Porter 5 forces analysis for Indian Shoe Industry for profitability/attractiveness

Porter 5 forces of Industry profitability Rivalry among competitors Bargaining power of Suppliers Bargaining power of Buyers Threat of new Entrants Threat of Substitutes

Industry Analysis High (-) Unattractive Low (+) Attractive High (-) Unattractive High (-) Unattractive High/Moderate (-) Unattractive

Industry Life cycle and External Analysis

Key Success Factor for Nike

The key success factors are most significant to future success of a firm in the industry. The KSFs for Nike are its distinctive marketing activities, extensive research and development effort to design premium concert athletic products for customers, product differentiation and extensive manufacturing, innovating and distribution capabilities. Superior performance in some or all of the factors creates a lot of value for the customers Core Competency of Nike Marketing Nike is a marketing company. Its distinctive competency lies in the area of marketing, particularly in the area of consumer brand awareness and brand power. Research and Development-Nikes R &D lab evaluated as far & away the best in the industry.Large number of patents testimony to its commitment to R &D

Nikes Business Strategy Process

Business strategy of NIKE

NIKE has followed the generic business strategy of product differentiation.

Differentiation Strategy
Differentiation strategy provide products in athletics and various sports events; for men, women, children providing preferences and choices; catering for sports apparels; accessories and sports equipments

Emphasis on strategy elements

brand advertising design of products exclusive customer service high quality product and new product development and innovation - product engineering, innovation and creativity and research capabilities

Differentiation Strategy
Aggressive Marketing Target the Air Max, the first Nike footwear to feature Nike Air bags that were visible. The campaign was supported by a memorable TV ad whose soundtrack was the original Beatles recording of Revolution. Just Do It, Bo Knows, Secret Tournament campaign

Differentiation Strategy
Number of products - reduce risk Related brands like Converse Inc, ColeHaan, Jordan Brand, NikeGolf, JumpMan23, Hurley International are some by which company differentiates its product lines and sells in particular markets

Target consumers High end, premium price paying, large age coverage (14+) consumers. Nike has also always targeted team sports for their promotion
Branding Swoosh Logo, Just Do It logo more of lifestyle Acquisition - Nike acquired other brands like Adidas, Umbro, LuluLemon, Bauer

Differentiation Strategy
Supplier Diversity program has had a favourable impact on Nike business by:
Creating more competition in the supply chain Maintaining a connection to the consumer base Contributing to the enhancement of the brand

Sale of products - several options like retail outlets, Nike flag ship stores, retail discount stores, website sale

Future Strategy: Closed-Loop Business Model

Move closer to achieving zero waste by completely reusing, recycling or composting all materials Including up-front design of products that can be manufactured using materials reclaimed throughout the manufacturing process and at the end of a product's life.

Future Strategy
To do this, Nike will need to: Innovate to deliver enterprise-level sustainability solutions Integrate sustainability into the heart of the NIKE, Inc. business model

Mobilize key constituents (civil society, employees, consumers, government and industry) to partner in scaling solutions

Tetra Threat Framework

THREAT OF IMITATION ADDED VALUE THREAT OF SUBSTITUTION

APPROPRIATED

VALUE

THREAT OF SLACK

THREAT OF HOLDUP
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Threat of Imitation
Barriers to Imitation Economies of scale Shared distribution channels and efficient production reduces costs Patents & copyrights Nike has around 3775 patents in the sports shoes, apparels and the equipments domain e.g. Nike AIR technology, self lacing shoes, etc. Innovation Strong emphasis on R&D and product development through new designs(more than 300 designs a year) e.g. recycled polyester for jerseys Brand reputation and Image Celebrity endorsements & sponsorships of sports events
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Threat of Substitution
Responses to substitution
Customization of footwear
Online customization of footwear

Aggressive advertising
Just Do It campaign

Mergers and Acquisition

Umbro, Converse, etc.

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Threat of Holdup
Responses to Holdup
Multiple sourcing and Contracting
Contract suppliers in China, Vietnam, Indonesia and Thailand; Argentina, Brazil, India, and Mexico

Building relationships with complementors

Tie up with Apple for the Nike + iPod sports kit

Increase Bargaining power

Just Do It advertising campaign

Forward Vertical Integration

Opened Discount stores in rural areas and flagship stores in urban areas

Building Trust
Improving working conditions through various programs e.g. Joining FLA & GAWC, transparency through publishing monitoring results on the website

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Threat of Slack
Responses to Slack
Performance based incentives
Pay dividends to the shareholders Nike encourages outsiders to become part of board, in order to avoid bias connected with corporate conformism

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Recommendations
Nikes current policy of constantly widening the range of sports which they produce could be continued and further expanded. Nike could look into different markets, for example Fishing, Hiking, etc. Nike could attempt joint ventures or acquisitions with companies to expand their product portfolio and also achieve economies of scale and access to markets. Nike could take their collaboration with Apple one step ahead by forming exclusive gamepads featuring games like soccer, cricket, golf, NHL, NBA, etc. Focus on different segments as well e.g. Age group 50+ with shoes specially meant for walking, custom footwear for women athletes. Nike should start Ethical campaign against the counterfeit production to improve on its image. Nike could get into partnerships with other firms and setup sporting academies in developing markets as a brand building exercise. Nike could make available online training videos of sporting stars and give their access to customers complementary along with certain range of products. 17 Nike could also get into sporting accessories like sunglasses which are highly profitable and are complementary in nature. Nike could cut down on the contracting in order to avoid threat of imitation and future

Recommendations
Economies of scale Brand reputation and Image New designs and technology (recycled polyester for jerseys) Customization of footwear Relationships Aggressive advertising Sub brands ( Cole Haan, Converse, Hurley International, Hurley International, and Umbro Inc) Competition is non priced based on differentiation Celebrity endorsements and sporting event sponsorships Just do it campaign signifies attitude, sports and lifestyle Flagship stores for selling Partnerships with retail discount stores like walmart Contract suppliers in China, Vietnam, Indonesia and Thailand. And also in Argentina, Brazil, India, and Mexico Nike + ipod Nike for women campaign

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