Threat of SubstituteThe substitution for the athletic footwear is low, as there are little alternatives available to choosefrom. Based on this element of the Five Forces Analysis, the threat of new entry is a minor concern for Nike Inc. Nike has made itself into a magic mirror, where it projects an image of strength, passion, and determination onto everyone it engages with. International revenues fueled a great portion of this growth with an 80% increase in 1991 from the prior year. Asset productivity ratios like inventory turnover, cash turnover, fixed asset turnover,receivables turnover indicate how effectively a company deploy its assets.
A lifestyle that everyone feels they need to have. In conclusion, both companies are always striving to better themselves and stay ahead of the competition, but Nike is just so far advanced that Under Armour has a lot of catching up to do. The cash turnover reveals whether a company can finance their current operations. Market development is a third strategy for consideration due to Nike's ability to geographically expand our product offerings. We realize that the team-mentality that captured the spirit of athletics in the late 1980's and early 1990's has been replaced by a sense of individualism. These groups have somewhat different tastes that Nike should be able to satisfy.
If Reebok can expand their appeal to incorporate female consumers who are not currently Reebok customers, Reebok could expand their market share and take customers away from Nike products. At the same time there are many suppliers of such rawmaterials in the industry. We utilize over 20,000 retailers, Nike factory stores, Nike stores, NikeTowns, Cole Haan stores, and internet-based Web sites to sell our sports and leisure products. Management of Accounts Receivable - Weakness Nike does permit sales in cash, cash equivalents and on credit. As a result, larger companies are able to manufacture products at a lower cost per unit with lower average costs of production. However, we are not using our resources to the fullest degree. One article notes how Nike has been consistent in their message to consumers that they stress the importance of their needs and preferences.
Competitive Strategy In the past, our company has utilized product differentiation as our competitive strategy. Buyers are strong if there are a few buyers that take up the entire market share, and are weak if the product producer can take over his own distribution and retailing. Nike has also shifted from not only targeting the elite sector of athletes but allowing consumers to explore their inner athlete - to become fit and healthy with Nike's products. The improved economic conditions will prove profitable for the companies in sports wear industry. The negative publicity that Nike has received thus far has lowered its image to that of being an ethical company. Our focus also allows us to maintain a somewhat narrow niche that enables us to effectively capture the needs and wants of our consumers. Incorporating fashion into our products is one way to achieve this strategy.
The table below concludes that focusing on product development will allow Nike to continue to build upon our founding tenant that has secured us a position that borders on leverage and maintenance within the athletic footwear, apparel, and accessories markets. Its operating profit margin is also more than 5, which reflects profitability and effectiveperformance. Short-Term: Decrease our cost of sales from 62. Applied research focuses on short-term initiatives such as successfully developing new product lines. These things are difficult to achieve without the resources of an established manufacturer. This segment has reached a point of maturity in the domestic market and can look forward to only modest sales growth for the long term. Strategy Control Establishment of Standards - Strength A comprehensive establishment of profitability standards has assisted Nike in our evaluation of individual performance as well as a comparison to other competitors.
While establishing these policies is a step in the right direction for Nike, the difficult task at hand will be the implementation of the aforementioned goals of the new labor initiative to ensure the success of the program. In 1998, the closest competitor, Adidas, held 15. Ultimately it means that consumers are shopping around for a better deal. The giant firms of the industry invest heavily in building a strong brand identity. In this industry, the buyer has some of the power because of the similar product design nature of athletic and performance shoes.
So long as a new company isn't created, to achieve more competitive advantage, Nike should continue to do well. At times, we need to adjust our posture in relation to a particular product line or area of products. We are also committed to making sound decisions in regards to our environment, resources, and the fight against pollution. The sales and revenue of the company has increased. There are over 7 million followers of the end of June 2016. Thus Nike has a high direct cost. However, in Europe, although awareness of basketball exists, the identification and technical aspects of the shoe are lost.
The rising middle class in regions like China and Latin America are increasingly demanding athletic apparel. Initially, the Nike brand was on athletic shoes only. Strategy Implementation Corporate Culture - Strength Nike has created a corporate culture rich with employee loyalty and team spirit. Sales and inventory data can be monitored in real-time. Nike brand strategy is excellent on this end because not only is the internal foe someone we can all hate, the hero is the viewer! Short-Term: Increase availability of educational assistance programs for world-wide manufacturing employees from 50% of factories to 70% by 2000.
Olympic Committee as an Official Outfitter of the U. Also write the sources of the competitive disadvantages. But these cannot be used in place of sports shoes, in any sporty event. See below for the chart comparison of Nike and their competitors and how one may argue Nike's product helped the athletes perform better. Each company is trying to stay one step ahead of the other and hopefully gain more market share int he process.