Eric Meier, Izzie Morrow, and Connor Meehan

Dr. Justin Paul

International Marketing Management
4/24/2019

Key Ref:
Paul, Justin, and Erick Mas. “Toward a 7-P Framework for International Marketing.” Journal of
Strategic Marketing, 2019, pp. 1–21., doi:10.1080/0965254x.2019.1569111.

Nike and the 7-P Framework for international marketing

Introduction

Nike, Inc., formerly Blue Ribbon Sports, was started by Bill Bowerman and Phil Knight
in Beaverton, Oregon in 1964. Bill was a track and field coach for the University of Oregon and
Phil was one of his former athletes. Their idea for the company was to manufacture shoes in
Japan to compete with the German shoe market. Their first sales outlet opened in 1966, and in
1972 they rebranded the company under the name Nike, after the Greek goddess of victory.
Starting in the 1980s, Nike began to expand their products into new markets and consumers by
way of multiple acquisitions. This includes the acquisition of companies like Converse, Canstar
Sports, Inc., and Umbro. About thirty years later, they had expanded their company into over 170
countries, and their trademarked “swoosh” logo had become an instantly recognizable symbol
for their brand worldwide. Some of their success is due to celebrity endorsements from top
athletes including Mia Hamm, Michael Jordan, Roger Federer, Serena Williams and Tiger
Woods. Public support from these people has helped increase Nike’s sales and become the well-
known worldwide brand that it is today (Britannica).
This essay will analyze the American firm Nike using the 7-p Framework for
international marketing. The 7-p framework for international marketing is used as a tool to
strategically plan the future internationalization or international expansion of a company, and is
broken down into the categories of potential, path, process, pace, pattern, problems, and
performance (Paul, 2019, p.1)

Review of Literature

The 7-p framework is a tool companies use to evaluate potential markets and consumers
internationally and can also help with companies looking to expand their international
enterprises. It is made up of seven different factors which companies should consider when both
initially entering international markets or when trying to expand. These factors are potential,
path, process, pace, pattern, problems, performance. Potential, the first stage in the 7P
Framework, must be considered well before a firm decides to enter an international market.
Potential “considers the opportunities and activities in a foreign market that create a favorable or
unfavorable position for incoming firms” (Paul, 2019, p. 5). Any firm that is looking to expand
has to consider a variety of factors as it relates to the country in which it is looking to expand
into. The article also goes on to explain the importance of timing for EMF’s (emerging market
firms). In regard to timing, firms must take into account the political and economic activities that
are taking place. This is the case because any time you enter a new market, there is a certain
level of dependence on the way the country’s political and economic systems are constructed.
For many EMF’s, they are native to Less Developed Countries, or LDC’s, meaning that since
their inception in their own country, they have become accustomed to a certain level of
corruption or inefficient political or governmental structures. Dr. Paul argues that this creates a
competitive advantage for those firms because they have already experienced such hindrances
and created systems to combat such political efficiencies. To summarize, firms from emerging or
developing countries could take advantage of their previous exposure to political struggles by
expanding into countries who have also experienced similar struggles.

The next dimension is path, and concerning this Paul writes that once a potential market
destination has been established, the path of growth is the next order of business. The author’s
look at path in terms of “who” and “what”. “Who” refers to the type of firm and “what” refers to
what foreign market entry modes a company is deciding to use. The what also talks about how in
the beginning stages of expansion, firms use out-of-pocket capital, then when the need for more
funding occurs, they look to foreign loans, and eventually joint ventures and strategic alliances.
In terms of being economical and maximizing profit for an expanding firm, Dr. Paul writes that
“a firm can achieve lower costs via resources in the home market should establish sales and
distribution in the host market, whereas firms that may find low-cost natural resources as inputs
for production would prefer to manufacture its products in the host country - saving on the
resources and export costs” (Paul, 2019, p. 8). To summarize, in terms of path, Latin American
countries have seen the highest level of success when they form strong strategic alliances,
business networks, and partnerships, as this is a way for firms to essentially get familiar with the
target country and a way to ensure a certain level of acceptance from buyers in the new country.

