A STUDY ON
BUSINESS ENVIORNMENTAL AUDIT
CRITICALLY ASSESS THE STARTEGIC
DIRECTION OF NIKE BRAND
ENROLLMENT NO. A19201160716
PROJECT SUBIMITTED IN PARTIAL FULFILLMENT FOR THE AWARD OF THE DEGREE OF
MASTER OF BUSINESS ADMINSTARTION
This to Certify that Yogender Bhatt as carried out a project work presented in this entitled “BUSINESS ENVIORNMENTAL AUDIT CRITICALLY ASSESS THE STARTEGIC DIRECTION OF NIKE BRAND” under my supervision and merits the award of Master of Business Administration from Amity University. The project embodied result of original work and studies carried out by a student himself and the content of the project do not form the basis of the award of nay other degree to the candidate o to anyone else.
Signature of the Student Signature of the Guide
YOGENDER BHATT PARTH VYAS
CHAPTER 1- EXECUTIVE SUMMARY
CHAPTER 2- INTRODUCTION
CHAPTER 3- EXTERNAL MARKET DRIVERS
3.1 POLITICAL DRIVER
3.2 ECONOMICAL DRIVER
3.3 SOCIAL DRIVER
3.4 TECHNOLOGICAL DRIVER
3.5 ENVIORNMENTAL DRIVER
3.6 LEGAL DRIVER
CHAPTER 4-COMPETITVE ENVIORNMENT
4.1 PORTERS FIVE FORCE MODEL
4.2 COMPEITETIORS ANALYASIS
4.3 NIKE VS FAKE GOODS
4.4 STAKE HOLDERS
CHAPTER 5- RESEARCH METHODOLOGY
5.1 RESEARCH OBJECTIVE
5.2 RESEARCH DESIGN
CHAPTER 6-DATA ANALYASIS
CHAPTER 7-CONCULSION AND FINDINGS
CHAPTER 8- RECOMMENDATION
CHAPTER 1- Executive Summary
Nike was founded in 1972 by Philip Knight and Bill Bowerman.
Bowerman is well known in America as the University of Oregon coach. He brought jogging to America, built an unrivalled track and field program at that university, and taught his athletes to seek the competitive advantage everywhere – in their bodies, their gear and their passion.
The Marketing men at Nike would like us believe that the brand is more than a product, it is an experience that we are buying into. Wherever a consumer interacts with the brand – in stores of their own or those of their retail partners, online, through advertising, at events their goal is to elevate that experience through compelling products and human stories.
Nike operates on six continents. It employs suppliers, shippers, retailers and service providers amounting to a total workforce of close to 1 million people. The diversity inherent in such size is helping Nike evolve its role as a global company and achieve vast economies of scale. Nike is trying to include building sustainable business with sound labour practices. Nike has built its empire by transforming the technology and design of its high performance sports gear into high fashion, vastly expanding its pool of potential customers.
Mintel estimated that spending on sports goods increased to £4,480million in 2003. The market is driven by consumer’s appropriation of sports clothing and footwear as general casual wear, and major sports brands such as Nike, Adidas and Reebok which are worn by a wide cross section of the population, the cult celebrity surrounding football in the UK also boosts sales of these brands and drives sales of replica shirts.
"Nike is a manufacturer, but really it's just a marketing company." – John Shanley, Securities analyst at Wells Fargo's Shanley in 2003
In this report I will be critically studying Nikes brand, evaluating its strategic direction and the market to which it belongs. I will examine the internal and external environmental factors that have influenced The company and its brand including the strategic position that it has adopted, using PESTEL analysis. The report aims to analyse the success of the brand and suggest possible future strategies for further brand development.
Itdefineshowheviewedtheworld,anditdefineshowNikepursuesits destiny. Nike claims tohave remainedtotally focused oncreating performance opportunities for everyone, and offering empowering messagesforeveryonewhowouldlisten.
Nike isnow theworld'smostcompetitivesportsandFitnessCompany. TheworldheadquartersisinBeaverton,Oregon.ThePacificNorthwest isNike's hometown.Ithasexpandedtheir horizonstoeverycornerof the world. Nike employs approximately 24,300 people. Each is significant toNike’s mission of bringinginspiration andinnovation to everyathleteintheworld.
Inthepastfewyears,thecompanyhasdevotedasmuchenergyto theeverydaydetailsofrunningabusiness-suchasdevelopingtop- flightinformationsystems,logistics,andsupply-chainmanagement–as it doestomarketing coupsandcutting-edge runningshoe design. Moreandmore, Nike issearchingfortheright balancebetweenits creative andits businesssides,relyingonanewfound financial and managerialdisciplinetodrivegrowth."Seniormanagementnowhasa clearunderstandingofmanagingthecreativeprocessandbringingit tothebottomline.That'sthebig differencecomparedtothepast," says RobertToomey,anequityanalystatRBCDainRauscherInc.in Seattle.
