5 Forces analysis on the athletic footwear market in UK

This report provides a comprehensive analysis of the athletic footwear market in UK, including a 5 Forces analysis, assets and competencies of Nike's internal environment, and a SWOT analysis for Nike (UK) with future strategies.

Business Environment

Table of Contents
1) 5 Forces analysis on the athletic footwear market in UK.......................................................1
2) Assets and competencies of Nike’s internal environment......................................................4
3) SWOT analysis for Nike (UK) and future strategy that can be pursued................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Athletic footwear industry offers four variety of products and it includes comprise of
Insert shoes, sport shoes, backpacking shoes and hiking shoes. Present report is based on Nike
which is leading company that offers superior quality products for its business consumers. The
report describes about five force analysis of the athletic footwear market of UK. Along with this
analysis and discussion of assets and competencies of Nike's internal environment has been done
by making use of appropriate tool. In addition to that SWOT analysis has been conducted and
future strategy has been recommended for the firm.
TASK 1
1) 5 Forces analysis on the athletic footwear market in UK
Footwear industry of UK is growing at a faster rate and it is offering success and growth
opportunities for various organizations that are working in this sector. It is critical that global
player firms should adopt Innovative approach for staying in market. It will also support for
gaining competitive advantage for the business and ensuring long term survival and growth in
market. Porter's five force analysis supports for evaluating different factors that gives impact on
the performance of this sector (Craig and Campbell, 2012). Other than this it also aids in
identifying elements that gives impact on the performance of the company. Analysis using
porter's five force is as mentioned :-
Bargaining power of buyers :- Buyers in the footwear sector have large number of options to
choose their products and due to that bargaining power of buyers is high. More preferences are
given by them for price and quality of the products and they give preferences for purchasing the
products which are of superior quality (Hollensen, 2015).
Consumers posses high control in this market and there are large number of substitutes
and competitors that are available in the market. It enhances power of the buyers to purchase
superior quality products in affordable price ranges. Large number of options are available for
buyers and due to that bargaining power of buyers becomes high. Large number of customer
purchase products from the footwear industry and due to that market size is large and it provides
opportunity for the business firms to sell large volume of the products. Quality of footwear
products are given more preferences (Huang and Sarigöllü, 2012). Hence it can be ascertained
that organizations working in this sector can adopt innovative practices so that satisfaction level
of buyer can be obtained by offering them superior quality products. Products are given more
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preferences by buyers and due to that it has become essential that strategic approaches should be
used by business firms so that consumers can be attracted towards selling products that are being
offered by the company (Lee and Carter, 2011).
Bargaining power of suppliers :- Bargaining power of suppliers is low as there are large
number of suppliers that are selling their products and due to that suppliers have vary little
power. Medium control is hold by them in market and majority of the activities in market are
regulated by market forces and consumers (Luan and Sudhir, 2010). Raw material for
manufacturing footwear products is easily available in the market and due to that it has becomes
essential that suppliers should take strategic approaches for selling their goods to companies.
Moreover, outsourcing can also be chosen by buyers so that they can sell large amount of
products without facing much difficulties and challenges. There are some elements that gives
impact on the bargaining power of suppliers and it includes low cost of switching due to which
difficulties are faced by suppliers in existing in the market (Nwokah and Ahiauzu, 2009). Other
than this volume of the products is also critical for them and due to which also low control is
hold by suppliers. In addition to that diverse distribution channels of the company also creates
difficulties for suppliers to sell their products in market. Along with this low concentration of
suppliers and rivalry among them also reduces their power in market. It creates advantage for the
companies that makes use of power enjoyed by the suppliers.
Threat of New entrant :- Huge success and growth opportunity that is provided by footwear
sector aids for attracting large number of firms for executing their operations in this industry.
Many global brands are already operating in this sector and small medium size firms are also
trying to operate their functions in this industry. However, any new entrant firm that is trying for
starting their operations in this industry has to face diverse barriers and due to that difficulties are
faced by them in performing their functions (Park, 2014).
Government rules and regulations needs to be followed and it makes it critical that all the
guidelines should be followed properly so that new companies can establish their business
successfully in footwear market. New companies have to face huge challenges and competition
and due to that it has become vital for them that they should develop and design innovative
products so that large number of consumers can be attracted for selling their services. It is vital
that strong brand name should be hold by companies so that buyers can be attracted for selling
the products that are being offered by the company.
