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Sports industry offers a range of potential opportunities to Nike - Essay Example

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The Sports Equipment Industry Introduction The sports equipment industry has undergone tremendous changes for the recent decades mainly due to the technological developments in telecommunication sector. The sports equipment industry or simply sports industry manufactures and sells equipments which are essentially required in sports items…
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Sports industry offers a range of potential opportunities to Nike
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Download file to see previous pages The company acquired annual revenue in excess of US$ 18.6 billion for the fiscal year 2008 despite the adverse impacts of the 2008 global financial crisis. Although Nike markets many of its products under its own brand, it also markets some additional brands including Nike Golf, Nike Pro, and Nike Skateboarding to effectively market its sports equipments across the globe. This paper will analyse micro as well as macro business environments of Nike, Inc. using appropriate analytical tools and a strategic fit analysis. TASK A - Market Environment Analysis In the section, different market analytical tools are used to evaluate the business environment of the Nike. Here, Porter’s five forces model is applied to analyse the sports equipment industry (micro environment) and PEST analysis is deployed to evaluate the market potentiality of the Nike, Inc. (macro environment). Porter’s five forces analysis Currently, the sports equipment industry constitutes a larger number of companies dealing with production and distribution of numerous and different sporting and athletic equipments. The total market capitalisation has reached nearly $8 billion and it is still growing. Most of the players in the sports equipment industry are grand corporate structures such as Nike, Easton, and Wilson; they offer equipments to a variety of sports items. In contrast, other companies like Callaway and Schwinn own noticeable market share and prominence in their specific area of focus. Sports equipment manufacturing companies mainly make use of two means of distribution. Wholesalers and retailers constitute the most common avenue of distribution whereas the company-owned and contracted specialty shops shape the second mode of distribution. In order to popularise their products and dominate the market, most of the sports equipment companies tend to sponsor high profile or top-rated sportsmen and athletes. In addition, such companies are also willing to undertake the sponsorship of major sporting events like World Cup Football as part of promoting their products. Threat of substitute products and services In general, sports can be easily substituted with a variety of different other activities, and therefore the threat of substitutes is very high in sports industry. To illustrate, people may easily turn their interest from physically demanding athletic or other sports activities to video/computer games. However, higher prevalence rate of obesity in the United States influences people to turn to healthy and fitness activities (U. S. Department of Health and Human Services). This situation relieves the sports industry from the threat of substitutes to some extent. At the same time, the substitution threat exists even in the sports industry itself. For instance, people may choose to play basketball rather than golf. Intensity of rivalry among competitors The intensity of competitive rivalry is very high in the sports industry and many sports equipment companies have been thrown out of the market due to this higher degree of competition. While analysing present trends in the sports industry, it is obvious that companies are striving for their market competency and searching for industry consolidation. It seems that most of the sports equipment companies adopt mergers and acquisitions strategy in order to broaden their product lines, to increase economies ...Download file to see next pagesRead More
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