After the path for growth of a firm looking to expand is set, they must turn their focus to
the process, or speed in which firms internationalize. Studies have shown that for Latin
American companies, they have no choice but to internationalize to compete with their
competitors, but it is also worth noting that they must do so gradually, while prioritizing their
domestic market first. Dr. Paul suggests that Latin American countries are slow to expand even
within their region, even considering the fact that they share a common language with most of
their neighboring countries. Due to the process of Latin American firms, as they are slow to
expand even within their region, they are much more likely to focus on expansion regionally as
opposed to globally. Only once they have established themselves regionally do they begin to
expand internationally.

Pace is defined as an extension of path and process, within the context of speed of
international marketing, “with respect to new business environment and the speed of switching
entry modes” (Paul, 2019, p. 10). Pace answers the question “how” in regard to how the firm will
expand. Dr. Paul lists some factors that determine the speed of internationalization, some of
which include technology, competition, mediating perception of entrepreneurs, the moderating
forces of knowledge, and network. Pace refers to the method in which a company uses to
internationalize, whether it be franchising, joint ventures, etc. Dr. Paul also writes about how
many firms switch from one entry mode to another throughout time. For example, a sample of
Mexican firms entering the US typically began their expansion with an export strategy with the
use of a third party. This was a way for Mexican firms to essentially test their product in a new
market for a period of time, and once they establish what makes them successful, they might
shift to a different entry mode, for example a joint venture or a merger and acquisition, as a way
to be more profitable.

After taking into consideration the speed at which a firm will go about its
internationalization, they must look to establish a pattern. The authors define ‘pattern” with
reference to firm structure, sector, and where (where the product or service is sold
internationally) (Paul, 2019, p. 11). Regarding Latin American countries, most of the region is
known for being very rich in natural resources, as well as its production potential. Additionally,
the article states that agricultural exports from Latin American countries are very high. To
summarize, emerging companies looking to expand must take into consideration the things that
their home country offers that places them in a favorable position to expand. For Latin American
countries, it makes more sense for them to expand if they are in the agricultural industry rather
than industrial, by simple nature of access to resources.

The next P in the framework is problems, which refers to the issues that firms run into
once they have begun their international marketing. Essentially, this just refers to the importance
of thinking through all potential problems that a firm may run into once they expand to a new
country. The article notes that companies coming from emerging nations or less developed
countries typically have to anticipate more hindrances, that may include bias or unethical issues
stemming from their home country. What the research showed is that companies who have
stronger management structures, business models, and human resource teams, are more poised to
be able to work through issues they may face abroad. The main problems that emerging
companies face, however, include “a cognitive bias, liability of foreignness, and resource
limitations” (Paul, 2019, p. 13).
 Finally, performance addresses whether or not internationalization would positively
affect the performance of the company. The 7-p framework argues that performance is a function
of the previous p’s. This means that the more prepared a company is to address the topics
brought up in the framework, the more likely they are to have a high level of performance in
internationalization. Studies also show that the more committed a firm is to internationalization,
the more opportunities arise for the firm. It is thought that this is because with higher
commitment, there is a higher threshold for risk, and ultimately a higher level of success. (Paul,
2019, p. 15)

Methodology

The 7P framework allows an individual to determine the standing, effectiveness, and

areas of growth of an international company. In regard to Nike, the 7P framework demonstrates
the apparel company’s methodology for expanding globally and the opportunities and issues that
they may face in doing so. Nike, an already global company, strives to “Bring inspiration and
innovation to every athlete in the world.” () This means reaching all markets, providing the
highest quality athletic apparel for athletes worldwide. By using the 7P framework, we can
determine the opportunities and threats that Nike faces in achieving their mission.

Findings

Potential
Nike strives to be the front-runner in athletic performance wear for every athlete across
the globe. According to research performed by Allied Market Research, the global activewear
market is expected to reach $546.8 billion by 2024 with a CAGR of 6.5% from 2018 to 2024.
Among this growth, the Asia-Pacific market is expected to grow at a CAGR of 8.0% and India at
13.9%. These markets demonstrate significant growth among the global markets and include
LDCs that could provide opportunity for Nike.

Path
Nike is an athletic footwear, clothing, and accessories company which designs, produces,
and markets their products for men, women, and children. Their organizational structure is a
corporation, which is owned via stocks largely through insiders of the company, but part is also
owned by the public. Nike originated in Oregon, USA where it is still headquartered, but their
products originally were manufactured in Japan (Britannica). Today, Nike manufactures their
products in 41 different countries in 527 factories around the globe. When entering foreign
markets, Nike typically licenses independent suppliers and manufacturers to make and sell their
products.

