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Management Challenges

The biggest threat for Nike lies in the fact that there have been observations regarding the changes in the consumer demand. It has been seen that the demand for branded athletic shoes is decreasing whereas people now prefer moderately priced casual shoes or sandals or work boots over what Nike sells. Nike will definitely have to overcome this threat by arousing the feeling of desire for its products among its potential target audience. Moreover, the increase in competition can even pose as a threat for Nike.

This price war or market share war is not necessarily Nike’s win every time. At times it might loose and that is when international competition becomes a threat. Furthermore, there are many eastern companies which are moving towards technological innovation in footwear. Nike has got to realize that now it has competition at home as well as abroad when it comes to innovation via technology. (Williams, 2000) PORTER’S COMPETITIVE FORCES Potential New Entrants There are no potential new entrants in the footwear market.

Even if there were, it would not pose as a threat for Nike as it is a very strong and established company, which has gained this recognition with years of innovation and inspiration.

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Any new entrant cannot easily break the brand name and the vast brand loyalty that Nike has created. Bargaining Power of Buyers Even though Nike has a strong brand name and brand loyalty exists among its target market, the buys still have a bargaining power. This is due to the intense competition that Nike faces from Reebok, Adidas, New Balance, K-Swiss, Fila, Asics, L. A.

Gear, Keds, Converse and British Knights. Prices have to be kept to suit the needs of the buyers, because the buyers have unlimited choice in brands when it comes to buying footwear. Bargaining Power of Suppliers There is no bargaining power of the suppliers because due to their backward integration strategy, Nike owns its suppliers. It can reduce costs as much as possible because it has ownership of its supplying operations. Threat of Substitute Products Nike does face serious threat of substitute products. Tiva’s sandals and Doc Marten work boots are gaining popularity in the youth market.

Nike’s target audience seems to be diverting away from branded athletic shoes. Rivalry amongst Competitors Nike’s major rivalry is with Reebok. There has always been a tug of war among these two companies when it comes to the gaining more market shares in the footwear industry. Moreover, as Nike is and plans to further go global, it faces competition from international companies. Beating these companies, which are local for their own residents, is a difficult task. (Certo, 1996) PORTERS COMPETITIVE STRATEGIES Initially, the company had adopted cost leadership. It did not spend much on manufacturing its products.

Rather, it scanned the globe for the most cost-effective manufacturing contract that it can get. It tries to cut costs highly while manufacturing its products. But with time, as competition increased and became intense, Nike changed its competitive strategy to differentiation. It aimed to develop and design products which will be unique and stand out themselves among its competitors. It spent heavily on R&D and brought new designs, new makes, new models and new styles in each of its footwear type. It extended itself to cater to the needs of athletes belonging to any sport.

CONCLUSION Therefore, as far as Nike is concerned, the management of the company has done a good job of planning, organizing, influencing and controlling since the company has excelled over the past some years. Their goals and objectives are clear from their mission and they know where to utilize resources and where to save their costs from. BIBLIOGRAPHY Certo, S. (1996) Modern Management. Prentice Hall Drucker, P. (1999) Management Challenges for the 21st Century. HarperBusiness. Williams, C. (2000) Management. South Western College Publishing

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