We NIKE and will identify potential entrants
We are going to explore the environment of the industry by using the Porter’s five forces; we will look at competitors of NIKE and will identify potential entrants and significant barriers to entry.
The relation with suppliers.An overall change in any of the forces in the in industry information requires a business unit to re-assess the given marketplace. The overall industry attractiveness does not indicate that every firm in the industry will return the same profitability. As an industry profitability is low and yet individual companies, by applying exclusive business models, have been known to make a return in the industry average. Porter’s five forces include threat of substitute products, the threat of established rivals, and the threat of new entrants; and two forces which are the bargaining power of suppliers and the bargaining power of customers.
For this assignment, Nike are chosen to be the subject company as our group will analysis this company and discuss about the impact of Porter’s Five Competitive Forces model on Nike company.For the first force of Nike company- the internal rivalry is high. The meaning of internal rivalry is the measures the degree of competition between existing firms. The higher the degree of rivalry the more difficult it is for existing firms to generate high profits.
Rivalry are told to be higher if there are a humongous amount of similar sized firms rather than a few dominant firms are all contending with each other for customers, and also the market is shrinking so firms are struggling for their share of the deteriorating sales. Based on the above factor, competition is targeted towards attaining more market share. Therefore, Nike introduced products at abundant price levels in order to compete and reach all areas of the market because if they fail to do so, their market share will be easily taken over by their competitors.
Haggling power to a great extent depends over the client’s utilization limit and it assumes crucial part in improving organization’s position in the market. Nike has a few brands and product offerings to pull in a considerable measure of clients having moderateness and unwavering quality in their items. Nike at one time began delivering superb costly items for its clients however around then clients conflicted with them and media additionally depicted a wrong picture. Around then Nike picture was seriously influenced.
A few customers sent their reused Nike shoes to the CEO of the organization to show their disappointment towards Nike’s exercises in Asia. The biggest threat business had been that its items were energizing at exceptionally incredible value which could have enacted the clients have to modify to the low value brands. So when purchasers convey such colossal bartering power organization needs to adjust its operations and items as indicated by the requirements of the clients.However, all of these can’t be used to substitute sports products or any sporty events. For example, a footballer will not wear a slipper in a match.
Therefore, there are no real substitutes for athletic shoes and this also applies to the athletic outfits. Since the threat of substitute product is low for Nike, it does not have any major impact on the company. However, in order to reduce the possibility of losing any potential customers, Nike come out with new innovated products to keep its market leadership up. Since everyone is chasing for new trends nowadays, an obsolete product is incompetent to increase the sales. Therefore, coming out new innovated products will assist in retaining and attracting customers.
Moreover, Nike also adopted differentiation strategy by producing striking and unique goods to assist consumers in distinguishing Nike’s product from substitute product. Nike Company is trying their best to offering goods where competitors unable to compete with to reduce the threat.The company has many brands and substitutes to compete with any other substitute but in 2000 when the company faces criticism by media the company engaged in marketing activities to overcome the negative impact on consumers but it gives palace to sale of some substitutes in market.
But it was for the limited time because NIKE is the name of Victory. Nike has several competitors who produce substitutes for their products:• Direct competitors of NIKE are:• Adidas, Fila, Puma, Reebok, New Balance, and One, Umbro• Indirect competitors of NIKE are:• Non-athletic footwear brands, Crocs, K-Swiss, Converse, Sketchers, Timberland.Company had made very strategic change and it enters into the partnership with President Clintons Apparel Industry Partnership (AIP). The Company also introduced its Corporate Social Relationship Strategy to give strength to itself.
It also participated in the Fair Labour Association which has aim to monitor the working conditions of all companies. Several steps are taken by this company regarding environment and need of time.