Expansion of Nike into the Footwear Market

However, the company must now faces challenges which did not exist in this industry only a few years ago. The recent upheaval in financial markets in Asia (one of Nike's primary markets) has brought into question the company's ability to continue its global expansion plans. In addition, there is currently a worldwide glut of shoes, causing price and profit pressure throughout the industry. This research considers Nike's strategic position in light of various tools used in strategic management, including traditional competitive analysis, strengths and weaknesses, and financial analysis.

The company was begun in 1964 as Blue Ribbon Sports; the name was changed to Nike in 1978. It began as a partnership between an MBA candidate and a former track coach who had manufactured running shoes in his spare time. The company built its reputation on its technological breakthroughs in athletic shoes, and helped to introduce speciali

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cated in the Far East, to manufacture its goods. Some countries have strict tariffs and quotas with regard to American shoes, and some legislators have sought similar, retaliatory measures against products manufactured in these countries. Even though Nike is an American company, its shoes are produced in the Far East and it may fall victim to higher quotas and tariffs when it imports shoes. There is also increased tension in some of these countries where the shoes are manufactured; internal commotion could jeopardize production. Currency fluctuations also can play havoc with the company's income statement and balance sheet, although the company has effectively managed the effect of currency fluctuations on cash from 1994 to 1996 (1996 Annual Report, 1996, p. 19). Nike's strongest opportunities are in the international arena and in the apparel market. Nike enjoyed a 97 percent increase in apparel sales during 1996, but the four largest footwear manufacturers combined possess less than 10 percent of the apparel market; this indicates that the apparel market continues to represent a significant opportunity for these companies (Chappell, 1998, p. 1666). Threats to Nike come from other competitors, including Reebok and Adidas, an
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Approximate Word count = 3334
Approximate Pages = 13 (250 words per page)

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