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It is critical that strong distribution network should be hold by companies so that products
can be sold to large number of consumers. Sales people should be trained so that distribution
network of the company can be make stronger. It will aid for selling large amount of products
that are being offered by the firm. Other than this high capital is required so that new entrant
firms should successfully start their operations (Pitta, 2012). It is vital that funds should be
raised so that all the required functional activities of the firm can be executed and growth of the
company can be ensured. Footwear industry requires economies of scale and due to that demand
and supply in this sector gets affected. New entrant firms also needs to support for gaining
economies of scale so that profitability and revenues for the companies can be enhanced. Other
than that one major challenge that is being faced by existing firms is that customers are loyal
towards existing brands and it is difficult to change their preferences. All are factors that creates
challenges for the firms and due to that difficulties are faced in starting operations in footwear
sector.
Competitor rivalry :- Intense competition is faced in footwear sector of UK and it aids for
increasing the competition in market area. Leading global brands such as Nike, Reebok and
Adidas are struggling for market share and due to that impact has been observed on their overall
performance. Competition rivalry is high and it makes is vital that strategic approaches should be
used by business firms for gaining success for the company (Sadjadi, Yazdian and Shahanaghi,
2012).
Rivalry among existing players is high and they struggle for gaining market share in this
sector. Prices are considered as elastic and it aids for enhancing demand for products. It has
become critical that companies should make use of innovative products so that success and
growth for the firm can be ensured. In addition to that it is critical that research and development
departments of the company should take strategic approaches for adding new features and
attributes in the existing products that are being offered by the company (Walker and Mullins,
J2011).
It will aid for offering superior quality products for the consumers and new variety can
also be launched in the market. There are different elements that gives impact on the competition
that prevails in this sector and large industry size of footwear sector makes the existing
competition more intense and critical. Other than this exit barriers for companies are low and due
to that intensity of rivalry is high. In addition to that footwear sector is growing at a faster pace
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and many firms are trying for starting their operations in this sector. All the factors combine
together for increasing the rivalry in this industry.
Availability of substitute products :- Customers have options for deviating in the footwear
sector and due to that availability of substitutes is high. Large number of companies are making
efforts for executing operations in this industry and it is helping for enhancing choice for buyers
to sell their products in market (Wrenn and Mansfield, 2014). Uniqueness and quality of product
makes it differ in market and on the basis of that sales of the products can be enhanced. Other
than this there are large amount of resources that are available for business for adding variety to
the products. In addition to that large variety of shoe products that are available in market makes
threat of substitute products high. Availability of substitute products in limited number provides
platform for the companies tom make improvements in their products so that satisfaction level of
buyers can be gained. Company can take advantage of this opportunity so that more number of
consumers can be attracted for selling products that are offered b y the firm.
2) Assets and competencies of Nike’s internal environment
There are different type of competencies that Nike has. With time the competencies raises
and is changes into a competitive advantage. There are different type of assets and competencies
that Nike possess. This has enabled them to be one of the worlds well know and one of the
leading sports organizations (Klapper and Parker, 2010 ). Further, there are different type of
tools that are helpful enough to conduct internal audit with the help of which competencies and
assets can be determined. With this respect, one of the effective source is or tools for internal
auditing is marketing mix. This is a type of strategies that enables to determine the areas or the
performance of Nike. With this respect, below given are the marketing mix for Nike:
Product: Growth of Nike depends upon the type of changes that they conduct in the
services and the product they make. As per the analysis made, with time there are different set of
changes that are conducted by Nike. They aim at understanding the needs and requirement of
customers and accordingly make changes. This element enables to enumerate the organizational
outputs that is being offered to customers. As per the type of products that are delivered by the
firm, there are three type of categories that Nike product mic is categories. They are Shoes,
Apparel and equipment and accessories (Iskanius, Page and Anbuudayasankar, 2010 ). There are
different type of companies that deliver their customers with similar products and services like
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Nike. With this respect, the products that are delivered by Nike is of high quality. Further, with
time, there are number of product line that firm has added. With this respect, it includes tennis
shoes, athletic shoes, etc. All these have boosted up the customers requirements and aimed to
satisfying them.
Price: Price play vital role in changing the buying behaviour of customers. In order work,
price can be determined as an effective factor on which a customer decides whether he/she is will
purchase the product or not. As per the findings made, it is identified that Nuke make use of
value based pricing strategy (Becker, 2017 ). This is helpful to ensure the growth in its profit and
sales. Further, there are different type of price range that delivered by Nike. The more quality
increases the more will be the price. With the brand name it has, customers trust the price that is
being sold. Further, with the help of value based pricing strategy, it enables to protect customers
in with the product that is being delivered to customers. Even at the highest price range,
customers are willing to make their purchases and they get to satisfied that requirement. The type
of pricing strategy that is being used by Nike is effective enough to raise the sales and
profitability of the firm. Further, they are also able to develop strong customer base.
