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Seitzhanov Aitemis
Nike co
INDUSTRY: production of sports equipment
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Scope and main purpose: Adhering to its corporate vision and mission, Nike Inc. strives for leadership in the international market, countering competition. to remain the leading manufacturer of sports shoes and clothing on the world market.
Company size, type, location: Almost all Nike products are manufactured by third-party contractors outside the United States (mainly in Asia), the company itself is the copyright holder of trademarks, develops product design and owns a chain of stores (about 1,150 worldwide), as well as Nike Town shopping centers. The headquarters is in the city of Beaverton (Oregon). Footwear production is carried out at 112 factories in 12 countries, including 49% of shoes are made in Vietnam, 23% in China and 21% in Indonesia. 334 factories in 36 countries are engaged in tailoring sportswear for the company, 27% of products are in China, 22% — in Vietnam and 10% — in Thailand.
Company products: Nike sells its products under its own brand, as well as under the brands Nike Golf, Nike Pro, Nike +, Air Jordan, Nike Blazers, Air Force 1, Nike Dunk, Air Max, Foamposite, Nike Skateboarding, Nike CR7, Hurley International, Converse. Nike sponsors many athletes and sports teams around the world.
Main competitors: Adidas, Puma ,Under Armour, New Balance, Skechers
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Technological forces:
Technology is one of the factors disrupting the work in almost every industry.
We talked about how important digital technologies and mobile devices are for the Nike sales, marketing and community engagement ecosystem. Technological developments were equally important for the development of the company's products and its production. The brand's mission is to expand human potential. And to achieve this, Nike creates new products with game-changing innovations. Most of the innovations come from the brand's own laboratory - Nike Sport Research Lab. The Nike Flywire support system, Lunarlite foam cushioning, Hyperdunk basketball sneakers are among the most famous. The latest innovation is Nike Fit, a foot scanning solution designed to find the best fit for every person. Like It uses a proprietary combination of computer vision, data science, machine learning, artificial intelligence and recommendation algorithms to find what suits you.
Economic:
During the 2008 economic crisis, customers struggled with job losses and falling incomes, which led to a 12% drop in sales. In addition, the company's shares lost as much as 28%. Nike adapted to the new conditions by conducting an expensive restructuring, cutting costs and 5% of its workforce, which was the largest job cuts in the company's history. While other businesses went bankrupt, Nike was able to solve the problem. The same thing happens during the pandemic in 2020, when there was another economic crisis caused by the COVID-19 pandemic. The company lost sales due to the widespread closure of physical stores, and global revenue for the fourth quarter fell by 38%. This showed the giant's dependence on high street stores and its impact on business. To offset the negative effects of store closures, Nike has accelerated efforts to develop its e-commerce business. The company's digital sales grew to 30% of total revenue during the pandemic. The number of new user registrations in Nike apps more than doubled during this period to 25 million, half of which belonged to women. Nike realized back in 2011 that the transition to mobile devices is mandatory. Since then, the company has developed Nike and SNKRS apps. They are designed to expand the brand's direct connections with consumers, which leads to an increase in sales.
Political:
Nike shoes are manufactured in 36 factories in the USA by 5,151 workers. In order to expand into other markets and for other business reasons, Nike has 517 production facilities in 41 countries. The company has the most production sites in China and Vietnam (108), followed by Indonesia and Thailand. China is one of the largest markets for Nike, whose revenue grew by 22% in 2019. As an international company, Nike must take into account the tariffs imposed on its shoes and other goods. In the USA, for example, shoe companies pay up to 25% of duties, which is one of the highest duties compared to other industries. In 2019, trade tensions between the US and China began to escalate when Trump threatened to raise tariffs on Chinese goods, including all types of shoes, from sneakers to sandals, by 10%. It was estimated that the tariffs would cost American customers an additional $7 billion a year. In an open letter to Trump, Nike and 173 other shoe companies called on the former president to reconsider their tariffs on Chinese-made shoes and “put an end to this trade war.” Industry experts argued that an increase in tariffs would affect the company to a negligible extent, since only 10% of Nike products manufactured in China are exported to the American market. In addition, the company has diversified its supply chain to include production sites located in other countries of the Asian continent, such as Vietnam, Indonesia and Thailand. It was a good business decision that protected the giant shoe manufacturer from the financial consequences of political power.
Environmental:
Over the past twenty years, Nike has made great strides in becoming an environmentally conscious and sustainable company. Today, Nike promises to use only renewable energy sources and reduce transportation emissions. The company has developed a line of athletic jerseys and sneakers made from recycled plastic waste and has announced its intention to switch to 100% renewable energy by 2025.In addition, by the end of 2021, Nice will completely eliminate single-use plastic bags from all of its stores.
Social:
Nike knew who its customers were, what they did and who they looked up to. At the time, Michael Jordan was winning every game on the basketball court with his iconic jump shot. Every kid around the world had a poster of Michael Jordan hanging in their room. Nike's partnership with all-time basketball star Michael Jordan has contributed to the growth of sneakerhead culture and global development. Today, the sneakerhead resale market is valued at $2 billion. Nike is also well aware of the changes in society and how the values of their most important customers have changed over the years. By launching the Dream Crazy ad in 2018, Nike knew it would cause controversy and possible negative reaction from a certain segment of its customer base. Which it did. The company wasn't concerned because this ad was aimed at a specific customer base that the brand sought to develop and connect with.
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