Analysis of Nike

Industry Analysis-Substitute Products 

Common Size Balance Sheet, 1995-1996 

Income Statement Information, 1994-1996 

Common Size Income Statements, 1994-1996 

Nike is one of the most successful manufacturers of athletic footwear, competing with Reebok, L.A. Gear and Adidas, as well as with manufacturers of casual footwear. In recent years, the company has expanded into the apparel market, to lessen its dependence on the highly fickle athletic footwear market, and has also seen significant opportunity in the international arena. Nike survived the stagnation in the industry of the early 1990s well, and is now one of the strongest companies in the industry from a financial standpoint.

However, the company must now decide whether it wants to remain only a participant in the footwear industry, or whether it wants to expand its activities into other markets, as well. It has enjoyed strong success in the apparel industry, but footwear manufactur

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nufacture; just as Nike has explored entering that market, those companies are likely to explore the athletic shoe market in order to take advantage of the synergies offered in terms of manufacture, distribution and promotion. Industry Analysis-Substitute Products Because athletic footwear is generally worn by nonathletes, substitute products in the form of other types of casual shoes pose a threat to the industry. Timberland, for example, markets "rugged" footwear designed to appeal to consumers who want to exhibit an active lifestyle focused not on sports, but on outdoor activity. As with athletic footwear, many of Timberland's consumers are not actively engaged in the activities for which the footwear is designed (Chappell, 1997, p. 1666). Because of the fashion element of the market, the footwear industry is subject to substitute products in the form of other types of shoes. Industry Analysis-Competitors Nike dominates the athletic footwear industry, although Reebok is also a strong participant. Other competitors include L.A. Gear and Adidas. Nike has a strong financial position relative to the industry as a whole, with higher gross margins and significantly higher net profits than its competition. In addition, its
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Approximate Pages = 11 (250 words per page)

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