Apply Porter's model to an organization Worksheet

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please follow all the instruction and add the answer to ( Nike’s Competitiveness in the Footwear Industry) file

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Instruction Now for the industry analysis utilizing porters Step 1. Gather the information on each of the five forces Use one of the many templates on porter’s/ competitive analysis to assist with this assignment. Some modifications will be necessary to customize for this class: Information Systems. Check the researched information against some of the factors listed e.g. under the threat of new entrants “How much capital is required to enter this market? Step 2. After gathering all the information, analyze the results, what impact does this force have? Sample: Porter’s five forces worksheet Name of force: e.g. Threat of New Entrants Threat of New Entrants is High/Low if List your reasons to support your conclusion Are there any opportunities? How? How does Information Systems affect this force? Check table 3.5 in textbook for ideas Continue for each of the five forces Name of force: e.g. Threat of Competitive rivalry Threat of Competitive rivalry is (use ranking e.g High/Low or 1-5) if List your reasons to support your conclusion Are there any opportunities? How? How does Information Systems affect this force? Once complete Step 3.Summarize your findings, make recommendations. Formulate strategies based on your findings. Create a table summarizing the forces? Summary of Forces Threat of Substitutes Competitive rivalry Threat How Role of IS How Which opportunities should the company embark upon? Create a table summarizing the opportunities Forces Opportunities Threat of Substitutes How Competitive rivalry Which forces pose the greatest threats? Where are the company’s greatest opportunities? Role of IS How? What are the main drivers of competition in this industry? Based on your analysis, can you suggest a competitive strategy(ies)? In addition to google searches, here are some possible sources of information. Please ensure you use a mixture of primary and secondary sources. Annual report & accounts Newspaper articles Analysts’ reports CEO interviews Regulatory /Government reports Presentations / speeches Pricing / price lists Press releases Promotions Advertising campaigns Recruiting ads Competitors’ documents Running head: NIKE’S COMPETITIVENESS IN THE FOOTWEAR INDUSTRY Nike’s Competitiveness in the Footwear Industry Name Institution 1 NIKE’S COMPETITIVENESS IN THE FOOTWEAR INDUSTRY 2 Nike’s Competitiveness in the Footwear Industry Nike is a multi-national sporting shoe manufacturer located in the U.S. The company which was formed in 1964 as Blue Ribbon Sports manufactures, distributes, and sells sports shoes, apparel, and sports equipment. Matter of fact, it is the world’s largest supplier of athletic shoes and apparel. The headquarters of Nike are in Beaverton, Oregon and the company has a worldwide supply chain for its products. The company has retail stores in over 1142 locations around the world, and its manufacturing plants are mainly located in Asian countries such as China, Cambodia, and Pakistan (Mahdi et al., 2015). Nike is a dominant player in the athletic footwear industry but must initiate innovative product development to increase market growth and discard the threat of competitive rivalry from Adidas. Nike’s business units are divided according to the products handled as well as the locations of the units. The main unit is the footwear business unit. Other units include the apparel segment, equipment and “other” segment, the North American segment, EMEA, Asia Pacific, other emerging markets, and global brand divisions. As already seen in the business units, the company handles footwear, apparel, and sports equipment as the main products. The company is also involved in extensive sponsorships for teams and individuals in sports. For this analysis, I adopt a specific analysis of the company’s footwear unit. The reason for choosing the footwear unit for analysis is because it is the most significant business unit which is well-structured and visible in the industry. Industry Identification Nike operates and competes within the footwear industry where it mainly manufactures, distributes, and sells sports shoes for athletics and casual wear. The footwear industry includes companies engaged in manufacturing and selling footwear such as dress shoes, sneakers, NIKE’S COMPETITIVENESS IN THE FOOTWEAR INDUSTRY slippers, athletic, and sandals. The specific unit of the business industry that Nike is placed in is the athletic footwear whereby the shoes produced by Nike are mainly for athletics purposes. Other than merely designing and manufacturing for suitability, the industry also experiences customization for style and identity. The sports footwear industry thus involves competitive comfortable designs that target a subset of sportspersons. For instance, shoes may be designed for track events while others may be designed for specific sports such as basketball or even rugby. The global athletic footwear industry was valued at around 80 billion dollars in 2015. Grand View Research (2013) predicted average growth of around 2% compound annual growth rate between 2016 and 2024. Therefore, judging from the anticipated growth, it is evident that the industry is a mature one almost reaching a level of stagnation. The anticipated growth is mainly due to increased participation in sports activities and also the increasing global populations. Also, it can be anticipated that the growth can be attributed to the increasing adoption of healthy lifestyles which