Place: Nike has reached out all the different market around the world. They make sure
that all the products and services that are being delivered reaches customers. More specifically,
there are different type of strategies that are implemented with the help which they are able to
reach out customers. In this context, it includes strategies like Retails, online stores, Nike retail
outlets. All these are helpful enough and enables to reach out customers. There are many retails
that are helpful enough to show the products that are being provided by the firm. With time there
is a raise in use of internet (Chavis, Klapper and Love., 2011 ). With this respect Nike make use
of online services that are helpful enough to make sure that deliver their customers services and
products. In addition to this, Nike has their own physical store around the world and they are
helpful enough to deliver the products and understanding the requirement of customers. Main
selling Nike does is with the help of their offline store.
Promotion: There are different type of tools that are helpful enough to convey proper
information to customers. There are different type of products that are introduced by the firm. In
order to deliver proper information, Nike make use of effective marketing strategies and this is
helpful enough to raise their sales and profitability. This is one of the competencies that Nike has
as they consider the marketing as an effective tool that enables to attract customers. With this
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respect, they make use of social media, newspaper, radio, television, etc. All these are helpful
enough to raise the sales and profitability (Welford, 2013 ). Further, with the help of social
media, it enables to have direct interaction with customers. As per the issues that are faced by
worker's management tent to make changes in the product and services with the help of which
they aim at satisfying their customers. There are advertisement and videos that are used by firm
to attract and develop curiosity for within the mind of customers for the product.
3) SWOT analysis for Nike (UK) and future strategy that can be pursued
There are many strength and other areas through which they can raise their performance
level. With this respect, below given are the SWOT analysis for Nike:
Strength:
Design: With time there management conduct frequent research and survey. This is
helpful for them to understand the taste and preference of customers. This way they come up
with new and innovative products that are helpful enough to attract customers . Further, they
spend highly on research and development and they way they are able to make innovation for the
products and services.
High quality: Nike is well known for its high quality services. They make sure that all the
products that they develop is of high quality. Further, they also charge for the product that are of
high quality (Craig and Campbell, 2012 ). It has high brand recognition and this is due to its
quality services that symbol that it has.
Fast service: There are about 180 countries in which they deliver their services. In
addition to this, also make use of online selling and these are helpful to consider the requirement
so customers and deliver the services accordingly.
Weakness:
The income of the business that is earned by the firm totally depends up the share that
cited firm holds in the market of footwear market. It is a type of vulnerable situation in case there
is any type of issues in related with market share erodes.
Retails: Retail sector is highly price sensitive. Further most of the income to Nike is
earned by selling to retailers (Commander and Svejnar, 2011). There are condition in which the
market is not effective or any type of inflation take place, then it has negative impact over the
business.
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Price competition: The price of the product is high when compared with other companies
products. This is a type of weakness and all people are not able to afford the products. If they
would have, then they sale will raise and more customers make purchases.
Opportunity:
Product development: There are different type of improvement that can be made by the
firm in their product. Further, there are various type of products that are delivered by the firm.
By making innovation s in the products, firm will be able to attract more and more customers.
New product line: Nike has opportunity in different areas for sport. In this context, it
includes sport wear, jewellery, sunglasses, etc. (Gecevska, Chiabert and Cus, 2010 ). By making
new product line, firm will be able to develop their sales and profitability.
Threats:
Competition: There are many organizations that deliver their customers with similar
products and services. This is a type of threat that is faced by Nike. In this context, it includes
competitors like, Rebook, Adidas, etc.
Recession: In a market, if there are situations related to inflation, then it has negative
impact over the business. They will not be able to have sale sales.
One of the strategy that will be pursued by Nike will be starting up new venture. This can
be an effective strategy that will help them to cover other range of customers (Gecevska,
Chiabert and Cus, 2010). This way they will be able to attract more and more customers. More
specifically, they get in to sports wear.
CONCLUSION
From this report, it can be articulated that tastes and preference of customers taken place
frequently. It is important for the firm to make sure that they conduct market research so that
preference of customers can be determined. As per the findings, made, changes should be made
in products and services so that they will be able to develop strong customers. Further, social
media can be determined as one of the most effective source that enables to have direct
interaction with customers and enables to identify the issues that are faced by them. Further, the
price of the product deliver by Nike should be reduced as it will be helpful in attract customers.
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