Abstract
In the today’s world of global wellbeing and competition, it has become very important to access the business opportunity while looking for the best thing that the people are looking for. The busy schedules of the people have left them with no time for exercise that affects their wellbeing. So, people are looking for the alternative that can provide them recreation as well as cover the need of physical exercise. This exclusive alternative for this is the sports, and this has given a boost to sports apparel manufacturer. This paper will access the various business environmental factors that affect the business operation in this industry as well as provide various aspects of competitor analysis to operate this business successfully. In addition to that, this paper will also assess the various managerial issues and operational issues that need to be prioritized while conducting the business. This includes the decision making styles, communication styles, managerial styles and various other management related function. Finally, the paper concludes the discussion by accessing the effect of change in external environment.
Introduction
Global Sports Industry is one of the fastest growing industries of the 21st century, with the growing need of athletic accessories like sportswear, sports equipment, and footwear. China is the global leader whereas South Asia, Central Asia, Middle East and Central and Eastern Europe are the fastest emerging markets for the global sports industry (Warn & Witherick, 2003).
The sports industry is rising globally due to the globalization of markets and rising trend in sports and sports activities.
One needs to have a good transnational strategy if they are planning on moving products from one country to another. Nike was first to adopt transactional strategy whose functions includes design, manufacturing, production, distribution, and marketing. A large figure of consumers around the globe prefer sports products from the world famous brands like Nike, Reebok, and Slazenger.
Nike's introduction:
Nike is a global leader in sports industry based in the United States. Nike means Goddess of Victory in Greek. Its activity includes design, development and worldwide marketing of its products which includes sports footwear, apparel, equipment, and accessories.
Nike is trying to reach globally with its strong marketing and innovative strategy. It produces a variety of athletic brands such as Nike Air, Max Air, etc. Nike mostly outsources its apparel and footwear from the outside US, whereas sports equipment are made in US and other corners of the globe.
Nike's sportswear and footwear are designed to complement each other and is linked with sports activities, but it can also be used in leisure and casual purpose. Company's annual report stated that its products and apparel are associated with licensed college and professional team and league logos for marketing purpose.
Adidas's introduction:
Adidas is the world's strongest brand after Nike. Adidas is a major competitor of Nike, which is positioned as competence in all sectors of sports around the globe (History, Adidas). Reebok, Rockport, and Taylormade are the main brands of Adidas. Adidas's brand is linked with a passion for sports and a sporting lifestyle. Following multi-brand strategy, Adidas wants to understand and maximize its customer. Through brand positive relation, it aims to maintain the legacy of the company and create a flexible supply chain to develop its influence in the market.
Environment Analysis of Nike and Adidas:
Economic Factors:
Both the company operates under the almost same circumstances. The economic factors throughout the world's economy affect both the company equally as they operate worldwide. Most of their factories are located in low wages market in Asia, like China and India Introduction of Euro since 2002 has helped them both to expand their market globally.
Social Factors:
Modern customers have become more brand and health conscious, so their attraction towards sports product is increasing. Markets of Nike and Adidas are growing day by day due to the preference of branded products. Nowadays, consumers taste is changing. Due to the advancement of technology, e-commerce, and online sites are gaining popularity. Today's youths are information-oriented; they gather information online rather than depending on the advertisement.
Technological Factors:
Both the brands give high priority to innovation and change. But Nike is strong at research and development, as is evidenced by its evolving and innovative product range compared to Adidas.
Legal Factors:
Both the companies face international laws as they operate globally. Mainly, Adidas is governed by European law whereas Nike operates under Federal law. Export and import laws of different countries vary according to the country, so both the companies face that law.
Financial Performance:
Nike is listed as fortune 500 companies. As it is the global leader of sports product, it is performing better than Adidas. The net profit of Nike is 3.27 billion in the recent year (Nike, 2015). On the other hand, the reported net profit is 640 million for Adidas Company in 2015 (Adidas, 2015). Demand for their product around the globe determines the financial performance and profitability of the company. With strong marketing strategy, both companies are increasing their profits.
Managerial Issues:
Adidas and Nike, both are globally renowned brands. They know the importance of their stakeholders to achieve an organizational objective. Both the company follows participative leadership style which involves employees while making a decision. Leaders influence subordinate to give inputs and to share ideas so that team can work as a whole.
Nike is more flexible in terms of organizational settings, as Adidas has more authoritative structure than Nike. Both the company focuses on effective communication skills. Pay and rewards are based on the performance of employees that depends on the demand and supply of labor. Both companies’ leaders have some charisma over employees. They can communicate with their employees on a deep, emotional level and are verbally eloquent. With high self-confidence and self-esteem, they are the charismatic leaders who have the power to influence their followers easily.
Operational Issues:
These companies rely on labor and operates worldwide, coping with a different style of operation. As discussed earlier, Nike has adopted transactional strategy whereas Adidas excels from multi-branding strategy. They both have cut-throat competition when it comes to innovation and marketing strategy. Both the companies sponsor professional football teams and sports events.
On one hand, Adidas is the official FIFA sponsor of the World Cup games and official sponsor of 12 of the 32 teams playing in the World Cup. Major teams like Germany and Spain which qualify the quarter-finals have Adidas logo emblazoned in their uniforms and TV commercials during the match are shown in their favor (Ofek, 2010).
Effect of Changing External conditions:
Both the companies have a similar approach in terms of production, as the design of both athletic and non-athletic products. But Nike maintains its position through its strong marketing strategy. From a long period of time, Nike has been focusing on a consumer brand awareness and brand power (Deng, 2009).
Nike has a competitive advantage over any other brand because of its strong positioning and strong market base. After Adidas acquired Reebok in 2005, it tried to capture the market share in 2005 and reduced the gap in market share between Adidas and Nike. But Nike has an undying brand image and equity. The biggest competitive advantage for Nike is its motivational slogan "Just Do It" and symbol "Swoosh" associated with start athletes.
Nike has a positive influence over youths as it has positioned itself as a brand with a high-quality product and a spirit of achieving courage and greatness. Nike offers high value to its consumers and has created a strong customer base. Few companies have brand recognition like Nike and can invest its resources and image to build their company's identity. Two main features of Nike are valued it provides to customer and inability to be replicated. It is the integrated part of American and world culture for over a decade.
References
Adidas. (2015). Annual Report. Retrieved from Adidas AG website: http://www.adidas-group.com/en/investors/key-financial-data/income-statement/
Deng, T. (2009). “Just Done It”--- Nike’s New Advertising Plan Facing Global Economic Crisis. International journal of Business and management, 4(3).
Nike. (2015). Nike Annual Report. Retrieved from Nike website: http://www.marketwatch.com/investing/stock/nke/financials
Ofek, E. (2010, July 9). The World Cup Brand Winner: Adidas or Nike? Retrieved March 8, 2016,
Warn, S., & Witherick, M. (2003). The Geography of Sport and Leisure. Cheltenham: Nelson Thornes.
