Term Paper on "Nike Corporation"

Term Paper 6 pages (1686 words) Sources: 15 Style: MLA

[EXCERPT] . . . .

Competitive Advantages of Nike

Nike is one of the leading developers, designers, manufacturers and global marketers of footwear, apparel, equipment and accessories. With operations in the Americas, the United Kingdom, Europe, the Middle East, Africa, and Asia Pacific, the company recorded revenues of $13.7 billion in fiscal year ending May 2005.

Nike is perhaps most well-known for their manufacture of footwear for men, women and children. In addition, the company has a sports apparel product line, as well as a performance equipment product line that includes: golf clubs, sports balls, eyewear, timepieces, skates, bats, electronic media devices, and other equipment specifically for sports activities.

Nike also receives significant revenues from their wholly-owned subsidiaries including: Bauer Nike Hockey, Cole Haan Holdings, Converse, Hurley International, Nike Golf, and Exeter Brands Group ("Nike"). By examining the environmental facets affecting Nike, one can better understand the competitive advantage the company has that has allowed it to become so successful.

Economic Forces Faced by Nike:

Economic forces are a considerable factor in Nike's competitiveness. This is especially true of global economic stability. With production plants based primarily in Southeast Asia, lower currency rates in the region would translate to lower production costs and higher profit margins. Should the currency strengthen, the organization will realize higher production costs and reduced profits. This factor is then affected by the associated money that consumers would have to spend on Nike products, affecting revenues (Binole).

Technological Forces Faced by Nike:

Technological advancements are certain to continue to affect Nike's competitiveness. Currently, there are a variety of cushioning technologies that Nike employs, some that are proprietary to Nike products.

The four cushioning systems pioneered and sold by Nike are Nike Air, Nike Air Max, Nike Air Zoom, and Nike Shox" ("Nike Technology"). The organization will have to continue to be innovative in technology, to remain a leader in the industry.

Sociocultural Forces Faced by Nike:

As the world becomes increasingly globalized, sociocultural forces will become increasingly more globally diverse. One of the primary sociocultural factors that Nike will have to contend with is society's outlook on responsible manufacturing, particularly in Third World countries.

The 1990s saw Nike as the "global poster child for corporate ethical fecklessness" (Zadek).

2000 saw the company recalling more than 100,000 pairs of Little Air Jordan shoes, because of concerns of lead paint ("Lead Paint"). However, today the organization has been able to develop ethically responsible business practices.

Demographic Forces Faced by Nike:

Urban and minority target markets are critical to Nike's current success. Demographic growth in these areas would enhance the likelihood of Nike's continued success.

By 2030, it is anticipated that the world's urban population will have grown to 4.98 billion people, from 2000 figures of 2.86 billion people (Hove). In addition, as former Secretary of Commerce, William Daley noted,

America is a growing dynamic country whose population will increase fifty percent over the next fifty years. Almost ninety percent of that increase will be in the minority community; and this is where the merging markets will take place in America. It is clear that both Fortune 1000 companies and minority businesses need to pay attention to this growing population.

This holds especially true for Nike.

Political and Legal Forces Faced by Nike:

Political and legal forces will continue to be an important consideration for Nike. As a recent example, Nike, along with other apparel manufacturers, spent considerable effort lobbying for the passage of the Central American Free Trade Agreement (CAFTA), this Spring.

This milestone legislation gives importers duty-free benefits from CAFTA regions (Ellis). Trade agreements such as CAFTA, or the loss of such free trade agreements, will continue to have a significant affect on Nike's competitiveness, as associated costs rise and fall.

Global Forces Faced by Nike:

Global forces are a factor in every organization's competitiveness, in today's increasingly globalized world, especially for Nike. With globalization comes new opportunities for the organization to expand their market reach and reduce costs through further offshore outsourcing. However, with these opportunities come the threats of global forces such as increased competition from international competitors, as well as the stigma that has centered on American pop culture in some regions of the world and the association of the Nike brand name with this culture (Tischler) and the negative association of the Nike brand from antiglobalists (Holt, Quelch, & Taylor).

Nike's Suppliers:

Suppliers offer a particular set of challenges for Nike, due to the nature of their industry. Most of Nike's suppliers are located in areas outside of the United States, with many located in under-developed nations. Because workers in these plants are not direct employees of Nike, Nike has no control over their treatment. Although the company has issued a Code of Conduct that they ask their suppliers to follow, it is often criticized at still being minimalist (Locke & Siteman).

Additional outsourcing challenges can occur with quality control as well as delivery, for this reason, suppliers have a large impact on Nike's competitiveness.

