JUST DO IT!

NIKE
OCT052022
IB1606

INDIVIDUAL
LECTURER: BUI
ASSIGNMENT THUY DUONG
Lê Hồng Ánh INTERNATIONAL
BUSINESS
STRATEGY
PAGE 20

HS160657
IBS301M

Anhlhhs160657@fpt.edu.vn

FPT University

5 Forces

ANALYSIS

HTTPS://DAIHOC.FPT.EDU.VN

INTERNATIONAL BUSINESS | IB | 1606

TABLE
t.2
OF
BACKGROUND
CONTENTS OF NIKE
Company overview

t.2

ANALYSIS LEVEL FIVE

FORCES

t.17

FIVE FORCES
ANALYSIS
Threat of New Entrants
Threat of Substitutes
Bargaining Power of Customers
Bargaining Power of Suppliers
Competitive Rivalry

t.24

CONCLUSION

According to your analysis, is

this sector an attractive
market?
Does your company have
competitive edge in this
market?

| P.1

NIKE
OVERVIEW
Nike, Inc. is an American
multinational association that is
involved in the design,
development, manufacturing and
worldwide marketing and sales of
apparel, footwear, accessories,
equipment and services.
The company’s world
headquarters are situated near
Beaverton, Oregon, in the
Portland metropolitan area
(USA). It is a major producer of
sports equipment and one of
the world’s largest suppliers of
athletic shoes and apparel.
INTERNATIONAL
BUSINESS STRATEGY
www.nike.com
1
The world’s largest athletic apparel company, Nike is
best known for its footwear, apparel, and equipment.
Founded in 1964 as Blue Ribbon Sports, the company
became Nike in 1971 after the Greek goddess of victory.
One of the most valuable brands among sport
businesses, Nike employs over 76,000 people
worldwide. It sells its apparel through the Nike brand,
as well as its Jordan Brand and Converse subsidiaries.
Analysis level
five forces
2 Analysis of five forces around the
world
| P.2
 FORCES
5 ANALYSIS
Threat of New
Entrants
NIKE
Nike is an American multinational
corporation which has set a legacy for
itself in the design and development of
footwear, apparels and equipment.
Though the obstacles for new companies
to enter the market and to start the
business is quite low, their survival against
leading brands like Nike catering the
premium segment would be difficult.
Sourcing supplies and starting the
operation is not the concern for the new
entrants here. The high cost involved in
the brand development; the marketing
efforts required to bring the product to
lime light etc. are the major problems for
them.
IBS301M
Nike competes against a lot of local
players who do not have much influence
outside their country of operation. But
these small companies will be unable to
beat Nike because of the Economies of
Scale of Nike. The brand can any day
attract customers by discounting their
retail price and providing additional
benefits along with their product. But
the new players will never be able to do
so because of the operating costs in
setting up and launching their business.
Besides, if the new entrants are
looking for taking their sales online,
they will face a lot of issues in the
supply chain and logistics
management. They will be quite
unmatchable against the already
established sales and channel
network which the company has.
Thus, threat of new entrant is a very
weak force in this context.
| P.3
 There are no substitutes for
the sports apparels and
accessories.
Nike being a already
established brand with a
strong R&D capabilities does
not give opportunities for a
substitute to take over its
place. Nike has a long history
of having the best R and D
team in the industry.
Besides, the brand has more
than 25,000 global patents
more than anyone in the
athletic brand category. But
one thing that cause a
problem to Nike is the rising
number of counterfeit
products resembling its
products.
Since, the functionality offered
by the counterfeit products
has also been improving
recently, there is an emerging
threat to the company’s sales.
Nevertheless, the threat of
substitutes is a weak force
when it comes to Nike.

IBS301m
| P.4
 20
22

BARGAINING
POWER OF
CUSTOMERS

The major force that gives an upper hand to

the customer’s is the lower switching cost for
them. They can easily switch to the rival
brand and the cost and effort involved in this
shift is quite low. But this can be easily
tackled by the fact that the contribution
brought in by individual customers is very
small. Besides, there is also a shortage in the
number of substitutes available to the
customers to shift to offering the same
functionality as Nike does.
This limited number of players to buy from
makes customers at a disadvantage and
hence the bargaining power can be assumed
to be a force of moderate intensity. Though
there are some customers who are price
sensitive and want to look for cheaper ones,
the quality, assurance and the good will
associated with Nike justify its premium
pricing. Besides, a rise in the knowledgeable
population with an increased disposable
income turns the tide in favor of Nike.

Thus, bargaining power of customers is a

moderate force.

| P.5
COMPETITIVE
RIVALRY
Nike competes with a plethora of
brands in selling its products. The
sales growth data has been
following a saturating trajectory
and this can be safely attributed to
the increasing competition in the
market. The high penetration
caused in the market by the
competing firm and the overall
saturation in the market has
resulted in a stagnation in the
growth of Nike.
The aggressiveness of the
competing firms make it even more
difficult for Nike to replicate the
growth it has done in the past. The
rival brands like Adidas, Puma etc.
have been investing lumpsum
amounts into their marketing
campaigns which makes it difficult
for the brand to make a
breakthrough in the market.
JUST DO IT!
| P.6
 JUST DO IT!

CONCLUSION

According to analysis on this field, Nike has a competitive

this is an attractive market because advantage in this market
most people use footwear and because Nike is a long-standing
sportswear products. big player.

| P.7