TABLE OF CONTENTS
Table of Contents 2
Nike Firm Analysis – 9
Adidas Firm Analysis – 15
Asics Firm Analysis – 21
Puma Firm Analysis – 27
Mizuno Firm Analysis – 33
New Balance Firm Analysis – 39
Skechers Firm Analysis – 45
I. Industry Definition
The athletic footwear industry includes all producers of shoes designed in an athletic style or for an athletic use. We define the active footwear industry as an industry that manufactures shoes for active lifestyles. The primary focus of this analysis is on the United States market as it represents roughly 32% of the overall footwear market (PRWeb, 2012). While companies in this industry also produce athletic apparel and accessories, our primary focus will be on the company’s athletic footwear. The industry chain consists of an abundance of suppliers of raw materials that include rubber, cotton, foam and synthetic fibers followed by low-cost manufacturers located mainly in South East Asia, except for New Balance who manufactures its athletic shoes in the United States (IndexMundi). After completion of manufacturing, the shoes are distributed out to either brand specific stores, sports stores, department stores, or sold through online sales channels directly to the consumer. In order to create a more complete understanding of the athletic shoe industry, the below graph provides a visual of the market share breakdown by sales volume. However, the graph does not account for the recent merger between Adidas and Reebok, therefore, Adidas percentage should be 22% (Dolleschal, 2009).
Source: Commerzbank Equity Research
II. Porter’s Five-Force Analysis
Porter’s Five-Force Analysis provides insight into the attractiveness of a particular industry. One of the five forces is Barriers to Entry or the Threat of New Entrants. This force was rated as low because brand recognition and large-scale retailing dominate this industry making it difficult for new firms to enter the arena. While it is not difficult to make one’s own shoe, it is difficult for companies to enter a market that is already dominated by powerhouse firms. The current companies in the industry enjoy enormous economies of scale due to high manufacturing output, therefore, making it difficult for new firms to enter. Additionally, in order to enter the market, it would require high capital investments in order to obtain manufacturers and research to create innovative products thus, making it difficult for new companies to enter the market. The industry relies heavily on a successful distribution model and since the current powerhouse companies in the industry already have relationships and established shelf-space, it would be extremely difficult for new companies to obtain these same benefits.
The Threat of Substitutes is a force that is also ranked as low in this industry. Due to the necessary specifications to make a high performing athletic shoe, other types of shoes can’t compete. Athletic shoes are designed to improve comfort and personal safety during exercise and substitutes such as boots, flats, or going barefoot cannot compare and therefore are not reasonable substitutes for someone who desires the intended benefits of an athletic shoe.
In the athletic footwear industry, the Power of Suppliers is considered to be low. Athletic shoes require the same basic commodities including rubber, cotton, foam, and in some instances other chemical combinations in order to become a finished good. These commodity goods are mostly obtained outside of the US from a variety of hundreds of suppliers. Overall, the cheap and quick availability of labor and the easy access to commodities allows athletic shoe manufacturers to develop a large supply at relatively low cost. Additionally, since much of the supplies and labor are readily available, there...