Nike Analysis Essay -- Business Analysis Shoe Industry

Since being founded in 1962, Nike has grown from a small fledgling shoe retailer into a world-wide corporate giant. During its first year, sales for Nike were $8000, but as of November 30th, annual sales for Nike were over 12 billion dollars. (hoover) Although Nike already dominates the sporting world, there are many opportunities for growth. According to our research, key strategic challenges facing Nike are increased competition from Adidas with their technological shoe, the Adidas One, and a potentially fatal inability to enter a new growth market such as the extreme sports market. Our recommendations to help Nike confront these challenges consist of developing a product to remain competitive with Adidas, and also an aggressive move into the extreme sports market. Our first recommendation for Nike is to develop a shoe that will compete with the new, technologically advanced Adidas One running shoe. The Adidas One, which will be available in March 2005 at a cost of $250 dollars, is a high-end, high-tech athletic shoe. Features of the Adidas One running shoe include sensors that measure how much compression is put on the heel of the shoe with each step, a microprocessor that can adjust the cushion of the heel based upon roughness or softness of the terrain, buttons that allow for different comfort levels to be set, and a lithium-ion battery that last about 100 hours. (time-sporting life) With their new shoe, Adidas threatens to capture some market share in the running shoe segment. This stands to be a substantial amount of lost profits if Nike is not able to compete. Fortunately, Nike is already well established in the athletic shoe industry. It should be able to utilize its strength of brand equity compete effectively with the Adidas One. According to market research from NPD Group,  ¡Ã‚ °running is heart and soul of the athletic shoe industry. ¡Ã‚ ± Americans last year spent over 4.5 billion dollars on running shoes, accounting for 25 percent of all money spent on athletic shoes and making them the top category in athletic footwear. (Knight Ridder Tribune)   Ã‚  Ã‚  Ã‚  Ã‚  We recommend that Nike produce a shoe that not only exceeds the technological capabilities of the Adidas One shoe, but also offers a more affordable approach to high tech footwear. Currently it is estimated that serious runners buy an average of 3 to 4 pairs of shoes per year. At 250 dollars ... ...e been implemented, this step helps to acknowledge success and hard work of employees. By reinforcing the good behaviors of employees, Nike can ensure future success and help create a new status quo. The fifth and final step is evaluation.  ¡Ã‚ °Management needs to know whether the change has had the intended effects ¡Ã‚ ± (Lewis). By evaluating the implementations, Nike can ensure that its actions have been effective. For example, if it is determined that creating a new shoe is not working; Nike can halt production of the shoe before further losses are incurred. Equally, evaluating the profitability of the move into the extreme sports market can help Nike determine whether it should continue funding advertisements and sponsorships. In conclusion, we recommend Nike use the five steps for planned change as a tool to help implement our recommendations of creating a new technological running shoe and entering the extreme sports market. These steps include creating a vision, communicating the vision, empowering employees, institutionalizing the new behavior, and finally evaluating the success. By using these steps, Nike can ensure a smooth transition when in implements our recommendations.