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BA (Honours) Business Studies BA (Honours) Business Administration BUSINESS STUDIES ASSIGNMENT BST 3003 Professor: Martyn Shaw Student name: Student number: 627 January 2008 UNIVERSITY OF BOLTON BOLTON BUSINESS SCHOOL Business Studies Pathway Module Name and number: Exploring Corporate Strategy (BST3004) Tutor: Martyn Shaw Assignment Number: One Weighting: 50% Assignment Title: Nike Strategy Fit Assignment Length: 2500 Words Issue Date: December 2007 Submission Deadline: 8 h February 2008 I declare this submission to be my own work. Signed (student name)………………………………………………. Date……………………………………………………………………. 2 I. INTRODUCTION Following the Forbes 2000 public companies, we've taken the ten countries and listed the top-ranking enterprise in each. Most of these global giants have brand names can see around the world. Nike is among the multi company with the largest seller of designs, develops and markets athletic, market quality footwear, active sports, equipment and accessory product. This assignment aims to use knowledge and understanding of strategic fit, competitive strategies, competitive advantage to evaluate as well as to explain that success of company in 2004 till now. II. STRATEGY ANALYSIS Part 1: Evaluating the extent to which Nike has achieved strategy fit. The strategic fit will bring more benefits for Nike. Because of Nike’s using well strategic fit to cost decrease, due to economies of scale, transfer of knowledge and skills. Now the assignment will apply four Model, PEST (Political, Economic, Social, and Technological), Five Forces, and The Value Chain, SWOT (Strength, Weakness, Opportunity, and Threat) 1. External Environment Analysis: 1.1 Macro Environment Analysis: (PEST Analysis) When the economics’ development and how the Nike’s use the position of strength. In addition, Nike has the strategic. The Model PEST had four steps, Political, Economic, Social, and Technological Political Factors: Political and government policy influences economic conditions with a major influence affecting government decisions. 3 The policy always secures independent monitoring for our factories, to improve safety and health conditions Economic Factors: The economic have influence in the industry footwear. In other country, as the economy slows in the U.S, consumer purchases are down. And with the terror that is the economy, costs and prices are up. Sociocultural Factors: People’s lifestyles are changing towards their diet and health. As predication , an increase in the number of people joining fitness clubs and a massive growth for the demand of healthier sports shoes, and tastes with vary with fashion, pricing and promotion strategies. Technological Factors: In the Word that new technology could provide a useful input, creating new industries, featuring new print and television advertising 1.2 Industry Structures Analysis: (Nike’s Porter’s Five Forces Analysis) 4 The Five Forces affecting competition in an industry (Adapted from M. E. Porter, Competitive Strategy, Free Press (1980), page 4) Barriers to Entry: low All companies had the competitor for customer, design, marketing, and prices. Purchase prices for Nike’s products cheaper more than the different companies. Customer’s loyalty products from others big companies Adidas-Salomon AG and Reebok are very high. Stronger companies have larger, more diverse distribution channels, which helps them fend off the inevitable problems that strike industries from time to time the name Nike inspires innovation and quality, an experience that consumers want to be a part of. . Bargaining Power of Buyers and Suppliers: Buyers in the footwear industry enjoy a largest contract of power. Nike should continuously market their product and differentiate their brand competitor in raise sales and market share. Nike had a website “nikeid.com” connect allows consumers to customize and design the product when the customer need and the choices to personalize the footwear with their name. The power of buyers is very high, because they have many choices. Consumer references in the market have a significant influence. By new technologies for the products, update the design, promotion and so on to notice buyers 5 Threats of Substitutes: low. The cheap products of China will make threats against Nike. For example: In fiscal 2004, China was imported 23.8 million pairs of footwear in total value of $481.3 million. Especially Chinese will imports the EU growing up 700% in 2005. Because of China is a country appearing socioeconomic development quickly in the world, besides Chinese could increase product s footwear and decrease the prices of product. EU is a decline in the market share for Nike with other company. Rivalry among Existing Competitors: high. Nike is the strongest brand in the world so it is dominating the market, besides some popularizes brands such as Adidas, Reebok, Puma. There are many competitions among the footwear companies. Example: 1.3 Stakeholders: Nike is a high situation in footwear industry. Besides it had been to relationship with lot stakeholders such as product trade unions, business reaction, investors and other. For example: Nike has relationship with Apple and product Nike Apple and then Nike will be product more produces can adjust with everybody in the world. Stakeholders will make more build valuable relationship. 