Industry Structure
Nike’s
industry structure can be diverged into many categories, but its main designations
are that of mature and multinational industries. The athletic textile (apparel, footwear, and
accessories) industry is by and large a mature industry considering its slowing
market growth coupled with a steady demand of repeat buyers, increasing competition
internationally amongst a few large competitors, and a definite slowdown of the
introduction of different, specific products.
Nike has a sustainable presence as the market leader basically due to
its continuous refinements of all of its products through its innovative
research and development processes of testing and putting into practice
sustainable products with now a creative, “green” genesis, i.e. in the 2010
World Cup, making the jerseys out of recycled plastic bottles while not compromising
performance.
Brazil Soccer Jersey made out of Recycled Plastic Bottles
Also
Nike is a large, multinational conglomerate that is spread out companywide across
six major geographic areas – North America, Western Europe, Eastern/Central
Europe, Greater China, Japan, and Emerging Markets. Even their affiliated brands operate in a
similarly collaborative way as multinationals.
Mainly the operations of each focus on local tastes and operations can
be maintained more effectively within each market at each center headquarters. This allows each geography the flexibility to
rapidly change without much bureaucracy.
For instance, Nike outsources all manufacturing processes so that all “branches”
have even further flexibility in a labor crisis, shortage, or negotiations.
Environmental Threats as Opportunities
Nike
didn’t get to be the market leader by not exploiting certain industry opportunities
along the way. Its leadership has
effectively neutralized certain threats continuously over the company’s
lifespan mainly using entry, rivalry and substitute threats to their advantage.
Nike
has sufficiently erected barriers to new entrants by exploiting their global
economies of scale and reducing production costs through outsourcing, but
mainly their focal point is their novel product differentiation techniques. By continually revamping current products
through lighter materials (the Nike Free shoes that mimic barefoot walking) and
specialty lines (2012 Black History Month shoe collection) as well as reinventing
new products that change the way we’ve always used their predecessors
(pedometers in relations to Nike+ FuelBand), Nike’s innovations allows them
stability at the top of the market for now and into the future.
Nike+ FuelBand Introduction Video
Furthermore,
Nike establishes their dominance through neutralizing rivals and substitutes through
this same innovative verve that shortchanges new entrants. Rivals attempt to copy Nike’s technology
leader status with substitute products but through Nike’s large capital
investment in research and development, they move rapidly as second movers to
eliminate any discrepancy there is or ever was created. Not only copying an idea that wasn’t
originally theirs, but changing the public’s mindset into believing that they
were the creators of it (much like they did with their Dri-Fit fabric in response
to Under Armour’s sweat-wicking fabric) is commonplace. Also they use their mighty bankroll to drive
out rivals from lucrative partnerships, such as Nike becoming the official uniform
provider to the NFL this upcoming season (a 5-year, $1.1 billion sponsorship) effectively
taking away a key branding opportunity from Reebok (who is owned by Nike’s main
competitor, Adidas).
Nike/NFL Uniform Change Promo Video
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