Athletic Shoe and Nike Brand free essay sample

Inc.Summary NIKE, Inc. , together with its subsidiaries, engages in the design, development, marketing, and sale of footwear, apparel, equipment, and accessories for men, women, and children worldwide. The company offers products in seven categories, including running, basketball, football, men? s training, women? s training, NIKE sportswear, and action sports. It also markets products designed for kids, as well as for other athletic and recreational uses, such as baseball, cricket, golf, lacrosse, outdoor activities, football, tennis, volleyball, walking, and wrestling. In addition, the company sells sports apparel and accessories, and athletic bags and accessory items, as well as markets apparel with licensed college and professional team and league logos. Further, it sells a range of performance equipment, including bags, socks, sport balls, eyewear, timepieces, digital devices, bats, gloves, protective equipment, golf clubs, and other equipment for sports activities under the NIKE Brand name; and various plastic products to other manufacturers. Additionally, the company has license agreements that enable unaffiliated parties to manufacture and sell apparel, digital devices, and applications and other equipment designed for sports activities. We will write a custom essay sample on Athletic Shoe and Nike Brand or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page It also designs, distributes, and licenses athletic and casual footwear, apparel and accessories under the Converse, Chuck Taylor, All Star, One Star, Star Chevron, and Jack Purcell trademarks; and designs and distributes various action sports and youth lifestyle apparel and accessories under the Hurley trademark. The company sells its products to through its retail stores and Internet sales, as well as independent distributors, licensees, and sales representatives NIKE, Inc. was founded in 1964 and is headquartered in Beaverton, Oregon. VISION STATEMENT OF NIKE â€Å"To bring inspiration and innovation to every athlete in the world† MISSION STATEMENT Nike is the largest seller of athletic footwear and athletic apparel in the world. Performance and reliability of shoes, apparel, and equipment, new product development, price, product identity through marketing and romotion, and customer support and service are important aspects of competition in the athletic footwear, apparel, and equipment industry. We believe we are competitive in all of these areas. The company aims to lead in corporate citizenship through proactive programs that reflect caring for the world family of Nike, our teammates, our consumers, and those who provide services to Nike. History: Nike, originally known as Blue Ribbon Sports (BRS), was founded by  University of Oregon  track athlete Philip Knight and his coach Bill Bowerman in January 1964. The company initially operated as a distributor for Japanese shoe maker  Onitsuka Tiger  (now  ASICS), making most sales at track meets out of Knights automobile. In 1966, BRS opened its first retail store, located at 3107 Pico Boulevard in  Santa Monica, California. By 1971, the relationship between BRS and Onitsuka Tiger was nearing an end. BRS prepared to launch its own line of footwear, which would bear the  Swoosh  newly designed by  Carolyn Davidson. The Swoosh was first used by Nike on June 18, 1971, and was registered with the  U. S. Patent and Trademark Office  on January 22, 1974. In 1976, the company hired John Brown and Partners, based in Seattle, as its first advertising agency. The following year, the agency created the first brand ad for Nike, called There is no finish line, in which no Nike product was shown. By 1980, Nike had attained a 50% market share in the U. S. athletic shoe market, and the company went public in December of that year. Together, Nike and Wieden+Kennedy have created many print and television advertisements, and Wieden+Kennedy remains Nikes primary ad agency. It was agency co-founder Dan  who coined the now-famous slogan Just Do It for a 1988 Nike ad campaign. Throughout the 1980s, Nike expanded its product line to encompass many sports and regions throughout the world. Nike  Facts * Nike first went under the name â€Å"Blue Ribbon Sports†. * The name â€Å"Nike† comes from the Greek goddess of victory. * Ilie Nastase, a tennis star, was the first pro athlete to sign with Nike. * Nike has many marketing names, such as Nike Golf, Nike Pro, Nike+, Air Jordan, Nike Skateboarding, Team Starter, and subsidiaries like Bauer, Cole Haan, Hurley International, Umbro and Converse. * Nike has factories in 45 countries around the world. Nike’s first self-designed product was based on Bowerman’s â€Å"waffle† design in which the sole of the shoe was made by the pattern of a waffle iron. * Nike has a history of  using inhumane labor practices to produce their products. * Nike has acknowledged these labor problems in the past and has promised to change  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã ‚   * Nike factories violated local minimum wage laws, payed subsistence wages and illegally forced massive overtime. * Nike factories subjected workers (90% young women and girls) to criminally dangerous, brutal sweatshops. * Nike supported military dictatorships that crush labor unions and worker protest. Nike  FY06 revenues were approximately $15 billion. They are the world’s leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities. * Nike  produces approximately 50,000 product styles per year. * Nike  sells products in more than 160 countries. * Nike has approximately 28,000 employees worldwide. * Almost 800,000 workers are employed in contracted factories around the world making Nike-branded products. * Nike operations (owned and not directly owned) contribute to approximately 1. 