Bymethodicallystudyingnewmarkets,ithasbecomeapowerhouse overseas–particularlyinnewmarketsegmentsthat itoncescorned, suchasfootballandfashion.Ithasalsobeefedupitsmanagement team.Afterstumblingwithitsacquisitions,Nikehaslearnedtomanage thosebrands — Cole Haan dressshoes,Converse retro-style trainers, Hurley International skateboardgear, andBauer in-line andhockey skates–moreefficiently.Indeed,partofNike's growthstrategyisto addtoitsportfolioofbrands.
Aswellastheimmediateenvironment,forcesinthewiderworldalsoshapemanagementpolicies.I willusePESTELanalysistoidentifylikely factorswhichthefigurebelowsummarises.
Nikeisthenumberoneinsportswear.Nike’sprofits,turnover,marketing, sponsorshipand advertisingsurmountallothersportswearcompanies. Nikenotonlyreferstoitspositionasamarketleader,butalsoseesitself asleadingtheindustryinlabourpracticesinitiatives.Nike stateintheir codeof conduct ‘weseek to do not onlywhat is required, but wheneverpossible,whatisexpectedofaleader’
Nike, Adidas, Puma, Hi-Tec andReebok all sub-contract theactual manufacturing to suppliers in China, the Philippines,Thailand, or Indonesia,wherewagesarelow.ManynewsarticleswhichIhavereadhavedetailedNikeasoneofthe worst offenders.Nike referstothemselvesasanetworkfirm. Thismeanstheyemploy8000peopleinmanagement,design,sales,andpromotion,andleaves productioninthehandsofsome75,000 workershiredby independent contractors.Mostoftheout-sourcedproductiontakesplaceinIndonesia,whereapairofNikesthatsellsintheUKforaround£60isproducedforabout£3 andyoungwomenpaidaslittleas£0.10 perhour.AtthemomentIndonesiaisNike’s biggestproductioncentre,with17footwearfactoriesthat employ90,000 workersandproduceabout7 millionpairsofshoeseachmonth.Christian Aid areasking thebig companies, suchas Nike totake responsibility forthe social andemploymentconditions underwhich shoesaremade.Nike’s rival Reebokhas acodeofconductwhich comesclosesttotheChristianAidmodelbutdoesn’tgofarenough.
AlthoughNike havesufferedbadpublicityover thelastdecadefor variousmatters,itreallyisintheir bestintereststo becomeanethical companyineveryrespectandalthoughthismayinitiallycosttoset up, thebenefitswillbelongterm andwillprobablyincreasethebrands strength,anexampleofgoodpublicityfrom performinginanethical mannerwasanarticlewhichIfoundon.
Itistitled‘NikegainsaperfectscoreonthecorporateequalityIndex for the fifth consecutive year’. This article is in reference to Nike receivinga perfect score on the Human Rights Campaign Foundation’sCorporateEqualityIndex.TheIndexrates corporate America’streatment of gay, lesbian, bisexualand transgender employees,thisisavery goodpieceofpublicrelationsandwillappeal tothosegroupswhohavebeenoftentreatedunfairly.
Nikes commitmenttoindustry-leadingtransparencyinitssocial responsibilityreportinghasledtothecompanybeing namedthetop U.S. Company and one of the world’s top 10 in the current SustainabilityGlobalReportersProgramrankingreleasedtoday.
Nikes inclusion on the list signifies its leadership in corporate responsibilityandclearly sets it apart as oneof theworld’s leading companiesinsustainabilityreporting,actinginsuchawayhasleadto widespread praiseforNike andawards suchas aplace in Fortune magazines’‘BestCompaniestoWorkFor’list.
It’sstrangetogo fromsuchanextremetoanotherbutnowIwilltakea look atvariousarticleswhichI havefoundtosuggestthatNike have unethicalpolicies,soasnottotakeonepointofview soI canattempt tounderstandmoreofNikespoliciesfrom avarietyofsources.
Nike claimtobe‘theonlybuyertorequirefullcashminimumwage’ andsayits‘corporatepolicyistokeepordersatorbelowthelevel equivalent to 48 hours of work’ per week in order ‘to require contractorstocapmandatoryovertimeat60 hoursperweek,’Nike alsostatethat‘independentmonitorsandsources’,suchasfirmslike Ernst&Young,‘areverifyingtheseissues ona routinebasisforNike’.
