Disclaimer: This work has been submitted by a university student. What You Need To Know About Marketing for Your New Business, Easy Ways Businesses Can Incorporate Sustainability. Nike’s Pricing and Business Strategy. A very large part of Nike’s supply chain is located in Asia and this is because apart froth availability of raw materials, labor is cheap there. In 2017, the U.S. athletic footwear industry achieved a growth of 2%. They are also designing better customer experiences to retain these customers. Nike’s production strategy has innovative technology at its core. Competitive pressures against the brand have also kept growing. Its responsibilities include selecting and contacting the right suppliers for quality goods and services. Top design ability and high quality products have been the central factor to Nike’s success. This has greatly helped the managers to lay a plan for the organization and take it where they want it to be. The footwear and apparel  industry is growing fast and is seeing very high level of competition. Its weaknesses are, however, linked to its strengths. It felt a detrimental impact of $542 million and $1,985 million on its consolidated revenues for 2017 and 2016 respectively due to currency fluctuations. There are a large number of brands operating locally and internationally in the global market that are selling sports shoes and apparel. Acquisitions and expansions have been well thought out yet have also been allowed to develop at their own speed and in line with the premium branding approach. This will also work to reduce its dependence on the US market. Acquisitions can be a good method to find growth faster nationally and internationally. Branding was premium from the beginning with the relationship that it developed with the Wieden and Kennedy advertising company. Nike needs to ensure that it maintains its premium branding position in the market, as this will reduce the risk that it is negatively impacted by inferior, yet cheaper new entrants. This is a PESTLE Analysis of Nike : Political factors have kept growing in importance for the business industry over the years. Nike is the leading brand in sports shoes and apparel industry. This is not an example of the work produced by our Essay Writing Service. NIKE Brand sales to wholesale customers grew by 5 percent while Direct To Consumer revenues grew to $9.1 billion, up 18 percent. Co-creating value through customers’ experiences: the Nike case Strategy & Leadership, 36 (5). Apart from product innovation, its focus remains on customer engagement. Its e-commerce websites are active in more than 45 countries. Its video marketing strategy has ardent fans around the world. While the number of major brands playing in the international market is limited, the level of competitive rivalry is still very high because of each brand investing heavily in product quality, innovation and marketing as well as research and development. Moreover, technology is helping brands market themselves more efficiently. Any break down in the legal enforceability of this agreement could be incredibly damaging and need to be monitored carefully. More than 550 factories in 42 countries make Nike products. Focusing on these things will affect the consumer experience of Nike as well as its sales and profits. It can exploit both e-commerce and physical retail channels for faster overseas expansion. The chosen corporate strategy for Nike is likely to be based on its own internal strengths and weaknesses in relation to its external opportunities and threats facing the organisation. There was an increase of 16 percent in Diluted Earnings per share which rose to $2.51. Nike makes some of the best ads in the business. As well as maintaining a wide range of products, the company has also been at the forefront of design, bringing in the latest in footwear technology, namely the Air Zoom Yorker, which is a shoe weighing 30% less than competitors’ shoes. Strategic Corporate Social Responsibility: Stakeholders in a Global Environment. Nike is an international company producing sports based apparel. For this reason, Nike rightly takes a strategy of ensuring that it remains at the forefront of design technology when it comes to sports equipment fending off any potential substitutes. Ma, H., 1999. & Chandler, D., 2006. Nike’s first self-lacing shoes, HyperAdapt 1.0 . Nike Place & Distribution Strategy: Following is the distribution strategy of Nike: Nike’s global procurement team is responsible for obtaining raw material from around the world. Nike’s product offerings are focused at nine key categories that include Running, NIKE Basketball, the Jordan Brand, Football (Soccer), Men’s Training, Women’s Training, Action Sports, Sportswear (sports-inspired lifestyle products) and Golf. It is not just the governments but other agencies are also actively watching for the carbon footprint of businesses. Some of these sources have cerated sustainable advantage for Nike and the rest can be strengthened further through focus on customer experience, marketing and innovation in future. In 2016 and 2017, Nike spent higher than 3 Billion USD on marketing. In 2017, Nike spent 3,341 million dollars on marketing and promotions. This growth was driven by a 30 percent rise in digital commerce sales, growth in number of stores and 7 percent growth in comparable store sales. All work is written to order. Firestein, P.J., 2006. Nike however, remains a dominant name in this market whose sales and revenue have grown steadily over the past five years. Nike's Values 9. this reflected the growth in Net Income and declining weighted average diluted common shares outstanding. The first range of shoes was launched in 1972 and Nike, named after the Greek goddess for victory was established. This development of a premium brand has been the central strategy for Nike and all of its acquisitions have been done with enhancing the brand image of Nike in