Description
20,000 retail accounts throughout the U. S. using independent distributors and also has contracts with 110 other countries
Also has agreements with Internet companies and subsidiaries
Operates within the sports footwear and apparel market.
Originally designing and producing running shoes, their portfolio has broadened to include a wide range of sports and leisure wear. This is all endorsed by top sporting personalities
Sports Footwear and Apparel
Sports Footwear and Apparel
Industry Analysis
Industry Analysis
Group 4:
Josh Fernino
Brent Hare
Victor Hemmati
Lance Hollister
Chris Kerschen
Ty Parasiliti
Vincent Uku
Nike
Corporation
Defning The Industry
Defning The Industry
Industry Defned
Industry Defned
?
20,000 retail accounts throughout the
! S! using independent distri"utors
and also has contracts with ##0 other
countries
?
Also has agree$ents with Internet
co$panies and su"sidiaries
?
%perates within the sports &ootwear
and apparel $arket!
?
%riginally designing and producing
running shoes, their port&olio has
"roadened to include a wide range o&
sports and leisure wear! This is all
endorsed "y top sporting personalities
NAICS Codes
NAICS Codes
?
North A$erican Industry Classifcation
Syste$
?
The standard used "y Federal statistical
agencies in classi&ying "usiness
esta"lish$ents &or the purpose o& collecting,
analy'ing, and pu"lishing statistical data
related to the !S! "usiness econo$y
?
The frst two digits o& code designate the
sector, the third designates the su"sector,
the &ourth digit designates the industry
group, the f&th digit designates the NAICS
industry, and si(th digit designates the !S!
detail industry
NAICS Codes )(a$ple
NAICS Codes )(a$ple
!"#C$ Co%es !ame Classi&cation
Le'el
*#+** ,anu&acturing Sector
*#-
.eather and Allied
/roduct
,anu&acturing
Su"sector
*#-2
Footwear
,anu&acturing
Industry 0roup
*#-2#
Footwear
,anu&acturing
Industry
*#-2##
1u""er and
/lastics Footwear
,anu&acturing
!S! Detail Industry
Nike /roducts
Nike /roducts
?
They design, de2elop, and
$arket high 3uality acti2e
sports apparel, e3uip$ent,
and accessory products
?
Nike distri"utes one new
shoe style e2ery single day
?
Nike4s critical &actors &or
success are $aintaining
current standards, closer
working relationships, and
retaining custo$er loyalty
"y guaranteed standard o&
product
Nike /roducts
Nike /roducts
?
Their products are
$ade &or $en,
wo$en, and children
o& all ages!
?
The co$pany
presently sells roughly
*00 $odels o& athletic
shoes in 500 styles &or
26 di7erent sports!
?
Nike8s target $arket
&or their shoes is
$ales and &e$ales
"etween #9 and *6
years old!
Nike /roducts
Nike /roducts
?
They not only see co$petition
&ro$ Adidas and 1ee"ok, "ut also
with %ld Na2y and A"ercro$"ie
and Fitch
?
Continuous $arketing research is
the key in assessing the $arket
Nike )(pansion
Nike )(pansion
?
Nike has success as a result o&
colla"orating with other co$panies
within the sports and ftness
industry
?
:ut at other ti$es, Nike e(panded
into $arkets &or which it is not
strategically suited
?
Nike has reali'ed to initiate $ore
aggressi2e progra$s to re2iew
product partnerships that are
outside o& its core "asis o& products
!ike(s Bi))est
!ike(s Bi))est
Competitor
Competitor
?
Consist o& * co$panies;
? Adidas
? 1ee"ok
? Taylor,ade
?
Adidas /urpose;
? The production and distri"ution o& apparel, &ootwear and
e3uip$ent &or sports and leisure as well as o& products o&
ad<oining felds, &urther$ore the co$$erciali'ation o& the
registered trade$ark Adidas!
?
Adidas ,ission;
? To "e the leading sports "rand in the world!
?
The Adidas "rand attitude =I$possi"le is nothing> dri2es all
o& their "rand co$$unication initiati2es and it helps the$
strengthen the Adidas "rand4s "ond with the consu$er!
?
1ee"ok4s ,ission;
? Always challenge and lead through creati2ity!
?
