Nike's Weaknesses

Essay by PaperNerd ContributorUniversity, Master's March 2002

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Nike is one of the world's most powerful brands but it faces also several problems such as a global glut of shoes, flat sales in key markets, and declining profits.

-The strategy of signing the most popular athletes that worked very well and allowed Nike to control 47% of US athletic-shoe market and almost 40% worldwide, is not that effective any more.

Phil Knight found out that if the best athletes in the world wore his shoes, all people would want to as well"¦ it was supposed to "be cool"�. However the brand become too common to "be cool"�. Nike is everywhere and its logo is "over-swooshing"� America. It turns off it's the most important target market and biggest consumer group, the 12- to 24-year-olds.

-The highest prices in the industry.

Nike is perceived by their core customers (teenagers) not only too common but also to expensive. The last collection of footwear is priced around $200 which is much above industry's average.

The last few years Nike's market share was quite stable while main competitors Adidas and Reebok, have gained part of the market with their lower prices shoes. Nike, instead responding with lower price products raised its prices ahead of inflation. Now the company was forced to cut their prices on last year's models. The only exception is Air Jordan line which sells very well.

-Recession in Asia.

Nike was not prepared for economic collapse in Asia. Because of the recession Nike has huge inventory glut and overproduction . It hit Nike very hard because Phil Knight has long believed his company's sells are recession-resistant. Management team expected revenues in Asia to grow very fast this year but retailers canceled orders .

-responsiveness of the Management team Crisis in Asia showed that Nike also makes mistakes in...