Nike Inc. Company Background

Nike Inc.

Nike Inc. is a multinational firm based in the United States that manufactures footwear. The name was inspired by the Greek Goddess of Victory and is pronounced "ny'-kee." Phil Knight, Nike's co-founder and chairman, wanted to name the firm Dimension 6, but the first Nike employee, Jeff Johnson, disagreed. They create, make, market, and sell footwear, as well as other sports equipment, accessories, and services (KNIGHT of 2016).

Founding and Early Innovations

Nike was founded in 1964 by Bill Bowerman but was initially called Blue Ribbon Sports (RBS) and was a distributor for Tiger shoes from a Japanese shoemaker called Onitsuka Tiger who are today Asics. In 1971, they became Nike Inc and in the same year Boweman innovated sports shoes whose soles had the grooved pattern of waffles which helped athletes maintain their grip on running tracks. They were called the Nike Waffle Trainers and were tested in 1972 in the U.S Track patented in 1974 (McCourt of 2001). They used Steve Prefotaine as their first brand ambassador as he had a winning record on the 2000m to the 10000m track races. The Nike swoosh logo was designed by Portland state University by a student called Carolyn Davidson for only$35 but the company later gave her stock in return which is currently worth more than $ 640,000 (FRISCH of 2009). The "Just Do it" slogan was inspired by a serial killer Gary Gilmore which were his last words during his execution by a firing squad in 1977. It was renamed Nike Inc. in 1978, launched the Nike Air technology in 1979 which strengthened their brand and gave them a great competitive advantage then went public towards the end of 1980 (Fleisher and Bensoussan 2003).

Global Market Share and Future Forecast

Nike holds approximately twenty four percent of the global market share today on footwear and is forecasted to have reached at least twenty seven percent by the year 2020 should they continue to grow systematically as they are today.

SWOT Analysis of Nike Inc

Strengths Weaknesses

Innovative and business minded founders

They diversify products to meet different needs

They have the financial muscle to buy out small competitors, develop them and sell them

They have the finances and products to sponsor athletes and grow their brand

They have the necessary human resource and outlets to meet market demands The business is dependent on footwear

Its retailers may not express the Nike Brand to customers as should

Opportunities Threats

They foresee user preferences and develop products to meet the needs

They have a diversification of products besides sportswear, equipment and accessories.

They have various outlets nationwide to meet growing demand of products Competition

Currency fluctuations in International Trade

Changing Customer Preferences especially due to price

Strengths

Their brand was very common with fitness, athletics and most sports fanatics and it's swoosh logo was well recognized worldwide. They expanded their business by diversifying their acquisitions through shoe companies, sports equipment companies, athletic and sports agencies. By 1982, they had become the American number one supplier of athletic or training shoes. By the early 21st century Nike had also diversified their products by including heart-rate monitors and high altitude wrist compasses amongst other cross-training accessories (KEYSER of 2015). Their fame and success was also increased by endorsing famous sportsmanship such as Micheal Jordan while he was a rookie and became the number one greatest all-round professional basketball player then, Mia Hamm who was the first International Star for the Women American football game, Roger Federer a Swiss Tennis player who stood undefeated and was an all round player of the game in the early 21st century and Tiger Woods who they signed up as a rookie and became the greatest African American golfer from late 1990'2 to early 2000s. He was the first African American or Asian to win the Masters Tournament. From 1990 Nike opened a chain of stores that had a full range of consumer products in different locations in all towns. It was called the NikeTown chain of stores. Nike keeps its head above the water by launching new editions of their shoes and designing various accessories each year as well as partnering with great sports teams in athletics, tennis, basketball, baseball, soccer and cricket. The excellent combination of the founders Bill Bowerman in his desire for always finding new and better solutions for the business and Phil Knights business innovation skills played a major role in getting Nike to be the most profitable and highly recognized companies around the globe (Cravens and Piercy 2006). By the year 2012 Nike was making annual revenue of approximately 24 billion.

Weaknesses

In 1990 Nike suffered a small glitch in its brand when complaints came in from overseas factories regarding poor working conditions. The greatest source of income is still the shoes hence they would be vulnerable if another market player came with better shoes. They would need to ensure their diversification in products catches the market too. Nike is a designer and manufacturer hence relies on its chain of retailers to sell the products to the consumers. The retailers sometimes do not understand the Nike brand difference and how to sell it as a prestigious brand in various products at a reasonably high price hence they may sell at lower prices to counter competition and trickle the pressure down to Nike.

Opportunities

Nike acquired many small shoe companies along the way in order to be stronger in business then sold them down the line of business. They have also opened two subsidiaries to expand business namely Converse Inc and Hurley International for diversification of business products. They provide various Nike Brand accessories despite sports items hence gain revenue from commoners from products like sunglasses and jewelry. They also continue to sponsor several potential players in professional football, tennis and basketball games. They read the market properly and have timely investments(Zimmerer and Wilson 2005). They are continuously innovative and continue to offer a big array of athletic equipment and accessories over and above their shoes designs. Due to their success, people want to work with them and they have over 44,000 employees and still make tens of billions of dollars annually.

Threats

Their largest competitors were Adidas and Under Amour. Other competitors were Puma, Sketchers, Anta and Li Ning. Despite Nike Inc. being the global market leader in athletic shoes, equipment and accessories, the competition continues to rise especially from Europe and China. Due to globalization and international trade, Nike experiences unstable currencies hence cannot clearly define its profits at all times. Sometimes they incur losses (Healy and Palepu 2012). Nike is a prestigious brand and relatively costly. It is therefore affected by competition that lowers their prices to entice customers to purchase their shoes. Customers are very susceptible to change and like to try new things hence may try competitive brands to save money.

Reference

Cravens, D.W. and Piercy, N., 2006. Strategic marketing (Vol. 7). New York: McGraw-Hill.

Fleisher, C.S. and Bensoussan, B.E., 2003. Strategic and competitive analysis: methods and techniques for analyzing business competition (p. 457). Upper Saddle River, NJ: Prentice Hall.

FRISCH, A. (2009). The story of Nike. Mankato, Minn, Creative Education.

Healy, P.M. and Palepu, K.G., 2012. Business analysis valuation: Using financial statements. Cengage Learning.

KEYSER, A. (2015). Sneaker century: a history of athletic shoes. http://search.ebscohost.com/login.aspx?direct=true&scope=site&db=nlebk&db=nlabk&AN=927096.

KNIGHT, P. H. (2016). Shoe dog: a memoir by the creator of Nike.

McCourt, R., Nike, Inc., 2001. Portion of a shoe sole. U.S. Patent D446,923.

Zimmerer, T., Scarborough, N.M. and Wilson, D., 2005. Essentials of entrepreneurship and small business management. Pearson/Prentice Hall.