Nike Inc.

Company Overview

Nike is an American multinational company that engages in designs, manufacturing and development of worldwide footwear sales. Other products by this company include apparel, accessories, equipment and services. The company has got is headquartered in Portland Metropolitan area (Valjakka, 2013).

Nike was founded in January 1964. Epstein, Buhovac, & Yuthas, (2015) discusses that, during its inception, the company was referred to as Blue Ribbon Sports. However, in May 30th, 1971, Blue Ribbon Sports was officially changed to Nike Inc. Nike refers to a goddess of victory in Greek. Also, it is a leading supply of sportswear in the world.

Over the course, since its inception, Nike has acquired several other companies. They included Cole Hann, a footwear company in 1988. In 1994, the Nile acquired Bauer Hockey and in 2002, Nike acquired Surf Apparel Company and Starter in 2004. In 2008, it bought Umbro and in 2013 Nike acquired two other subsidiaries: Converse Inc. and Hurley International. Today, though, Nike has sold off some of the companies acquired (Valjakka, 2013).

In 2005, Nike was among the first companies to publicly produce the addresses of the other companies that are producing their products. All the companies worldwide that engage in the production process of Nike products are in the public domain so as to increase accountability (Valjakka, 2013).

The company is also making efforts towards environmental goals which will see them have a clean production. By 2011, the company recorded an achievement of 3% reduction in carbon emission and an increase in profitability by 26%. Through to 2015, the company has achieved up to 15% carbon emission reduction Grant, (2015).

Financially, Nike was in December 2013 listed at the Dow Johns industrial average and replaced Alcoa. The effect of the membership to Dow Johns impacted on its profit by 13% in global orders. Additionally, fortune orders including shoes and apparel experienced a growth of $ 10b. Moreover, the company shares rose by 0.6 % in extended trading Grant, (2015).

Company Analysis

Just like many other firms in the global world, Nike too is affected by the changing external environment. The strategies that are adopted by the organization contribute a lot towards defining its sustainability. The external factors that affect Nike’s performance are also affecting their business decisions.

Firstly, the demographics are always changing.  Mahdi, Abbas, Mazar, & George, (2015) explains: the company’s once local and loyal market is constantly evolving. It, therefore, implies that the ones athletic customers are aging and becoming less active. With this situation comes an opportunity; to influence the new market into purchasing Nike’s products. However, with this comes a threat. Will the new generation have the same loyalty to Nike’s products? New competitors are penetrating the market with competitive and stylish products that are appealing to the new generation. Innovation is more important today than was in the past.  With the current resource challenges, Nike does not stand a better chance like it deed in the past. The competition is stiffer, and many competitors like Addidas, Reebok and other modern labels are gaining more traction which may see Nike suffer some reduction in market size.

Secondly, suppliers challenge. Grant, (2015) explains: Nike has ability to manufacture significantly huge quantities which gives it a competitive edge over the other market entrants. The company has a vast network of manufactures across the world and has engaged in the purchase of other competing firms. For instance, Nike acquired Cole Hann, a footwear company, Bauer Hockey, Starter and Surf Apparel Company. In 2008, it acquired Umbro and in 2013 acquired two other subsidiaries: Converse Inc. and Hurley International. This strategy ensures that the company continues to retain its market share while adding on that which was taken by other competitors. This is a workable strategy that will see Nike continue to survive in the market.

Nike is a brand. It has built a name and a reputation over the past, as such; the buyers do not have much in determining the prices. At whichever price the products will be available in the market, Nike will have its customers loyalty expressed through the purchase. Customers spend the extra coins on swoosh and the logo Mahdi, et al (2015). Swooshes make consumers purchase a product at a higher price even during an economic downturn. This aspect will have a greater potential of enabling Nike to keep in the market maintaining sales even in times of low sales volume. The brand that Nike as a company has built together with the aura around its products makes it difficult for new entrants to compete strongly against the company Grant, (2015).

Nonetheless, with increased globalization, barriers to distribution are eliminated by day. Free trade agreements are entered around the world with different countries Grant, (2015). This has a potential effect in hurting the international distribution of Nike’s products in other countries.

Additionally, there is much innovation going on today. Increased distribution methods in the market are resulting into lower cost of distribution as well as lower cost of manufacturing Mahdi, et al (2015). Other governments are also offering incentives t the local companies. The two working together will significantly lower the production and distribution cost making competition against Nike’s market even stiffer Grant, (2015). Nike too needs to take advantage and capitalize on technology and incentives.

 

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