1.1 Onitsuka Tiger, now ASICS. – Company

Published: 2020-08-09 07:10:04
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1.1 Background Information
– Company History
Nike was founded on January 25, 1964, as Blue Ribbon Sports, by Bill Bowerman and Phil Knight, and officially became Nike, Inc. on May 30, 1971.
Nike has acquired several apparel and footwear companies over the course of its history, some of which have since been sold. Its first acquisition was the upscale footwear company Cole Haan in 1988, followed by the purchase of Bauer Hockey in 1994. The company, Nike used to distribute shoes for the Japanese brand Onitsuka Tiger, now ASICS.
– Company mission / vision
Nike’s mission, To bring inspiration and innovation to every athlete in the world.”
– Set up structure
The set up structure of Nike is a public limited company. It is traded on the NYSE as NIKE. The closing price as at 28/08/2018 is 82.58 USD.
– Industry
Nike is in the retail industry. Nike is one of the biggest seller of sports shoes in the world. After more than 50 years in the business, Nike has become intrinsically linked with the sports industry and with many of the biggest names within it.
– Business sector
Nike belongs to tertiary sector as it sells sport shoes,clothing(shirt,shorts,pants,sports bra etc), accessories and sport gears to consumers.
– Target market
Nike’s target customers will be aged 15 to 40 years old. It caters to both men and women athletes, and also placing an increasing on tweens(8 to 12 years old) and teenagers(13 to 19 years old).Nike is expanding women’s apparel, especially sport bras and tights. Kids who play sports are a growing part of Nike business, according to the person in charge of Nike. Another category that Nike focused in is running category, they have also revamped Nike app. The running app lets runners track their route, distance, pace, time and calories. Nike sponsors running events around the world to recruit new customers as well.
1.2 Business Objective
– List business objective (s)
Nike’s mission statement prompts the business to support the endeavors of athletes.
Nike launched innovative platforms across style and performance. Nike also invested in digital and membership, which allows them to serve every athlete individually. They continue converting the supply chain by increasing their ability to sense the market, drive effectiveness, and manufacture more sustainably. In fiscal year 18, they seize their purpose by using the power of sport to keep the world moving. And by protecting the earth to promote an inclusive culture. Nike is focusing on leaving a positive carbon footprint.
2.1 SWOT Analysis
S
1. Strong brand image
2. Excellent Marketing capabilities W
1. Limitations in the product mix
2. Limited presence in developing markets
O
1. Improve labour
2. Improve the product mix T
1. Tough competition
2. Imitation
Strength
1) Strong Brand Image
Explanation: A powerful brand image is a key force for any brand. Over time, Nike has built a strong image as a customer- oriented and ethical business. It is an innovative brand known for its excellent marketing and good quality products.
Example: Nike’s strong brand image evolves based on product quality. Nike being able to make great changes quick is a core factor in Nike’s ability to create cutting edge designs for its athletic footwear, equipment and apparel. The company’s extensive global production and distribution network is a strength that enables the business to support global market dominance. This shows that Nike has capabilities to retain its global market leadership.
2) Excellent Marketing capabilities
Explanation: The company’s effective marketing campaigns also contribute to this strength. Due to modern technology, Nike rely on advertising to bring up their brand to their targeted consumers.Not only Nike, its competitors also concentrate heavily on marketing.
Example: Nike came out with an original youtube series ‘Margot vs Lily’. Margot vs Lily centres around two sisters, featuring Nike merchandise like shoes, workout gear, and Nike+ technology. It also directs viewers to the #BetterforIt website, which contains more detailed content for those interested in initiating and improving their fitness journey. As of now, the series has received over 80 million views, leading to increased downloads of the Nike+ Run and Training Club, as well as greater activity and purchases by existing members.
Weakness
1) Limitations in the product mix
Explanation:Although Nike Inc has throughout the year, the resulting product lines are still limited to capture more of the sports shoes, equipment and apparel market.
