business strategy report nike inc

SS Nike has all the sports related products or substitutes.. Industry NIKE, Inc., together with its subsidiaries, designs, develops, markets, and sells men's, women's, and kids athletic

UNIVERSITY OF FINANCE —- MARKETING INTERNATIONAL SCHOOL OF FINANCE —- MARKETING

TRƯỜNG ĐẠI HỌC

TAI CHINH - MARKETING

BUSINESS STRATEGY REPORT

TABLE OF CONTENTS

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1 Introduction

Nike, Inc is an American multinational corporation that is engaged in the design, development, manufacturing, and worldwide marketing and sales of footwear, apparel, equipment, accessories, and services The company is headquartered near Beaverton, Oregon, in the Portland metropolitan area.with revenue $46.7 billion in year 2022 NIKE, Inc is a team comprised of the Nike, Jordan and Converse brands driven by a shared purpose to leave an enduring impact

1.1 Mission and Vision

1.3 Product, Industry, Market

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SS

Nike has all the sports related products or substitutes Nike has put athletes at the center

of its products and support athletes to get the best results

But Nike Inc.'s most popular items are shoes, and the company's general marketing strategy gradually introduces new product lines to enhance the product mix Running

shoes, tennis shoes, and shoes for a range of other sports, including cricket, are now

available from the brand Nike also offers clothing, such as jerseys, shorts, and other accessories These items are sold under a variety of the company's labels, including Air

Jordan and Converse

Industry

NIKE, Inc., together with its subsidiaries, designs, develops, markets, and sells men's,

women's, and kids athletic footwear, apparel, equipment, and accessories worldwide Nike in the textiles, apparel and luxury goods with market cap $343.22B

Textile, apparel, and luxury goods firms grow into new markets, product categories, and consumer segments by leveraging strong brand awareness, excellent supply chain management, and marketing and sales tactics Customer buying power has increased as

a result of fashion trends and the rise of internet purchasing

Market

Nike has grown into one of the world’s most recognizable companies over the last five decades, with its ‘Just do it’ catchphrase and 'swoosh' logo instantly recognizable The

corporation has overcome competitors like as Adidas, Puma, and Under Armour to become the world's biggest sportswear brand

Nike Market Share: Athletic Brands : Nike vs Major Apparel Brands

Nike portrays itself as a brand for athletes, yet if you have a body, you are an athlete Nike's outstanding financial success has resulted in approximately $44.5 billion in global sales by 2021

2 SWOT analysis

2.1 Strengths

Nike is a company with strong competition and one of the leaders in the market with high market share and huge customer database Also have iconic Relationships — Nike’s long-term partnership with Michael Jordan, create a large community support so that has proved to be beneficial in terms of sales for the company

Nike always follows an effective outsourcing strategy that helps it reduce production costs Most of their factories and production units are located in Asian countries with emerging economies and low production costs such as China, Vietnam, Korea, and

Thailand

In a competitive market, innovation is an essential determinant of sustainability Nike,Inc has always been successful and is considered as one of the pioneers in introducing various enchanting products With its ever-evolving and innovative product range, it has cemented its position as one of the leading brands in the apparel and footwear industry

Nike is considered as one of the strongest global brands with a prominent worldwide presence Brands promoted by celebrities and top sports professionals create considerable equity in terms of identity and image

Superior Marketing Capabilities — Nike has excellent marketing campaigns In the 2021, Nike spent $3.1 billion respectively The brand has successfully utilized social media and marketing campaigns to target more customers

2.2 Weaknesses

Income heavily depends on the footwear market

Nike, Inc has a wide range of products including apparel, equipment and footwear But marketing trends show Nike, Inc.'s sustainability Depends on the company’s footwear sales If in any case the footwear segment is worn down, the entire organization will be adversely affected

High-priced products

When Nike, Inc has a great reputation all over the world, almost all the products have high prices That might support their higher margin strategy, but it significantly reduces the number of potential customers, especially in emerging economies in Asia and South America Their high-priced products also encourage Nike, Inc.'s competitors keep fees lower than Nike so that gives them the opportunity to increase market share

High ads spend

Nike, Inc spends a lot on advertising and brand endorsements Although considered a successful marketing strategy, annual increases in costs vary widely and make a significant impact on profit margins According to the Annual Report of Nike, Inc (2021), total spending on advertising and promotions accounted for about 11% of total revenue or about $2.7 billion

Poor Labor Conditions in Foreign Countries

In the last 20 years, Nike has been consistently targeted regarding their poor labor

conditions These issues include forced labor, child labor, low wages, and horrific

working conditions that were deemed “unsafe”, especially in Asian countries Considered a difficult problem, it tarnishes the company’s image and hurts sales Overall, the situation has changed and Nike, Inc succeeded in regaining its image significantly but corporate social responsibility continues

Dependency on US Market

Even after having established itself globally, Nike still relies on the U.S Market in terms

of sales and revenue In the fiscal year 2021, about 39% of Nike’s sales came from the

North America, while the rest of 61% came globally Despite its fame, Nike depends on the U.S for substantial sales and growth

2.3 Opportunities:

Sustainable development market, the rise of emerging markets

Nike is a global brand so it is easy for Nike to access emerging markets such as countries like South Africa, Southeast Asia, VietNam Thailand etc Although Nike was present in the country early on in these countries, the potential is still highly untapped Nike can have some collabtion with local brands to provide the product suitable for local culture, speard easily to new market

Expanding product lines related to sportswear

The sportswear industry is growing rapidly Today, people not only wear sports clothes when on the training ground, but can apply them in daily life Also because of the COVID-19 pandemic, home sports activities, requiring separate equipment, and health improvement solutions, this will be an opportunity for Nike brands to make a

