Thursday, February 2, 2012

Evaluating Nike's Environmental Opportunities


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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