NIKE CASE ANALYSIS

Nike case Analysis

Nike case Analysis

Introduction

Nike. Inc was graded 204 in the 2002 Fortune 500 with over 9 billion in annual revenues. The founders went from trading footwear from the back of a van to 10,000 Nike shops all over the world. That is an achievement story. Each and every athlete has a distinct way of accomplishing and Nike presents a kind of goods (make, form and body style) permitting athletes to present to their fullest and best performance. I powerfully acquiesce that the achievement of Nike is founded on an enterprise form that leverages components and tendencies in the functioning environment. (Hatch 2006)

Porter Five Forces 

Barriers to Entry - Low

Due to the large scale of both Nike , these firms are able to control their costs to retain performance advantage over emerging competitors in the industry. Their web sites are more sophisticated and enticing to browse, both contributed to their large marketing budgets. The capital injection into web site development is high and must be updated frequently with new promotions and added features to attract online shoppers. There are many proprietary product differences in the industry therefore brand identity has an immediate competitive advantage. The Nike brand is well renowned globally and plays a major role in consumer decision making. Selling footwear online is highly competitive; however, barriers to enter into this e-commerce industry are quite low. The capital requirement for setting up an online shop is comparatively lower than setting up a traditional bricks and mortar establishment. Therefore, the online footwear industry is highly abundant with hundres of online merchants.

Bargaining Power of Buyers - High

There are a large number of buyers relative to the number of firms in this industry. Therefore, companies like Nike must continuously market their product and differentiate their brands against competitors, in order to increase sales and market share. The use of online tools has helped to enhance the accessibility and intimacy among users. For example, Nike's "nikeid.com" link allows consumers to customize and design their own footwear by permitting customers to specify the desired colours and the option to personalize the footwear with their name. Brand identity plays a critical role in the buying behaviour; strong identity will offer consumers trust and loyalty. Many online buyers are price sensitive and switching cost is low for the buyer.

Bargaining Power of Suppliers - Low

There are many suppliers in this industry. In essence, there is very little differentiation among the suppliers which makes suppliers' bargaining power non-existent. Leather, rubber, and cotton are commodity items and are available abundantly in the market place. Conglomerates such as Nike have a definite advantage and power over their suppliers. These suppliers become dependent on these firms as their means to survival.

Threats of Substitutes - Low

Buyers' propensity to substitute is low. Consumer substitutes for athletic footwear products are low because there are little alternatives to switch, some substitutes for athlete footwear could be boots, sandals, dress shoes or bear feet. Consumers are not likely to substitute due to the performance ...