include exercising. The industry is expected to grow further due to the innovation in providing lightweight and increased functionality footwear for different subgroups. The global athletic footwear industry is characterized by a few dominant players with many other local or international players as well. The key players include Nike which is the leading supplier of athletic footwear, Adidas which is Europe’s largest and most successful sportswear company, and Puma which comes third regarding dominance in sports footwear. These three companies have subgroups and have acquired various brands in several areas thus becoming the three most dominant players in the athletics sports footwear. According to Statistica (2018), Nike is still the most dominant player with revenue of 19.87 billion dollars in 3 NIKE’S COMPETITIVENESS IN THE FOOTWEAR INDUSTRY 4 2016. The company was followed by Adidas revenue of 10.68 billion dollars with Puma closing the top three with revenue of 1.71 billion dollars. These figures show that Nike is the dominant market player and it made more sales than the other two combined. Adidas and Puma are the main competitors of Nike. The most direct rival is Adidas which has been the biggest rival of the business, especially in Europe. Puma is also considered a direct competitor, but it does not pose a significant threat to Nike’s sales. The basis for the competition is mainly through the sales of athletic footwear and also the sponsorship of sports teams and individual athletes. Soccer teams have received massive sponsorships from these key players with Nike sponsoring different entities such as Michael Jordan, the National Football League and many other teams and sportspersons. Adidas also sponsors several national teams and individual sports personalities. Another basis for competition is the production of lightweight, eco-friendly shows that provide great ergonomics for the users. Threat of Competitive Rivalry Competition against Nike Inc. determines its market share of the sports footwear industry. The performance of individual firms is scrutinized using the five forces provided under Porter’s model. Three forces affect Nike’s threat of competitive rivalry. The first force is that of low market growth. This low market growth is mainly due to the organization’s high market penetration and seemingly the high market saturation. Since the organization has penetrated most of the markets worldwide, the growth rates have stagnated. Further, this is a strong force since the company and other firms compete in a slowly growing market. The second force affecting the athletic footwear industry and Nike, in particular, is the high aggressiveness of rival firms in large markets. Adidas and Puma compete aggressively for unsaturated markets where Nike has not achieved a significant dominance. Lastly, the third force NIKE’S COMPETITIVENESS IN THE FOOTWEAR INDUSTRY 5 affecting its competitive rivalry is the moderate number of firms that affect the company’s market share. As identified earlier, only Adidas and Puma pose a significant threat to the company’s market share. Therefore, this third force is a moderate force that gives the company a competitive advantage in the industry. The threat of competitive rivalry is thus moderate and could be awarded a score of 2.5 out of five with five being the highest and 1 being the lowest threat. Recommendations The analysis of the competitive rivalry of Nike in the athletic footwear industry shows that the company faces a significant threat of competition from Adidas. However, the market shows little or no opportunities due to market saturation. The available opportunity is competing in innovative, attractive designs for footwear. Further, the company can invest in unsaturated markets especially in Asia. Information systems affect the company’s supply chain through the advertisement of its products and services. Further, the company is investing in global communication systems which require sophisticated equipment to allow global coordination of its activities in all global locations. Nike is a world leader in athletics footwear among other products such as apparel and sports equipment. According to the assessed competitive rivalry, the company faces the greatest competitive rivalry from Adidas. The company should thus invest in market development and innovative product development to ensure a growing market share in the global athletic footwear industry. Since the company has gained high market saturation, the development of new products which exhibit higher sustainability, functionality, and ergonomics is necessary. The company is a world leader in athletic footwear, but growth in market share would mitigate the competitive rivalry threats. NIKE’S COMPETITIVENESS IN THE FOOTWEAR INDUSTRY 6 References Grand View Research. (2013, March). Athletic Footwear Market Analysis, Market Size, Application Analysis, Regional Outlook, Competitive Strategies and Forecasts, 2016 To 2024. Retrieved from https://www.grandviewresearch.com/industry-analysis/athleticfootwear-market Mahdi, H. A. A., Abbas, M., Mazar, T. I., & George, S. A. (2015). A Comparative Analysis of Strategies and Business Models of Nike, Inc. and Adidas Group with special reference to Competitive Advantage in the context of a Dynamic and Competitive Environment. International Journal of Business Management and Economic Research, 6(3), 167-177. Statistica. (2018). Revenue from footwear segment of Nike, Adidas, and Puma from 2010 to 2016 (in billion U.S. dollars). Retrieved from https://www.statista.com/statistics/278834/revenue-nike-adidas-puma-footwear-segment/
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Attached.

