The Nike Company Analysis Essay Sample
Nike is a multinational company that deals with designing, manufacturing, marketing and selling of sports footwear, services, accessories and equipment. Its headquarters are in Beaverton, Oregon and, the company is one world’s largest providers of athletic shoes. The Nike Company was founded in 1964 and it gets its name from the Greek goddess of victory. By the end of 2012, the revenue of the company stood at an excess of US$24.1billion. Besides designing and manufacturing of an assortment of sportswear and equipment, it also operates several retail stores under the trade name of Niketown. The firm also participates in the sponsorship of many high profile athletes and various sports competitions in many different parts of the world. This paper thus explores the Nike Company.
The origin of the Nike Company in 1964 coincided with winning of gold medals involving an athlete at the University of Oregon. Nike’s first business year recorded a huge number of sales whereby 1,300 pairs of Japanese running shoes were sold. There is a clear indication that the Nike Company symbolizes sports and the public assumes like Nike is an indication of sport, because the products are sports-related. Nike together with Wieden have created advertisements of the television and print media making this company more famous. A popular slogan for Nike Company, “Just Do It”, has been established by a co-founder Dan Wieden. This company has several acquisitions that include apparel and footwear organizations. Some companies have been sold with others being acquired fully based on locations and companies’ profits. The products of Nike belong to a wide range of offerings that include running shoes, jerseys, shorts, base layers and cleats (Kolomazník, Adámek, Andel, & Uhlirova, 2008). In the recent report, the company has engaged the introduction of cricket shoes and high performance basketball shoes. This is clear indication that the company is doing well.
Primary Industry and Standard Industrial Classification
The primary industries that Nike participates in are design of shoes, sportswear and equipment and their distribution. This industry is arranged according to the NAICS code and has its own reports, key characteristics, conditions and key competitors. Within the industrial rank of the Nike Company, it has been involved in acquiring more firms for its expansion and more sufficient activities. Some of the companies that have been acquired include Umbro Limited which has increased the chances for success (Thomasseli, 2004). A standard classification of the industry is a corporation of sportswear. The portfolio of this company has broadened and it now includes a wide range of leisure and sportswear endorsed by the top sports personalities.
The heritage of the Nike Company is pronounced like Ni-Key which comes from the Greek name for the goddess for victory. Mystical presence symbolizes encounters that are victorious. Nike has often engaged in presiding over the battlefields it has had over and over its history to date. The main image of Nike is a victorious sportsman, which attracts professional athletes as well as regular people just interested in sports. The world’s greatest mastery of athletic victories is put in Nike’s achievements and embodies the spirit of a goddess who is winged and inspires most of the warriors who are chivalrous. Even though Nike began as a sportswear outlet, it has developed way beyond that becoming a world leader in sport outfits and shoes
Customers, Households, Governments, Businesses and Schools for the Nike Company
Nike focuses on most innovating and economic programs and approaches that drive change based on the market share of the company. Nike sees the future with children who are running just like adults in order to reach their greatest potential. The Nike Company has women as its major customer base, as it has a belief that an addition of women to the company’s sales and operations will add more financial stability. This company is sure that women will be the better customers as compared both to men and children. Presently, the Nike Company has invested in the biggest push ever that advertises for women and targets them (Ramaswamy, 2008). There is a recent campaign that awards women for more shopping. Such campaigns focus on the athletes who are already accomplished and encourages women to have more of their activities geared towards challenging and pushing themselves towards success.
Consumers and other people who interrelate in the Nike Company undergo their fitness journeys and put themselves into a comfort zone that is desired by many people. Reports provide information that Nike is a friendly company and its relationship with the public is viewed positively. More targets for women give the Nike Company an ability to operate digital communities. The company already owns a digital community that comprises of women who are seriously interested in Nike. Targeted markets are not only local, but also international, and that is why Nike is becoming digital and is expanding its outlets. Communities are increasing their involvement in sports to keep fit, thereby making Nike an important company both locally and internationally.
Currently, families, governments and societies are experiencing depressed wages all over the world, and Nike is trying to make its contribution to establishing the balance. Raising wages will make create consumers for Nike, which is important when it comes to profit making. Thus, consumers are involved in campaigns and advertisements with women as specific targets.
Determinants for Nike’s Primary Products
There is the demand for the Nike’s products that is determined by many measures and variables. The primary focus of Nike is to provide athletic footwear and leisurewear with respect to the public demand and consumption. The company carries specific trademarks and marks brand names along the lines of its footwear. A major determinant of the Nike Company’s products is the size of the industry. The size of industry determines how an approximation is made for the pairs of shoes that should be served to the public. There is a wholesale value for Nike’s products with an indication that the size of the industry is capable of producing a huge amount of products. Nike first of all focuses on its capacity, as it cannot produce more than it is capable of, no matter how extensive the demand is. The profitability of the industry determines how products are presented in the market and how much goods are produced. It is true that the athletic industry is saturated and thus the amount of profit made by the company must define the quality and quantity of products for tougher competition. Intense competition, trends in fashion and consumers who are conscious about price really slow down the growth of this company and affect the profit variable negatively. As the company is recording sluggish sales, new styles and products come up and primary products are becoming cheaper in the offshore facilities. There is a new way of boosting maturity in the domestic market and targeting an aim of the modest growth of sales.
