Exploring Entrepreneurship and Small Business Management with Nike Inc.

Introduction

Nike Inc. was established in 1962 by Bill Bowerman and Phil Knight as Blue Ribbon Sports, specializing in sports shoes, sportswear, and other sports products. This paper will explore various important subjects within the field of Entrepreneurship and Small Business Management (EOE and SBM). Each topic discussed here includes The Challenge of Entrepreneurship and its Benefits and Competition, Competitive Business Model (CBM) with Core Competencies, Innovations for Sustainable Competitive Advantage, Key Success Factors, Solid Strategic Plan encompassing Vision and Mission, Objectives and Goals, SWOT Analysis, Competitor Analysis, Business Strategy as well as Feasibility Analysis which covers Industry and Market Feasibility, Product or Service Feasibility along with Financial Feasibility using the 5 Forces Model.

Let's now delve deeper into the specifics of these topics.

Entrepreneurship poses a challenge that demands attention.

There are many advantages to entrepreneurship.

According to surveys, small business owners believe that they work harder, earn more money, and are more satisfied compared to working for someone else (Via Dr.

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José A. Torres Essentials of Entrepreneurship and Small Business Management Powerpoint). Nike, originally known as Blue Ribbon Sports (BRS), was founded in January 1964 by University of Oregon track athlete Philip Knight and his coach Bill Bowerman. Initially, the company acted as a distributor for Japanese shoe maker Onitsuka Tiger (now ASICS), with most sales taking place at track meets from Knight's car. Otis Davis contradicts Phil Knight's claim that he was the first to have Nike shoes made for him. According to Davis: "I told Tom Brokaw that I was the first.

I don't care what all the billionaires say. Bill Bowerman made the first pair of Nike shoes for me. People don't believe me. In fact, I didn't like the way they felt on my feet. There was no support and they were too tight. But I saw Bowerman make them from the waffle iron, and they were mine" (Via HTTP://en.Wikipedia.org/wiki/Nike,_Inc.).

Nike introduced the Air cushion technology called "Air" on their Tailwind running shoes in 1979. This technology, patented by inventor M. Frank Rudy, provided cushioning and protection with a gas film in the soles of the shoes. Nike partnered with advertising agency Wieden+ Kennedy to create numerous print and television ads, with Wieden+ Kennedy remaining Nike's primary ad agency.

In 1988, agency co-founder Dan Wieden coined the slogan "Just Do It", which became one of the top ad slogans of the 20th century. The slogan was inspired by the last words of Gary Gilmore before his execution, as he said "Let's do it".

Nike expanded its product line throughout the 1980s, reaching various sports and regions worldwide. In 1990, Nike relocated to its World Headquarters campus in Beaverton, Oregon, consisting of eight buildings.

(Via HTTP://en.Wikipedia.org/wiki/Nike,_Inc.)

Significant profit improvement opportunities emerged for Nike with the introduction of the "Air Jordan 20 generations" and the Nike Free series in 2005, as these products offer barefoot-like training while still providing foot protection. By May 31, Nike's total annual profits reached $13.7 billion, indicating a 12% growth compared to the previous fiscal year. On December 19, 2013, Nike Inc observed a quarterly profit increase due to a surge of 13% in global orders for merchandise scheduled for delivery by April. The future orders for shoe or clothing deliveries between December and April amounted to $10.4 billion. Consequently, shares of Nike (NKE) rose by 0.6%, reaching $78.75 during extended trading.

(Via HTTP://en.Wikipedia.org/wiki/Nike,_Inc.)

NIKE Charity Organization, a Non-Governmental Organization based in PORT HARCOURT RIVERS STATE, NIGERIA, operates independently and adheres to the laws of the Federal Republic of Nigeria. Our primary objective is to make a positive impact on society and gain recognition for our endeavors. We strive to bring hope to those who are less fortunate and fulfill our duties as members of a non-profit organization at the national, state, and local government levels. Moreover, we are dedicated to collaborating with other entities and individuals in combating Girl Child Abuse.

(Via HTTP://saccharinity.com/about_us.php)

Competition

The demand for NIKE products is influenced by the popularity of various sports and fitness activities, as well as changing design trends. Both domestically and globally, there is intense competition in the athletic footwear, apparel, and equipment industry. We face strong competition from international companies specializing in athletic and leisure footwear, as well as those focused on athletic and leisure apparel. Additionally, we compete with sports equipment companies and large corporations that offer a diverse range of athletic and leisure products. Furthermore, we also vie with other companies to secure production capacity from independent manufacturers and import quota capacity.

