THE NIKE EMPIRE: ENSURING SUCCESS

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The Nike Empire: Ensuring Success

Milestone One

Karla Wilbur

Southern New Hampshire University

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            Introduction

This paper is written to provide my analysis of the Nike, Inc. Empire, how microeconomic principles impact the sustainability of the highly-successful firm and how the athletic footwear and apparel giant can ensure its future success in the industry. I will explore the supply and demand conditions for Nike’s popular products, evaluate the firm’s trends over the years and analyze their impact on the athletic footwear and apparel market. I will explore the price elasticity of demand for Nike’s successful products and illustrate the different factors that affect consumer responsiveness regarding product price variation and how it directly impacts Nike’s pricing decisions. I will also analyze Nike’s production costs, their trends and the impact that they have had on the retailers’ profitability over time. This will also include an analysis of Nike’s output decisions and how varying costs affect the firm’s final output. I will discuss the market share of Nike, Inc. and its direct competition while detailing trends and current percentages. Lastly, I will outline the barriers to entry in the athletic footwear and apparel market while analyzing the market structure and how it affects Nike’s ability to influence the overall market.

Keywords: price elasticity of demand, consumer responsiveness, pricing decisions, costs of production, profitability, output decisions, overall market, market share, barriers to entry, market structure.

History

            Headquartered in Beaverton, Oregon, Nike, Inc. is an American corporation specializing in the design, development, manufacturing and worldwide marketing and sales of footwear, apparel, equipment, accessories and services. Originally known as Blue Ribbon Sports (BRS),

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Nike was founded by Phil Knight and his track coach, Bill Bowerman in January 1964. Blue Ribbon Sports began its operation as a distributor for Japanese shoe maker, Onitsuka Tiger, which is known today as ASICS. Blue Ribbon sports welcomed aboard Knight’s formal rival, Jeff Johnson to the company in 1965 as a primary salesman, where he made the majority of his sales from an automobile at track meets. From there, Blue Ribbon Sports became incorporated in 1967 under the laws of the State of Oregon and conducts business under this name until approximately 1970, when Bowerman had a desire to grow the company and product. (“Nike FY2015 Annual Report” n.d.) In his effort to expand and improve the quality of his running shoe, Bowerman used his family’s waffle iron to create the prototype for the infamous Nike Waffle Outsole. This ingenious creation ultimately lead to the company’s new identity and name, Nike, Inc., which was inspired by Johnson and his continuous dreams of the Greek Goddess of Victory, Nike. Today, the Swoosh logo and the “Just Do It” slogan are a few of the world’s most recognizable trademarks. (Theodoros II, 2014)

            With revenue in excess of $24.1 billion (US) in fiscal year 2012, it is no wonder that Nike, Inc. is one of the world’s largest suppliers of athletic shoes, apparel and equipment.  Nike is known around the world for its branding, marketing its products under its own name (Nike Pro, Nike Golf, Nike+, Air Jordan, etc.). In addition to the highly successful sales of athletic shoes and apparel, Nike also operates its own retail stores.

            Nike’s advanced marketing strategy is a key component in the company’s success with many high-profile sponsors, athletes and professional sports teams around the world recognizing

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their product as the best in athletic footwear and apparel. The Nike Empire faces microeconomic challenges in its future, but as they believe that diversity and inclusion drives innovation, they will continue to be successful in the athletic footwear and apparel market. (Nike.com, 2017)

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References:

Nike FY2015 Annual Report (n.d.) Retrieved from

About Nike (2017) Retrieved from

A Brief History of Nike (2014) Retrieved from

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