Capstone assignment 4

Introduction

The Nike Company is a giant company whose operation are influenced by a number of factors. The environment under which the company operates influence its level of production, sales and marketing. Additionally, the environment is an important function of the company’s human resource management. The industry which the company operates in is highly competitive due to existence of other companies. The company has come up with extensive strategies which increase its ability to compete and increase its customer base. The five forces of competition are a major ingredient of the company’s competitive design. The management in the company understand the importance of adopted a well-structured design to enhance future improvements and control external threats and opportunities. The strengths and weaknesses of the company also influence production and marketing. The available resources, capabilities and core competencies are integral in achieving a vantage position in the sports merchandise industry.

General environment

Sports merchandise industry is made up of different components which directly influence the existing company. The world of sports has grown in popularity during the last few decades. This has prompted the growth of a robust industry which focuses on manufacturing and selling sportswear and other accessories. The environment in this industry is highly competitive due to existence of many company which produce similar products. Companies such as Adidas, Puma, and Mikasa among others offer competition to Nike. Therefore, the existence of a highly competitive nature within this industry ranks as the most influential part of the environment. Technological advancement also plays a huge part in influencing this industry. The world of sports has embraced application of new and innovative technologies which improve performance. The company has to adapt to the change in customer preference in terms of the choice of technology. This is because a customer influences the company’s level of sales and production.

Five forces of competition

The five forces of competition are important to the company since they influence its operations. The factors determine how much the sportswear industry is attractive thereby influencing the strategies laid out by the company. The forces also determine the attractiveness of this industry in terms of favorable competition and likely profit margins. The factors also directly influence the company’s ability to give good services to its customers thus gaining loyalty. These microenvironment forces help the Nike Company to apply core competencies and resources to achieve high profits.

Item 1

The onset of new sportswear companies whose products are almost autonomous creates a threat to the firm. These products are a good customer substitute. Some customers go these products since they solve the same economic need. The availability of such close substitute combined with the customer’s ability to bargain imposes a threat to the company’s profits. The company has come up with new strategies to ensure that prospective customers opt to purchase a Nike brand. The threat of substitutes is minimized by the company ensuring that their products are simple and well designed to fully satisfy the customer needs. Nike has built affordable sportswear with modern features and easily accessible to potential customers thus neutralizing the threat of substitutes.

Item 2

Among the potential impediments of making profits in the organization is the threat created by new entrants in the industry. Within the last two decades, there has been an upsurge of new sportswear companies. These new companies have led to the deduction of profits as previously made by the company. Though there is no perfect competition, profitability must be above zero so that the business can stay afloat. These factors has been neutralized by customer loyalty to the Nike Company. The company has also switched the cost of some products while ensuring that it takes full advantage on its access to the market channels. Nike has a strong brand which has been in existence for decades. The popularity and effectiveness of Nike products ensure that it enjoys a larger part of the existing customers. Individuals who have previously used Nike brand remain loyal to the company thus the threat of new entrants is minimized (Porter, 2008).

Evaluation

The Porter’s five forces framework is an integral tool used to look into enhancing completion ability of the organization. The framework creates an in-depth analysis of the profiting making ability of any organization therefore painting the goal driven competition. Profit making is associated with the microenvironment forces. Unlike the macro environment forces which are inclusive of the external factors, microenvironment factors are those factors which surround the firm but these forces adversely affect the profit making prowess of the firm. A single alteration of any of these factors prompts the company to rearrange its marketing strategies so as to reach the profit ceiling. The Nike Company has dealt with the threat of substitutes and new entrants by ensuring that its products are quality, assessable and affordable. The company has intensified its advertisement with signed deals with major sports federations such as the NBA together with major athletes. This makes the brand popular thus attracting more customers.

Future improvements

The company should improve its performance by increasing its production to other sports accessories. Additionally, Nike can reinforce their dominance in future by fully sponsoring major leagues such as English Premier League or any other sport league. The company’s management should work to minimize competition by buying smaller companies to increase customer base.

External threats and opportunities

The major external factor affecting Nike Company is its customers. Individuals who are willing to purchase the company’s products influence how Nike performs. Additionally, customers are Nike computer consumers which means that their preference in consumer sportswear directly affects the company. Apart from customers, the company operations are affecting by the market forces. Existence of similar products in the market results into higher competition. Companies such as Adidas, Puma among others develop similar consumer electronics. This lowers Nike’s products consumption resulting into lower profits.

Threats and opportunities strategies

The company should come up with a feasible design of satisfying its customers. The company should increase customer satisfaction and create active online platforms to receive comments, suggestions and complaints from customers. The company should also made strides in ensuring that it stays relevant in the market. The company’s structure, human resources and management should provide a strong foundation for operation. The company’s philosophy of creating simple, unique and reliable products will ensure that Nike remains dominant in the market even in the future.

Strengths and weaknesses

Nike has been involved in numerous controversies in the past. Its involvement in such scenarios is the company’s greatest weakness. The company also has experienced strikes and go-slows from employees demanding better working conditions. The greatest strength in this company is existence of a highly organized management which is able to coordinate production, human resources and marketing. This ensures the company runs smoothly without major setbacks. The company also enjoys a robust communication network between all stakeholders.

Threats and opportunities Strategy.

The company should adopt a well-defined organizational structure so as to maintain effective competition within the consumer electronic industry. There is a strong product rivalry in the market propagated by cheaper and more reliable products. Nike’s success in the market lies within its goal, mission and structure. The company was founded with a goal of providing well designed and reliable products. This is should be seen in the company’s unique products. Additionally, the company should minimize involvement with controversial characters and issues in the sports industry. This will ensure that it maintains all its customers thus maintaining profit margins.

Resources, capabilities and core competencies

Nike Company has the ability of growing its profits to unimaginable levels. The sports industry is robust with discovery of new game platforms and an increase in the number of people participating in sports. The company has numerous assets includes a stable financial position, competent and skilled employees, many offices and plants spread across the world and numerous shops in different countries. With these resources the company can increase production and improve marketing. Although the company has been named as the most robust in sportswear industry, proper utilization of the resources will increase profits and dominance in the industry (Nike, 2010).

References Nike. (2010, May 23). Nike Inc.'s Website. Retrieved from Nike: http://www.nike.org Porter, M. (2008). The Five Competitive Forces that Shape Strategy. Harvard Business Review, 78-93.