Our competitors are subject to fierce competition in various areas, such as product offerings, technologies, marketing expenditures (such as advertising and endorsements), pricing, production costs, and customer service. Furthermore, our operations face significant risks due to the rapid advancements in technology and evolving consumer preferences in the markets for athletic footwear, leisure apparel, and athletic equipment. If we fail to anticipate and adequately respond to our competitors, it may lead to increased costs or a substantial decline in consumer demand for our products. (Via Nike-2013-form-10K)

Creating a competitive business model is crucial.

Core Competencies

Nike is renowned for its quality, technology, and brand. The company's basketball shoes are famous for incorporating the Air cushion technology, which provides exceptional support to athletes. Nike has gained a competitive advantage and captured a significant market share by leveraging their skills and core competence in designing athletic footwear and other sports items. They have their own research and development (R&D) department that plays a crucial role in creating innovative footwear for maximum consumer comfort. Quality is also a priority for Nike as it is essential in shoe production. Additionally, they offer various shoe categories such as running shoes, Nike shocks, Jordan, and more to cater to consumers with different preferences.

Nike's design process is a vital part of their operations as they collaborate with production companies in Korea, China, or Vietnam. Instead of manufacturing shoes internally, Nike focuses on the design aspect. This approach enables them to specialize in innovative designs and enhance their expertise in creating athletic footwear.

Advancements in technology and innovative ideas.

According to the Nike 2013 Annual Report, research and development play a crucial role in Nike's success. The company aims to design products that enhance athletic performance, reduce injuries, and provide utmost comfort. To achieve this goal, Nike closely collaborates with experts from various fields such as chemistry, exercise physiology, engineering, industrial design, sustainability, and related disciplines. This collaboration enables them to gather valuable insights for improving their footwear and apparel. One notable accomplishment of the brand is the incorporation of innovative air cushion shock absorption technology in their basketball shoes. Additionally, Nike offers a wide selection of colors and styles for popular shoe models like LBJ, Kobe, and KD.

Sustainable Competitive Advantage

Nike, a well-known global brand and the preferred choice for many shoe buyers, has gained significant visibility through its sponsorship of prominent athletes like Jordan and LeBron James. According to Nike's 2013 annual report, they have consistently grown despite competition from Adidas, Puma, and Reebok, maintaining the largest market share. Internally, Nike is recognized for its commitment to producing high-quality products. They have their own R&D center dedicated to developing new technologies such as air cushion shock absorbers and environmental technology that are integral to their products. Nike continuously incorporates innovative features into their offerings, including knitting technology in their shoes. Furthermore, they employ imaginative marketing and advertising strategies to enhance brand awareness and equity across their diverse product range. One example of this is their partnership with skilled golfer Tiger Woods in promoting their golf line.

Nike employs professionals in various departments such as distribution, marketing, finance, product management, research and design, information technology, and product development to sensitize the market about its diverse products. Additionally, Nike offers a summer internship program lasting for three months to give students an insight into its various brands. This diversification strategy is further achieved through mergers, joint ventures, takeovers, and acquisitions. In order to continue producing unique products like the cushioning system in shoes, Nike has an R&D unit called the innovation kitchen located in its main parent company in Oregon.

Key Success Factor

Nike's Jordan Brand is a crucial part of their success, with popular shoes that are loved worldwide. In the US, they hold a 10.8% market share in 2009, almost doubling Adidas' sales (source: http://sports.sina.com.cn/k/2009-09-12/16084584096.shtml). This highlights the significance of Jordan Brand for Nike. Young people especially favor this brand due to its stylish and comfortable shoes, particularly with the use of air cushion technology in basketball footwear. To ensure product excellence, Nike has a team of specialists in various fields like biomechanics, chemistry, exercise physiology, engineering, industrial design, sustainability and related areas. They also collaborate with athletes, coaches, trainers, equipment managers orthopedists podiatrists and other experts to improve designs materials concepts manufacturing processes and compliance with safety regulations worldwide (Nike Annual Report). Advertisements play a vital role in the athletic apparel industry as consumers heavily rely on catalogs and online promotions.

