Nike BCG Matrix Essay

Published: 2020-02-10 14:30:54
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Category: Nike Inc.

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Nike Corporation is a Fortune 500 company, founded in 1964 and listed on the NYSE as NKE. Headquartered in Beaverton, Oregon, Nike is a proven leader in the sports equipment, apparel and athletic shoe industries. As of 2013, Nike employees more than 44,000 people worldwide. The brand portfolio, in addition to a wide variety of Nike premium products for leisure and sports activities, includes: Cole Haan, Converse, Umbro, Ltd., Hurley and Nike Golf. Nike contracts with more than 800 retail outlets globally, promoting exclusive lunarite foam and flywire technology in brand items. Annual sales exceed $30 billion. The business income is heavily dependent on the shoe market and an overseas workforce. Nike is known as a fashion brand, worn by individuals for many occasions outside of sports activities. However, with its mission to bring innovation and inspiration to all athletes throughout the world, Nike has a strong presence in world championship sports competitions, celebrity and community sponsorships as well as numerous athletic wear eShops.

On the BCG Matrix, based on an economic index rating, Nike is considered a Cash Cow. The Nike BCG Matrix also indicates that the company portfolio is established and can benefit from economies of scale, which means mass output or expansion with lower production costs and a bigger is better philosophy. Nike has over 765 factories and 1,000,000 employees worldwide. Only 40 of these factories are in the United States and some are distribution centers only. Therefore, Nike can and will charge top dollar for their products while maintaining cheap labor costs. Although the Cash Cow market has slowed over the years, notably due to the Great Recession in America, Nike products possess a fairly stable market share as of 2013. Sales revenues have increased an average of 14-18 percent annually for the last eight years.

Net profits have gained 14-18 percent per year. As a company rooted in competition, Nike marketing strategists focus on more diversification of the market share, quality products and service as well as price leadership. The future is extremely bright for Nike. Although Nike at its core is a shoe company, it has morphed into something much more. Nike has become the leader in sports equipment, sports apparel, and of course, athletic shoes. More importantly, Nike is a brand transendant. Nike is able to get our kids to view their products as status symbols. Michael Jordan sells twice as many basketball shoes now than he did as a player. Some Jordans sell for as much as $300. People willing to pay outrageous prices coupled with low production cost will keep Nike as a Cow Cash for many more years.

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