At the core o& the 1ee"ok "rand is the a?r$ation o& the
uni3ueness o& all people!
?
1ee"ok Strategic Focus;
? to "eco$e a consu$er+dri2en "rand that re@ects the e$phasis on
indi2iduality!
?
Athletes )ndorsed "y 1ee"ok;
? Sidney Cros"y
? Ale(ander %2echkin
? Allen I2erson
? Aao ,ing
? Thierry Benry
?
1ee"ok /artnerships;
? NF.
? NB.
? ,.:
?
Taylor,ade4s ,ission;
? To ha2e the leading per&or$ance gol& "rands in the world!
?
Taylor,ade changed the ga$e o& gol& "y "ringing the
$etalwood to the pu"lic 2C years ago, and today is
the $arket leader in the $etalwood category!
?
Stri2e to continually e(tend their "rands4 positions as
leaders in the de2elop$ent and i$ple$entation o&
ad2anced per&or$ance technologies in all o& their
products including clu"s, "alls, &ootwear and apparel!
?
Dust to gi2e you an idea o& how well Taylor,ade is
doing, they currently endorse 66 pro&essional gol&ers,
one o& which is Sergio 0arcia, and as o& Fe"ruary #C,
2005 he is ranked nu$"er two in world!
Adidas 0roup Financials
Adidas 0roup Financials
!et $ales
in
millions
!ine
*onths
+,,-
!ine
*onths
+,,.
Chan)e
Adidas -,00E 6,E-6 5!5F
1ee"ok #,69C #,C-6 G#0!#HF
Taylor,ade -#E -05 0!9F
Industry Structure
Industry Structure
0rowth in 1ecent Decades
0rowth in 1ecent Decades
?
Nike and 1ee"ok set the standard
?
Nike gained popularity
?
.urking co$petitors
? Adidas 0roup
? nder Ar$our
Industry Ieakening
Industry Ieakening
?
Internet skyrocketed sales in late
504s
?
pco$ing co$panies took ad2antage
o& new technologies
?
Sales ha2e slu$ped tre$endously in
past year
?
Nike $aking EF cut
?
nder Ar$our stated that analyst4s
esti$ates are &ar "elow earlier
predictions
Threat o& New )ntrants
Threat o& New )ntrants
?
Bighly saturated and challenging
industry
?
Depend in large part on frst
$o2er ad2antage and scale
econo$ies
?
Areas to &ocus; Technologies,
pricing, and costs o& production
Inno2ator
Inno2ator
?
Sports Apparel and Footwear industry
relies $ainly on inno2ations and
creati2ity
?
Inno2ati2e IdeasJKey success &actor
?
Co$pany could ha2e an ad2antage
?
Iithout proper &unding and resources
a fr$ could "e at a se2ere
disad2antage
?
Threat o& new entrants "ased on frst+
$o2er ad2antage is $ini$al
)cono$ies o& Scale
)cono$ies o& Scale
?
Di?cult to co$pete with large
econo$ies o& scale
?
Bard to handle all le2els, $ore
e(perienced fr$s are a"le to
disperse
?
New entrants su7er a se2ere cost
disad2antage
?
Signifcant a$ount o& assets
needed
:argaining /ower o& :uyers
:argaining /ower o& :uyers
and Suppliers
and Suppliers
?
/ower o& "uyers can "e deter$ined
"y supply 2s! de$and and nu$"er o&
"uyers
?
/rice sensiti2ity e7ects de$and
?
Custo$ers $ore a7ected "y price
?
Suppliers are $ore power&ul when
the ratio to "uyers is $ore
?
The 2ast range o& products in the
Athletic Apparel industry leads to a
dissi$ilar a$ount o& "argaining
power &or the supplier
Su"stitute products and
Su"stitute products and
ser2ices
ser2ices
?
The threat o/ su0stitute
pro%ucts
The e(istence o& close su"stitute
products increases the propensity
o& custo$ers to switch to
alternati2es in response to price
increases
Su"stitute products and
Su"stitute products and
ser2ices
ser2ices
?
Su"stitutes are a threat "ecause;
#H They are an attracti2e alternati2e
product or ser2ice, which custo$ers can
easily shi&t to i& there are low switching
costs!