Whilerights promisedinNike’s codeofconductoftenmirror therights activistsarecallingfor,thereseemstobeawidegulfbetweenthe codesandthe realityofconditionsinthefactories.Nike’s oversightof theseconditionstoooftenfallsshort ofitspromisesand this policy needstobe changed andfollowedcorrectly.
I havealreadyshownthe increasein demandfor productsin the sportingclothingmarket,and for over the last20 years,thesports industryhasbeenbig business,whichsuggestswhy Nike arehappyto spendmillionsofpoundsayearonsponsoringindividualsandteams. Wecanseetherearetrendsinplacewhichsuggestthatconsumers arecontinuingtospendmoreandmoremoneyinthisindustryandif thiscontinues,Nikeshouldbecomemoreprofitablethroughincreased sales,andloweredcoststhrougheconomiesofscale.
IntheUK,about22 percentofmenand23 percentofwomanare obese(atleasttwotothreestoneoverweight),meaningtheir weightis puttingtheir healthatconsiderablerisk.Thelevelofobesityhastripled inthepast20 years,andisstillrising. Obesityisrising amongchildren too.Inthepasttenyearsithasdoubledinsix-year-olds(to8.5percent) andtrebledamong15-year-olds(to15percent).
Theriseoftheinternetandpersonalcomputersarefrequentlycitedas contributors to the obesityepidemic. Television, DVD players and computergameconsolesencouragesedentary behaviourandlimit their engagement inhealthierpursuits–suchasjoggingorbiking.But recentdevelopmentshavesomewhat redefinedthecomputer, television,andvideogameaspotentiallyusefultoolsinfightingobesity.
Nike and Apple have teamed up to launch Nike + as global collaborationbringstheworldsofsportsandmusictogetherlikenever beforewith thelaunch of innovative Nike + Ipod products. The first productdevelopedthroughthispartnershipistheNike+iPodsportskit, awirelesssystemthatallowsNike+ footweartotalk toyouriPodnano to connect you to the ultimate personal running and workout experience.
As these emerging technologiesdemonstrate,in the absence of
Researchand developmentarea key factorin Nikes success. Technicalinnovationinthedesignoffootwear,apparel,andathletic equipmentreceiveemphasisastheytrytoproduceproductsthathelp to reduce injury, enhance athletic performanceand maximize comfort.Nikeemployspecialistsintheareasofbiomechanics,exercise physiology,engineering,industrialdesignandrelatedfields,theyalso utiliseresearchcommitteesandadvisoryboardsmadeupofathletes, coaches, trainers,equipment managers,orthopaedists,and other expertstoconsultand reviewdesigns,materialsandconceptsfor productimprovement.Employeeathletesandotherathleteswear-test andevaluateproductsduringthedesignanddevelopmentprocess.
Nikehasmadetremendouseffortstowardscreatingabetterworldfor everyone.Nike implements aSustainable Product Innovation Cycle; theystrive tocreateinnovative andsustainable products whichwill have applications beyond consumer products. It can guidetheir operationsandthoseoftheir suppliersasenvironmentalimpactsoccur ateverystageinthelifecycleofNikeproducts.
Nikehavealsoanewenvironmentalinitiative,withtheuseofOrganic cotton,thisisbecausetheactofconventionalcottongrowingtakesa hugetollontheearth’s air,water,soil,andaffectsthehealthofthe peoplelivinginthecottongrowingareas.
Andin 2002, Nike introducedawoman’slinethatwas100 percent
Nike haveobviouslyseentheneedthatintoday’schangingculture, theenvironmentisavery importantaspectofpeoples opinionsand actions,andbusinessethicshasbecomeahigherprioritythanever before.
This has encouraged especially the bigger businessesto create environmentalactionplansandthink moreaboutwhataffectstheir
A goodenvironmentalplancanalsobeseenasa strongpublic relationstooland can enticecustomersand investors alike,man people feel strongly about investing in something they believe in ethical.
Nike has released arange of greenerand moreethically-sourced shoes. It's called Nike Considered,and consists of five pieces of footwear – aboot,climbing shoe,trainer,open-backed trainer and sandals. Apparently the shoesare easiertorecycle, solvent useis reducedby over80%comparedwith Nike’s "typicalproducts"andall thematerials aresourcedwithin 200 miles of theunnamedfactory. NikealsoreckonstheBoot,RockandGemshoescreate63%lesswaste thanacomparableNikelighthikingshoe.
I wouldliketomentionthattheEnvironmentalissues arereallysucha largepartoftoday’slifestyle;Ethicalproductsreallyarethe‘big thing’ ofthis decade.I foundanarticlefrom theFinancialTimespublished today(27thNovember2006)whichbacksthisup.