Example:Compared to Puma, Nike focuses on its footwear business, which can be quite risky considering that market trends are changing and that most companies are maintaining a product diversification strategy. Puma can think that the only type of company can also concentrate on producing apparels in the lifestyle section and creating a new customer market.
2) Limited presence in developing markets
Explanation: Nike global growth is limited due to problems with pricing, imitation and patent protection.
Example: After nike’s controversial decision to feature Colin Kaepernick in an ad campaign, the company got a load of valuable free publicity. Nike’s online sales quickly saw a boost after the campaign was launched, leading to its stock hit a record high. Due to the Kaepernick’s effect, Nike’s online sales for the following 10 days after the campaign’s launch has went up by 61% in the amount of sold-out merchandise compared to before the campaign was launched. No doubt the initial ad might have caused negative reaction among investors, nike maintained its product pricing structure, offered less discount items and revenue went up ever since the campaign launch.
Opportunities
1) Improve labour
Explanation: Nike has the opportunity to improve its practises to address controversies in this area of business. Proactive strategies can lead to improved brand image.
Example:
2) Improve the product mix
Explanation:Nike also has the opportunity to improve its range of product by bringing in more athletic footwear, apparel, and equipment business to attract more customers, especially non- athletes.
Example: Give complimentary goods when customer purchase a good.
(nike produces apparels such as shirts, shorts, sweatpants and slip on for non-athletes to earn more revenue. explain that as everyone wears clothes, hence athletes or non-athletes can purchase their apparels.)
Threats
1) Tough competition
Explanation:Nike is facing tough competition with other major players such as Adidas, Skechers and New Balance.Some consumers may not like the design that nike produced so they might prefer other design from other brand. Nike sales have fallen as other brand reported on stronger sales and profitability. Fast technological innovation could also further increase competitive pressure unless Nike innovates as quickly.
Example: Adidas is one of the Nike competitors. They have launched some technical innovation such as their teams are trying to influence the environmental footprint of their products. For their clothes , they are using the dry-dyeing material . Because it can saves water, chemicals and energy.
2) Imitation
Explanation: Nike must improve on its image where their products are being seen as resulting to exploitative business practices in its overseas outlets.
Example: Factories and other companies can come up with the similar product at a cheaper price.
2.2 Business competitors
1. Adidas
Explanation: Adidas is the largest sportswear manufacturer in Europe and it belongs to second largest manufacturer in the world. Although Nike is the largest manufacturer in the world but Adidas is still a strong competitor of Nike.
Example: Adidas AG, the German sportswear maker which earlier this month reported stronger sales growth and profitability, in part due to focusing its efforts on the key North American market.
Puma
Explanation: Puma, the third competitor of Nike, is also known for their running shoes, clothings and apparels. Even though Adidas and Nike is way far ahead for their sports sponsorships than Puma, but the revenue generated can show that the brand is also well loved by many consumers.
Example: Nike used well-known athlete like Kobe Bryant while Puma used Danny Green.
3.1 PEST Analysis
P
1. Human rights defender
2. Improving government
support for infrastructure
E
1. Economic stability
of developed markets
2. Rapid growth of developing markets
S
1. Increasing
individual wealth
in developing countries.
2. Increasing emphasis on product safety.
T
1. Increasing R;D investment among firms.
2. Rapid technological obsolescence.
Political
1) Human rights defender
Explanation: A few years ago, the issue of sweatshop labour has become the focus of political awareness. Until today,there is still have unfairness exists in the First World and the Third World.
Example: In the mid 1990s, scholars, labor rights activists, and journalists began to protest of workers’ rights in Nike factories. These included health and safety issues, worked over-time, was paid an unfair wages, and the use of hire-and-fire practices to avoid paying the worker fringe benefits.
2) Improving government support for infrastructure
Explanation:
Example:
Economic
1) Rapid growth of developing markets
Explanation: Developed markets like the United States are relatively stable, thereby proving Nike Inc. with the opportunity to continue the slow but yet stable growth in these countries. The company also has opportunities to quickly grow by increasing the operations in high-growth developing countries.
