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Business Overview of Nike Inc

Nike’s vision is “to carry on the legacy of innovative thinking, whether to develop products that help athletes of every level of ability reach their potential or to create business opportunities that set Nike apart from the competition and provide value for our shareholders”. According to Nike’s vision for the future, they keep introducing innovative products in the market. Like, recently, they are going to launch the Nike “Studio Wrap” in 2013, which are fashionable ‘barely there’ shoes, designed for people who are more into modern studio workouts like dance, Pilates and yoga. These shoes are the picture-perfect mix of innovation, style, and athletic requirements. Products like these by Nike help everyday and professional athletes the support and motivation to stick to a healthy lifestyle and to excel in their chosen field of sports. Nike products create additional value for its customers by adding style to the equation. all Nike products are aesthetically pleasing, yet high quality, innovative sportswear. A big job to be done by the company’s strategists is to deal with its competitors. however, that’s not all that their duties encompass. According to Porter’s theory, there are four other forces that need to be taken into consideration. Following is a diagram outlining the relationship between these five forces of competition. Originally published in 1979, Porter’s article talks about external forces that a company has to consider when planning a competitive strategy. Namely, these include the bargaining power of producers, the bargaining power of consumers, indirect competition by substitute products, the threat of new entrants due to barriers of entry and the rivalry between the existing players in the market in the specified category. (Harvard Business Review, Magazine, 2008). In Nike’s specific case, the business is lucrative and highly profitable and thus new entrants are common. This would reduce market share and profit levels but Nike stays on top of its game due to its immense goodwill in the market, its reputation, product quality, and innovative techniques. However, strategists have to remain on their toes to make sure that the company’s strategy doesn’t lag and allow new entrants to gain on Nike’s expense. This requires them to continually innovate product design, establish strong customer relationships and loyalty, invest in research and development, invest in employee training, improve distribution and most importantly patent their designs and products to protect them from competitors. Using these precautions will mostly eliminate the threat of new market entrants. Threat from substitutes is low because Nike provides essential gear for athletes and sportsmen and women which cannot really be substituted by other products, especially in the shoe category. Other sports gear like shirts and shorts etc, may be substituted by unbranded shirts and shorts not designed specifically for sports use. However, the threat is low because Nike products like “Dry-Fit” sports gear have added benefits that other products don’t and thus customers will not easily switch to substitutes. Bargaining power at the supply end is higher than bargaining power at the demand end, and thus Nike is pretty much autonomous with regards to pricing strategy, product line, etc. this power is afforded to Nike due to its loyal customer base, strong distribution network and economies of scale as they expand production.

Business Overview of Nike Inc