Athletic Shoe and Nike Essay
Early Days of Nike
Phil Knight, the starter of Nike revolution, began merchandising his athletic shoes designs, stores in a trunk inside a car. It is difficult to digest the fact that what is considered as an iconic brand today, …show more content…
The Threat of Competition to Nike
The athletic shoe industry is slowly becoming a global oligopoly. There are many barriers to entry preventing new entrants from capturing significant market share. Nike can enjoy economies of scale that create cost advantages over any new rival. Today’s athletic shoes are highly technical. An extremely large capital investment is required for new firms to open athletic shoe factories and conduct research and design to create a popular athletic shoe.
Nike has incorporated forward vertical integration into their corporate level strategy. Nike opened discount factory outlet stores in rural areas and retail stores in urban shopping Mecca’s. Monolithic athletic manufacturing companies utilise economies of scale by spending millions on product endorsements and advertisements by spreading the high cost over their entire yearly sales. The aggressive marketing campaigns turn their products into household names making it arduous for new firms to compete.