Report on the Global Business Strategy of Nike in the United Kingdom
01 Introduction
1.1 Purpose 1
1.2 Data collection method 1
1.3 Major findings 1
1.4 Suggestions 1
1.5 Limitations 1
1.6 Report Structure 2
02 Strategic Environment Analyses
2.1 Analytical tools
2.1.1 PESTEL analysis 3
2.1.2 Porters five forces 3
2.1.3 VRIO analysis 4
2.1.4 SWOT analysis 5
2.2 Internal Environment Analysis of Adidas
2.2.1 VRIO analysis 5
2.3 External environment of Adidas in UK market
2.3.1 Porters five forces 7
2.3.2 PESTEL analysis 8
2.4 SWOT analysis 9
03 Company Performance review
3.1 Overview of Adidas AG 10
3.2 Performance of Adidas AG in UK market 11
3.2.1 Consumer market of Adidas in UK market 11
3.2.2 Financial/ Sales performance of Adidas in UK market 12
04 Company Development Forecast in the UK market 13
05 Recommendation on Business strategy in the global market 14
06 References 15
List of Tables
Table 01. VRIO analysis of adidas 5
Table 02. Justification for resources and capabilities of VRIO 6
Table 03. Porter’s five forces 7
Table 04. PESTEL analysis 8
Table 05. SWOT analysis 9
List of Figures
Figure 01. The relationship between VRIO and company strength and weakness 4
Figure 02. Adidas retail sales in 2021 10
Figure 03. Consumer market of Adidas in UK market 11
Figure 04. Adidas sales performance in Europe 12
Report on the Global Business Strategy of Nike in the United Kingdom
Your Name
Subject and Section
Professor’s Name
July 3, 2023
Chapter 2: Strategic Environment Analysis. 4 2.1. Analytical Tools. 4 2.1.1. Porter's Five Forces Framework Analysis. 4 2.1.2. PESTLE Analysis. 6 2.1.3. VRIO Analysis. 8 2.1.4. SWOT Analysis. 9 2.2. Environment Analysis of Nike United Kingdom.. 11 Chapter 3: Company Performance Review of Nike. 12 3.1. In-Depth Overview of Nike. 12 3.2. Comprehensive Product Overview.. 13 3.3. Performance of Nike. 13 3.3.1. Market Share. 13 3.3.2. Sales and Profit of Nike. 14 Chapter 4: Prospective Company Development over the Coming Decade. 14 Chapter 5: Recommended Business Strategies in the Global Market 15 Chapter 1: Introduction a.1. Purpose This report provides a comprehensive strategic analysis of Nike's operations in the United Kingdom. As a leading global sportswear company, understanding Nike's strategic environment, entry strategy, and performance in the UK market provides valuable insights into international business strategy. The goal is to analyze the impact of COVID-19 on the business critically, forecast future development potential, and suggest investment strategies for the global market. a.2. Data Collection Methods In line with the purpose of this paper, the subsequent analysis is based on secondary data collected from various sources, including Nike's official reports and documents, industry reports, academic research papers, and reputable business news sources. Data regarding the UK's strategic environment was obtained from market research databases, governmental reports, and other relevant publications. a.3. Major Findings Our findings indicate that Nike's performance in the UK has shown resilience despite the challenges posed by the COVID-19 pandemic. Specifically, the company's strategic approach and entry mode have allowed it to adapt effectively to market changes. However, potential opportunities and threats lie ahead, detailed in the forthcoming chapters. a.4. Suggestions The report proposes recommendations to help Nike leverage its strengths, address weaknesses, and maximize future opportunities in the UK market. These recommendations are rooted in thoroughly understanding the strategic environment and market dynamics. a.5. Limitations The author of this paper provides that the main limitation of this study is its reliance on secondary data, which might only capture some nuances of Nike's operations. Also, the unpredictability of the ongoing COVID-19 situation might influence the forecasted future development potential. a.6. Structure To provide a comprehensive understanding of the company's global and regional capabilities, the report is structured as follows: Chapter 2 evaluates Nike's strategic environment in the UK, considering both internal and external aspects, along with the impact of COVID-19 on the business environment. Chapter 3 discusses Nike's initial entry strategy into the UK. Chapter 4 reviews Nike's performance, with a focus on the effect of the COVID-19 pandemic. Chapter 5 forecasts Nike's potential development in the UK for 5-10 years. Chapter 5 concludes with recommendations for Nike's future investment strategies in the global market. Chapter 2: Strategic Environment Analysis 2.1. Analytical Tools
This analysis employs four primary strategic analytical tools: Porter's Five Forces, PESTLE, VRIO, and SWOT. 2.1.1. Porter's Five Forces Framework Analysis
a) Competition in the Industry
The sportswear market in the UK is highly competitive. Nike is contending with other global powerhouses such as Adidas and Puma and fast fashion brands like H&M and Zara that have expanded into sportswear (Hiwale, 2022). According to a 2023 market research report written by Li (2023) for Euromonitor, while Nike holds a significant market share, competition remains high, necessitating constant innovation and strategic marketing initiatives.
