Self-Assessment
According to Grant (2005), there are many features of an industry in which a company competes that determines the level of competition it will face and the profits it will get. The most famous classification was done by Michael Porter, known as Porters Five Forces framework. Porter (1980) provided the five forces competition model is a framework for analysing the level of company competition and the development of enterprise strategy. There are five important forces (Supplier power, Buyer power, Competitive rivalry, Threat of substitution and Threat of new entry) that determine the competitiveness of enterprises. In the following we will discuss the level of competition within the Nike via the Porter’s Five Forces.
Threat of new entry
The threat of entry is highest in the apparel market. It is because Nike was a market leader with 45% global market share (Torry 2012). Now company has developed its name and market so it has no major threats regarding new entrants. Another major reason that no new entrant is possible that easily is that the cost of production is really very high. So, those who are already operating are enough to deal with customer needs (Kasi, 2012). Therefore, the relatively lower costs of manufacturing apparel compared to the footwear market where the biggest threat posed is basically from current rivals already established in the market such as Adidas and Puma, who although behind in market share, are currently implementing strategies that are helping them close the gap on Nike.
Competitive rivalry
The internal rivalry is high for Nike company. The meaning of internal rivalry is the measures the degree of competition between existing firms. The higher the degree of rivalry the more difficult it is for existing firms to generate high profits. Nike introduced products at abundant price levels in order to compete and reach all areas of the market because if they fail to do so, their market share will be easily taken over by their competitors. Many competitors like Adidas and Puma are developing alternative brands to take away NIKE's market share.