Seasonality of the industry is a determinant that defines the products of the Nike Company
Therefore, the whole system is not stable, as any clothes company has seasons. There is a global variance in the balance of market with spring seasons recording more performance. It is important to note that goods are produced depending on the season, because it is better to have products that sell at a particular point in time (Locke, Qin, & Brause, 2007). Seasonal consideration in production then allows for decreased losses and more profits that make producers focus on what is needed at a time. Cyclicality of industries is relatively favorable for economic cycles. The Nike Company ensures that cycles with high profits are the ones that have most products for a maximized sale balance, but during low cycles fewer products are manufactured. Entry and exit barriers have to do with licensing and policies, which is an important variable for determining primary production at Nike. Entry barriers may not keep the brands alive as economic scales lead to new entrants in the market. It is the entry barriers that create competition, and wise competitors use tricks to outdo these entry barriers and achieve more out of their resources. The Nike Company applies the entry barriers as an advantage in order to be smarter than other competitors and have better primary products. Exist barriers, on the other hand, ensure that industry is involved in strategic productions so that there is no room for exit.
Price Elasticity for Available Substitutes of the Nike Company
The brands similar to Nike recreate available substitutes that really tighten its elasticity of demand. The demand of the Nike Company faces competition for the purpose of monopolistic markets. Many firms sell the same products as Nike, but the organization still has control over its prices and production. The Nike Company is categorized as a monopolistic competitor because it is not influenced by other market players in the industry. Product differentiation distinguishes Nike from its competitors and there is little possibility that the competitors can overtake Nike. Substitutes in relation to prices and budgets of customers put Nike at the top. Homogenous competitors come in with different designs, quality and comfort levels, but still Nike is the strongest market participant. With more stability among the competition, this company is seen to have its easy entry and exit into the market (Reuters, 2012). In other words, the Nike Company is more stable as compared to its competitors, as its market elasticity is table. It boasts of its product differentiation, and obviously this is what makes it the most outstanding firm among its competitors. Its prices do not depend on competitors or regulators, which makes it a unique firm with normal profit in its long-run operations. Price elasticity is thus a function of the market stability for the Nike Company.
Nike Company’s Market Structure and the Industry of Operation
The industry in which Nike operates has a distributive market structure. The products are distributed through channels in order to reach consumers. Nike also applies the distributive market structure and uses three channels. This industry has a mix of retail and service activities. Brand designs are developed in order to help customers reach high athletic performance. Designs, products and accessories are marketed openly with increasing distribution across the globe. The corporate structure has a general trend that is standardized and operates in a flexible economy.
The competitors are developed partners in the footwear industry with a number of partners. 190 competitors are identified to exist in the footwear industry. Competitors are more labor intensive, even though their application of technology varies. Southeast Asian location has advantages that ensure a growing market. Low wages, semi-skilled labor and governmental encouragement in the form of investments enforce production and labor standards (Lahart, 2005). There is an indefinite number of similarities among Nike’s competitors, but the industry still has a rough competitive edge. Products are similar in a manner that the all competitors produce shoes. The Nike Company, however, is unique and its product differentiation must be appreciated. In the production of shoes, Nike is proving to be unique and no matter how much its competitors produce, this company still stands out as the best in the footwear industry.
Barriers to entry in the footwear industry are compelling, because not all footwear is made for sport and athletic purposes. It may be difficult to enter the industry due to the lack of brand fame. Nike still reigns in the footwear industry, because its rivals are not experienced (Cassidy, 2007). Nike not only has a victorious image, but also a real a huge market share. Thus, Nike is forcing its rivals to limit their profit margins by offering low prices. Competition that is non-price based encompasses design for competitive purposes, and Nike still offers the best design. Nike targets not only men, but also women and children. That is why its retail stores are not only international, but also diversified. Economies of scale act as a barriers in the footwear market, and it is important to note that acting smart is strengthens such barriers.
The Nike Company always not only serves its customers, but also the environment. The company designs products in a unique manner and extensively invests in research and development. Since its formation, Nike has enhanced its technologies to ensure their applications for the product lines that depend on consumers’ preferences. Premium services and solutions are tailored for the customers. Therefore, competitive prices and products are differentiated and enhance Nike’s competitive ability. Nike offers a premium-level service with vast experience. North America is Nike’s largest driver of growth and development, and this region does bring good revenue for Nike. There is a combination of pricing and innovation techniques that spearhead efforts that provide economic stability. There are dynamics of retail in the strategies of growth and global revenues get to higher margins. Sales mixes are geared towards the direct distribution when there may even be no need for such additional distribution. The distributive market is still important and higher margins are appearing in the process of changing market structures.
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