ECONOMIC CHALLENGES
Nike is growing rapidly in the international market, which now accounts
more than 55 % of its revenue.
The situation of unviability and high price of the high quality brand
“Adidas” provided a very good environment for Nike brand to take root very
quickly due to its availability and affordability and also made a lot profit.
Besides, it suffered financial challenges due to the CEOs decision to solve
BRSs financial problems by offering 30% of the company to the public in
May 1970 failed.
Also the revenue was not made as expected in china due to the cultural
barrier. Nike goes on the loss as the expected revenue growth was 18% but
posted a 4% growth.
From 2008 to 2009, Nikes annual revenue had climbed 3% to $19.2 B.
however, it again fell in 2010 by 1% to 19B. Once the world economy grew
more stable, Nikes yearly revenue has also kept improving.
POLITICAL CHALLENGES
Nike being number one sportswear in the use not only positioned as a
market leader but also leaders in the industry labor practices.
It is assumed that if the political states are down, business tend to flourish.
An open minded government and stable political environment offers
better opportunities of business and growth of Nike. Although Nike had
suffered bad publicity over the last decades.
Nike Company’s external environment had a lot of political pressure. The
company suffered entry mode regulations, intellectual property rights
were infringed on when tiger took it to court.
In the past Nike has faced several lawsuits related to child abuse and
wages. Though the company did not face any issue with the taxation laws
in California
. Nike stake holder sued it claiming that Nikes executives withheld
negative news and profited from the results. The allegation stated that the
actions of Nike led to increases in stock which caused issues in the
process of growth of the company.
Since large percentage of footwear is made in other countries included in
the TPP fact and about 40% of the sneakers are imported from Vietnam,
tariffs are already high ranging from 4% or 40% with President Donald
trump signing an executive order signaling the US will not be joining the
TPP, Nikes contingent promise looks dead on arrival. Because trump
proposed border tax there is already high tariffs imposed on the shoes.
CULTURAL CHALLENGE
From market to market the cultural and social structure can be vastly
different. Nike culture is consdired to be somewhat insular and protective.
People are looking for product that is despite being athletic are fashionable
and stylish in china,
Nike expected to grow the revenue of 18% but sales in china fell for five
straight quarter. It didn’t go as per the expectation in china because china
focused more in the academic achievement rather than sports. Although
culture of biking to work exist in china but people do mostly in street clothes
instead of spandex. This is because Nike could not match with the culture of
china.
The departure of two executive at Nike speaks to a larger cultural issue
ETHICAL CHALLENGES
The company lacked the ability to monitor the ability of the working
conditions on their supplier’s factories.
Nike faced issues with no’s and labor activists since the laborers were
provided with poor working conditions that was below the norms accepted
in the developed world.
In Korea they have to work 17 straight hours in silence. The wages level of
developing or underdeveloped countries were comparatively low than
developed countries.
They faced the problem of Child labor in many countries are overlooked by
Nike and children as young age are made to work long hours.
Their operations in Vietnam posed some environmental, health and safety
issues. Skin and breathing problems are observed in factories that make Nike
products.
Also Nike sells its products at a high price, while we all know that products
are manufactured for low price.
TECHNOLOGICAL AND ENVIRONMENTAL CHALENGES
The factor affecting the marketing strategy could be the technology, which is
improving every day.
For marketing Nike is using internet web mode, any future marketing
strategy should consider telecommunications and technology advancement
as they can go twitter, Facebook as these websites are mostly accessed by
youngsters.
Social media allows things to blowup away faster than ever. Nike is doing
well with sing media to build their brand, but it can be a double edged sword
if used incorrectly
Nikes mass production factories are, without a doubt, harming the
environment. Not only do they release plenty of aerial pollution like most
factories, but Nikes production centers occasionally go as far directly
polluting rivers.
RELATE THE COMPANY WITH GLOBALIZATION
Globalization occurs as more connections are made between countries
through trade and communications. It can bring wealth but it also causes
inequalities.
Nike links many parts of the world. Its headquarters and much of its
research take place in Beaverton, Oregon, in the use. The rubber for its
trainers comes from Malaysia and Indonesia and the cotton comes from
turkey, India, and the use.
Its products are manufactured in Indonesia, china, Pakistan, the Philippines
and Vietnam, where labor costs are cheaper. Nike have over 648 factories
with 800000 workers in 45 countries including china, Indonesia, Vietnam,
Italy, Philippines, Taiwan, and South Korea.
Besides Nike has manufacturing agreements with independent factories in
India and Latin America like Brazil, Mexico and Argentina to produce
footwear for sale primarily within those countries.
Nike uses its involvement in multiple countries to gain the comparative
advantage. It can be said that most the the Nikes product are produced
usually outside the US. In the United States, Nike products are sold through
about 20000 retail in the worldwide; the company products are sold in about
110 countries.
At the 1972 us Olympic trials the Nike brand is promoted for the first time;
company enters its first foreign market, Canada.
Roughly 42% of Nike brands sales is coming from the US and 27% from
Europe. Growth should be more heavily weighted to developing regions,
with particular strength coming from the greater china and emerging
markets.