36 million tonnes of CO2 annually. Brand Portfolio Acquisitions As of September 2012, Nike, Inc. owns four key subsidiaries:   * Cole Haan, designs and distributes dress and casual footwear, apparel, and accessories for men and women * Converse Inc. , offers a diverse portfolio including premium lifestyle mens and womens footwear and apparel. * Hurley International LLC. , designs and distributes a line of action sports apparel for surfing, skateboarding and snowboarding, and youth lifestyle apparel and footwear * NIKE Golf, designs and markets golf equipment, apparel, balls, footwear, bags and accessories worldwide. * Umbro. Ltd. , designs, distributes, and licenses athletic and casual footwear, apparel and equipment, primarily for the sport of football (soccer) * Nike id, NikeID  is a service provided by  Nike  allowing customers to personalize and design their own Nike merchandise. They offer online services as well as physical NikeID studios in different countries around the world, including: United Kingdom, France, Spain, Germany, China and the USA. Products: Nike produces a wide range of sports equipment. Their first products were track running shoes. They currently also make shoes, jerseys, shorts,  base layers, etc. or a wide range of sports, including track and field, baseball,  ice hockey, tennis, association football (soccer),  lacrosse, basketball, and  cricket. Nike Air Max  is a line of shoes first released by Nike, Inc. in 1987. The most recent additions to their line are the Nike 6. 0, Nike NYX, and  Nike SB  shoes, designed for  skateboarding. Nike has recently intro duced cricket shoes called Air Zoom Yorker, designed to be 30% lighter than their competitors  In 2008, Nike introduced the Air Jordan XX3, a high-performance basketball shoe designed with the environment in mind. Nike is well known and popular in  youth culture, chav  culture and  hip hop culture  for their supplying of  urban fashion  clothing. Nike recently teamed up with  Apple Inc. to produce the Nike+  product that monitors a runners performance via a radio device in the shoe that links to the  iPod nano. In 2004, Nike launched the  SPARQ Training Program/Division. Some of Nikes newest shoes contain  Fly wire  and Linarite Foam to reduce weight. Organizational Structure Structure Nike has a matrix structure; it is a combination between the functional and the divisional structure. Nike consists of 5 departments: HR, Marketing Sale, Accounting, Production, and Design Development that cooperate with each others very well. Nike does not manufacture its own products; Nike signed contracts with the factories to produce their products. In Vietnam, Nike signed contract with 12 factories to produce for them and to control the production process, Nike has many production teams and each team is responsible for 1 factory. Each production team include of a team leader, quality staff, quantity staff, technical staff and scheduling staff. Information Flow Nike operates efficiency due to having a smoothly information flow within the company. Information can be divided into 2 kinds: general information and technical information. General Information: is information about administration, about the general working of the whole company or an announcement from the CEO. Those types of information usually flow from top to bottom, from the CEO, vice presidents to the operational employees. General information is usually connection between the departments in the company. Nike also has an intranet and a mail system to ensure the information flow smoothly inside the company. Technical information: is information regarding to the products. It flows sideways; it can flow horizontally or vertically within the organization. This kind of information usually comes from the Design Development or Production department and then it flow back to the top and flow throughout the departments. It also flows through the intranet and mail system however this kind of information is used only by certain group of users who are involved with the products. Competitors of Nike and There Market Share: Nike currently enjoys a 47% market share of the domestic footwear industry, with sales of $3. 77 billion. Nike has been manufacturing throughout the Asian region for over twenty-five years, and there are over 500,000 people today directly engaged in the production of their products. They utilize an outsourcing strategy, using only subcontractors throughout the globe. Their majority of their output today is produced in factories in China, Indonesia, and Vietnam, but they also have factories in Italy, the Philippines, Taiwan, and South Korea. These factories are 100% owned by subcontractors, with the majority of their output consisting solely of Nike products. However, Nike does employ teams of four expatriates per each of the big three countries (China, Indonesia, Vietnam), that focus on both quality of product and quality of working conditions, visiting the factories weekly. Reebok, as the second leading manufacturer of footwear, has domestic revenues of $1. 28 billion and a market share of 16%. Similar to Nike, they also utilize a 100% outsourcing strategy and manufacture their products throughout Asia. Adidas is currently enjoying the fastest growth of any brand domestically, with a market share of 6% and revenues of $500 million. They have adjusted their manufacturing strategy, from a vertical operation in Germany in the 60’s and 70’s, to an outsourcing focus today throughout Asia. Unlike the big two, they do not have a code of conduct, and their factories are considered to be the worst in the industry. Converse with a market share of 3% and revenues of $280 million, Converse manufactures their products both domestically and internationally. SWOT ANALYSIS STRENGTHS * Recognized brand name * Strong in research and development * Strong marketing campaign * Diverse portfolio * Successful advertising campaigns * Customer loyalty * Strong financial position * Strong international presence| WEAKNESSES * Products are highly priced * Revenues are mostly dependent on footwear sales * History for violations of minimum wages, child labor in its manufacturing countries * Little control over quality of products from 3rd party contractors * Use of contract manufacturing in foreign countries has the potential to create financial problems due to foreign currency fluctuations