Nike Case Study

CASE 39

Nike, Inc.

1. Evaluate the competitive position of Nike.

According to Nike, Inc. Case; the market is dominated by Nike especially in athletic footwear and apparel in the world. Key competitors of Nike are Adidas, New Balance and Reebok respectively in the worldwide market. Nike holds the market leader position on hand in the world market and Adidas is the challenger of Nike. Also New Balance and Reebok are the followers which are closer to the challenger of the global market. As it happens in the worldwide market, Nike has the leadership with a percentage of %40 market shares too. When we examine the U.S. market, according to the case ranking of the competitors’ market positions differs. Reebok is the challenger of Nike in the market. Respectively New balance and Adidas are the third and fourth followers of Nike in the U.S. market. The market leader of athletic footwear and apparel market that Nike enjoys has both advantages and disadvantages for the company when we take into accounts Nike’s leadership both in the world and U.S. markets. Due to the intensive competition in this industry, it is difficult to protect the competitive position for Nike.

Nike kept its position by increasing the footwear, apparel and equipment sales in other regions despite the slower sales of the athletic shoes in U.S. market. On the other hand Nike doesn’t keep this position by applying the same strategies. Company may face with difficulties if they don’t find the solutions of the problems such as Foot Locker feud, allegations about the bad working conditions and wages of Nike, accusations from the journalists and special interest groups regarding employment rights, little child labor and also wrong advertising strategies. Due to these reasons it is not clear whether Nike has a sustainable competitive advantage or not.

2. What are the strengths and weaknesses of Nike?

Strengths of Nike:

• Market leader in all over the world especially in the U.S. market.

• Large R&D and advertising budget to maintain “demand creation”.

• Nike is constantly trying to increase their international presence to increase their foreign sales and balance the overall sales.

• Well arranged brand segmentation and identification.

• Global brand name loyalty and recognition, because Nike has been around so long, the brand is recognized and respected both internationally and domestically. Nike has consistently produced quality products that appeal to its consumers both internationally and domestically.

• Nike has a wide product lines.

• Nike considered its product design and ability to quickly take advantage of technological advances key sources of competitive advantage.

Weaknesses of Nike:

• Intensive competition makes it difficult to get a larger piece of market share.

• The retail sector is very price sensitive as it happened in the Foot Locker situation.

• Not taking into consideration the importance of women’s segment.

3. When you asses the industry and rivals of Nike what are the opportunities and threats for Nike?

Opportunities of Nike:

• Product Diversification, with new technology and increased earnings