Nike has a variety of endorsers like Jordan, James, Durant, and others, attracting many customers to their brand. They also have an online store where you can purchase various items. Additionally, customers receive email notifications before new product releases. Nike's impressive advertising reaches not only online platforms but also everywhere else.

On the other hand, Adidas is a well-known company globally but has experienced a rapid decline in market share recently. This is mainly because Adidas's endorsers are not as famous as those of Nike. Some of Adidas's endorsers include Yao Ming, A.I., D.Rose, and others; however, they have either been injured or retired. Despite its well-known quality and technology, Adidas has lost out due to its endorsers.

New Balance (NB), renowned for being the most comfortable shoes available incorporates various new technologies such as BIOSHIELD, ABZORB EX, REVAX, ENCAP etc. It is popular among young people who often wear NB shoes on the streets—presenting a significant market opportunity for NB.

Creating a Strong Plan for Strategy

A strategy plan is essential for business success as it enables the company to stay focused on its mission, goals, and objectives while offering guidance in the right direction. The goal of the strategy plan is to establish a competitive advantage by creating a vision and mission statement, setting objectives and goals, conducting SWOT and competition analysis, and formulating strategies. To evaluate Nike's uniqueness and distinctive characteristics compared to others, I will utilize the Five Forces Model.

Below, we have outlined our vision, mission, goal, and objective:

According to the Nike Help Center, Nike's vision is to inspire and innovate for every athlete worldwide. This vision is rooted in co-founder Bill Bowerman's belief that anyone with a body is considered an athlete. With this belief driving their mission, Nike aims to become the leading global sportswear brand. To achieve this objective, they strive to minimize manufacturing costs and maintain reasonable prices, enabling them to enter markets in less developed countries. These markets hold potential for economic dependence on the industry, as stated by Wiki Answers.

SWOT Analysis.

Nike, a leading global brand for sportswear listed in the 'Fortune 500', distributes its products worldwide and has established strong brand recognition through robust marketing campaigns. Instead of owning factories, Nike strategically partners with OEM to handle manufacturing operations. The company has contracts with over 700 shops in approximately 45 countries and maintains offices in these locations. Additionally, Nike operates retail stores such as Niketown for direct product sales. The widely recognizable 'Swoosh' logo is even permanently inked on Phil Knight's ankle. However, despite offering a diverse range of sports products, Nike heavily relies on its share of the footwear market for revenue generation which exposes the organization to potential erosion of market share. This dependency also puts the organization at risk of squeezed margins due to intense competition among similar sports retailers considering the high price sensitivity within the retail sector.

Opportunities in product development provide Nike with various chances for growth. The brand's owners passionately defend Nike as not just a fashion brand. However, even though consumers may not always buy Nike products solely for sports participation, some argue that Nike is indeed seen as a fashion brand, particularly in youth culture. This situation creates opportunities as consumers may consider replacing their products if they become unfashionable before wearing out. Additionally, there are possibilities to expand the product range by developing sportswear, sunglasses, and jewelry. These high-value items often generate high profits. Furthermore, there is potential for international expansion, leveraging the strong global brand recognition of Nike. Numerous markets, including emerging ones like China and India, have a growing affluent consumer base with disposable income to invest in high-value sporting goods.

There are global marketing events such as the World Cup (soccer) and The Olympics that can be utilized to support the brand. However, Nike is exposed to threats due to the international nature of trade. It deals with different currencies, resulting in unstable costs and margins over time. This exposure could lead to manufacturing and/or selling at a loss. This issue is faced by all global brands. Additionally, the market for sports shoes and garments is highly competitive. The model developed by Phil Knight during his time at Stamford Business School, which involves manufacturing high-value branded products at a low cost, is now commonly used and no longer provides a sustainable competitive advantage.