2H The a2aila"ility o& su"stitutes in2ites
custo$ers to $ake price, 3uality and
per&or$ance co$parisons
*H Co$petiti2ely priced su"stitutes i$pose
a $a(i$u$ 2alue on prices rele2ant
industry can charge &or its products or
ser2ices
Su"stitute products and
Su"stitute products and
ser2ices
ser2ices
1) They are an attractive alternative
product or service, which customers can
easily shift to if there are low switching
costs
OR
Su"stitute products and
Su"stitute products and
ser2ices
ser2ices
2) The availability of substitutes invites
customers to make price, quality and
performance comparisons
IS IT
CHEAPER?
CAN I JUMP
HIGHER?
CAN I RUN
FASTER?
Su"stitute products and
Su"stitute products and
ser2ices
ser2ices
?
*H Co$petiti2ely priced
su"stitutes i$pose a $a(i$u$
2alue on prices rele2ant industry
can charge &or its products or
ser2ices
What is
worth ?
1i2alry A$ong /articipants
1i2alry A$ong /articipants
?
Competiti'e ri'alry
?
This is the $a<or deter$inant
o& the co$petiti2eness o& the
industry! So$eti$es ri2als
co$pete aggressi2ely and
so$eti$es ri2als co$pete in
non+price di$ensions such as
inno2ation, $arketing, etc!
1i2alry A$ong /articipants
1i2alry A$ong /articipants
?
Generally competiti'e ri'alry ill
0e hi)h i/:
?
There is little di7erentiation "etween the products
sold "etween custo$ers!
?
Co$petitors are appro(i$ately the sa$e si'e o&
each other
?
I& the co$petitors all ha2e si$ilar strategies!
?
It is costly to lea2e the industry hence they fght to
<ust stay in
?
Bigh f(ed or storage costs, which encourages &ast
turno2er o& in2entory!
1i2alry A$ong /articipants
1i2alry A$ong /articipants
?
*arket o/ Competiti'e
1i'alry
Industry )n2iron$ent
Industry )n2iron$ent
Nike 2s! The )cono$y
Nike 2s! The )cono$y
?
As the econo$y slows, consu$er
purchases are down! The "iggest threat
&or Nike would "e econo$ic recession!
?
Asian econo$ic crisis also a7ects Nike
since its goods are $anu&actured in Asia!
? The la"or costs and $aterial prices are going
up! Nike8s growth is not <ust a7ected "y the
local econo$y "ut also in the international
econo$y!
? A weak )uro and an Asian recession could
$ean weak sales &or Nike!
Nike 2s! )thics
Nike 2s! )thics
?
In #55-, the ethical issue o& child
la"or ca$e to the sur&ace
regarding the hiring o& young
e$ployees "y Nike4s Asian and
.atin su"contractors whose ages
ranged &ro$ 2ery young to
teenagers! The teen workers would
ha2e not "een so contro2ersialM
howe2er, there were no regulations
or work per$its issued!
Nike 2s! )thics
Nike 2s! )thics
?
Iithout proper $anage$ent
leading and planning in the Nike
Corporation, the co$pany would
ha2e su7ered &ro$ the child la"or
issue!
?
Nike has $ade a true "ounce+"ack
&ro$ the negati2e $edia attention,
and continues to "e success&ul due
to their strong "usiness ethic
philosophy!
Nike 2s! Society
Nike 2s! Society
?
/eople are $ore health conscious
nowadays! Conse3uently, $ore and
$ore people are <oining ftness clu"s!
There is an acco$panying growth &or
de$ands o& ftness products
particularly e(ercise apparels, shoes
and e3uip$ent! Nike naturally is at
the &ore&ront o& this surge in de$and
as people are looking &or sports
shoes, apparels and e3uip$ent!
Nike 2s! Society
Nike 2s! Society
?
The largest a$ong Nike4s
o"<ecti2es, the wo$en4s athletic
$arket will "e a top priority in the
ne(t ten years! The nu$"er o&
wo$en collegiate athletes ha2e
increased &ro$ a &ew thousand in
the #5-04s to al$ost one $illion
today!
Technology
Technology
?
/roduct technology $ust e2ol2e as
ftness e2ol2es, in order to gi2e
co$petitors an ad2antage
?