Nike's Distributors:

Nike distributors are a crucial partner to Nike's success (Locke & Siteman). Therefore, distributors will figure greatly in their competitiveness in the future. Whether these distribution points occur through specialty footwear stores, sports stores, or department stores, or other outlets, distributors are a driving force in Nike revenues. In 2000, Venator closed 123 Footlockers and 27 Champs, primary distributors of Nike (Fredeen). This type of occurrence can significantly negatively impact the organization.

Nike's Customers:

Customers are the life blood of any organization. Without customers, Nike would simply not exist. For this reason, changing customer needs and desires, and Nike's ability to meet these needs and desires, will be the primary means of Nike's continued competitiveness. As an example, "the lines between sportswear and activewear in the U.S. fashion are blurring. As sportswear companies enter the athletic arena and customers look to active companies to dress them outside the gym, athletic apparel companies are having to reexamine the balance of performance and fashion" (Beckett). Meeting these continually changing customer needs is crucial to Nike's success.

Nike's Competitors:

Nike's top competitors are: Adidas AG, Callaway Golf Company, PUMA AG Rudolf Dassler Sport, and Reebok International Ltd. ("Nike").

German manufacturer, Adidas, is a global leader in the sporting goods industry, and, like Nike, markets a diverse array of products ("Adidas"). Callaway is a leading manufacturer of golf products, competing directly with Nike Golf. Callaway reported revenues of nearly $1 billion in 2005 and a strong growth of 6.8% ("Callaway").

PUMA offers a more diverse product line, with three primary divisions: footwear, apparel and accessories ("PUMA"). And, lastly, Reebok is the largest of Nike's competitors with revenues reaching nearly $4 billion in 2005 in the footwear, apparel, and accessories segment, as well as non-athletic apparel ("Reebok"). These, as well as smaller competitors, will continue to be a threat to Nike's competitiveness as they all vie for valuable market share in a saturated marketplace.

Conclusion/Recommendations:

In the end, Nike has been successful for a variety of reasons. First, they've been able to use innovation in both product design and marketing campaigns to create unique products that differentiate themselves from their competitors. Second, they have been able to exploit the use of cost effective offshoring to mass produce quality products at a price point acceptable to consumers. Third, the company understands their target audience and is continually designing and developing products to fit these consumers' changing needs. Fourth, growing target market demographics has been a boon to the organization.

However, there are challenges that Nike needs to be prepared to ward against. Increased globalization has equated to an increased social conscience regarding the use of minimally paid factory workers in under-developed countries. Globalization itself has come under attack from critics. In addition, competitors are likely to enter the marketplace and increase competition. For these reasons, Nike will… READ MORE

How to Reference "Nike Corporation" Term Paper in a Bibliography

Related Term Papers:

Nike, Inc Term Paper

Nike Company Profile

Analyzing the last five years of financial performance of Nike Corporation through extensive financial analysis, industry trend analysis, and completing a SWOT analysis of their current global… read more

Term Paper 12 pages (3132 words) Sources: 1+ Topic: Business / Corporations / E-commerce

---

SWOT Nike Air Max 2012 Women's Running SWOT

SWOT

Nike Air Max 2012 Women's Running Shoe

Situational and SWOT Analysis

Term

SITUATION ANALYSIS

SWOT ANALYSIS

Nike Corporation is one of the consistently most profitable and innovative providers of… read more

SWOT 4 pages (1160 words) Sources: 3 Topic: Business / Corporations / E-commerce

---

Nike's Open Innovation Strategy Essay

Nike's Open Innovation Strategy

Nike Innovation Strategy

The following pages focus on presenting the open innovation strategy developed by Nike. The introduction describes the point-of-view that is used in this… read more

Essay 8 pages (2508 words) Sources: 15 Topic: Business / Corporations / E-commerce

---

Nikes Exploitation of Child Laborers in Asian Countries Thesis

Nike and Child Labor

It is no secret that American-owned countries frequently outsource their labor to people in foreign countries, because foreign labor is cheap when compared to domestic labor.… read more

Thesis 13 pages (5337 words) Sources: 5 Style: APA Topic: Child Development / Youth / Teens

---

Nike in Today's Increased Globalization Term Paper

Nike

In today's increased globalization, one must understand the fact that it has become increasingly difficult for a global manager to manage his operations perfectly. The manager would need to… read more

Term Paper 4 pages (1511 words) Sources: 3 Style: APA Topic: Business / Corporations / E-commerce

---

View 100+ more related papers  >>