Competitors are emerging to challenge Nike's dominance and gain a larger portion of the market. As mentioned earlier in the weaknesses section, the retail industry is experiencing increased competition in terms of pricing. Consequently, consumers are actively seeking out better deals. For example, if one store sells a pair of sports shoes at a certain price, a consumer may go to another store nearby to compare prices for the identical item and purchase the more affordable option. This sensitivity towards price among consumers poses as an external threat to Nike. (Via Nike 2013 Annual Report)

The provided text contains links to three websites: http://www.quality-assurance-solutions.com/swot-analysis-nike.html, http://www.ukessays.com/essays/marketing/account-management-provides-special-treatment-in-marketing-administration-marketing-essay.php, http://www.marketingteacher.com/swot/nike-swot.html

Analyze the Competition. Nike faces strong competition from Direct competitors such as Adidas, New Balance, and Li Ning. These companies offer similar products to Nike, but each has their own key success factors. Adidas, in particular, has been a prominent competitor of Nike for over 40 years. However, in recent years, Adidas's market share has declined rapidly. This can be attributed to the fact that Adidas's endorsers are not as famous as Nike's endorsers. Some of Adidas's endorsers include Yao Ming, A.I, Derrick Rose, and others, but they have either been injured or retired. Despite Adidas's renowned quality and technology, they have suffered because of their endorsers. On the other hand, New Balance is renowned for providing the most comfortable shoes. They have introduced new technologies such as BIOSHIELD, ABZORB EX, REVAX, ENCAP, and more. New Balance shoes are especially popular among young people; it is common to see many young people wearing New Balance shoes on the street.

IT’s a massive market for New Balance. They face strong competition from brands like Under Armour and Skechers, who offer similar apparel and footwear products and go head to head with Nike in some areas. Additionally, indirect competitors like The North Face and Columbia, both widely recognized outdoor brands, provide windbreakers and accessories that rival Nike's offerings, impacting Nike in certain overlapping markets. In conclusion, Nike excels in terms of quality and endorsements, having secured deals with significant players and teams worldwide. Adidas, although lacking a dominant position, performs adequately across all factors. The standout feature of New Balance lies in its technology, as it is capable of creating particularly comfortable sneakers. (New Balance has never signed any endorsers since its inception, thus slightly affecting its overall score)

Cost leadership is a strategy that focuses on being the lowest cost producer in an industry.

Nike employs a Business Simulation Strategy by utilizing OEMs to carry out its production and by primarily relying on franchised retailers to sell its products. This approach allows Nike to minimize costs by avoiding the need for factories and physical stores, resulting in lower overhead expenses. Additionally, Nike benefits from having the ability to easily switch suppliers to ones with lower costs, thereby ensuring continued access to factors of production at low prices. The scale of Nike's operations relative to its suppliers grants the company a significant advantage in negotiating production terms. Given Nike's considerable product volumes and its rigorous selection process for manufacturers based on cost-effectiveness, coupled with the fact that the success of their suppliers heavily relies on Nike, these suppliers have limited room for bargaining power when it comes to raising prices. Consequently, Nike is able to consistently maintain low production costs.

Nike's use of hardware and software technology, along with their focus on using superior materials and fostering an innovation culture, provides them with a competitive advantage in terms of cost savings. However, these advancements typically only result in short-term savings due to industry competition, although their creative nature does have long-term benefits. Nike has been able to reduce costs by discontinuing certain endorsements, such as the Italian soccer team, which research showed was not yielding the desired outcomes. Notable endorsers like Michael Jordan, LeBron James, and Kobe Bryant have been retained while others, like the Italian soccer team, have been eliminated, resulting in savings of over $100 million. Nike has proven to be highly effective in cost control. (Nike 2013 Annual Report)

Distinctiveness.

Nike utilizes a differentiation strategy to gain an advantage in the expansive footwear market. In addition to footwear, the company offers a range of products including clothing, equipment, and accessories. This strategy involves creating consumer goods and services that are perceived as high quality or possessing unique features. By continuously innovating cutting-edge athletic shoes, Nike employs bold "guerrilla" marketing techniques to advertise their products. The marketing approach aims to persuade customers that Nike's shoes are not only superior, but also represent a fashionable lifestyle centered around athletics or sports.

The company has distinguished itself by using highflyers to differentiate sporting disciplines, allowing it to reach its target market. Examples of highflyers include the Brazilian national soccer team and Michael Jordan. Nike's advertisements also set it apart from others. They showcase not only their technology but also leading endorsers such as Michael Jordan, LeBron James, Kobe Bryant, and Cristiano Ronaldo. In addition, their ads are known for their creativity and ability to leave a lasting impression on viewers. (Via Nike 2013 Annual Report) Focus.