Itstatesthat‘Ethicalspendingandinvestmenttopped£29bnlastyear morethanconsumers'retailpurchasesofcigarettesandalcohol’ Althoughusuallyethicalbehaviour affectsthe costsofmaterials pushingupthecostswhichlaterreflectthefinalprice,mostconsumers arewillingtopayextra,asthisethicalbehaviourisseentoaddvalue andpossiblybecomesasourceofcompetitiveadvantage.
Ethicalbehaviourisbeneficialtoall,ithelpsthedevelopingcountries with economicgrowthandinturn this mayresultinmoreconsumers andahigheraggregatedemandinamarketwhichNike couldretail in.
Nike was suedby apolitical activist Marc Kasky overmaking false statementsinregardstosweatshops. Itwasruledthatthestatements Nike madewereprimarilygearedtowardsconsumersandthatthey wereusedtoincreaseormaintainsaleswhichisaviolationofthelaw ofDeceptiveadvertising.
NikestockholdersclaimedthatNikeexecutiveshadwithheldnegative news and profited from the results. Allegations stated that Nike’s actionsresultedinastockincrease.
Thiswasa copyrightinfringementcasethatwassettledoutofcourt. Bothsidescame toanagreementandbothsidesweresatisfiedwith theresults.Both NikeandOakleydeniedanywrongdoings.
InspiteofNike’s negativestheyareconsistentlyworkingto improve andexcel in theareas of social responsibility. With public announcements of Nikes standpoint onissues of social responsibility and ethics,and continuedplansarebeingimplementedtoimprove labour conditions in thecompanies600 contractfactories. Reforms over new labour policies for health and safety, child labour, independentmonitoringandworkereducationarestillunderway.
Nike has also hadtograpple with the touchytopicof sweatshop labouratthe900-oddindependent overseasfactoriesthatmakeits clothesandsneakers.
Since2002, Nike hasbuiltanelaborateprogramtodealwith charges oflabourexploitation.ItallowsrandomfactoryinspectionsbytheFair LabourAssn., amonitoringoutfititfoundedwith humanrights groups and otherbigcompanies,suchasReebokInternational Ltd.andLiz ClaiborneInc.thatuseoverseascontractors.Nikealsohasanin-house staff of 97 whichhas inspected600 factories in thepast twoyears, grading themonlabourstandards.
Not onlyaretheconsumersofNike lookingforahighqualitypairof shoes,ortobeseenwearingthebrand,theyalsoexpectotherbenefits notonlytothem,whichmaybeseentojustifythehighercostthan somesubstitutes.
Consumersarelookingforasenseoffulfilment.Itisfashionabletobe seenasethicaland within higherclasscirclesitcan almostbecomea competitiontoprovetobethemostgenerous.Tocapitaliseonthese trendswithinthetargetsegments,Nikehavepublicisedtheir charitable nature, through pressreleasesonthewebsitewitharticlessuchas
‘NikeDonatesmorethan $29 Millionin Cash,ProductandIn-Kind
Nike hopetoshowthroughtheir contributionshowtheyfocusonthe importance of communityinvestment,and their commitment to addresstheissues that mostpeoplecareabout,forindividuals andfor thecompany.
Nikes grantmakingeffortsarefocusedprimarilyonprogrammesthat increasetheparticipation of youngpeople in physical activity and programsthataddress innovativesolutionstothechallengesof globalisation.
Nike haveavery cleverstrategyinthiscase,itsnotonlygoodpublic
relationsandmakingthebrandstrongerbutifNike canencourage morepeopleintosporttherewillbeahigherlevelaggregatedemand inthesportsconsumermarketandtheirwillbecustomerloyaltyfrom thiswhichNikewillhopetoresultinincreasedsales.
has alsohelped toreinforcethepersonalityandcorevalues of the brand.
BarrierstoEntry-LowDuetothelargescaleofbothNike andAdidas, these firms are able to control their costs to retain performance advantageoveremergingcompetitorsintheindustry.Theirwebsites aremoresophisticatedand enticingtobrowse,bothcontributedto their large marketing budgets. The capital injection intoweb site development is highand must be updated frequently with new promotionsand addedfeaturestoattractonlineshoppers.Thereare manyproprietaryproductdifferencesin theindustrythereforebrand identity has an immediatecompetitive advantage. The Nike and Adidas brandiswell renownedglobally andplays amajor role in consumerdecision making. Selling footwear online is highly competitive;however,barrierstoenterintothis e-commerceindustry arequitelow.Thecapitalrequirementforsettingupanonlineshopis comparativelylowerthansettingupatraditionalbricks andmortar establishment. Therefore, the online footwear industry is highly abundantwithhundredsofonlinemerchants.Switchingcostislowfor theconsumer,and mayoccurfrequentlydepending onconsumer preference andotherfactorsaffectingconsumerbuyingdecision,(i.e. pricesensitiveconsumers).Anothermajorbarrieris security.Although, Nike andAdidashaveinvestedmillionsofdollarsintotheir website, thereisanindustry wideproblemofsecuringdata overtheInternet medium.Hackers maypotentially lacerate intothe site andcould retrievesensitivedatasuchasconsumerprofiles,creditcardnumbers, andothercorporatedata.Theycouldevenredirectthecompany's websitetraffictoanotherwebsitesimilartothecaseofNike inJune2000. Nike experiencedahijackingofitswebsite.Thetrafficfrom www.nike.comwasredirectedtoaserverataScotland-basedWeb hostingcompany.