and interest rate changes. * Price sensitivity of products| OPPORTUNITIES * Creating footwear that would incorporate recycled materials from their own production lines and other places. * Promotion as a fashionable wear, not just a sportswear. * Growing segment of female athletes. * International expansion into emerging markets i. e. India. Additional marketing of existing products to appeal to new demographic groups. * Develop new alliances with companies that are respected regarding social responsibility. * Brand reorganization by market region| THREATS * High competitive industry * Failure to respond to the market trends in timely manner could greatly affect financial position. * Production of imitation goods and general products. * Negative public perception created by environmental, child labor, contracted manufacturing issues and sponsored athletes. * International currency changes could decrease profits. * Federal trade regulations in dealing with foreign manufactures. | | Strengths| Weaknesses| Recognized brand nameStrong in research and developmentStrong marketing campaignDiverse portfolioSuccessful advertising campaignsCustomer loyaltyStrong financial positionStrong international presence| Products are highly pricedRevenues are mostly dependent on footwear salesHistory for violations of minimum wages, child la bor and over times in its manufacturing countriesLittle control over quality of products from 3rd party contractorsUse of contract manufacturing has the potential to create financial problems Price sensitivity of products| Opportunities| S-O Strategies| W-O Strategies| Creating footwear that would incorporate recycled materialsPromotion as a fashionable wear. Growing segment of female athletes. International expansion into emerging markets i. e. India. Additional marketing of existing products to appeal to new demographic groups. Develop new alliances with companies that are respected regarding social responsibility. Brand reorganization by market region| With the help of brand image and effective RD Nike can focus on Growing E-commerce Market expansionIncrease marketingUnrelated diversification| Product DevelopmentBetter employment practices| Threats| S-T Strategies| W-T Strategies| High competitive industryFailure to respond to the market trends in time. Production of counterfeit goods and generic products. Negative public perception. International currency changes could decrease profits. Federal trade regulations in dealing with foreign manufactures. | Focus on Alternative brandsMarket penetrationBackward integrationPromote company as an ethical company. Come up with innovated and creative ideas for product development| BCG MATRIX STARSHigh growth rate and high market share * Cole haan * Nike id| QUESTION MARKHigh growth rate and low market share * Hurley * Converse * Nike + apple product| CASH COWLow growth rate and high market share * Nike brand| DOGSLow growth rate and low market share * Ni ke skateboarding known as Nike sb| Proposed Strategies * Build Market Share: Make further investments (for example, to maintain Star status, or turn a Question Mark into a Star) * Get rid of the Dogs, and use the capital to invest in Stars and some Question Marks. Areas of Improvement Nike has strong competitive position as well as fast market growth rate. As the market growth is fast customer needs are vary immediately, same like Nike has strong competitive position as compared to their competitors so these are the strategies which are more suitable for maintaining the Nike position: * Market penetration: Nike should increase the market share of an existing product, or promoting a new product, through strategies such as bundling, advertising, lower prices, or volume discounts. * Backward integration: Due to backward integration Nike purchase of suppliers. Companies will pursue backward integration  when it will result in improved efficiency and cost savings. For example, backward integration might cut transportation costs, improve profit margins and make the firm more competition. * Forward integration: Due to forward integration Nike get the  controls of  the direct distribution of its products. * Horizontal integration: Nike will acquire the additional business activities that are at the same level of the value chain in similar or different industries. * Related diversification: we use related diversification because market is growing for that particular industry in which we are moving. Strategy Recommendation Conclusion Appropriate strategy for Nike Inc. ,  is Market Development. * Nike should remain in the present business and should introduce present products in more countries by improving their image. Keep expanding into current and future foreign markets by being aggressive and the worldwide leader of the footwear industry. * A lot of people don’t know that it has subsidiaries which are dealing in apparel clothing in dustry so Nike Inc. should have more strong marketing strategy to build awareness among the consumers that is how the sales will be increased. * Implement product diversification with company’s newest technologies so resulting increased earnings could be reinvested into RD plans. * Nike Inc. can improve its position more by expanding more geographically although it has manufacturing factories in developing countries but it should offer its products by targeting these countries too so that they will have an international brand strength. It should make more strong management strategies so that it won’t have to face the corporate governance issues or ethical issues. * Nike Inc. due to its subsidiary has gone for unrelated diversification which was a risky decision and bared some losses therefore it should follow related diversification. * Due to its high most of the middle class people doesn’t go for the brand they should reduce their prices as the Nike Inc. is already cost efficient company because of its low labor production costs. * They should have more outlets to maximize penetration. References * Nike Annual Reports * www. nikebiz. com (Investor Relations) * www. bigcharts. com