Running head: NIKE’S COMPETITIVENESS IN THE FOOTWEAR INDUSTRY

Nike’s Competitiveness in the Footwear Industry
Name
Institution

1

NIKE’S COMPETITIVENESS IN THE FOOTWEAR INDUSTRY

2

Nike’s Competitiveness in the Footwear Industry
Nike is a multi-national sporting shoe manufacturer located in the U.S. The company
which was formed in 1964 as Blue Ribbon Sports manufactures, distributes, and sells sports
shoes, apparel, and sports equipment. Matter of fact, it is the world’s largest supplier of athletic
shoes and apparel. The headquarters of Nike are in Beaverton, Oregon and the company has a
worldwide supply chain for its products. The company has retail stores in over 1142 locations
around the world, and its manufacturing plants are mainly located in Asian countries such as
China, Cambodia, and Pakistan (Mahdi et al., 2015). Nike is a dominant player in the athletic
footwear industry but must initiate innovative product development to increase market growth
and discard the threat of competitive rivalry from Adidas.
Nike’s business units are divided according to the products handled as well as the
locations of the units. The main unit is the footwear business unit. Other units include the apparel
segment, equipment and “other” segment, the North American segment, EMEA, Asia Pacific,
other emerging markets, and global brand divisions. As already seen in the business units, the
company handles footwear, apparel, and sports equipment as the main products. The company is
also involved in extensive sponsorships for teams and individuals in sports. For this analysis, I
adopt a specific analysis of the company’s footwear unit. The reason for choosing the footwear
unit for analysis is because it is the most significant business unit which is well-structured and
visible in the industry.
Industry Identification
Nike operates and competes within the footwear industry where it mainly manufactures,
distributes, and sells sports shoes for athletics and casual wear. The footwear industry includes
companies engaged in manufacturing and selling footwear such as dress shoes, sneakers,

NIKE’S COMPETITIVENESS IN THE FOOTWEAR INDUSTRY
slippers, athletic, and sandals. The specific unit of the business industry that Nike is placed in is
the athletic footwear whereby the shoes produced by Nike are mainly for athletics purposes.
Other than merely designing and manufacturing for suitability, the industry also experiences
customization for style and identity. The sports footwear industry thus involves competitive
comfortable designs that target a subset of sportspersons. For instance, shoes may be designed
for track events while others may be designed for specific sports such as basketball or even
rugby.
The global athletic footwear industry was valued at around 80 billion dollars in 2015.
Grand View Research (2013) predicted average growth of around 2% compound annual growth
rate between 2016 and 2024. Therefore, judging from the anticipated growth, it is evident that
the industry is a mature one almost reaching a level of stagnation. The anticipated growth is
mainly due to increased participation in sports activities and also the increasing global
populations. Also, it can be anticipated that the growth can be attributed to the increasing
adoption of healthy lifestyles which include exercising. The industry is expected to grow further
due to the innovation in providing lightweight and increased functionality footwear for different
subgroups.
The global athletic footwear industry is characterized by a few dominant players with
many other local or international players as well. The key players include Nike which is the
leading supplier of athletic footwear, Adidas which is Europe’s largest and most successful
sportswear company, and Puma which comes third regarding dominance in sports footwear.
These three companies have subgroups and have acquired various brands in several areas thus
becoming the three most dominant players in the athletics sports footwear. According to
Statistica (2018), Nike is still the most dominant player with revenue of 19.87 billion dollars in

3

NIKE’S COMPETITIVENESS IN THE FOOTWEAR INDUSTRY

4

2016. The company was followed by Adidas revenue of 10.68 billion dollars with Puma closing
the top three with revenue of 1.71 billion dollars. These figures show that Nike is the dominant
market player and it made more sales than the other two combined.
Adidas and Puma are the main competitors of Nike. The most direct rival is Adidas
which has been the biggest rival of the business, especially in Europe. Puma is also considered a
direct competitor, but it does not pose a significant threat to Nike’s sales. The basis for the
competition is mainly through the sales of athletic footwear and also the sponsorship of sports
teams and individual athletes. Soccer teams have received massive sponsorships from these key
players with Nike sponsoring different entities such as Michael Jordan, the National Football
League and many other teams and sportspersons. Adidas also sponsors several national teams
and individual sports personalities. Another basis for competition is the production of
lightweight, eco-friendly shows that provide great ergonomics for the users.
Threat of Competitive Rivalry
Competition against Nike Inc. determines its market share of the sports footwear
industry. The performance of individual firms is scrutinized using the five forces provided under
Porter’s model. Three forces affect Nike’s threat of competitive rivalry. The first force is that of
low market growth. This low market growth is mainly due to the organization’s high market
penetration and seemingly the high market saturation. Since the organization has penetrated most
of the markets worldwide, the growth rates have stagnated. Further, this is a strong force since
the company and other firms compete in a slowly growing market.
The second force affecting the athletic footwear industry and Nike, in particular, is the
high aggressiveness of rival firms in large markets. Adidas and Puma compete aggressively for
unsaturated markets where Nike has not achieved a significant dominance. Lastly, the third force

NIKE’S COMPETITIVENESS IN THE FOOTWEAR INDUSTRY

5

affecting its competitive rivalry is the moderate number of firms that affect the company’s
market share. As identified earlier, only Adidas and Puma pose a significant threat to the
company’s market share. Therefore, this third force is a moderate force that gives the company a
competitive advantage in the industry. The threat of competitive rivalry is thus moderate and
could be awarded a scor...


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I was having a hard time with this subject, and this was a great help.

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