The business environment both the external and internal can be measured through marketing auditing tools. In this assignment, we have discussed the footwear industry in UK. Forces of Porter are being applied in this particular industry to judge the competitiveness of the external environment.

1. Table of Contents
Introduction ................................................................................................................................1
Task: 1........................................................................................................................................1
1.1 Describing Porter’s five forces analysis on Athletic Footwear market in UK with key
factors. ....................................................................................................................................1
1.2 Overall Competition State of the UK’s Athletic Footwear market .................................7
Task: 2........................................................................................................................................7
2.1 Analyze and Discuss the assets of Nike’s internal environment with an auditing tool.........7
2.2 Analyze the competencies of Nike’s internal environment with an auditing tool. ...............8
Task: 3......................................................................................................................................10
3.1 SWOT analysis of Nike ...................................................................................................10
3.2 A future strategy that can achieve sustainability in Competitive Advantage Sector ..........13
Conclusion................................................................................................................................14
References ................................................................................................................................14
Introduction
The business environment both the external and internal can be measured through marketing
auditing tools. In this assignment, we have discussed the footwear industry in UK. Forces of
Porter are being applied in this particular industry to judge the competitiveness of the external
environment.
Task: 1
1.1 Describing Porter’s five forces analysis on Athletic Footwear market in
UK with key factors.
UK is one of the biggest athletic footwear retailers in the world with 90 billion USD and also 5
billion unit of Global shipments around the world in 2016. The main elemental product of this
market is as following:

2. Figure: Main elements of Athletic Footwear Market in UK
Now, here’s the Porter’s five forces analysis on Athletic Footwear Market in UK to judge the
competitive power which are illustrated as following:
Figure: Five Forces with Their intensity
I. Supplier’s Bargaining Power:
Supplier’s bargaining power refers how much strength an average supplier has to manipulate the
price in the market to change supple-demand curves and equilibrium point. The less the supplier
the more monopolistic the market become by which they can have a perpetual position in the

3. market. Supplier’s bargaining power in accordance with UK’s Athletic Footwear Market are as
following:
Low Concentration of Suppliers: UK’s Athletic Footwear Market has multifarious suppliers
but with less concentration which makes them having less bargaining strength with the
customers. Though it effects positive in the Athletic market of customer’s perspective but have
inverse effect from supplier’s perspective. High individual suppliers decline the effect on the
demand curve on footwear market.
Diverse Distribution Cycles and Channels: UK’s Athletic Footwear Market has more
Distribution Cycles which make one average supplier having less bargaining power. Though it’s
also positive on the context of overall footwear Market aspect.
Producer’s Volume is Critical to Suppliers: If suppliers try to raise price in order to
manipulate the market, producers may give threat to cut volumes unit which can lead to
supplier’s profitability into a complete disaster.
Figure: Portrait of Supplier’s bargaining power (Source: Pinterest)
II. Bargaining Power of Buyers
Bargaining powers of Buyers refers the strength and capability of buyers to manipulate the
demand of the market. Here the contribution and the importance of the buyer in demand cycle is
being measured. Bargaining powers of Buyers in accordance with UK’s Athletic Footwear
Market are as following:
Large Number of Buyers: UK’s this particular sector has a huge number of buyers. As UK is
the fifth most playing sports including football, cricket, rugby, badminton, tennis, so sports shoes
are requisite elements for most of the sport lovers. As there are multifarious buyers, no

4. individual average consumer holds the power to bargain. Eventually, it’s a positive sight for the
supplier’s perspective.
Product is priority to the customers: Athletic Footwear are such products which will always
attract majority sports lover, regardless of their prices or supply rate. For an example, A football
lover may always want to buy NIKE shoes regardless of their increasing prices. So, this directly
influence Athletic Footwear market.
III. Competitive Rivalry or Competition:
Competitive rivalry refers the current number of competitor’s presence in the market and their
capacity to manipulate the demand-supply curve. In footwear market, if products are too
homogeneous and there are multifarious competitors then, it will result up being difficult to
survive in the market. Here the Competitive rivalry in accordance with UK’s Athletic Footwear
Market are as following:
One of the Largest Industry: Foot wear industry is treated as the top five industries in UK. As
the industry size and market share is very large, so competition is very strong. If products are
homogeneous then it need penetrate niche or too differentiated marketing strategy. If products
are little heterogeneous, brand can have absolute or higher competitive advantage in footwear
market in UK. Eventually this quality criteria decrease the cost of most product and allowed
firms to grow in profit or market shares.
Lowest Exit Barriers: As mentioned earlier, because of huge competition small firms find it
very difficult to sustain in the market which ends up leaving the mass market. Eventually it’s a
positive sign for Athletic Footwear Industry in UK.
Higher Industry Growth rate: As there are more competitor firms in footwear industry in UK,
the growth rate is increasing enormously. On the other side, Market share and GDP is growing
fast which has a huge contribution in UK’s overall economy in general and Footwear industry in
particular.

