NIKE

Just Do It

October 15,2018

GROUP 1
NIKE SHOES
JUST DO IT
Logo here

Nike is known as a brand of sports shoes mainly.

However, it also makes athletic apparel and gear.
 The recent years have been quite profitable for the
brand. It is because of the athleisure trends and for
the high demand during the Olympics. Nike’s Just do
it slogan and the Swoosh logo set it apart from the
crowd of brands. In history, it has kept signing the
best athletes for endorsing its brand and products.
PORTER’S FIVE FORCES ANALYISIS

Bargaining power of suppliers: low

Bargaining power of buyers: low to moderate

Level of competitive rivalry: Strong

Threat of substitutes: low to moderate

Threat of new entrants: Low

 Bargaining power of suppliers: low

The bargaining power of Nike’s suppliers is

low. Its products are made globally in 42
countries in 620 factories. While individual
suppliers are small in size, they do not have the
ability of forward integration either. This
reduces the chances of competition from
suppliers. Moreover, the number of suppliers is
high and they are scattered throughout the
world. It is why individual suppliers cannot exert
any pressure on Nike. The brand sets
standards for its suppliers to comply with. If a
supplier does not adhere to the standards, Nike
can easily switch to another. However, in such
a case, the supplier would be losing a major
source of revenue. Overall, Nike holds strong
control over its suppliers and audits them
regularly through third party auditors for
compliance.
Bargaining power of buyers: low to
moderate

The bargaining power of Nike’s buyers is

low to moderate. The number of its
competitors is not so small if not very large.
Apart from Adidas and Under Armour, there
are other competitors like Puma and Reebok.
There are many other local and international
brands also that compete with Nike. The
switching costs for customers are low. To
some extent this force is moderated by the
quality and marketing of Nike’s products. Nike
focuses on performance and design. It is why
it has been able to build good customer
loyalty. This reduces the bargaining power of
individual buyers which is low to moderate.
Threat of substitutes: low to moderate

The threat of substitute products

is moderate for Nike. It is because a
large number of competing brands
make similar or matching products.
There are several brands in local
and international markets that make
low priced shoes compared to Nike.
These brands offer lower priced
substitute products for Nike. To
some extent this threat is moderated
by the quality and design of Nike
products. Overall, the threat from
substitute products is moderate.
Threat of new entrants: Low

The threat of new entrants for Nike can be

considered low to moderate. It is because while
the investment for starting the business is not
very large, still there are other requirements that
are not easy to fulfil. Any new competitor may
have to start at a local or small level initially.
Apart from production, there are marketing,
distribution and supply chain management that
require investment, skilled workers and time.
Building a brand image and equity are also
difficult. These factors moderate the threat from
the new entrants. For any new brand, it is not
possible to create the kind of brand image like
Nike overnight. It takes time, efforts and capital
investment. Nike’s strong position in the market
mitigates the threat to a large extent. Based on
these factors the threat from new entrants is low.
While investment for production may be low,
developing a notable brand can be time
consuming and requires a lot of capital
investment.
 Level of competitive rivalry:
Strong

The level of competition in the sports

industry is strong. Some of the major
competitors of Nike are Adidas, Under
Armour and Puma. The industry has grown
saturated and the existing players are
engaged in tough competition for deeper
market penetration and to snatch away
market share from each other. Brands invest
a lot in marketing and other things. The
number of top players and direct
competitors of Nike is low, however that
makes the competition even intense.
Overall, the level of competition in the
industry is strong.
 PEST
ANALYSIS
Political Factors Affecting Nike’s Business
Nike’s sports shoe business is subject to the effects of the
political landscape. This component of the PEST Analysis model
deals with governmental influence on the remote or macro-
environment of businesses. The following political external
factors determine some of Nike’s strategies:
• Stable political climate in most major markets (opportunity)
• Expanding free trade policies (opportunity)
• Improving government support for infrastructure (opportunity)
Stable political conditions in most major markets present
opportunities for Nike to grow its business in these areas. Also,
expanding free trade policies facilitate better market penetration
overseas. Moreover, improving government support for
infrastructure, especially in developing countries, gives Nike
more opportunities to expand its operations in these markets.
Based on the political external factors in this component of the
PEST Analysis, Nike Inc. experiences opportunities to improve
its market presence and global expansion in the sports
footwear, apparel and equipment market.
 