Nike introduced Nike Shox, which
re2olutioni'ed the cushioning &oa$
used in shoes
?
Nike also colla"orated with Apple
and is launching new apparel and
&ootwear that will easily carry the
consu$er4s i/od
Technology
Technology
?
/roduct inno2ation is an ongoing
process and is 2ital to stay ahead o&
co$petition
?
Co$panies in this industry in2est
$oney in 1ND to keep up with the new
de$ands o& today4s athletes
?
Nike e$ploys $any specialists
including engineers, athletes,
"io$echanics, and industrial designers
to work together in the design process
Co$petition
Co$petition
?
The top * fr$s in this industry are
Nike, Adidas, and /u$a
?
The industry is relati2ely old, so fr$s
$ust fght &or $arket share rather
than relying on $arket growth
Areas Fir$s Co$pete %n
Areas Fir$s Co$pete %n
?
/roduct o7erings
?
Technologies
?
,arketing )(penditures
Gendorse$ents and ad2ertisingH
?
/ricing
?
Costs o& /roduction
?
Custo$er Ser2ice
Co$petition
Co$petition
?
Fir$s in athletic &ootwear and
apparel also co$pete with fr$s
that pro2ide other su"stitutes
Gsuch as leisure and casual wearH
?
Skechers, K Swiss, New :alance,
and Aasics
?
Nike has created their own lines
o& casual shoes to co$pete in
these $arkets as well
? )(a$ple; Con2erse
Co$petition
Co$petition
?
During hard econo$ic ti$es, people
consu$e less retail goods such as
clothes and &ootwear
?
:ureau o& the Census esti$ates that
retail and &ood ser2ice sales &or
Danuary 2005 are 5!CF "elow a year
ago
?
Conse3uently, the industry has turned
to e$erging $arkets to continue sales
growth
? China
? 1ussia
? .atin A$erica
0eography
0eography
?
/roduction is outsourced to plants in
Asia, .atin A$erica, and A&rica
? This reduces costs "ecause la"or is cheaper
? /uts sources o& production closer to where
they will "e sold
?
Fir$s who outsource lose the a"ility to
closely $onitor product 3uality and
working conditions
?
Although so$e people fnd this
unethical, fr$s cannot a7ord to keep
production close to ho$e and still
co$pete on proft $argins
0eography
0eography
?
/lants are also located in $any di7erent
countries, rather than "eing concentrated
in one area
?
Di2ersifcation o& production plants
reduces the risk that a fr$ will greatly "e
a7ected "y a pro"le$ in any particular
country
? )(a$ple; Nike4s largest &ootwear &actory
accounts &or only -F o& the total &ootwear
production
? Nike clai$s it can reco2er &ro$ any loss in
production within one year4s ti$e
Conclusion
Conclusion
%2er2iew o& the Industry
%2er2iew o& the Industry
•
In this industry there is intense
co$petition, &ashion trends, and
price conscious consu$ers that
ha2e slowed growth in this industry!
•
This creates di?cult situations &or
co$panies to produce a "rand
i$age that appeals to consu$ers
that want to shop &or cheaper
apparel, "ut also apparel that has
3uality!
Ihere the Industry is Now
Ihere the Industry is Now
?
Financially, the co$pany $ust "e
aware that econo$ies are not up to
par and that costs $ust "e kept low
to "ring in the re2enue!
?
Iith the internet "eing a huge
entry to Nike4s products, the
co$pany $ust fnd a way to keep
their consu$ers to see the$ as
"eing $ore user &riendly as
co$pared to their co$petitors!
Cont!
Cont!
?
Iays &or Nike to do this is to keep
the site si$ple, &resh, and easy to
use!
?
:y using new designs and "etter
deals &or orders $ade online &or the
custo$ers, it has the potential to
"ring in $ore re2enue, as well as
i$pro2e the relationship "etween
the co$pany and its clients!
Industry Forecast
Industry Forecast
?
Technology is always changing, and i&
Nike can create apparel and athletic
e3uip$ent that the co$petitors cannot
$atch, then Nike will grow e2en higher
than its ri2als!
?