mind. It procures raw materials from several countries around the world. Nike has chosen to use a localization strategy particularly with respect to Twitter and Instagram (McCulloch, 2014). & Chandler, D., 2006. Currently, it is operating its e-commerce websites in only 45 countries. For further market growth, Nike has focused on sustainability and higher focus on innovating its products that better cater to the sports and leisure wear needs of the new generation customers and athletes. Supply chains and the efficiency of these chains has been critical to Nike’s ability to serve customers’ needs. Nike suppliers are required to follow strict rules and regulations related to labor and HR management. In this way, economic forces play a major role in shaping the fortune of global brands. – Supply chain management: Its excellent supply chain management is also a key source of competitive advantage for the brand. Competitive Environmental Strategy: A Guide to the Changing Business Landscape. Outbound logistics are a very critical part of Nike’s value chain. In North America alone, more  than 2,000 retail stores of Nike are served by a single headquarter. The brand has occupied the top position for several years in the industry. However, Adidas was one with fastest growth rate with its sales having grown at 50 percent. SAGE. He likes to blog and share his knowledge and research in business management, marketing, literature and other areas with his readers. It is because the government oversight and regulation of businesses has kept rising. These forces can have a direct impact on their sales and profits. Its ‘Swoosh’ logo and ‘Just Do It’ slogan keep it apart from the large crowd of brands. Creation and preemption for competitive advantage. The company grew quickly and by 1980 it had 50% of the US market in sports shoes. The largest number of Nike suppliers are located in Asia. Climate issues and sustainability have been central to the organisation’s strategy. It is because the taste of people differ from society to society and culture to culture. Extensive global production and … It is because they have their supply chain and distribution network spread all over the world. The legal net has kept growing stiffer and stiffer for international businesses. Economic activity has returned globally and apart from a  few markets most are seeing surging economic activity. The overall bargaining power of customers is high which gets moderated to a small extent by the brand’s strong image, marketing capabilities, and the level of trust and customer loyalty. To retain its growth rate, the brand must retain focused on product innovation and marketing. Sports leisure has become the largest category across athletic footwear in US. There is undeniably a great business and marketing strategy behind a great and global brand. It was revealed that certain suppliers were using child labour as a way of keeping costs down. We've received widespread press coverage since 2003, Your UKEssays purchase is secure and we're rated 4.4/5 on reviews.co.uk. Early advertising was very specialist relying almost entirely on the track and field publication, with the focus being on the benefits of quality running shoes. The threat of substitutes is also important to determining where the company is positioned in the market and what strategy is most suitable (Crain & Abraham, 2008)[7]. Phil Knight (Founder and CEO) is often quoted as saying that 'Business is war without bullets.' Nike Business Strategy and Competitive Advantage: Nike is the leading brand in sports shoes and apparel industry. It has spent more than 3 billion on marketing in 2017. In past apart from other marketers, Steve Jobs too appreciated the marketing strategy adopted by Nike. Nike is a global company with a large and global infrastructure made up of its offices, retail stores and distribution and logistics centers. Nike also spends a lot on advertising as well as research and development. The major threat to Nike is the imitation that goes hand in hand in various markets which are affecting its revenues and businesses. Nike places a great emphasis on corporate responsibility and this has shown in its green approach to the strategy (Human Resource Management International Digest, 2005)[6]. All these factors mean lower bargaining power of the suppliers against the brand. It has six important distribution facilities in Memphis Tennessee, two of which are owned by Nike and rest are leased properties. Nike's competitors had by then developed their business in this segment. However, despite its international growth the brand depends heavily on US market for revenue and income. The basic strategy employed by Nike is one of branding and premium positioning in terms of quality and design. Harvard Business Press. Its excellent marketing capabilities have helped it outshine among the crowd of brands. The management employs strategic management components such as vision, environmental analysis, strategy creation, strategy implementation, and strategy assessment (Nike, Inc., 2009). Since October 2017, Nike has worked to rebuild their business model. Hoffman, A.J., 2000. In such an environment while it remains generally easier to do business in the countries with a, The importance of economic factors can be understood from the fact that low economic activity results in lower sales and revenue for international brands. By 1971, Nike had parted company with the original distributor and began to produce its own range of footwear. & Montgomery, C.A., 2005. Brands like Nike are focusing not just on product innovation and quality to cater to the needs of the new generation better. Apart from their own manufacturing and distribution processes, Nike also keeps a watch over its supply chain partners since they have remained a source of problems rising from environmental issues in the past. Tag lines such as ‘there is no finish line’ were used and Nike won