Economic Factors Important to Nike’s Business
Nike’s business performance depends on the state of economies
where it sells its athletic footwear, equipment and apparel. This component
of the PEST Analysis model identifies the economic concerns that affect
the remote or macro-environment of the business. The following economic
external factors are significant in determining Nike’s performance:
• Economic stability of developed markets (opportunity)
• Rapid growth of developing markets (opportunity & threat)
• Slowdown of the Chinese economy (threat)
Developed markets like the United States are relatively stable,
thereby proving Nike Inc. with the opportunity to continue its slow but stable
growth in these countries. The company also has opportunities to rapidly
grow by increasing its operations in high-growth developing countries.
However, the rapid growth of developing markets also threatens Nike by
increasing labor costs in the company’s supply chain and production
facilities. In addition, the slowdown of the Chinese economy threatens
Nike’s performance, which is now significantly dependent on the Chinese
market for sports shoes, apparel and equipment. The economic external
factors in this component of the PEST Analysis show that Nike Inc. must
emphasize global expansion strategies while devising new ways to capture
growth in developing countries.
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Social/Sociocultural Factors Influencing Nike’s
Business Environment
Social issues impact the attractiveness of Nike’ athletic
shoes, apparel and equipment. This component of the PEST
Analysis model deals with the effects of social conditions on
the firm’s remote or macro-environment. In Nike’s case, the
following sociocultural external factors are most significant:
• Increasing individual wealth in developing countries
(opportunity)
• Increasing emphasis on product safety (opportunity)
• Improving positive attitudes about leisure (opportunity)
In developing countries, Nike has opportunities to tap
consumers with increasing individual wealth. Also, the
company has opportunities to develop safer products and
use marketing campaigns that highlight the safety of its
sports shoes, equipment and apparel. Nike can also adopt
new product development strategies to address needs for
products for leisure activities. Based on the external factors
in this component of the PEST Analysis, Nike Inc. has
considerable opportunities for product development and
business growth.
Technological Factors in Nike’s Business
Nike’s business changes according to technologies available
for business processes and athletic footwear, apparel, and
equipment. This component of the PEST Analysis model identifies
the technological conditions that lead to significant change in the
remote or macro-environment of companies. The following
technological external factors affect Nike Inc.:
• Increasing R&D investment among firms (threat)
• Rapid technological obsolescence (opportunity & threat)
• Widespread use of mobile technology (opportunity)
The increasing R&D investment among firms threatens Nike,
as these competing firms aim to develop more technologically
advanced sports shoes, equipment and apparel. Rapid technological
obsolescence also threatens Nike by putting pressure on the
company to increase its product development efforts. Nonetheless,
this external factor provides opportunities for Nike to integrate
advanced technologies in its products. In relation, the company has
opportunities to integrate mobile technologies in its products to
capture consumers who frequently use mobile technologies, such as
mobile apps and online tools. The external factors in this component
of the PEST Analysis show that Nike faces considerable threats as
well as opportunities based on new and changing technologies.
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 COMPETITO
RS

V
S
ADVANTAGES WEAKNESSES FEATURES

• One of the giant sports clothing • PREMIUM HIGH RANGE: High price range • Upper: leather and textile
company’s most effective due to innovative technology or production lining
promotional methods for its methods have made the brand affordable to
limited customers only, especially in
products has been to associate developing countries.
them with popular celebrities
and sports idols.
• The close cooperation with • OUTSOURCED MANUFACTURING: • Midsole: CloudfoamTM
celebrities and top athletes who Adidas has 93% of production memory foam sockliner
work together with Adidas to outsourced to 3rd party manufacturers and wedge for comfort and
produce better, high performance
apparel, shoes and other sports
(largely to Asia) to avail of low labour cushioning
products is a major factor towards cost & easy availability of resources.
the successful coordination of the
research and development and the
marketing departments, resulting in
innovative products, generating
higher sales and company growth.
• Outsole: rubber
ADVANTAGES
Successful track record of integrating
complimentary firms through mergers
& acquisition. It has successfully
integrated number of technology
companies in the past few years to
streamline its operations and to build
a reliable supply chain.
Reliable suppliers – It has a strong
base of reliable supplier of raw
material thus enabling the company to
overcome any supply chain
bottlenecks
Strong Free Cash Flow – Skechers
U.S.A. has strong free cash flows that
provide resources in the hand of the
company to expand into new projects.
WEAKNESSES FEATURES
Limited success outside core business – Even though • A beautiful exterior to
Skechers U.S.A. is one of the leading organizations in give you a style of your own
its industry it has faced challenges in moving to other
product segments with its present culture.
The marketing of the products left a lot to be desired. • A perfect fit, since they
Even though the product is a success in terms of sale design shoes keeping in
but its positioning and unique selling proposition is not mind the size approved by
clearly defined which can lead to the attacks in this the world shoe
segment from the competitors. manufacturer’s association
Investment in Research and Development is below the • Every material used is
fastest growing players in the industry. Even though excellent in its quality and
Skechers U.S.A. is spending above the industry researched before use.
average on Research and Development, it has not
been able to compete with the leading players in the
industry in terms of innovation. It has come across as
a mature firm looking forward to bring out products
based on tested features in the market.
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ATHLETES Nike shoes targets are the
athletes because we believe
they need the best quality
shoes during their games.
Athletes are those who are
trained or skilled in sports,
games, or exercises that
require physical skill and
strength. There are many
models of Nike shoes to
choose from. Each sport has
specific designs and styles of
footwear.
TARGET
MARKET
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Many people buy Nike shoes, even if they do not play any sports. They use their favorite Nike shoes in casual outings and
events. Because of so many benefits, Nike sports shoes are one of the best sports shoes available on the market today.
There are many features that make Nike shoes different from other brands of shoes. Some of these features are:
– A pair of Nike makes perfect flexibility – Yes, you get the elusive flexibility of shoes from Nike.
– Nike shoes provide excellent support – Nike shoes comes with a herringbone pattern and a solid rubber, which adds to the
comfort and support of users.
– Nike shoes are lightweight and durable – Despite provides exceptional comfort, flexibility, of Nike shoes are very light. If
you buy a pair of Nike shoes for specific sports, you will definitely reap the benefits for a long time.
– Nike shoes help prevent foot injuries – It is one of the most important reasons for the popularity of Nike shoes. These
shoes have features that protect your feet while you are participating in any sport. Shoes reduce the likelihood of
catastrophic foot injuries.

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THANK YOU
MALINAO, MAY GRACE
LUNA, DON MAXELL
DAYONDON, NESS ALYSSA
CASINDAC, FRANZELLE
AGUAM, PRINCESS NADHRA
DACULA, BAILANIE
CARPENTERO, QUEEN LYCA
MENDOZA, PRINCESS MARIE
ZAFRA, LUTHER
LIBRERO GUILLER