Technology can "e "ased around
anything &ro$ so&ter and $ore dura"le
running shoes, to a "ase"all "at with a
new $etal to $ake the "all go &urther!
doc_258367121.ppt
20,000 retail accounts throughout the U. S. using independent distributors and also has contracts with 110 other countries
Also has agreements with Internet companies and subsidiaries
Operates within the sports footwear and apparel market.
Originally designing and producing running shoes, their portfolio has broadened to include a wide range of sports and leisure wear. This is all endorsed by top sporting personalities
Sports Footwear and Apparel
Sports Footwear and Apparel
Industry Analysis
Industry Analysis
Group 4:
Josh Fernino
Brent Hare
Victor Hemmati
Lance Hollister
Chris Kerschen
Ty Parasiliti
Vincent Uku
Nike
Corporation
Defning The Industry
Defning The Industry
Industry Defned
Industry Defned
?
20,000 retail accounts throughout the
! S! using independent distri"utors
and also has contracts with ##0 other
countries
?
Also has agree$ents with Internet
co$panies and su"sidiaries
?
%perates within the sports &ootwear
and apparel $arket!
?
%riginally designing and producing
running shoes, their port&olio has
"roadened to include a wide range o&
sports and leisure wear! This is all
endorsed "y top sporting personalities
NAICS Codes
NAICS Codes
?
North A$erican Industry Classifcation
Syste$
?
The standard used "y Federal statistical
agencies in classi&ying "usiness
esta"lish$ents &or the purpose o& collecting,
analy'ing, and pu"lishing statistical data
related to the !S! "usiness econo$y
?
The frst two digits o& code designate the
sector, the third designates the su"sector,
the &ourth digit designates the industry
group, the f&th digit designates the NAICS
industry, and si(th digit designates the !S!
detail industry
NAICS Codes )(a$ple
NAICS Codes )(a$ple
!"#C$ Co%es !ame Classi&cation
Le'el
*#+** ,anu&acturing Sector
*#-
.eather and Allied
/roduct
,anu&acturing
Su"sector
*#-2
Footwear
,anu&acturing
Industry 0roup
*#-2#
Footwear
,anu&acturing
Industry
*#-2##
1u""er and
/lastics Footwear
,anu&acturing
!S! Detail Industry
Nike /roducts
Nike /roducts
?
They design, de2elop, and
$arket high 3uality acti2e
sports apparel, e3uip$ent,
and accessory products
?
Nike distri"utes one new
shoe style e2ery single day
?
Nike4s critical &actors &or
success are $aintaining
current standards, closer
working relationships, and
retaining custo$er loyalty
"y guaranteed standard o&
product
Nike /roducts
Nike /roducts
?
Their products are
$ade &or $en,
wo$en, and children
o& all ages!
?
The co$pany
presently sells roughly
*00 $odels o& athletic
shoes in 500 styles &or
26 di7erent sports!
?
Nike8s target $arket
&or their shoes is
$ales and &e$ales
"etween #9 and *6
years old!
Nike /roducts
Nike /roducts
?
They not only see co$petition
&ro$ Adidas and 1ee"ok, "ut also
with %ld Na2y and A"ercro$"ie
and Fitch
?
Continuous $arketing research is
the key in assessing the $arket
Nike )(pansion
Nike )(pansion
?
Nike has success as a result o&
colla"orating with other co$panies
within the sports and ftness
industry
?
:ut at other ti$es, Nike e(panded
into $arkets &or which it is not
strategically suited
?
Nike has reali'ed to initiate $ore
aggressi2e progra$s to re2iew
product partnerships that are
outside o& its core "asis o& products
!ike(s Bi))est
!ike(s Bi))est
Competitor
Competitor
?
Consist o& * co$panies;
? Adidas
? 1ee"ok
? Taylor,ade
?
Adidas /urpose;
? The production and distri"ution o& apparel, &ootwear and
e3uip$ent &or sports and leisure as well as o& products o&
ad<oining felds, &urther$ore the co$$erciali'ation o& the
registered trade$ark Adidas!
?
Adidas ,ission;
? To "e the leading sports "rand in the world!
?
The Adidas "rand attitude =I$possi"le is nothing> dri2es all
o& their "rand co$$unication initiati2es and it helps the$
strengthen the Adidas "rand4s "ond with the consu$er!
?
1ee"ok4s ,ission;
? Always challenge and lead through creati2ity!
?
