2021 BTEC Business Level 3:
Unit 1 - Exploring Business
(DISTINCTION*) Assignment
2
Nike porter's five forces1
Nike is known as a good sports shoes brand. However, it also
makes athletic apparel and gear. In the recent years Nike have
been profitable for their goods such as shoes, clothing and
equipment. This is because of the athlete’s trends and for the
high demand during the Olympics. Nike’s “Just do it” slogan and
the “Swoosh” logo set it apart from the crowd of brands and
creates more awareness. In history, it has kept signing the best
athletes for endorsing their brand and products. Michael Porter’s
analysis of five important forces that affect the state of
competition in an industry and its profitability. This tool can be
used to understand the state of competition and reduce
competitive pressure.
Competition determines how Nike Inc. maintains their share of the
sports footwear market (strong force). This element of the Five
Forces Analysis shows how competition influences the industry
environment and the performance of individual firms. These
external factors create the strong force of competitive rivalry in
Nike’s case, low market growth rate, high aggressiveness of firms
and moderate number of firms. The low market growth rate is
partly due to firms’ high market penetration and market
saturation. This condition creates a strong force, as Nike and
other companies compete for a market that grows slowly. In
1 http://panmore.com/Nike-inc-five-forces-analysis-porters-model
, relation, firms are highly aggressive in competing for bigger
market shares. Also, there are only a moderate number of firms
that significantly impact Nike. Based on this element of the Five
Forces Analysis, the external factors that lead to strong
competition requires Nike Inc. to focus on market development
and product development to ensure competitive advantage and a
growing share in the global athletic shoes, apparel and equipment
market. Also while Nike has several serious competitors such as
Adidas, Reebok and Puma there’s only one Nike swoosh “Just do
it” this is probably the most recognized slogan in the sports world.
In the past, Nike has responded to these factors by creating high
barriers in order to not let other firms enter. They also have fair
prices for their good quality clothes, shoes and equipment; this
would enable customers to get attracted towards Nike products
and purchase them. In the future, Nike should continue
manufacturing good quality products and tag a fair price so
customers can afford. If customers can afford Nike’s goods, then
this will benefit the business as this will increase their revenue
and profit. Furthermore, Nike should also maintain their high
barriers in order to reduce competition and stay in the lead.
Nike’s customers directly affect business performance (moderate
force). This element of the Five Forces Analysis shows how
consumers determine business competitiveness and the industry
environment. In Nike’s case, external factors such as low
switching cost, moderate substitute availability and small size of
individual buyers contributes to the moderate bargaining power of
customers. The low switching costs make it easy for customers to
buy Nike goods such as shoes, clothing and equipment. The
moderate availability of substitutes also enables customers to buy
other products instead of always buying from Nike. However, the
small size of individual customers minimizes their individual
forces on the company. These external factors lead to the
moderate bargaining power of customers. This element of the
Unit 1 - Exploring Business
(DISTINCTION*) Assignment
2
Nike porter's five forces1
Nike is known as a good sports shoes brand. However, it also
makes athletic apparel and gear. In the recent years Nike have
been profitable for their goods such as shoes, clothing and
equipment. This is because of the athlete’s trends and for the
high demand during the Olympics. Nike’s “Just do it” slogan and
the “Swoosh” logo set it apart from the crowd of brands and
creates more awareness. In history, it has kept signing the best
athletes for endorsing their brand and products. Michael Porter’s
analysis of five important forces that affect the state of
competition in an industry and its profitability. This tool can be
used to understand the state of competition and reduce
competitive pressure.
Competition determines how Nike Inc. maintains their share of the
sports footwear market (strong force). This element of the Five
Forces Analysis shows how competition influences the industry
environment and the performance of individual firms. These
external factors create the strong force of competitive rivalry in
Nike’s case, low market growth rate, high aggressiveness of firms
and moderate number of firms. The low market growth rate is
partly due to firms’ high market penetration and market
saturation. This condition creates a strong force, as Nike and
other companies compete for a market that grows slowly. In
1 http://panmore.com/Nike-inc-five-forces-analysis-porters-model
, relation, firms are highly aggressive in competing for bigger
market shares. Also, there are only a moderate number of firms
that significantly impact Nike. Based on this element of the Five
Forces Analysis, the external factors that lead to strong
competition requires Nike Inc. to focus on market development
and product development to ensure competitive advantage and a
growing share in the global athletic shoes, apparel and equipment
market. Also while Nike has several serious competitors such as
Adidas, Reebok and Puma there’s only one Nike swoosh “Just do
it” this is probably the most recognized slogan in the sports world.
In the past, Nike has responded to these factors by creating high
barriers in order to not let other firms enter. They also have fair
prices for their good quality clothes, shoes and equipment; this
would enable customers to get attracted towards Nike products
and purchase them. In the future, Nike should continue
manufacturing good quality products and tag a fair price so
customers can afford. If customers can afford Nike’s goods, then
this will benefit the business as this will increase their revenue
and profit. Furthermore, Nike should also maintain their high
barriers in order to reduce competition and stay in the lead.
Nike’s customers directly affect business performance (moderate
force). This element of the Five Forces Analysis shows how
consumers determine business competitiveness and the industry
environment. In Nike’s case, external factors such as low
switching cost, moderate substitute availability and small size of
individual buyers contributes to the moderate bargaining power of
customers. The low switching costs make it easy for customers to
buy Nike goods such as shoes, clothing and equipment. The
moderate availability of substitutes also enables customers to buy
other products instead of always buying from Nike. However, the
small size of individual customers minimizes their individual
forces on the company. These external factors lead to the
moderate bargaining power of customers. This element of the
