Porters Five Forces framework is used by companies to analyse industry attractiveness by assessing the five competitive forces. These are; threat of entry, bargaining power of suppliers, bargaining power of buyers, threat of substitutes and competitor rivalry. Porter stipulated that in any industry where the five forces are high, the industry is not attractive. High rivalry, high bargaining power of buyers and suppliers, high threat of entry and substitutes squeeze the profitability of an industry.
In this report, the author will use the Porters five forces framework to help us to recognize and analyze the important forces that determine the profitability of the global athletic wear industry industry. Using Porters five forces, we will evaluate the nature of competitiveness in the athletic wear industry and develop strategies for Nike accordingly.
Nike Porters Five Forces Case Study
Key Learning Outcomes
- Use Porters five forces model to analyse an industry on the basis of the five competitive forces.
- Analyse the global sports apparel retailing industry and how the five forces have affected Nike and rival firms like Adidas, Reebok, Puma, Under Armour etc. and the impact on industry structure, attractiveness, and profitability.
- Understand how Nike has managed to defend against intense competition from Adidas, Under Armour and Puma and the strategies it uses to create 'blue oceans' that are defensible, helping it capture market share and maintain competitive advantage.
Nike is the largest apparel and footwear company that manufactures a wide range of products mainly athletic footwear, apparel and equipment. It was founded in 1964 as Blue-Ribbon Sports by Phil Knight and Bill Bowerman with its headquarters in Beaverton, Oregon. Key product categories are running, basketball, the Jordan Brand, soccer, training and sportswear. Nike has more than 1,150 retail stores in the United States and internationally, and employs approximately 76,700 workers worldwide. In 2021, Nike's global revenue amounted to about $44.54billion U.S. dollars., up from $37.4 billion in 2020 (Statista 2020c). This makes Nike the biggest retailer of athletic apparel and footwear in the world. As of 2021, its global market share of athletic footwear stood at 27.4%.
In the following sections, the author examines Nike through the lens of Porters five forces to assess how the five forces affect Nike and the sports clothing retail industry.
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