The Nike Shoe Company
As known to all, international relations between commercial organizations is one of today’s strongest trends in business industries. The truth is that every single organization, whether small or large scale, is considerably involved in reaching the goal of being globally known through international trade. Just what is meant by the terms international trade, international relations, and international strategy; and how are they particularly related to each other? These questions shall be given answer through the discussion that follows through.
Business entrepreneurs around the world all have a common goal, to influence a larger scale of market who would appreciate their products and services thus giving them the opportunity of increasing their revenues and strengthening their chances of increasing their profitable gains as well.
This is the primary reason why it is an essential for entrepreneurs of the present-day business organizations to discuss to their employees the different aspects of international relations that particularly affects the major operations of the business that equips it with the necessary strength that it needs for further organizational growth in the future. The possibilities of both increasing the competence of the business in the field and making the aims of progress more efficient in becoming factual and practical for the organization to take. This is perfectly the same with the situational goals of Nike with regards their global relations.
THE Company: A Brief Description
Nike Shoe Company, Nike inclusive is a company that basically indulges in the designing, developing and international marketing of quality apparel, equipment, footwear, and accessory products. The company started trading actively in sportswear back in the year 1999. The footwear is precisely designed and manufactured for athletic use. A large portion of Nike’s products is however used for leisure and casual purposes. Nike inclusive operates it own subsidiaries for manufacturing and the distribution of sports apparel. The main competitors of this company are Adidas, Reebok among others.
Describe the market structure within which the company operates and the pricing strategies adopted by the company Nike operate in a very competitive field of business. For some reasons, the said industry of sport shoe production and distribution has already weakened through the years of operation. For this reason, companies hosting the said situation actually tried to access different procedures of marketing their products and their services to the society. The seasoned process of the appreciation that consumers have towards the said products actually makes it possible for the production activities of the said materials to fluctuate. (Porter 1985)
The selling price adopted by a company for its products directly affects the profitability and eventually the viability of the company. This area usually receives a lot of attention from Nike’s management. To ensure the viability of the company products in the market and rise above its competitors, Nike uses the following pricing strategies, (Thompson, and Strickland, 2001). Setting rather than managing prices; The brand manager adopts a reactive approach in making pricing decisions rather than a proactive approach.
This means that the setting of prices at Nike inclusive depends on the prices adopted by competitors and the sales figures that Nike has. Avoidance of customer value when pricing; It is not always accurate to predict the value that a customer has towards a given product. It is also not possible to quantify the value that the products give to customers. For this reason, Nike avoids the use of customer value when making pricing decisions. Although consumers may not buy a product whose price is higher than the satisfaction derived from the product , they will at all times purchase a product that has a price lower than its perceived satisfaction.
By avoiding this approach, Nike keeps off under pricing its products in order to maintain the brand equity and customer loyalty, (Porter, 1985). Establishing customer value for products; the brand managers at Nike inclusive rigorously engage in attempts to know the value that customers have for their brands. This is undertaken by carrying out detailed interviews with the customers on Nike’s brands.
Through this process, the organization is able to comprehend better with the needs and the demands of the people, their clients, who are the primary target of the changes that the organization particularly want to work on. The precise information obtained is used by brand managers to establish a basis for the pricing decisions in the company. Such information is reliable in developing an effective pricing strategy that is proactive. (McGahan, 2004).
The changing Global Economy Nike is keen on the changing global economy and has been seeking competitive advantage over its rivals. Several changes have taken place in the shoe industry and this has been greatly beneficial to the industry. These changes are; (Hunger, and Wheelen, 2003).
Rapid growth in footwear production
Manufacturers today must have flexible designs and high output. There is a massive increase in shoe designs increasing competition and volatility in the market. High innovation and quality designs are a must for success. . Producers have to be protective of their information and manufacturing technology. One of the main reasons for the success in seeking competitive advantage in the changing global economy is flexibility. Nike has at all times remained flexible in the changing market by subcontracting to international countries that have low cost of labor. Secondly, Nike highly focuses on differentiating of its products.
Rather than dealing in one line of a product, the company has diversified and differentiated the products it offers to the market. For instance, Nike began as small company that distributes sport shoes, however, as time passed, the developments began to grow thus giving the company a better reputation in the industry. Today, Nike is known in the industry as it produces and sells a variety of products ranging from equipment, clothing all the way to even offering accessories. This differentiation has enabled Nike to successfully obtain and gain loyalty from buyers on its brand. Certainly, register an increase in sales command a fine price for all the company products.
From the SWOT analysis featured within this paper, the different elements needed to be considered by Nike to face the global business competition has been carefully presented (Bakan, 2004, 66). From the said assessments, it could be observed that there is huge attention needed to be placed on the situation of the organization when it comes to cost alignment of both expenses as a balancing matter with that of the revenues gained by the company in an annual procedure. (Egan, 1998, 11)
Aside from financing, the process of marketing and product shifting should also be given clear attention as it also gives a fine description and certainty with regards the situation that the organization would likely face within the global picture of the international trade. The issue of globalization offers both threats and the opportunities to the current human generation.
Undeniably, the said progression of industrialization that affects the entire global operations of the trading industries bring an impact on how local business organizations work towards the dreams and goals that they have particularly set for themselves to reach (Goldman, 1999, 10). The consequences through in being involved in the said revolution of business systems in the society today involves the adjustments that organizations must take risk of to be able to jump into the bandwagon of international progress.
True, international business industries offer a larger market. The involvement of Internet and modern communication applications today within the systems of business connections worldwide has even made the said international commercial invasion a faster process of progress for entrepreneurial beginners in the said field. Understandably, to be able to gain progress, the risks and the opportunities should be grabbed by each individual business organization for the sake of part taking in the process of globalization of industries today.
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- Egan, Timothy.(1998). “The swoon of the swoosh”. New York Times Magazine.
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- Grant, R.M. (2005) Contemporary Strategy Analysis. Blackwell Publishing Ltd., Oxford (U.K.)
- Hunger, J. and Wheelen, T (2003) Essentials of Strategic Management. New Jersey: Pearson Education Inc.
- McGahan, A. (2004) How Industries Evolve – Principles for Achieving and Sustaining Superior Performance. Harvard Business School Press, Boston.
- Porter, M.E. (1985) Competitive Advantage. The Free Press: New York.
- Thompson, A. and Strickland, J (2001) Crafting and Implementing Strategy. Irwin McGraw-Hill.