Phil Knight and Bill Bowman founded Nike Inc. as Blue Ribbon sports in 1962, the first Blue Ribbon sports shoe was introduced as a soccer shoe which bore the Nike brand name referring the Greek Goddess of Victory and Swoosh trademark. In today’s sports world, Nike is well known as the leading seller and distributor of genuine sports footwear, clothing, kits and accessories for a wide variety of sports and fitness activities along with the fashionable commodities as well.
Risk of legal violation in terms of human rights, environmental issues, etc.
Risk of contract manufacturers copying of product (intellectual property rights).
Porter’s 5 Forces Model STRATEGIES CONCLUSION & RECOMMENDATIONS EXTERNAL INTERNAL ORGANIZATIONAL ANALYSIS ANALYSIS PURPOSES High Moderate Low Bargaining power of buyers Threat of Substitutes Intensity of Rivalry Between Firms Threat of New Entry Bargaining power of suppliers
Selling footwear online is highly competitive; barriers to enter into this e-commerce industry are quite low
Cheap copies from the Far East
Competitive products all compete on differentiation
Many online buyers are price sensitive & switching cost is low for the buyer
Buyers of sports footwear have changed in the past decade
An increase in women buying the shoes
Generation Y has a different taste & purchasing methods
Buyer’s propensity to substitute is low
Consumer substitutes for athletic footwear products are low
Sub contracts to more than 500 small scale factories
Low bargaining power due to Nike’s big volume
Reebok, offering more choice of shoe, introducing endorsement by sports personalities, sponsoring sporting leagues etc
Adidas have recovered from the problems that plagued them, and have a good product mix, covering a wide range of sports.
Industry Life Cycle STRATEGIES CONCLUSION & RECOMMENDATIONS EXTERNAL INTERNAL ORGANIZATIONAL ANALYSIS ANALYSIS PURPOSES Growth Shake-out Maturity Decline Market Size Nike is in the stage at which the efficiency of dominant business model provides the company competitive advantage over the competition. Factors: Strong Product Awareness Barrier of New Entry Share Market Quality of Product Development
Strategic Group Analysis STRATEGIES CONCLUSION & RECOMMENDATIONS EXTERNAL INTERNAL ORGANIZATIONAL ANALYSIS ANALYSIS PURPOSES PRODUCT LINE CASUAL ATHLETIC BRAND IDENTIFICATION LOW MEDIUM HIGH 11.2% 2% 2.5% 1.4% 1.8% 0.5% 2.7% 2.7% 5% 2.3%
First mover advantage in e-commerce in the industry
Pre-sales & after
Added value service
COST ADVANTAGE Support Activities Primary Activities MARGIN MARGIN STRATEGIES CONCLUSION & RECOMMENDATIONS EXTERNAL INTERNAL ORGANIZATIONAL ANALYSIS ANALYSIS PURPOSES CORE COMPETENCIES FIRM INFRASTRUCTURE IT system across supply chain; E-commerce infrastructure; Strong financial position & CSR HUMAN RESOURCE MANAGEMENT Strong management team; Global learning & staff training; Excellent employee relationship TECHNOLOGY DEVELOPMENT Research and product development; Leading edge in technology development; Product improvement; Ability to change PROCUREMENT Long-term and trusting relationship with suppliers; Localised and bulk procurement
Mission Statement STRATEGIES CONCLUSION & RECOMMENDATIONS EXTERNAL INTERNAL ORGANIZATIONAL ANALYSIS ANALYSIS PURPOSES “ To bring inspiration and innovation to every athlete* in the world. “ * If you have a body, you are an athlete . Markets Customers Technology Self-concept Products/ services Philosophy
Mission Statement - Breakdown STRATEGIES CONCLUSION & RECOMMENDATIONS EXTERNAL INTERNAL ORGANIZATIONAL ANALYSIS ANALYSIS PURPOSES 1. Customers Each person 2. Products or services Revolutionary sports correlated commodities 3. Markets Global 4. Technology Up to date through innovation 5. Concern for survival, growth and profitability. No 6. Philosophy Considering every entity as a possible valued buyer 7.Self-concept Carry along motivation and innovation which differentiates the company from their rivals. 8. Concern for public image No 9. Concern for employees No
Broad Differentiation Strategies : Nike has always been valued higher than its competitors in terms of innovative design and excellent quality of the goods.
STRATEGIES CONCLUSION & RECOMMENDATIONS EXTERNAL INTERNAL ORGANIZATIONAL ANALYSIS ANALYSIS PURPOSES Differentiation 4 Hybrid 3 Low Price 2 8 Price 1 Low price, low added value 7 Strategies destined for ultimate failure 6 5 Focused differentiation Low High Low High Perceived Added Value
Nike has successfully identified and understood the strategic customers.
The strategy/route that Nike should consider is the route 3 i.e. Hybrid strategy
Better understanding of their competitors.
This strategy is again about having differentiation of product when compared to competitors with low price.
Ansoff Matrix STRATEGIES CONCLUSION & RECOMMENDATIONS EXTERNAL INTERNAL ORGANIZATIONAL ANALYSIS ANALYSIS PURPOSES Existing PRODUCTS New INCREASING RISK INCREASING RISK Existing MARKETS New MARKET PENETRATION In fiscal 2009, U.S. sales of accounted for 42% and non-U.S. sales of accounted for 58% of the total revenues with the target revenue growth to $23 billion by fiscal 2011 MARKET DEVEOPMENT Nike, used this approach to sell their existing range of sports clothes and sport shoes in the fashion market (fashionable leisurewear) and recently the company challenged Adidas by extending their market by sponsoring the Germany national football team starting in 2011. PRODUCT DEVELOPMENT By redesigning their products, Nike can give reposition existing products in new ways to their customers. In addition, it saves Nike the costs of developing an all together new product, and allows them to earn more of a return Eg Nike Air Force 1, Nike ‘Dunk’ DIVERSIFICATION Since now Nike has not focused on diversifying their products.
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