Effects to Nike's growth are also affected not only by domestic economy but also by the international economy. The continued weak Euro and Asian recession could potentially hurt Nikes international sales and growth. Nike's extreme sports product line is seen as inferior quality compared to competitors and is hurting sales and brand image. CUSTOMERS
In 1998, Americans spent $38 billion to buy over 1.1 billion pairs of shoes. Sporting Goods Manufacturers Association revealed that athletic footwear makes up almost 35% of all footwear purchases.
The existing domestic industry focus is on casual and comfortable shoes. Demand is up for the "brown shoe" casual footwear with a comfortable and rugged design. This is because of the increasing number of workplaces allowing casual dress codes. Multinational customers account for a large part of Nike's sales. In 1995, Nike's international operations accounted for 36.06 of its total revenues. The company believes that demands from international markets will increase in future.
Nike must cater to a large portion of the new generation that demands the latest trends and styles. Nike should take into account the changing US demographics due to the rising proportion of Hispanics, Asians, and African Americans. These groups have different preferences that Nike should be able to satisfy. Nike should identify the next generation of loyal customers and provide for their needs.
Competition is very fierce due to the number of companies competing for sales. Lots of money goes to marketing and promotions using various channels to reach the young demographic group of consumers who spend the most money on Nike's products. Growth is slowing down in the athletic footwear industry. But new markets are emerging with high growth rates. These markets include extreme sports market and the corporate merchandise market.
Nike's global market share was an impressive 30.4% in 1998. The closest competitor, Adidas, held 15.5% of the market share while Reebok held 11.2%. The remaining competitors, including Fila, Timberland, Asics, Converse, and New Balance, among others, each hold approximately 3-5% of the remaining market share.
Nikebiz.com stated that Nike's mission statement is “Through the adoption of business practices Nike is committed to securing intergenerational quality of life, restoring environment and increasing value for our customers, shareholders and business partners.” Nike shows passion for their company, products, and athletes. They are determined to provide consumers with comfort and assurance. They also find ways to innovate and create. They adhere to their five brand principles namely: inspire, innovate, focus, connect, and care.
Another Nike's objective is “to be the world's leading sports and Fitness Company."
Nike's mission statement is similar to a vision statement and is potentially a weakness. The mission identifies the sports and fitness industry business they are in, it does not specify as to what products and services they provide. The mission statement does not mention distribution channels and customers. However, it portrays management's beliefs and the desire to be number one and remain in the leading position in sports and fitness shoe and apparel industry.
The past two decades saw a change in economy from “standardized” to flexible”. Having a strict corporate organization used to be the rule, now it is common to have a flexible organization that uses subcontracting.
The main reason Nike succeeded in competing in the footwear industry for a long time is because they remain flexible in an unpredictable market by subcontracting overseas in countries with low labor-cost....