Process
 Nike desires to be a front-runner in emerging markets. Their mission to provide the
highest quality of athletic apparel to athletes across the globe demonstrates their directive a part
of every household. This early/accelerated approach will help Nike gain early market share in
emerging markets such as Asia Pacific, India, and Latin America.

Pace
With respect to a high degree of consumer preference, heavy competition, and high
degree of innovation, Nike will look to quickly enter new markets. Before brick-and-mortar
stores are established, Nike will enter using licensed retailers, as to supply the market with the
product while minimizing risk of heavy capital investments. In the past, Nike’s flagship stores
entered foreign markets after the brand was established.

Pattern
Nike holds its headquarters in Oregon and has most of its production in Asia and South
America. They are an organization that has 46% of their sales domestically. With production
abroad, along with cheaper transport of raw materials, Nike is able to establish a channel of final
product distribution. They have been able to establish trade in the production markets, allowing
for further expansion

Problems
Nike has faced backlash in their past related to overseas production. In their Asian
factories, there have been speculations of unfair sweatshop working conditions as well as
accounts of child labor practices. Nike has addressed these concerns and provided a
standardized and sustainable approach of their production lines.

Performance
Currently, Nike operates in 120 countries around the world and employs around 73,000 people.
Among athletic apparel competitors like Adidas, Puma, and Under Armor, Nike holds the largest
global market share with 2.8%. Nike’s international sales continue to counteract the steadied
growth in a saturated domestic market. According to CNBC, Nike growth in Europe, Middle
East, and Africa sales rose 12%. In China, revenue climbed 24% and in Asia Pacific and Latin
America, revenue was up 14%. Although Nike is a multinational firm, they maintain that the
company is still in growth stage as it enters new emerging markets and sustains growing market
share.

Discussion
The global activewear market is a fast-growing industry, in which Nike is the front-
runner. Nike’s mission to “Bring inspiration and innovation to every athlete in the world”
provides the goal to be a part of every household in the world. As the global market continues to
grow, especially in Asia and Latin America, Nike looks to increase market share by leading the
field in emerging markets, maintaining growth in current markets, and expanding its
performance wear lines to reach a larger variety of athletes.

Conclusion
To conclude, we found that the 7 P’s of marketing framework is an extremely useful framework,
but mostly when it is targeted to certain firms within certain industries. We found that through
our research, industry leaders and global market share dominators are likely to be a level above
the 7P framework. Starting with potential, Nike has already established this by being a industry
leader in sports activewear in the United States. They have built such a massive pedigree, one of
commitment to quality as well as establishing a strong reputation, that they can seamlessly enter
any global market that they may choose and thrive. This was a fun way for us to learn the ins and
out of a global firm like Nike and see how they are essentially an outlier to most firms we have
studied. We have learned this semester that most global brands must change things about their
product or their marketing strategy to appeal to their local consumers, but outside of using local
professional athletes to endorse the brands in their home country, their marketing strategy and
product base is essentially synonymous across borders. After analyzing Nike using the 7-ps of
international marketing, we were able to better understand the business strategies which Nike has
deployed in the past and present to dominate the worldwide athletic product market.

References

Paul, Justin, and Erick Mas. “Toward a 7-P Framework for International Marketing.” Journal of
Strategic Marketing, 2019, pp. 1–21., doi:10.1080/0965254x.2019.1569111.

“Read Nike's Mission Statement and Find Information about NIKE, Inc. Innovation,
Sustainability, Community Impact and More.” Nike News, about.nike.com/.

Research, Allied Market. “Global Activewear Market Expected to Reach $546,802 Million by
2024.” Global Activewear Market Expected to Reach $546,802 Million by 2024, 29 May 2018,
www.prnewswire.com/news-releases/global-activewear-market-expected-to-reach-546802-
million-by-2024-683920011.html.

The Editors of Encyclopedia Britannica. “Nike, Inc.” Encyclopedia Britannica, Encyclopedia

Britannica, 2002.

Thomas, Lauren. “Nike Shares Fall after North American Sales Growth Disappoints.” CNBC,
CNBC, 21 Mar. 2019, www.cnbc.com/2019/03/21/nike-reports-third-quarter-fiscal-2019-
earnings.html.