At the core o& the 1ee"ok "rand is the a?r$ation o& the
uni3ueness o& all people!
?
1ee"ok Strategic Focus;
? to "eco$e a consu$er+dri2en "rand that re@ects the e$phasis on
indi2iduality!
?
Athletes )ndorsed "y 1ee"ok;
? Sidney Cros"y
? Ale(ander %2echkin
? Allen I2erson
? Aao ,ing
? Thierry Benry
?
1ee"ok /artnerships;
? NF.
? NB.
? ,.:
?
Taylor,ade4s ,ission;
? To ha2e the leading per&or$ance gol& "rands in the world!
?
Taylor,ade changed the ga$e o& gol& "y "ringing the
$etalwood to the pu"lic 2C years ago, and today is
the $arket leader in the $etalwood category!
?
Stri2e to continually e(tend their "rands4 positions as
leaders in the de2elop$ent and i$ple$entation o&
ad2anced per&or$ance technologies in all o& their
products including clu"s, "alls, &ootwear and apparel!
?
Dust to gi2e you an idea o& how well Taylor,ade is
doing, they currently endorse 66 pro&essional gol&ers,
one o& which is Sergio 0arcia, and as o& Fe"ruary #C,
2005 he is ranked nu$"er two in world!
Adidas 0roup Financials
Adidas 0roup Financials
!et $ales
in
millions
!ine
*onths
+,,-
!ine
*onths
+,,.
Chan)e
Adidas -,00E 6,E-6 5!5F
1ee"ok #,69C #,C-6 G#0!#HF
Taylor,ade -#E -05 0!9F
Industry Structure
Industry Structure
0rowth in 1ecent Decades
0rowth in 1ecent Decades
?
Nike and 1ee"ok set the standard
?
Nike gained popularity
?
.urking co$petitors
? Adidas 0roup
? nder Ar$our
Industry Ieakening
Industry Ieakening
?
Internet skyrocketed sales in late
504s
?
pco$ing co$panies took ad2antage
o& new technologies
?
Sales ha2e slu$ped tre$endously in
past year
?
Nike $aking EF cut
?
nder Ar$our stated that analyst4s
esti$ates are &ar "elow earlier
predictions
Threat o& New )ntrants
Threat o& New )ntrants
?
Bighly saturated and challenging
industry
?
Depend in large part on frst
$o2er ad2antage and scale
econo$ies
?
Areas to &ocus; Technologies,
pricing, and costs o& production
Inno2ator
Inno2ator
?
Sports Apparel and Footwear industry
relies $ainly on inno2ations and
creati2ity
?
Inno2ati2e IdeasJKey success &actor
?
Co$pany could ha2e an ad2antage
?
Iithout proper &unding and resources
a fr$ could "e at a se2ere
disad2antage
?
Threat o& new entrants "ased on frst+
$o2er ad2antage is $ini$al
)cono$ies o& Scale
)cono$ies o& Scale
?
Di?cult to co$pete with large
econo$ies o& scale
?
Bard to handle all le2els, $ore
e(perienced fr$s are a"le to
disperse
?
New entrants su7er a se2ere cost
disad2antage
?
Signifcant a$ount o& assets
needed
:argaining /ower o& :uyers
:argaining /ower o& :uyers
and Suppliers
and Suppliers
?
/ower o& "uyers can "e deter$ined
"y supply 2s! de$and and nu$"er o&
"uyers
?
/rice sensiti2ity e7ects de$and
?
Custo$ers $ore a7ected "y price
?
Suppliers are $ore power&ul when
the ratio to "uyers is $ore
?
The 2ast range o& products in the
Athletic Apparel industry leads to a
dissi$ilar a$ount o& "argaining
power &or the supplier
Su"stitute products and
Su"stitute products and
ser2ices
ser2ices
?
The threat o/ su0stitute
pro%ucts
The e(istence o& close su"stitute
products increases the propensity
o& custo$ers to switch to
alternati2es in response to price
increases
Su"stitute products and
Su"stitute products and
ser2ices
ser2ices
?
Su"stitutes are a threat "ecause;
#H They are an attracti2e alternati2e
product or ser2ice, which custo$ers can
easily shi&t to i& there are low switching
costs!
