's emphasis on fashion products may be the result of a better reading of the market than Nike has made.
2. Production. While Nike management pursues total control of the company's distribution process, this same management appears to be complacent about relinquishing total control over the production of the goods marketed by the company. Nike, as is true of many other American companies, wants to be free of the headaches associated with manufacturing operations, and wants to lower production costs associated with production in third world countries. This strategy causes Nike to be vulnerable to changes political and economic within the source countries of production, and this strategy causes Nike to depend heavily on the willingness and capability of production subcontractors to continue to produce goods for Nike within the specifications and time frames required to support Nike's marketing objectives. Nike's production strategy, thus, is a high risk strategy.
With respect to distribution, Nike contends that the company has complete control of the distribution of the company's products in North American, and that the company has 90 percent control in Western Europe. While Nike management likes to point to these facts and figures as indicators of the success of the company's strategy, there is another side to these statements. The dark side to such facts is that Nike has virtually abandoned markets such as Japan where 100 percent control of the distribution of the company's product certainly is not feasible and likely is not even possible. An insistence on 100 percent distribution control, therefore, may actually thwart Nike's objective global leadership in the athletic shoe industry overall, in every region, and in every segment.
With respect to the product/target market relationship and competition, Nike assumes that a fitness craze motivates people to buy athletic shoes. In actuality, however, the decline in soci...