Example: The economic external factors in this component of the PEST Analysis show that Nike must emphasize global expansion strategies while invent new ways to capture growth in developing countries.
Social
1) Increasing individual wealth in developing countries
Explanation: In developing countries, Nike has the opportunities to tap consumers with the increase of individual wealth. Also, the company has opportunities to develop a safer products and use marketing campaigns that highlight the safety of its sports products.
Example:
Technological
1) Increasing R&D investment among firms
Explanation: The increasing R&D investment among firms threatens Nike, as competing firms aim to develop more technologically advanced sports product. Rapid technological obsolescence also threatens Nike by putting pressure on the company to let them increase the product development efforts. Nonetheless, this external factor provides opportunities for Nike to combine in advanced technologies in its products. In relation, the company has opportunities to integrate mobile technologies in its products in order to capture consumers who always use mobile technologies, such as mobile apps and online tools.
Example:
– Cite 1 example for each component to show impact on biz
Political:
Stable political conditions in most major markets present opportunities for Nike to grow its business in these areas. Expanding free trade policies facilitate better market penetration overseas. Moreover, improving government support for infrastructure, especially in developing the countries, gives Nike more opportunities to expand its operations in these markets.
Economic:
Social:
In developing countries, Nike has opportunities to tap consumers with increasing individual wealth. Also, the company has opportunities to develop safer products and use marketing campaigns that highlight the safety of the sports shoes, equipment and apparel. Nike can also adopt new product development strategies to address needs for products for leisure activities.
Technological:
The increased investment in R&D among companies threatens Nike, as these competing companies aim to develop technologically advanced sports shoes, equipment and apparel. Rapid technological obsolescence also threatens Nike to increase its product development efforts by putting pressure on the company. Nevertheless, Nike has the opportunity to integrate advanced technologies into its products. The company has the opportunity to integrate mobile apps and online tools
3.2 Ethics, CSR and Business Practices
Ethics
NIKE, Inc. has an Ethics Code for all employees that defines the standards of conduct that employees expect to follow and includes a range of topics related to employee activity, ethical behavior, product safety, legal compliance, competition and resource use.
CSR
The National Mentoring Partnership
Mentors provide care, stability and care for young people and let them know about their problems. Nike works with MENTOR to ensure that all young people receive the support they need in all areas of life. MENTOR is a unifying national organization that promotes quality youth mentoring relationships and links volunteers to their local communities.
Marathon Kids
Marathon Kids is dedicated to improving children’s health by providing tools, motivation and support to live a healthier lifestyle. They also help children unlock their potential one lap one day at a time.
4.1 Business Practices
Explanations
In Nike’s product, it does not use materials like fur, angora or other exotic animal hair or skin. But on the other hand, it uses leather, wool and down feathers without identifying the sources that are problematic as animal welfare and workers are unrevealed and are not guaranteed.
examples to support
1) Nike uses several environmentally friendly materials, including organic and recycled cotton and polyester.
2) In response to environmental protection?Nike has launched some of its most iconic products. Air is considered one of the NIke’s iconic innovation products. 75% of Nike products are made from recycle polyester.
4.2 Recommendations
-Students recommend at least 2 ways to improve business
1. Making Korean idols endorse their products
Just like Adidas, they used popular k-pop girl group to market their products, Nike can also use the same technique as Korean idols are the trend starters/trend setters.
If Nike were to use popular idols to promote or endorse their products, more consumers will tend to look out for their products and those fans of the popular band will buy as they will follow the trend/ want to get the product their idol endorsed. It will help the company to earn more revenue when more consumers were to purchase their product the idols endorsed for.
2. Finding other athlete for endorsement
Colin Kaepernick, a former American Football quarterback is the endorser for Nike. Being the first player to kneel down during the national anthem of US was playing to protest for the brutality against racial injustice, he has attracted controversy and backlash on Nike. And thus, there are reports stated that they destroyed Nike related merchandise (shoe) and cutting off the Nike logo from their socks to protest” against Nike’s use of Colin Kaepernick. This will result in lesser consumers getting their products and as a result in earning lesser revenue for the company.

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