2H The a2aila"ility o& su"stitutes in2ites
custo$ers to $ake price, 3uality and
per&or$ance co$parisons
*H Co$petiti2ely priced su"stitutes i$pose
a $a(i$u$ 2alue on prices rele2ant
industry can charge &or its products or
ser2ices
Su"stitute products and
Su"stitute products and
ser2ices
ser2ices
1) They are an attractive alternative
product or service, which customers can
easily shift to if there are low switching
costs
OR
Su"stitute products and
Su"stitute products and
ser2ices
ser2ices
2) The availability of substitutes invites
customers to make price, quality and
performance comparisons
IS IT
CHEAPER?
CAN I JUMP
HIGHER?
CAN I RUN
FASTER?
Su"stitute products and
Su"stitute products and
ser2ices
ser2ices
?
*H Co$petiti2ely priced
su"stitutes i$pose a $a(i$u$
2alue on prices rele2ant industry
can charge &or its products or
ser2ices
What is
worth ?
1i2alry A$ong /articipants
1i2alry A$ong /articipants
?
Competiti'e ri'alry
?
This is the $a<or deter$inant
o& the co$petiti2eness o& the
industry! So$eti$es ri2als
co$pete aggressi2ely and
so$eti$es ri2als co$pete in
non+price di$ensions such as
inno2ation, $arketing, etc!
1i2alry A$ong /articipants
1i2alry A$ong /articipants
?
Generally competiti'e ri'alry ill
0e hi)h i/:
?
There is little di7erentiation "etween the products
sold "etween custo$ers!
?
Co$petitors are appro(i$ately the sa$e si'e o&
each other
?
I& the co$petitors all ha2e si$ilar strategies!
?
It is costly to lea2e the industry hence they fght to
<ust stay in
?
Bigh f(ed or storage costs, which encourages &ast
turno2er o& in2entory!
1i2alry A$ong /articipants
1i2alry A$ong /articipants
?
*arket o/ Competiti'e
1i'alry
Industry )n2iron$ent
Industry )n2iron$ent
Nike 2s! The )cono$y
Nike 2s! The )cono$y
?
As the econo$y slows, consu$er
purchases are down! The "iggest threat
&or Nike would "e econo$ic recession!
?
Asian econo$ic crisis also a7ects Nike
since its goods are $anu&actured in Asia!
? The la"or costs and $aterial prices are going
up! Nike8s growth is not <ust a7ected "y the
local econo$y "ut also in the international
econo$y!
? A weak )uro and an Asian recession could
$ean weak sales &or Nike!
Nike 2s! )thics
Nike 2s! )thics
?
In #55-, the ethical issue o& child
la"or ca$e to the sur&ace
regarding the hiring o& young
e$ployees "y Nike4s Asian and
.atin su"contractors whose ages
ranged &ro$ 2ery young to
teenagers! The teen workers would
ha2e not "een so contro2ersialM
howe2er, there were no regulations
or work per$its issued!
Nike 2s! )thics
Nike 2s! )thics
?
Iithout proper $anage$ent
leading and planning in the Nike
Corporation, the co$pany would
ha2e su7ered &ro$ the child la"or
issue!
?
Nike has $ade a true "ounce+"ack
&ro$ the negati2e $edia attention,
and continues to "e success&ul due
to their strong "usiness ethic
philosophy!
Nike 2s! Society
Nike 2s! Society
?
/eople are $ore health conscious
nowadays! Conse3uently, $ore and
$ore people are <oining ftness clu"s!
There is an acco$panying growth &or
de$ands o& ftness products
particularly e(ercise apparels, shoes
and e3uip$ent! Nike naturally is at
the &ore&ront o& this surge in de$and
as people are looking &or sports
shoes, apparels and e3uip$ent!
Nike 2s! Society
Nike 2s! Society
?
The largest a$ong Nike4s
o"<ecti2es, the wo$en4s athletic
$arket will "e a top priority in the
ne(t ten years! The nu$"er o&
wo$en collegiate athletes ha2e
increased &ro$ a &ew thousand in
the #5-04s to al$ost one $illion
today!
Technology
Technology
?
/roduct technology $ust e2ol2e as
ftness e2ol2es, in order to gi2e
co$petitors an ad2antage
?
