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This study seeks to establish how Porter's Five Forces model can be used when evaluating a new market for Nike Corporation. Nike is a chief supplier of athletic footwear in the whole world, and different equipments for sports including sport swear. The main offices of this company are Beaverton, Oregon. Nike's original name was Blue Ribbon Sports, and its founders as of January 1964 were Philip Knight and Bill Bowerman.
Nike enters new markets its through having sponsorship agreements with sports men and women who are well known, athletic teams from colleges, professional teams, and a lot of advertising. The main goal of the company is to survive in the competitive environment, maximize profits, and growth. Porter's five forces are an influential management tool that is highly used by many companies around the world including Nike Corporation (Kotler & Kevin, 2006).
Porter's five forces are crucial in the correct decision-making by the managerial branch of a firm. It is also crucial in maintain healthy competitive advantage within the firm and follow up the present state of affairs of the market in an understandable way. Managers should comprehend the five forces of competition in order to understand how attractive the industry is, and understand how to run a firm in the right direction. Porter's five forces provide an approach, which helps in analyzing the framework of the industry (Porter, 2008). It establishes and categorizes the attractiveness of a collection of firms producing the same line of products and the competition involved. Porter's Five Forces gives an insight on profitability of an industry. These forces can be used in making [url=http://www.maximoupgrade.com/hot.php]hollister[/url] decisions of entry or exit of a firm in an industry (Coyne & Sujit 2006).
In order for the Nike Corporation to enter a new market and succeed in generating profit, a few factors must be considered with porters five forces. The marketing department of the company will look at the basic condition of the new market. This will make it crucial in order to know whether the new market will yield the expected revenue to the company. A new market can be hard to [url=http://www.1855sacramento.com/peuterey.php]peuterey outlet[/url] determine (Dawes, 2001).
However, by observing, the conditions of the market the department will be able to determine the general condition in which the market is in, which in turn will help the marketing department know what strategy to follow when entering the market. One of the most crucial things that the Nike marketing department, will look at is the risk factor in the country (Porter, 2008). By determining, the risk factor that the country is in, the department will be best suited to know how to move forward.
Some of the basic risk factors that the marketing department will look at are the competition in the market, the economy of the country the rate of growth that the country has and the demand of the market (Sage, 2008). First, it is essential that the company determine exactly how much competition it is going to face in the country. This shows the diversity of companies in the country that offer the same products as the company does as Nike. This will help the department determine exactly how it is going to enter into the market (Porter, 2008). While using the five forces, the company will be able to judge exactly how the new market will be approached. A new market is only valid if it yields profit. However, if the companies offering the same products as Nike are in the country, not many of them will be able to take advantage of the situation (Kotler, 2007). It is essential to appreciate the fact that reduced competition results in exponential profits for the company. First, it is crucial to determine the main [url=http://www.1855sacramento.com/woolrich.php]woolrich bologna[/url] reason of behind the company entering into the new market. The main reason why Nike is interested in entering in the new market is to make profits while selling its products (Coyne & Sujit 2006).
However, depending on the economic situation in the new market, the company will be forced to either lower its prices in order to attract buyers or seek other ways to sell its products. However, one of the most effective strategies that can be used while trying to fit in a new product is reducing the prices (Porter, 2008). Considering the economical state that most countries are in Nike will have to lower its products in order to attract new customers. However, this will be determined by target customer the company has in mind. If the company is targeting high-income consumers, the prices will either go up or remain constant (Hoskisson, [url=http://www.1855sacramento.com/woolrich.php]woolrich parka[/url] 2001).
However, if Nike is targeting the low-income consumers because of their numbers the company will have to reduce its prices. Through the identification of these factors, the company [url=http://www.rtnagel.com/airjordan.php]jordan pas cher[/url] will eliminate the risk that comes with entering a new market. [url=http://www.davidhabchy.com]barbour outlet[/url] One of the most crucial things that the company will look at while [url=http://www.ilyav.com/uggpascher.php]boots ugg pas cher[/url] entering the market is the elasticity of demand. Concerning the five forces, this would fall under threat. In order for a company to make more profit, there must be a demand [url=http://www.achbanker.com/home.php]hollister france[/url] for the new market (Dawes, 2001).
One of the common mistake that a company can make while entering market new market is [url=http://www.achbanker.com/home.php]www.achbanker.com/home.php[/url] assuming that there [url=http://www.getconversational.com]hollister france[/url] will be demand for the product it offers. However, in order to know without a doubt that the company is going to make a profit it would be necessary to look at the elasticity of demand from other companies who offer the same service. [url=http://www.1855sacramento.com/moncler.php]moncler outlet[/url] If the companies were not making any profit, then it would be correct to assume that there is no elasticity of demand (Kotler & Kevin, 2006).
The product the company is offering will have to be differentiated from its competitors. The hardest thing to do while trying to differentiate the product is coming up with a complete way of doing it. For instance, if Nike enters a market and find a firm offering the same services Nike will have to redesign their strategy, which will then lead to product differentiation. The firm performance will be one of the biggest advantages or disadvantages in the new market. In order to assess the performance of Nike, in order to see its success in a new market, [url=http://www.mansmanifesto.fr]doudoune moncler homme[/url] three factors will be examined. The factors are efficiency, brand equity, and profitability. This is the time and effort used to research on the new market has to be of importance (Rainer, 2009).
Diversity of products from the same company in most cases will result to market influence. The company will be able to control the consumer by shifting prices on the different products. This means although the products will be on demand the firm will be able to control the market pricing. The biggest factor that Porter considers highly influential in choosing a new market for Nike Corporation is the availability of raw materials needed in manufacturing.
When a company does not have access to the materials needed, the new market might be a failure (Porter, 2008). In this case, the availability of raw material will be extremely valuable if Nike is going to make profits. Porter's Five Forces will be highly influential in the market success of the company. Porter's Forces provide a basic approach to how the company can venture into a new market and be successful.
References Coyne, K. & Sujit, B. (2006). Bringing Discipline to Strategy. New York. The McKinsey Quarterly Dawes, J. (2001). "What is Differentiation and How Does it Work?" Journal of Marketing Management Hoskisson, I. (2001). Understanding Business Strategy. SOUTH WESTERN. Kotler, P & Kevin, LK. (2006). Marketing Management. New Jersey: Prentice Hall Kotler. P. (2007). Marketing Management. New York: Prentice-Hall, Inc. Porter, M. (2008). The Five Competitive Forces That Shape Strategy. Harvard business Quinn, B. (2000). Strategies for Change: Logical Incrementalism. New York. Economic Printers Rainer. T, (2009). Introduction to Information Systems. London: Wiley Sage, Alexandria (June 26, 2008). Nike Profit Up but Shares Tumble on U.S. Concerns. Reuters. Retrieved 2011-07-11 from . Salancik, G. (2001). The External Control of Organizations. New York. Lemma Press
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