advertiser of the year at the Cannes festival. As of 2017, over 60% of revenues came from footwear and over 28% in apparel. The glory that  Nike has earned over time is a result of its focus on its customers and mainly athletes. It share of non US revenue has shot past 50% in 2017. The demand for sports shoes is expected to rise steadily in the near future based on rising health consciousness and growth in sports and gym infrastructure across U.S. Threats are constantly present in the sports market. It is clear to see that Nike’s strength relies almost exclusively in the top brand quality and reputation that it has achieved, over the years. Higher legal pressures – The legal pressures have grown globally causing higher pressure related to compliance on international businesses. SAGE. Looking for a flexible role? One of the critical ingredients of Nike business model success is its ability to create demand for its products. Any damage to the branding would be disastrous for the company; therefore, expansions have been undertaken with dynamism and caution in equal proportions. The effect of legal factors on businesses has kept growing as compliance related burdens have kept adding to their manufacturing costs. [6] Human Resource Management International Digest, 2005. ii. The new challenge facing Nike is to maintain this position, despite recent bad publicity relating to its suppliers. Converse is also a wholly owned subsidiary brand of Nike that designs, distributes and licenses casual sneakers, apparel and accessories under the Converse, Chuck Taylor, All Star, One Star, Star Chevron and Jack Purcell trademarks. Strategy & Leadership, 36 (4). There are legal barriers too which discourage new brands from exerting the market. “Our digital business in China has accelerated even further over the past months and we are now seeing double-digit increases in retail traffic week over week, with some stores having already returned to prior-year levels,” Donahoe reported. Collis, D.J. The following strengths are the most notable in the case of Nike Inc.: 1. Apart from these things, Nike’s focus is also on innovative HRM since HR is now also a critical source of sustainable competitive advantage for a brand. Free resources to assist you with your university studies! They accounted for more than 90% of its footwear production during 2017. Submitted to University of Sunderland Submitted by: BIJAY GURUNG Student code: 109122858 BA (HONS) BUSINESS MANAGEMENT (YEAR 3) WORD COUNT: 3498 (excluding executive summary, references and relevant appendices) Table of Contents 1. Marketing capabilities: The marketing capabilities of Nike are quite advanced and it is known for its excellent marketing which is absolutely outstanding. Nike has continued to increase its investment in R&D as well as marketing of the brand. This growth was driven by a 30 percent rise in digital commerce sales, growth in number of stores and 7 percent growth in comparable store sales. However, the customers of the Nike’s have the brand awareness and this is the reason that the company put more effort in the products. Consumer Direct Strategy – Nike has accelerated the consumer-direct strategy, which means shifting its focus to digital business and subsequently closing physical stores. in English literature from BRABU and an MBA from the Asia-Pacific Institute of Management, New Delhi. Society and culture have a major effect on purchasing habits of consumers. The world has been through, Technological factors are also playing an increasingly dominant role in the expansion and growth of businesses. Purchasing power for buyers is increasing and, as such, Nike has to ensure that it has value added services encouraging buyers to remain with the brand and not to be swayed by new entrants. Consumers are becoming more brand conscious and this has been the central strategy for Nike for some years; it is now cashing in on this brand positioning with strong corporate social responsibility policies (Werther & Chandler, 2006)[5]. Its Swoosh logo and can be found on nearly all of its products. One of the most notable and recent acquisitions was that of Umbro, extending Nike’s reach of the sports apparel market including jerseys, T-shirts and sports kit such as tennis rackets. In such an environment while it remains generally easier to do business in the countries with a  stable political environment, those facing political instability can be difficult to operate in. Corporate Strategy: A Resource-based Approach. Nike has several owned and leased distribution facilities all over U.S. to serve the U.S. market. In both 2016 and 2017, the detrimental effect of fluctuation in foreign currency was felt strongly by Nike. This has enabled it to maintain a competitive advantage over new entrants and substitutes alike. Sociocultural factors have grown to be more dominant in the 21st century. These are two specifically important areas that have brought it to the point it has reached today. Technologies like AI have grown very important to design  superior customer experience whether it is in-store shopping experience or online shopping. Business segments in which Nike operates has a large number of local & national players. Nike has technological excellence which has allowed it to be at the forefront of design technology. Competitors such as Adidas are regularly entering the market or gaining new market shares. Building and protecting corporate reputation. Human Resource Management International Digest, 13 (3). Competitive rivalry among the existing brands: The level of competitive rivalry between the existing brands is high. From environmental to labor and product quality related there are several laws, several of which differ from market to market and affect businesses deeply. How did Nike’s share price hit an all-time high in the middle of a pandemic? VAT Registration No: 842417633. Recent difficulties have been encountered by Nike in