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Industry

Porter’s five forces analysis of Nike Inc. helps in comprehending this industry and how it operates.

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Porter’s five forces analysis of Nike Inc. helps in comprehending this industry and how it operates.

Competitive rivalry

There is high competition in the sports industry following the existence of multiple international companies that produce the same products, particularly those that are competing with Nike. Nike’s main rivals are making the competition to be intense, are Adidas, Reebok, FILA, Puma, and Under Armour, among others. These companies are competing for a significant market share, even though it is saturated. However, Nike has gained some upper hand in this market since it is leading in the production of sports apparel with Adidas coming in second. Nike is holding a more significant market share in all sectors of production, and its competitors continue to invest heavily, making the competition to be intense. However, Nike has a strong brand even with the strong competition; it still standouts.

Bargaining power of suppliers

It is worth acknowledging that the bargaining power of Nike’s suppliers is significantly low. Nike is a global brand, this is what makes the bargaining power low, and several companies are interested in creating a connection or link with such companies. Nike products are manufactured across 42 countries and 620 factories, making it have a wide range of suppliers interested in their products. This makes Nike dominant since suppliers cannot exert pressure on it. The company is very flexible as it can quickly change from one supplier to the other due to the ease at which it manufactures its shoes and apparel. The biggest drawback that Nike has ever experienced was when it was exposed for using sweatshops to sell its products in the developing countries. It was a big blow to Nike as a company making it change how it is manufacturing its shoes. The company learned a lesson about evaluating the suppliers they are dealing with as such accusations can ruin the image of the company. However, Nike diversity in substitutes allows it still to hold the majority of leverage over its suppliers.

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