5. Figure: Portrait of Competitive rivalry (Source: Pinterest)
IV. Threat of Substitution
Threat of substitution refers the capability and potential availability of customer’s finding
different but similar regarded product in the market. It’s a sign of huge potentiality of switching
current product to competitor’s product by customers. The treat of customer can be avoided
through efficient marketing strategy or switching cost to an optimal level. Threat of substitution
in accordance with UK’s Athletic Footwear Market are as following:
Very limited number of Substitutes: UK’s footwear industry has very limited number of
substitutes. As here majority footwear products are not too homogeneous so that customers find
it difficult to search for other similar footwear products. Eventually limited substitutes have a
positive effect for producers and suppliers.
Figure: Portrait of Threat of substitution (Source: Pinterest)

6. V. Threat of new Competitors or Entry
The threat of new entry refers the possibility of new competitors with similar homogeneous traits
come to the market. If regarded brand has strong durable position with strong customer
engagement, the new threat of entries won’t consider a barrier after all. The threat of new entry
in accordance with UK’s Athletic Footwear Market are as following:
Improved and Established Brands: UK’s footwear market has multifarious well established
footwear brands. So, there is limited scope of rising threat for new entry unless the new brand
got something heterogeneous product with higher competitive advantages. Greyson, Church,
Ticker, Loke, Adidas, Nike are some of the established footwear brands.
Strong and Dedicated Distribution Network: UK’s footwear industry has strong and dedicated
distribution network with premium and penetrated pricing strategy. New entry with similar
products may need to choose niche or differentiated marketing strategy to enter the market rather
mass marketing.
High Resources and Capital required: To enter a big industry like Athlete footwear requires
high resources and capital support. New firms find it very difficult to survive in the market and
compete with others.
Current Buyers loyal to Existing Brands: Another big barrier for the new entries is that
current customers are likely to buy from the established brands rather the new one. Either the
new footwear brand got absolute advantage over the design of the shoes or it will find very
difficult to sustain in the athlete footwear market, where established brands have very strong
customer engagement and brand loyalty.
Figure: Portrait of the threat of new entry (Source: Pinterest)

7. 1.2 Overall Competition State of the UK’s Athletic Footwear market
UK’s Athletic Footwear market has more Heterogeneous products and well established brands
got higher competitive advantages. Buyers hold less decision making power as footwear
products are not homogeneous in function and Suppliers got more convenience to make the
market more elastic in nature. It has overall 21.8% Man’s sneakers, boots, outdoor boots, 15.2%
Women’s outdoors boots, 14.6% includes Men’s casual footwear, 7.7% includes children’s
hiking boots and the last 5.5 % includes children’s toddlers.
Figure: Study conducted by Neilson on UK’s Athletic Footwear market
Task: 2
2.1 Analyze and Discuss the assets of Nike’s internal environment
The current assets (cash and cash equivalents, short term investments, net receivable, inventory
and others) of Nike are illustrated as following:

8. Figure: Assets of Nike’s Balance sheet:2016 (Source: Nasdaq)
2.2 Analyze the competencies of Nike’s internal environment with an auditing
tool.
The Value Chain: Nike always try do manufacture he most efficient product as possible while
eliminating potential errors. The value chain of Nike’s is efficient and cost effective.

9. Figure: Nike’s Global Value Chain
Nike currently has more 900 contract factories around the world with 1M factory workers. From
the upstream contract suppliers, Nike distribute products directly to the dealers and retailers.
Production Operation: The production team of Nike is reinforced by cost effective, innovative
unique designs and ingredients to make the best product line on their field. They have efficient
machine operators, modern technological mechanisms, brand loyalty, brand customer
engagement for each of the sector. With their regardless cross national outlook, Nike is
outsourcing the best employees in their industry to make the best fruitful effort.
Figure: Average Athletic Footwear Inventory Days 2011-2016
Human Relation Management: With Nike’s strong corporate environment HR tends to excel
faster in regarded specialized sides. Nike has established ideology which makes the internal
heritage more deep and reinforced. Here Nike’s employees sees their work not as a separated
entity but as an integral part of their regular lifestyle.