BargainingPower ofBuyers -HighTherearealargenumberofbuyers relativetothenumberoffirmsinthisindustry.Therefore,companieslike Nike and Adidas must continuously market their product and differentiatetheir brandsagainstcompetitors,inordertoincreasesales andmarketshare.Theuseofonlinetoolshashelpedto enhancethe accessibility andintimacy among users. For example, Nike's "nikeid.com"linkallowsconsumerstocustomizeanddesigntheir own footwearby permittingcustomerstospecifythedesiredcoloursand theoptiontopersonalisethe footwearwiththeir name. Brandidentity playsacriticalrolein thebuyingbehaviour;strongidentitywilloffer consumerstrustandloyalty.Manyonlinebuyersarepricesensitiveand switchingcostislowforthe buyer.
BargainingPower of Suppliers -LowTherearemanysuppliersin this industry. In essence, there is very little differentiation among the suppliers which makes suppliers' bargaining power non-existent. Leather,rubber,andcottonarecommodityitemsandareavailable abundantly in themarket place.Conglomerates suchas Nike and Adidas havea definite advantage and powerovertheir suppliers. Thesesuppliersbecomedependenton thesefirmsastheir meansto survival. Additionally, Nike andAdidashavestandardised their input procedures pertaining to the materials used, their labour force, supplies, services, and logistics. Firms are able toswitch between suppliers quickly andcheaply, duetotheglobal network of cheap labouronvariouscontinents.Additionally,inputsarereadilysubstituted and there are an abundant number ofsuppliers available.
Threats of Substitutes – Low Buyers' propensityto substitute is low. Consumersubstitutesforathleticfootwearproductsare lowbecause thereare little alternatives to switch, some substitutes for athlete footwearcouldbeboots,sandals,dressshoesorbearfeet.Consumers arenotlikelytosubstituteduetotheperformancespecificationofthe product.For instance, abasketball player would notwearboots to play basketball. Therefore, thereare noreal substitutes for athletic footwear.
RivalryamongExisting Competitors-Hightherivalry amongexisting competitorsinthefootwearindustryisquitehigh.Largefirmssuchas Nike andAdidashavegrown immenselyoverthelasttwodecades. Their global reach has expanded through all continents; this is attributedtotheemergencesoftheInternetande-commerce.Online sellinghasenlargedthereachforthesefirmsallowingthemtoincrease saleswhileminimizingoperatingcosts.Almosteverylargefirm hasa website, andmostof thesewebsites contain virtual stores which provideconvenience toconsumers.MostindividualsinNorthAmerica have access to high speed Internet and onlinepurchasing has become thenewtrendfor the twentyfirstcentury.Competition is fiercein thefootwearindustryandthosewhodominateorleadthe market doso with high capital expenditures, aggressive sales and marketingstrategies,andstrongbrandidentity.
Regarding competition, therecentAdidas-Reebok mergerposesa challengetoNike.
Whenitcomestoathleticshoes,theadvantagehasalwaysbeenwith Nike, Nike havehadthelargershareofthecriticalUSMarketmaking themamuchmoredominantforceworldwide.
HoweverinthelastyearAdidashaveaddedsomemarketingmuscle with the acquisition of Reebok International Ltd, boosting the combinedU.SshareofNo2 AdidasandNo3 Reebokto21 percent, whichseemsenoughtocontendwithNikeonalargerscale.
AlthoughAdidasplansto keepthebrandidentitiesseparateaswell,it willstrengthen theforceagainstNike, andcanfocusonexpanding ReeboksalesinEuropeandAsia.
ThetakeovershouldhopefullysaveAdidasabout$25 millionayear throughincreased economiesofscale,whichcouldleadtoAdidas andReebok affording tolower prices while retaining currentprofit margins, mostlikely resulting in increased sales, or simply increasing prices and investingthe increased revenues into research and developmentintonewproductsprovingasourceofinnovationand competitiveadvantage.
ThecombinationofAdidasandReebok givesthemabout28%ofthe internationalmarketforathleticfootwear,nudgingthemmuchcloser tothe31%shareofsalesNikehasoutsidetheUS.