6 2. Company Analysis: 2.1 Nike’s Resources – Capabilities – Core Competencies: The company’s sells its products were sold through approximately 28,000 retail accounts and 21 sales offices in the United States. Beside, Nike are using product outsourcing the most production occurred in Bangladesh, China, Greece, Honduras, India, Indonesia, Malaysia, Pakistan, the Philippines, Sri Lanka, Taiwan, Thailand, and Turkey. Nike brands name are inspired by mission, vision. The company strategic plan is make the long-term vision and the brand strategy will help the company identify why and how it will achieve those goals. In addition, Nike outstanding performance in three primaries organizational function that creates superior value for its customers thus creating competitive advantage and competitive strategies . Nike’s core competencies had three identified financial, marketing and advertising, research and development. Nike’s to maintain dominant position in the athletic footwear industry. Furthermore, the company has the good demonstrated the ability to manage and utilize these resources better than another company. Nike has grown to be tremendous advantage for the company when commerce with their competition, customers and moreover creating high entry barriers for other company 2.2 Porter’s Value Chain Analysis: 7 Primary Activities: Inbound Logistics: Most important value attrition in production with payable attentiveness of Nike associated making services as well as on-going measures. Operations: The new inventiveness will be developing systems and processes disturbed with identical the supply and demand of products. Estimated will be increasing profits, margins and cash flows of Nike throughout decrease rejoinder time, allocation costs and inventories. Outbound Logistics: The futures in both the US and overseas will demonstrate come back to a successful model subsequent weak festival season, Olympics and difference with Foot Locker. Marketing and Sales: Nike have successful with marketing, a significant of sales, another disturbed with demand manufacture and advertisement. Service: The supply network products of Nike have over the world. People can buy products in stores and outlets. Beside Nike had a website www.nikeid.com, when customer need design product and write idea for Nike. Support Activities: Procurement: Nike is footwear product uses the materials and applying material in the country the company outsourcing: natural, plastic, nylon, leather, synthetic rubber, foam, canvas and polyurethane company used to make develop AIR-SOLE 8 Technology Development: Nike always creates new products and design in compliance with client's liking. Corporation is still applicator many method small tables are as Nike is the first using the new technology” Air” and developing by Marion Frank Rudy. In addition, Nike was product a more produces Jordan, Nike air force, Nike air max 2003, Nike air max 2004 and so on Human Resource Management (HRM): In around the world, Nike has more than 30,000 people globally. The HMR have more the outsourcing in the Vietnam, China, Indonesia and Thailand manufactured 22%, 36%, 24%, and 16% of total Nike in 2004. All most workers have good skills and abilities to construct the high value products. Firm Infrastructure: . Nike, Inc headquartered in the United States near Beaverton, Oregon and product outside the United States (US) thought a mix of independent distributors, licensees, and subsidiaries in 200 countries around the world. 3. Nike’s SWOT Analysis: 9 Strengths: Nike has one companies strong brand name and captured the largest market share in the global foorwear and apparel industry.Nike has a healthy dislike of is competitors such as Adidas, Puma…It can produce high quality product at the lowest price. It use to outsourcing from Asia, Africa…because it pay a little expense for labor. Weaknesses: Nike is the largest division and relies frailly heavily in the market. Nike’s products are considered to be of higher quality and highest prices relative to our competitors with other company and have a relationship with Footlocker. Nike are placing emerging technology and innovation towards development of new product. Opportunities: . The currently strong economic will bring benifit in the athletic footwear and apperal industrial. International profitability is growning up quickly as well as the invesment marketing and operations in the US. Nike can also benefit from benefit from taking advantage of its strong relationships with large quality- focused retailers within Europe. Threats: Nike is the leader in the footwear and apparel industrial but its must competitor with other company like that Adidas, Reebok. The launch of technologically higher by Nike’s competitor with the new technology Nike Air in 2004.In March 2005, Adidas and Reebok has the products new technology Adidas released Adidas 1 and Reebok pump 2 .0. 10