10. Strong Brand Loyalty: Nike has world recognized brand loyalty. This is the biggest strength of
Nike. Strong customer engagement can increase brand value and gain sustainability in long run.
Task: 3
3.1 SWOT analysis of Nike
SWOT matrix is used to measured and spot the main four crucial internal business elements
namely Strength, Weakness, Opportunities and Threats. SWOT analysis of Nike can be
illustrated as following:
Strength of Nike:
Extreme Competitive Organization: Literally, from their motto “just do it”, we can get how
aggressive they are in terms of competition in the footwear market. With their slogan and their
unique brand logo, they founded philosophies as well as ideologies on footwear industry.
Whether its niche market, differentiated or mass marketing, Nike always proved who is the
player here.
Outsourced Production: Nike individually don’t have any producing outlet whereas its
manufacture products from outsourced production. This particular absolute advantage has
motivated the brand to focus on the sales volume and promotional activities as well.
Transnational HR with best outsourcing, Nike’s HR can be one of the moving factor for its
today’s brand development.
Globally Recognized Brand: Nike is a globally accepted and recognized manufacturer brand.
People across the world, when they hear best footwear, the first top three name that come to the
mind, one of them is Nike. With strong customer engagement and Brand loyalty Nike is the
globally recognized footwear brand.
USP Effect: Eventually Nike’s USP (Unique selling Proposition) is very unique then its
competitors. This alone can drag Nike to become the Globally standing footwear manufacturer
company.

11. Figure: Portrait of Strength of Nike (Source: Pinterest)
Weakness of Nike
Most Concentration on Footwear business: Nike got more recognition for footwear
manufactural company then clothing, gear or bags. The majority of Nike’s shares are in
Footwear industry. Eventually, it’s not paragon for a business to lean on the one particular
segment all the time. So, diversification and innovation is needed in other segments as well.
Labor Unfriendly Condition: When Nike have, the biggest absolute advantage called “All
Outsourced Production”, it got some demerits too which is having labor unfriendly conditions.
Most of the workers across the globe can’t adopt themselves with others. Such condition greatly
hamper company’s internal environment and brand image in so far.
Main Supply Chain element is “Retailers”: This footwear manufactural company does its
most of the supply chain through the retailers for majority product segment. Here retailers got
other competitor’s products too. Here, Nike unintentionally reducing their overall appeal from
the market through their bound supply chain.
Wrong Perception of being too Luxury: Sometimes, Nike is being perceived as one of the
most premium and luxurious footwear products in the world. While, this is a bad image because
Nike has segmentation for the middle class, upper middle class sector as well. Such image only
question Nike’s brand loyalty and undertaken promotional activities.

12. Figure: Portrait of Weakness of Nike (Source: Pinterest)
Opportunities of Nike
Emerging Market of China and India: Here comes the current big opportunity for Nike which
is grab the emerging footwear market in India and China. Nike can easily penetrate the market
with their brand insights in such populated country where Buyers are at a boom. In addition,
there billion of people are following western culture which leads them to buy Nike products.
With efficient value chain process and enhanced BTL and ATL promotional activities Nike can
grab the footwear market of both countries.
Diversification: Nike has other products regardless shoes. Nike have huge opportunity to use
their established brand images and networks to mobilize other products as well. Diversification is
needed for this brand. They can run a test run in congested countries like India or China for
better improvising or innovation.
Figure: Portrait of opportunity for Nike (Source: Pinterest)

13. Threats of Nike
International Trade Barriers: As Nike is a Global footwear manufactural company it has to
deal with other countries international trade barriers like strikes, showdown, sudden policy
changing and so on. Because of international trade barriers Nike has to suffer lot in recent times.
International trade barriers are from the external environment, which Nike can’t have control
over. So, because of not having unpredictability and strategy, Nike have to play the role of silent
audience on such obstacles.
Recession Effect: Current ongoing recession has a very inverse effect on Nike’s business. Nike
may find it difficult to find the expansion door to the positive inflation.
Competitors: Though Nike is a team player, but the threats of competitors still a big question. As
business’s external environment is more than unpredicted so it’s shouldn’t good for Nike to
choose the market or select segment without considering competitors.
Figure: Portrait of Threats for Nike (Source: Pinterest)
3.2 A future strategy that can achieve sustainability in Competitive Advantage
Sector
Nike had a bad image for being too much expensive or luxurious. Literally Nike follows
premium pricing but that doesn’t refer such too much term where Nike has its own segmented
group of audience. So, to eliminate this bad image and gain unique higher comparative
advantage, Nike can undertake following strategy which it hadn’t done before:
Manufacturing Footwear products for Middle and Upper middle class especially in India
and China: This time Nike may manufacture products for the middle and upper middle class
people of the society with penetration pricing. They can test run such initiative in India and
China, where people are mostly from middle and upper middle class and want recognized brand
footwear products. This initiative will eliminate the bad image of Nike as well as set the
benchmark high.

14. Conclusion
UK’s foot wear industry is one of the biggest footwear industries in the world. On the other side,
with limited supplier power, less threat of substitute, more buyers bargaining power and more
less barriers to entry the market, has made the market very durable and enhanced. Eventually,
UK’s recognized Footwear industries are going across the border in order to make the field
enhanced, efficient and outsourced.
References