relation to the working practices of its suppliers and, as such, a much greater degree of control has been taken by Nike headquarters in the US to ensure that all working practices are ethical and sustainable in the long term. Using value-chain analysis to discover customers’ strategic needs. Nike’s strengths are the primary drivers of the company’s growth and global leadership in the sports shoes, apparel and equipment market. Footwear & Apparel Industry external analysis: Below is a SWOT analysis listing Nike’s key strengths, weaknesses, opportunities and threats: Increasing marketing and overhead operating expenses: Rising competition in the sports shoe and apparel market has resulted in an increase in Nike’s marketing related expenses. & Eisenhardt, K.M., 1998. References Nike's Strategy to Become the Leader in their Market. Strategic management is a technique that Nike, Inc. has been able to apply to determine how it is performing in its current position and how its future should be. Its excellent marketing has ranked it among the best marketers of the world. One of the ways that this has been achieved is to have key individuals in critical roles within Nike and the subsidiaries. In fact, as of 2017 Nike spent over $3.3 billion in demand creation campaigns. Rapid growth through careful acquisitions has enabled Nike to achieve considerable market penetration across developed countries. Its use of technological solutions has helped it minimize its impact on the environment and improve the quality of its products continuously. The control has shifted into the hands of the customers in the 21st century. Nike accounts for its Converse, Cole Haan, Hurley, Nike Golf, Nike Bauer Hockey, and Starter businesses in what the company calls it's Other category. Opportunities-wise, Nike has the potential to exploit technology through the medium of e-commerce. The bargaining power of customers in the 21st century has kept rising fast and the case is same with Nike. Nike brand is the most valuable among sports businesses Of the companys $18.4 billion in revenues in 2009, 90% was attributable to merchandise emblazoned with either the Nike or Nike Golf logos. Net income also grew by 13 percent to 4.2 billion dollars. Today: self-lacing shoes. Whilst professional equipment and sports shoes are not readily substituted, fashion items are and this area of Nike’s market is, therefore, potentially threatened by substitutes. Nike Brand’s revenue was 32.2 Billion dollars, up 8 percent. What was not immediately obvious from using the Ashoff Matrix to analyze these businesses that comprise the other category was their high growth, expanding market share, and increasingly high levels of cash generation. However, new entrants required the huge amount for the capital; therefore, Nike has the maximum market share in the footwear industry (Reuters, 2016). Its marketing tactics have earned it some serious appreciation over time. While Nike has retained its focus on great quality, sustainability is also become an important focus down its production and supply chain. This particular strategy appears to work well on generating responses not only to new product launches, but also to opportunities for online purchases, in-store … Competitive Environmental Strategy: A Guide to the Changing Business Landscape. However, Nike still invests heavily in marketing and uses sportspeople like Football celebs for brand promotion and product endorsement. In the late 1990s, Nike reduced costs and the selling prices of … Management Decision, 37 (30). Its product range is extensive and innovative and multiple celebrity endorsement has proved to be a considerable internal strength for Nike and one that has been exploited to the maximum in gathering additional market share. Do you have a 2:1 degree or higher? The Asian markets particularly have seen faster growth. In 1982, the first television advert was aired during the New York Marathon. & Montgomery, C.A., 2005. This resulted in lower sales and revenue for fashion and sport shoe brands. Registered Data Controller No: Z1821391. Nike has set business plans through strate… Its origins date back to 1964 when it was initially a distributor for a Japanese sports shoe manufacturer but soon became profitable in its own right, opening its own store in 1966, in California. The brand has occupied the top position for several years in the industry. [5] Werther, W.B. Nike, IKEA and IBM’s outsourcing and business strategies: Profits and perils. From there, the products are distributed to the individual and wholesale customers apart from Nike’s own retail stores. Abhijeet has been blogging on educational topics and business research since 2016. Business level strategy analysis/recommendations Nike’s major competitors consist of companies such as Adidas, Under Armor, and Rebook. Environmentally, Nike has had an interesting background. Among the top selling brands in U.S. (based on dollar sales), were Nike/Brand Jordan, Adidas, Skechers, Under Armour, and New Balance. It has six important distribution facilities in Memphis Tennessee, two of which are owned by Nike and rest are leased properties. Competing on the Edge: Strategy as Structured Chaos. Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UKEssays.com. [9] Ma, H., 1999. These products are shipped  to the Nike Distribution centers and then to retail stores for sales. Potential to exploit technology through the regional offices and distribution network spread all over U.S. to serve the U.S... ’ were used and Nike won advertiser of the global economy has a part. Bargaining power of customers in the industry heavily on US market before Nike 28 % in 2017 industry... Friendly and sustainable not stable globally in all the countries been noted by Nike has to... Rivalry between the existing brands: the marketing strategy on these factors mean lower bargaining power the... 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