Potential of New Entrants
The barriers to entry in the sportswear market are considerably high. Prospective entrants need significant capital for research, development, manufacturing, and marketing. Furthermore, building a robust distribution network and attaining brand recognition comparable to established players like Nike would take much work, making the threat of new entrants relatively low.
Power of Suppliers
Nike has a well-diversified, global supply chain, which mitigates the power of any individual supplier. However, as outlined in its 2022 Impact Report, Nike's commitment to sustainability has led to an increased focus on ethical sourcing (Mahirova, 2021). This shift, while advantageous for the brand image, could increase production costs if suppliers raise prices for sustainable materials.
Power of Customers
In the sportswear industry, customers wield considerable power. Brand loyalty is crucial, and here Nike has an advantage due to its iconic brand and loyal customer base. However, customers are also price-sensitive and have multiple alternatives, allowing them to shift their brand preferences based on price and quality (Gielens et al., 2021).
Threat of Substitute Products
The threat of substitute products is significant. The market is flooded with brands offering comparable products, often at lower prices. This situation is compounded by the athleisure trend, where fashion brands outside traditional sportswear create products that customers may choose as substitutes. Nonetheless, given that Nike's market share of around 38.23 of the market, around 96% brand awareness in the United Kingdom, and a relatively low price which makes it accessible to most markets, this gives the brand a low threat of substitute products (Sher, 2023).
2.1.2. PESTLE Analysis
a) Political: The political landscape in the United Kingdom is generally stable, providing a favorable environment for businesses such as Nike to operate and flourish. Nevertheless, the aftershocks of Brexit and the ensuing changes in trade policies might significantly affect Nike's operational costs, primarily if tariffs on imported goods surge (Emery, 2019). The evolving political dynamics necessitate vigilance and proactive mitigation strategies to circumnavigate potential challenges.
b) Economic: The economic health of the UK is a crucial driver of consumer spending, significantly impacting Nike's sales. Data from the Office for National Statistics exhibits a consistent economic recovery following the downturn triggered by the COVID-19 pandemic, with consumer expenditure on an upward curve (Victor et al., 2021). As disposable incomes rise, this could boost Nike's sales, underscoring the importance of closely monitoring economic indicators.
c) Socio-cultural: Britain's robust sporting culture, with a special focus on sports such as football, cricket, and rugby, augments demand for sportswear. The society's shifting trends towards health consciousness and fitness, further catalyzed by the pandemic, could also propel the demand for Nike's offerings. However, the increasing consumer consciousness around sustainability and ethical manufacturing processes presents a challenge and opportunity for Nike to align its operations with these societal values (Allal-Chérif et al., 2023).
d) Technological: The rapid technological strides present many opportunities for Nike—these range from disruptive product designs to enhanced customer engagement through online retail experiences. The success of its digital initiatives, such as the Nike Training Club app, demonstrates the strategic advantage of weaving technology into its customer engagement strategies. This trend signifies a more tech-centric future for the company (Yan et al., 2022).
e) Legal: Compliance with the local and EU legal regulations is paramount. This encompasses labor, health, safety laws, consumer protection, and environmental standards. Non-compliance could lead to lawsuits, financial penalties, or damage to Nike's brand reputation. For instance, compliance with the EU's General Data Protection Regulation (GDPR) necessitates stringent data protection measures, and failure to do so can lead to severe repercussions.
f) Environmental: Amidst the growing public concern about climate change and environmental degradation, companies face increasing pressure to adopt sustainable practices. Nevertheless, Nike has demonstrated its commitment to this through its “Move to Zero” campaign, which targets zero carbon emissions and zero waste (Biron, 2019). Successful implementation can enhance its brand image, making it more appealing to environmentally conscious consumers.
2.1.3. VRIO Analysis
a) Value: The significant brand value that Nike has cultivated over the years is one of its most valuable assets. The iconic Swoosh logo and the inspirational "Just Do It" slogan have endowed Nike with unmatched brand recognition and respect globally, bolstering its competitive position.
b) Rarity: The distinctive design, leading-edge technology, and exceptional quality that Nike infuses into its products augment their rarity. Breakthroughs such as the Nike Air technology and Flyknit fabrics set the brand apart, carving a unique niche in the sportswear market. Collaborations with high-profile athletes and renowned designers further enhance the exclusivity of their product lines.
c) Imitability: Although it is possible to mimic Nike's products to a degree, it is incredibly challenging for competitors to duplicate the brand's holistic customer experience, substantial brand equity, and innovative technology. Furthermore, the strategic alliances Nike forges and its significant influence on popular culture are elements that competitors need help to replicate. However, this does not discount the large-scale fabrication of fake Nike products, one of the world's most counterfeited products (Kim, 2016).
d) Organization: Nike effectively marshals its resources and capabilities to bolster its strategic goals. The company’s organizational structure fosters efficiency and flexibility, enabling it to stay responsive to dynamic market trends. For instance, its successful embrace of digital transformation during the pandemic is a testament to its adaptability, highlighting its preparedness to navigate unforeseen challenges.
2.1.4. SWOT Analysis
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Strengths
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Weaknesses
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