Nikeislikelytorespondtothisthreatwiththekindofmarketingskillsthat havemadeitthelargestathleticshoeand clothingmanufacturerin theworld.
Not onlydoesNikefacecompetitionfromothermajorsportsbrandsas previouslyshown,theyalso faceproblemsagainstfakeNikegoods.
fakeNikerunningshoes,fromone ofthelargestcounterfeitsmuggling ringsinrecenthistory,suggeststhisisquiteaproblem.
(£8.5m)andweretobesmuggledtotheUSin15shippingcontainers, sixpeoplehavebeenchargedwith trying toimportthefakegoods from China,USofficialssaid.
Thiswillincrease,asNike hasbeenraisingtheir pricesoftrainers.This should result in amarket for counterfeitgoods suchas this. Those peoplewhowant thenameandtheNikeswoosh,butdon’twant,or can’tpayNikeprices.
Speakingfrom experience,I havepurchasedcounterfeitgoodsinthe past,andhonestly,iftheopportunitycameabout,Iwouldinthefuture.
Today, engagementwith stakeholders isincreasingly important; this includesnot onlyathletesand consumersbutanyofthosegroups affectedby, oraffectingtheir businessoperations.
Nike canlearnfrom thisinteraction,andusethemtounderstandnew issues andviewpoints.
Nike’s core stakeholders are employees, shareholders, athletes, suppliers, the community and consumers.Also indirectly the governmentandNon-GovernmentalOrganisations(NGOs)
Nike hasrelationshipswith alargenumberofexternalgroups.Inorder tohaveeffective, quality engagements, its important Nike prioritise and select which groups they will engage. So Nike focuses on Stakeholderswhohavefollowingcharacteristics.
Legitimacy.Theyhaveadirectstakein anissue,orthereisa generalpublicperceptionthattheyshouldbeatthetable.Networked.Theyarepartofextensivenetworksandcanbring perspectives from large numbers of stakeholders around a particularissueorwithin aparticularregion.Expertise,resources,capabilities.Theyhavespecificknowledge,resourcesorcapabilitiesthatcanhelpNike tounderstandand addresscorporateresponsibilitychallengesandopportunities.Willingnesstoengageconstructively.
AsNike isworkingondevelopingsystemstohelpensurethattheyare responsivetostakeholderswhomareactivelyengaged.SustainAbility, a UK-based research, advocacy and consultancy company, completedanassessmentofallthefeedbackwe havereceivedfrom stakeholdersinthepastseveralyears.
Nikeintendtocontinueseekingdirectfeedbackfrom stakeholders,but areexploringwaysthismightbeachievedthroughexistingnetworksor in conjunction with other companies – to reduce the burdenon stakeholdersandNikethemselves.
CHAPTER 5- Research Methodology
Research comprises defining and redefining problems , formulating hypothesis and suggested solutions, collecting, organise, evaluating, data, making deduction and research conclusion and at last carefully testing the conclusion to determine whether they fit the formulating the hypothesis.
In short the search of knowledge of objective and systematic finding the solution to a problem Is research.
5.1 RESEAFCH OBJECTIVE.
• To study the taste and preference , buying behaviour of consumers in case of footwear of nike.
• To recommend strategies rot Nike to increase sales.
The main objective of the study are:
• to do Swot analysis of the product sold.
• Comparative study with the competitors.
5.2 RESEARCH DESIGN
TYPES OF RESEARCH: Descriptive research.
Descriptive Research include surveys and fact finding inquiry of different kind. The main characteristic this method is that the researcher has no controls over the variables, he can report what has happened and what is happening.
There are too types of data. Source of primary data for the present study collected to questionnaire and answered by consumer to shoes. The secondary data is collected from ten journals, books and through internet research.
The data which that is collected the first hand by someone specially on the purpose for face-lifting study is known as primary data.so in this the date is collected from the respondent through questionnaire.
for the company information I had used secondary data from broche, website of the company etc. The method used by me is survey method as the research done is descriptive research.
Selected instrument for data collection for online survey is questionnaire.
QUESTIONNAIRE DESIGN FORMULATION
Undue this method , the list of question pertaining to survey are prepare consumer for shoes. Questionnaire has structured type of question as well a s unstructured types of question. Structured objective TYPES OF question are prepared for the respondent's for then fixed response categories.
TYPES OF QUESTION INCLUDED:
Which have only two answered yes or no.
MULTIPLE CHIOCE QUESTION
Where respondent is offered more than two choice.
A SCALE THAT rates the importance of some attributes.
A SCALE that rates form attributes write from highly satisfied to highly unsatisfied, or very efficient to very inefficient.
who is to be survyed? The researcher must define the target population that is to be sampled.
