In the 1950’s, Bill Bowerman, a track and field coach at the University of Oregon, began cobbling shoes for his runners. Bowerman and one of his runners Phil Knight formed Blue Ribbon Sports and sold shoes for Tiger shoes in 1964. While Knight was selling the shoes, Bowerman was ripping them apart to see how he could make them lighter and made his runners test his improved shoes. Their first full-time employee, Jeff Johnson, was an early designer of shoes and came up with the name Nike in 1971. In 1972, the BRS broke business with Tiger shoes and Nike, along with its brand marked “Swoosh”, debuted its new line of footwear. Their first endorsed athlete, Steve Prefontaine, wore Nike’s light weight shoes with an outsole that had waffle-type nubs for traction ("Nike inc.," 2011).
In 1989, shortly after becoming a publicly traded company, Nike came out with the tagline “Just Do It” to endorse its new cross-training business, which drastically increased sales. During that decade, Nike lost and regained its position as the industry leader; the only time an athletic footwear/apparel company has done so and has not lost its position since. During the 90’s, Nike mostly focused on endorsing athletes, such as, the World Cup winning Brazil team, Lance Armstrong, and Tiger Woods ("Nike inc.," 2011).
Today, Nike has witnessed growth in China and currently operates in 160 countries. A future goal of the company is to reach revenue of $28-30 billion in 2015. The Nike portfolio of brands currently consists of Cole Haan, Converse, Hurley International, Nike Golf, Jordan Brand and Umbro; these affiliate businesses contributed $2.7 billion to the company’s total $20.9 billion in revenue at the end of 2011 ("Nike inc.," 2011). As of May 31, 2012, Nike employed around 44,000 employees worldwide. Nike has a competitive advantage over adidas because of its American dominance, where the company made 42% of its total revenues in 2012 ("Nike fy2012 annual," 2012).
Nike focuses its business on Running, Global Football, Basketball, Men’s Training, Women’s Training, Action Sports and Sportswear. The vast majority of its products are manufactured by independent contractors in Vietnam, China and Indonesia; each country is responsible for 41%, 32% and 25% of footwear production, respectively. The company also has agreements with companies in Argentina, Brazil, India and Mexico for sale within each of those countries. The majority of its apparel is also manufactured outside of America by independent contractors in 28 countries. Nike’s direct to consumer operations are managed with a geographic structure, the segments are; North America, Western Europe, Central & Eastern Europe, Greater China, Japan, and Emerging Markets ("Nike fy2012 annual," 2012).
Porter’s Five Forces Analysis
Rivalry Among Firms
Nike’s top competitors in the Nike+ product’s industry are adidas, MapMyRun, Arawella Corp., and Zen Labs. In response to its competitors, Nike has made products available at various prices and makes products that track features for specific sports. The rivalry within the personal training technology industry is intense between adidas and Nike; the organizations are similar in size and scope of products. Part of the rivalry includes anticipating each other’s moves and responding in a strategic way to gain a competitive advantage in price and quality (Nike fy2012 annual, 2012).
The intensity of a rivalry increases as the total number of members increases, members become similar in size and capability, and consumers can easily switch brands . Nike has leveraged its size and networking capabilities to lower its fixed costs by hiring independent manufacturers in China, which translated into lower costs for consumers due to the cheaper manufacturing costs. This has become a standard for the industry and is now needed in order to be competitive based on price, which is a major factor in the technology industry (Encyclopedia...
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