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Transcript of Nike Competitive Analysis

About Nike
Market leader in athletic footwear, apparel and equipment
Works to drive product innovation for athletes and improve performance
Mission statement is
“To bring inspiration and innovation to every athlete in the world. If you have a body, you are an athlete”.
The “Just Do it” slogan and Nike swoosh logo are inherent to consumers

Primary Competitors
Adidas
Iconic logo
has 3 other brands (Reebok, TaylorMade, Rockport)
Puma
growing apparel sales
expanding into more sports
Under Armour
success in sports clothing
footwear gaining popularity, began in 2006
New Balance
big competitor in footwear
variety in shoe widths
Internal Environment
Weaknesses:
High Advertising Costs
Over 10% of revenue
Celebrity Endorsements
Subject to fluctuations
Potential public relations issues
Reliance on footwear segment
57.8% of revenue
Past Strategic Issues
In early 1990's, Nike outsourced its manufacturing to Bangladesh
Corporation used cheap labor and exploited workers
Provoked public backlash
and protests

Using iconic celebrities; Tiger Woods and Kobe Bryant
Personal/marriage issues that potentially affected their marketing ability
Tiger (infidelity)
Kobe (sexual assault)
Corporate Level Strategy
Nike has four subsidiaries: Cole Haan, Converse, Umbro, and Hurley
All four subsidiaries produce apparel, footwear, and accessories
Products range from luxury items to more athletic footwear and apparel

Nike's Current Situation
Nearly $27B in 2013 revenue
11% revenue growth
American multinational corporation- 693 factories in 42 countries
Emphasis on offshoring
Focus on innovation and product design
80% of value from footwear/apparel
Nike store expansion
Capitalizing on emerging markets
Nike Competitive Analysis
General Environment
Demographic:
majority of US citizens have high school education or higher and education level is growing
mean household income across all income levels has increased over the past several years
Social cultural:
bigger push in society for fitness and healthy lifestyles
greater concern for environment and well-being of workers
Competitive Environment
Porter’s 5 forces

Bargaining power of buyers:
High number of buyers (Dick’s, Sports Authority, Modells), and individual sports teams
Bargaining power of suppliers:
Global suppliers in different countries, utilize backward integration and wholly owned subsidiaries to minimize switching costs
Threat of new entrants:
There is a large capital requirement to enter this industry
Firms looking to enter this industry need significant R&D to compete with established firms

Internal Environment

Strengths:
Global Brand Recognition
Nike Swoosh, "Just Do It" slogan
Brand loyalty
Premium pricing
Product Innovation
Nike Explore Team Research Lab
Sustainable Innovations
Low Cost Manufacturing & Distribution
Offshoring
Outsourcing

Business Level Strategy


Strategy includes:
Prestigious Nike brand image
Ex. Nike logo and slogan is a global phenomenon
Innovative product design
Ex. Nike Flynit sneakers uses lightweight material to provide “virtually seamless” upper foot bed

Cutting edge technology
Ex. ColorDry technology- removes water from the dyeing process of apparel, & use recycled CO to infuse color with fabric
Customization
Ex. NikeID feature allows for customization of shoes/gear (colors, embroidery, names, and logos)
Excellent customer service
Business Level Strategy
2
Nike uses a Differentiation Strategy and incorporates value and uniqueness in its products
Corporate Level Strategy
Nike uses diversification in related businesses
Benefits from horizontal relationships in athletic footwear, apparel, and equipment:

leveraging core competencies in marketing campaigns
sharing of tangible resources like production facilities, manufacturing equipment, and suppliers
loyal brand following and close relationships with suppliers leads to enhanced R&D, increase product quality
International Strategy
Porter’s Diamond of National Advantage
Factor endowments- Land, Labor, Capital
Demand conditions- Apparel, Product customization, Equipment, Sponsorships
Related and supporting industries- Fashion Industry
Firm strategy, structure and rivalry- Innovation, Branding, Quality and Sustainability
Recommendations
Nike could rely less on endorsing professional athletes
Nike's reputation was hurt by various celebrity scandals so Nike could further distance themselves from these athletes
Could change their advertising to focus on superior product quality and customers’ ability to customize products
Recommendations
Recommendations
Sources
Political/legal:
OSHA regulations are a big concern for some of Nike’s facilities
Technological:
New technology has helped companies maintain more efficient production facilities and develop new product materials
Economic:
Unemployment in the US increased between 2008 and 2010, but has been declining slowly
Global:
Global trade has been increasing dramatically
Many companies are using strategic outsourcing

General Environment
Competitive Environment
Porter’s 5 forces
Threat of Substitution:
There is somewhat low threat to Nike due to few products outside of the industry that fit consumers’ needs
Intense Rivalry:
Nike has intense competition with rival companies such as Adidas, Under Armour, Puma, and New Balance
Almost all compete in various business areas (footwear, apparel, protective clothing against excessive heat/cold)

Use sponsored youth fitness initiatives to build community outreach
Leverage $1B partnership with NFL
NFL Play 60
NFL Rush fight vs childhood obesity
Lower advertising costs
Improving public relations
Foster brand loyalty amongst young consumers

Make value chain activities more transparent to increase consumer trust
This will help overcome consumer aversion to products produced overseas
Build consumer loyalty and awareness of value chain activities

Agenda
About Nike
Snapshot of Nike's current situation
General and Competitive Environment
Primary Competitors
Internal Environment
Strategic Issues
Business, Corporate, and International Strategies
Recommendations
http://www.wsj.com/articles/SB10001424052702303873604579493502231397942
http://www.businessinsider.com/how-nike-solved-its-sweatshop-problem-2013-5
http://about.nike.com/pages/sustainability
http://about.nike.com/pages/nike-explore-team-sport-research-lab
http://philnike.blogspot.com/2013/03/business-level-strategy.html
http://strategicmanagementofnike.blogspot.com/2013/03/corporate-level-strategy-of-nike.html
https://hexalog.files.wordpress.com/2010/12/article1_nike_strategy_sciwatch_alarcon.pdf
http://news.nike.com/earnings
http://www.bloomberg.com/bw/articles/2014-03-20/is-nike-spending-too-much-on-superstars
http://news.nike.com/news/nike-inc-introduces-2015-global-growth-strategy
http://www.nikeresponsibility.com/report/content/chapter/labor
http://www.nikeresponsibility.com
http://www.bloomberg.com/bw/articles/2014-03-20/is-nike-spending-too-much-on-superstars
http://finance.yahoo.com/news/market-share-gain-spurs-nike-153636267.html
https://www.trefis.com/stock/NKE/model/trefis?easyAccessToken=PROVIDER_649d6ec3ff8c75f73b6dc24ad5580e60ac2b2ff3
http://www.nfl.com/news/story/09000d5d80b4a489/article/nfl-play-60-the-nfl-movement-for-an-active-generation
http://www.census.gov/quickfacts/table/INC110213/00
http://www.census.gov/hhes/www/income/data/historical/household/
http://data.worldbank.org/indicator/NY.GDP.MKTP.CD/countries/1W?display=graph
http://data.worldbank.org/indicator/SL.UEM.TOTL.ZS/countries?display=graph
http://csimarket.com/stocks/suppliers_glance.php?code=NKE
http://careers.adidas-group.com/mission-and-values.aspx
Full transcript