The sample unit taken by me:50 respondent of all age group of diffrent gender and diffrent profession.
Consumer of shoes 50 nos.
STEPS FOLLOWED IN COMPLETING THE STUDY
(1) Internet sites containing information on Nike shoes and marketing are browsed.
(2) Sample survey was conducted
(3) Data was thoroughly checked for error.
DATA PROCESSING METHODOLOGY
(1) Once the primary data has been collected they are edited, inspected, corrected and modified.
(2) Tabulation-bring similar data together and totalling them in meaningful categories.
(3) Questionnaire are edited. The responses are thoroughly checked in home for incorrect and inconsequential or contradictions categories are often the replies has been reviewed.
(4) The collected data are placed into anorder. Percentage of respondent similarly are calculated and place into table. Then this is interpreted. This involved drawing conclusion from gathered data.
CONCULSION WAS DRAWN BASED ON THE SURVEY FINDINGS
Finally recommendation was made to improve the sales strategy of Nike shoes to increase sales volume.
LIMITATION OF RESEARCH
• The collected data are placed into anorder. Percentage of respondent similarly are calculated and place into table. Then this is interpreted. This involved drawing conclusion from gathered data.
• Due to limited time period and constrained working hour of the most of the respondent, the answer at the time were vague enough to be ignored.
CHAPTER6- DATA ANALYASIS
• 74% of the people are the brand conscious while purchasing shoes for themselves, whereas 26% do not consider brand name as deciding factor for buying shoes.
• When respondent was asked about brand preference, 40% said that they were prefer Nike, 16% preferred Adidas, 22% preferred puma 12% preferred Reebok and remaining 10% said they would have preferred other brands. These means that most of the people preferred buying Nike shoes.
• The deciding factor for the buying shoes for the people are mainly comfort quality and brand name whereas packing and personality do not matter to people.
• 30% respondent are brand loyal to nike,26% people regular shift to other brand of shoes. These means that larger no of people prefer Nike over other brand.
Q1. ARE YOU BRAND CONCIOUS OF FOOTWEAR?
Q2.IF YOU ARE GOING TO BUY A PAIR OF SPORTS SHPES, WHICH BRAND YOU WOULD YOU LIKE TO PREFER?
Q3. WHAT DO YOU THINK NIKE IS OS SUCCESFULL?
Q4. WHY WOULD YOU CLASS AS NIKE MAIN COMPETITORS?
Q5. WHY WOULD YOU CLASS AS NIKE MAIN COMPETATIORS?
Q6. DO YOU THINK NIKE IS OFEERING CUSTOMIZED FOOTWEAR?
Q7. IF YOU ARE GOING TO BUY PAIR OF CUSTOMIZED PRODUCTS WHICH BRAND WILL YOU CHOOSE?
Q8. WHAT ARE THE MAIN FACTORS IF YOU SWITCH TO BUY THE FOOTWAER OF ANOTHER BRAND?
CHAPTER7- CONCLUSIONS& FINDINGS
Nike is a global brand. It is the number one sports brand in the World. Its famous 'Swoosh' is instantly recognisable along with its trademark "Just Do It"Nike has recently tried hard to change the ‘unethical views’ which previously dented their images. Nike is on the right track with joint ventures such as with Apple’s Ipod, continued innovation. Strong control over its own distribution channelStrong financial position with minimal long term debts
Innovative designs in footwear enabling consumers to design their own shoes online.
Nike are a very competitive organisation. Nike has a healthy dislike of is competitors. They have a strong management team and good corporate strategy in all markets. Nike has no factories. It does not tie up cash in buildings and manufacturing workers. This makes Nike very efficient. Nike are strong at research and development, as is evidenced by its evolving and innovative product range. They then manufacture wherever they can produce high quality product at the lowest possible price. If prices rise, and products can be made more cheaply elsewhere, Nike will move production.