Nike introduced Nike Shox, which
re2olutioni'ed the cushioning &oa$
used in shoes
?
Nike also colla"orated with Apple
and is launching new apparel and
&ootwear that will easily carry the
consu$er4s i/od
Technology
Technology
?
/roduct inno2ation is an ongoing
process and is 2ital to stay ahead o&
co$petition
?
Co$panies in this industry in2est
$oney in 1ND to keep up with the new
de$ands o& today4s athletes
?
Nike e$ploys $any specialists
including engineers, athletes,
"io$echanics, and industrial designers
to work together in the design process
Co$petition
Co$petition
?
The top * fr$s in this industry are
Nike, Adidas, and /u$a
?
The industry is relati2ely old, so fr$s
$ust fght &or $arket share rather
than relying on $arket growth
Areas Fir$s Co$pete %n
Areas Fir$s Co$pete %n
?
/roduct o7erings
?
Technologies
?
,arketing )(penditures
Gendorse$ents and ad2ertisingH
?
/ricing
?
Costs o& /roduction
?
Custo$er Ser2ice
Co$petition
Co$petition
?
Fir$s in athletic &ootwear and
apparel also co$pete with fr$s
that pro2ide other su"stitutes
Gsuch as leisure and casual wearH
?
Skechers, K Swiss, New :alance,
and Aasics
?
Nike has created their own lines
o& casual shoes to co$pete in
these $arkets as well
? )(a$ple; Con2erse
Co$petition
Co$petition
?
During hard econo$ic ti$es, people
consu$e less retail goods such as
clothes and &ootwear
?
:ureau o& the Census esti$ates that
retail and &ood ser2ice sales &or
Danuary 2005 are 5!CF "elow a year
ago
?
Conse3uently, the industry has turned
to e$erging $arkets to continue sales
growth
? China
? 1ussia
? .atin A$erica
0eography
0eography
?
/roduction is outsourced to plants in
Asia, .atin A$erica, and A&rica
? This reduces costs "ecause la"or is cheaper
? /uts sources o& production closer to where
they will "e sold
?
Fir$s who outsource lose the a"ility to
closely $onitor product 3uality and
working conditions
?
Although so$e people fnd this
unethical, fr$s cannot a7ord to keep
production close to ho$e and still
co$pete on proft $argins
0eography
0eography
?
/lants are also located in $any di7erent
countries, rather than "eing concentrated
in one area
?
Di2ersifcation o& production plants
reduces the risk that a fr$ will greatly "e
a7ected "y a pro"le$ in any particular
country
? )(a$ple; Nike4s largest &ootwear &actory
accounts &or only -F o& the total &ootwear
production
? Nike clai$s it can reco2er &ro$ any loss in
production within one year4s ti$e
Conclusion
Conclusion
%2er2iew o& the Industry
%2er2iew o& the Industry
•
In this industry there is intense
co$petition, &ashion trends, and
price conscious consu$ers that
ha2e slowed growth in this industry!
•
This creates di?cult situations &or
co$panies to produce a "rand
i$age that appeals to consu$ers
that want to shop &or cheaper
apparel, "ut also apparel that has
3uality!
Ihere the Industry is Now
Ihere the Industry is Now
?
Financially, the co$pany $ust "e
aware that econo$ies are not up to
par and that costs $ust "e kept low
to "ring in the re2enue!
?
Iith the internet "eing a huge
entry to Nike4s products, the
co$pany $ust fnd a way to keep
their consu$ers to see the$ as
"eing $ore user &riendly as
co$pared to their co$petitors!
Cont!
Cont!
?
Iays &or Nike to do this is to keep
the site si$ple, &resh, and easy to
use!
?
:y using new designs and "etter
deals &or orders $ade online &or the
custo$ers, it has the potential to
"ring in $ore re2enue, as well as
i$pro2e the relationship "etween
the co$pany and its clients!
Industry Forecast
Industry Forecast
?
Technology is always changing, and i&
Nike can create apparel and athletic
e3uip$ent that the co$petitors cannot
$atch, then Nike will grow e2en higher
than its ri2als!
?
Technology can "e "ased around
anything &ro$ so&ter and $ore dura"le
running shoes, to a "ase"all "at with a
new $etal to $ake the "all go &urther!
doc_258367121.ppt