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breakthrough Several products such as Nike Flyknit, recycled polyester, Colordry, Nike Grind, Nike vapor untouchable, “Space Jam” Air Jordan 11, Tech Pack collection and more show their skill and diligence towards introduction of new products

The growth of e-commerce

The implementation of sales on e-commerce sites can reduce store operating

costs,reduce the cost of products sold, in addition, can attract more customers from many

different markets Especially in the context of the epidemic, this creates even more opportunities This figure helped partially offset a drop in sales when retail stores had to close during the stages of the outbreak

Approach towards sustainable development

According to the survey, consumers are increasingly paying attention to brands that are conscious of protecting the Earth will also have more brand love Nike comes in at #2

in a survey of climate-friendly companies behind only Canon As every year, climate change and global warming are becoming more serious, it becomes important to play a constructive role to protect the environment Nike, Inc promises to provide specific strategies to start recycling, eliminate the use of chemical components, and take appropriate precautions to protect the health of workers in factories and customers that have brought them global fame and acclaim

2.4 Threats

Fierce competition from rivals

In the sports fashion industry, along with Nike, there are many other "foreign" competitors Because this is a very competitive industry Although Nike has an advantage in market share over other competitors, it has always faced other equally excellent brands like Adidas or Puma Customers in this footwear segment are often more loyal to trends than brands, they will be more likely to choose other competitors if Nike products are outdated Nike also has to "watch out” for creative "local brands" with the understanding the local culture Customers have more and more choices, so the challenge for Nike is also bigger

Fake products problem

For many years in a row, Nike is not happy to have to top the list of the most counterfeited brands in the world The main distribution area of these counterfeit products is Asia, one of the potential regions that Nike is trying to conquer This problem will negatively affect not only the annual revenue but also the reputation and brand image of Nike

The supply chain contains many risks

Despite being an “empire”, Nike owns no footwear and apparel factories, although it accounts for 90% of its revenue.All are processed from a third party, with materials also from another independent supplier The advantage of this is that it improves margins and reduces inventory, but it also comes with major risks

For example, during the outbreak from April 2021 in Vietnam, many workers were infected with Covid-19, causing the work situation to be delayed Or the current war of Russia - Ukraine, the global supply chain is seriously affected, the price of materials is high, the restrictive measures of countries with each other

3 Porter’s Analysis

3.1 Bargaining Power of Suppliers:

There are several suppliers all around the world who supply sports brands with rubber, cotton, synthetic leather, and other materials This reduces the total bargaining power of the industry's suppliers Nike, being a well-known brand, carries a lot of goodwill with

it, which suppliers want to be associated with Nike's suppliers are reasonably large, thus they do not have a bargaining advantage over Nike The firm has a practice of collaborating with the region's manufacturers to reduce the overall cost of raw materials They lack bargaining power since they are simply replaced Suppliers’ bargaining power can be fairly regarded to be a weak force

3.2 Competitive Rivalry:

The sales growth data has been following a saturation trend, which can be reasonably attributed to the market's rising competitiveness Nike's growth has stalled due to the competitor firm's strong penetration in the market and the general saturation of the market Rival companies such as Adidas, Puma, and others have been investing large

sums of money in their marketing efforts, making it harder for the brand to break into

the market

Despite the fact that Nike has few direct competitors, the competition is fierce, and hence competitive rivalry is a powerful factor here

3.3 Bargaining power of buyers

Firstly, because of the low switching cost, customers can easily switch to the rival brand

— Addidass But this can be easily tackled by the fact that the contribution brought in by individual customers is very small The second factor is the availability of substitutes, which enables customers to buy other products instead of always buying from Nike In the Vietnamese sportwear market, there is a shortage in the number of substitutes available to the customers to shift to offering the same functionality as Nike does, so that it can reduce the bargaining power of buyers Lastly, Vietnamese customers who are price sensitive and want to look for cheaper ones, the quality, assurance and the good will associated with Nike justify its premium pricing Thus, bargaining power of customers is a moderate high force

3.4 Threat of substitutes

Substitutes of Nike are any type of footwear that the user can use for a similar purposes, however, the thread of substitutes for sport shoes and apparel is weak Nike being a already established brand with a strong research and development capabilities do not give opportunities for a substitute to take over its place Nike has a long history of having the best R and D team in the industry Besides, the brand has more than 25,000 global patents more than anyone in the athletic brand category But one thing that cause a problem to Nike is the rising number of counterfeit products resembling its products Since, the functionality offered by the counterfeit products has also been improving recently, there is an emerging threat to the company’s sales

3.5 Threat of new entrants

The threat of new entrants is weak due to the high capital requirements, the saturated sports shoe market, and the setting legacy in the design It wuould be difficult for new companies to survive against leading brand like Nike catering in the premium segment Sourcing supplies and starting the operation is not the concern for the threat of new

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entrants here The high cost involved in the brand development and the marketing efforts required to bring the product to market are the major problems for them Moreover, Nike competes against a lot of local players who do not have much influence outside their country of operation These small companies, for example Bitis, will be unable to beat

Nike because of the Economies of Scale of Nike

4 VRIO Framework

Value Rare Imitability Organized | Implication

$11.8 billion, driven by triple-digit growth in their wholesale business and strong

double-digit growth in NIKE Direct NIKE’s strong results demonstrate NIKE’s unique

competitive advantage and are able to continue its growth strategies, through acquisitions, product development and technology improvements Therefore, Nike’s financial resources are particularly valuable