The organisation does have a diversified range of sports products. However, the income of the business is still heavily dependent upon its share of the footwear market. This may leave it vulnerable if for any reason its market share decreases or Nike fail to keep up with new trends. Market is becoming saturated and consumers may become sick of Nike brand and move to other smaller, more individual brands. Negative image portrayed by poor working conditions in its overseas factories
Product development offers Nike many opportunities. The brand is fiercely defended by its owners whom truly believe that Nike is not a fashion brand. However, like it or not, consumers that wear Nike product do not always buy it to participate in sport. Some would argue that in youth culture especially, Nike is a fashion brand. This creates its own opportunities, since product could become unfashionable before it wears out i.e. consumers need to replace shoes. There is also the opportunity to develop products such as sport
wear, sunglasses and jewellery. Such high value items do tend to have associated with them, high profits. The business could also be developed internationally, building
upon its strong global brand recognition. There are many markets that have the disposable income to spend on high value sports goods. For example, emerging markets such as China and India have a new richer generation of consumers. There are also global marketing events that can be utilised to support the brand such as the World Cup and The Olympics. Nike could look to develop in the more traditional outdoor
pursuits such as Walking and Climbing as they have not yet been attempted successfully by Nike and brand could be strong enough to compete with the small specialist shops, however further research would have to be conducted to see if this is viable. Increased female participation in athletics New technology and innovation to stay on top of market needs
Nike is exposed to the international nature of trade. It buys and sells in different currencies and so costs and margins are not stable over long periods of time. Such an exposure could mean that Nike may be manufacturing and/or selling at a loss. This is an issue that faces all global brands.The market for sports shoes and garments is very competitive. The
traditional view of Nike of a high value branded product manufactured at a low cost is now commonly used and to an extent is no longer a basis for sustainable competitive advantage. Competitors are developing alternative brands to take away Nike's market share. Nike will always face threats from pressure groups and human rights campaigners over fair trade and wages in the third world can potentially damage brand and customer loyalty. Negative image due to "sweatshops" Economic downturn in North America and Asian Countries Strong competition from some of its major challengers in all branches of the business. Continuing challenges in import/export duties Negative image created by the sponsored athletes Increase in the Price of Raw materials Change in options on Sportswear due to certain unpopular groups wearing it, such as what the ‘Chavs’ did for Burberry.
After ananalysisofthecurrentpositionoftheNikebrandandpotential opportunities in the external operating environment,a number of recommendationscan be made toensurethefuturesuccessand continued developmentofthebrand:
Nikes currentpolicyofconstantlywideningtherangeofsportswhich theyproducecouldbecontinuedandfurtherexpanded.TheMintel reportwhichI investigatedshowedhighlevelsofdemandintheUKfor outdoorpursuits;Nikecouldlookinto thismarket,forexampleFishing, WalkingandHiking. Thesemarketscontainfewbarrierstoentryand Nikeinterventionisjustthethingtochangepersonalopinions,likeNike andTigerWoodsdidtoGolf.
Therearefurtheropportunitiesavailablenotonlywithin theSportsand Clothing industries; Nike could attemptjoint venturesor acquisitions with companiestoexpand their productportfolio. The takeover of Converseproved successful, howeverfirms in emergingeconomies couldbetargetedasagrowthstrategyforNike, iftheycouldlookfor new,upand comingbrands totake over,theycould benefit from economiesofscale,whilststillbeingadifferentalternativetoNike.
IreallylikewhatNikehavedoneoverthejointventurewithAppleand their Ipod, I recommend Nike should think about other popular products,and examplecouldbewith acomputergame,likePro EvolutionSoccer,this wouldbeinnovativeandcouldbegoodPRas Nike couldbeseen asattemptingtogetchildrenfrom simplysitting downplayingcomputergamesbutmorephysicalinteraction.
AsI havementionedcounterfeitproductionIsatahigh levelandis damagingtheeconomy,Nikecouldstartacampaignagainstthistype ofactivityandwhilethiscouldhelpincreaseNikesprofits, itwouldalso begoodPR,justwhatNikeneedstobecomemore‘Ethical’.
Communication campaigns really create excitement around the brandanditis importantthatNikefind sportsstarswhoarecomingup inthegameandNikecontinuetoactthisway.
CHAPTER 9- ANNEXURE
QUESTIONNAIR ON NIKE FOOTWARE
Q1.ARE YOU BRAND CONCIOUS OF FOOTWARE?
Q2.IF YOU ARE GOING TO BUY A PAIR OF SPORTS SHPES, WHICH BRAND YOU WOULD YOU LIKE TO PREFER?
Q3.WHAT DO YOU THINK NIKE IS OF SUCCESFULL?
o RANGE OF THE PRODUCT OFFER
o VALUE STYLE
Q4.WHY WOULD YOU CLASS AS NIKE MAIN COMPETITORS?
o K SWISS
Q5.WHY WOULD YOU CLASS AS NIKE MAIN COMPETITORS?
Q6.IF YOU ARE GOING TO BUY PAIR OF CUSTOMIZED PRODUCTS WHICH BRAND WILL YOU CHOOSE?
Q7.DO YOU THINK NIKE IS OFEERING CUSTOMIZED FOOTWEAR?
Q8. WHAT ARE THE MAIN FACTORS IF YOU SWITCH TO BUY THE FOOTWAER OF ANOTHER BRAND?
CHAPTER 10- BIBLOGRAPHY
NikeSwot Analysis- http://www.marketingteacher.com/SWOT/nike_swot.htm
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