Decision Making in a Business: The Sneaker Market in the United States Paper Example

Paper Type:  Case study
Pages:  5
Wordcount:  1214 Words
Date:  2022-09-22

Introduction

The sneaker market in the United States is wide due to the high demand for the commodities manufactured by these entities. A significant number of them are multinationals meaning that they have a wide customer base around the world and due to this, their products are of high-quality, and they fetch good prices in the market. Many organizations are operating in this market among them the Nike, Adidas, The North Face, Sketchers, Reebok, Puma, Columbia Sportswear, Prada, and Steve Madden among others. Over the years, Nike has dominated the market despite the fierce competition it has been getting from other brands like Adidas, Jordan, and Sketchers. Its strong brand has enabled the firm to remain on top for so many years, and the domination is likely to continue if the other companies are not going to improve the quality of their products and services that they are offering the public (Chin, 2018). Based on the information given in the diagram below, it can be noted that in the year 2017, Nike enjoyed 35.6% of the market share and it was followed by Jordan at 15.7%, and a good thing to note is that Jordan is a subsidiary of Nike. This is an indication that the brand has dominated the market with more than 50% of the America market being run by the entity either directly through the Nike brand or the subsidiary and at third place is Adidas with 11.4%. In the year 2017, the organization posted revenue of more than $15.2 billion in the United States while Adidas had $5.1 billion in the same fiscal year. The sneaker market in the United States can be described as being a perfect competition market for there exists many buyers and sellers, and none of the manufactures can influence the operations of the industry (Carroll, 2017). There exists free entry, and there are no restrictions, and this market ensures that all the sellers can compete against each other and only those with quality commodities will enjoy a wider marketable.

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Porter's Five Forces

Competition in the industry: There exist many sneaker firms in the United States meaning that there is no single firm that can manage to control the industry. The competitive rivalry is high meaning that no single entity can do what they want with the aim of achieving higher sales.

Potential of entrants into the market: The sneaker market in the United States makes it possible for any organization to enter or leave the industry at wish. The demand for quality goods by the consumers means that the firms have to invest a huge sum of money, but this is not a deterrent factor considering that the wider market base enables a firm to recoup its initial cost.

Suppliers Power: The market has perfect competition, and because of this, the suppliers cannot increase the prices of the goods and services. The prices are influenced by the forces of demand and supply.

Power of the customers: The customers in the American market do not have the power to drive the prices of sneakers down. Customers can easily switch from one brand to another, but this is not enough reason to lead to an organization reducing the price of its commodities to keep its client base. A large number of end users in the market means that even if a good number of them switches a brand, the organization will still have a significant market to sell its merchandise.

The threat of substitutes: The United States sneaker market has a wide range of substitutes that the end user can utilize. The high demand due to the large population means that the power of the firms is not weakened by the availability of substitutes in the market.

Nike and Adidas

The two major companies that are operating in the United States sneakers market are Nike and Adidas. The strategic priorities of Nike range from the desire to ensure that the firm remains the strongest brand in the sneaker industry in the country and other regions of the world. The firm is considered to be the benchmark for the other companies in the industry, and the high-quality goods mean that it makes limited mistakes in the production process. The consumers are already aware of what they will be getting by purchasing Nike's products. The firm concentrates on providing low-cost and quality goods to the consumers to ensure that all the end users have the capability of buying their products. The entity has resulted in outsourcing to ensure that the costs of operation and the final goods have remained low enough for the buyers. Some of the clients make their purchases online and request the firm to deliver them. Nike works toward ensuring that the delivery time is reduced with the customers' orders being handle professional and in the shortest time possible. Any promise made on the delivery process is met, and whenever a new product is introduced in the market, they take the responsibility of informing its consumers about it. Nike has undertaken the steps of ensuring that it plays a role in the corporate social responsibility which includes ensuring that its workforce is enjoying favorable pay scales and working in a conducive environment. The organization has also undertaken steps to manage the issue of climate change by ensuring that its manufacturing activities reduce the environmental impact through conservation of the water bodies.

In the recent past, Adidas launched a sustainability project named "Sport needs a space" for the organization culture believes that the sport can change the lives of people globally. All the actions undertaken by the organization under this policy works towards improving the world of sport for good with the goal of making sure that it remains a source of happiness. The firm also works towards ensuring that water, one of the endangered elements in the world is available to all people and it is not polluted. It works towards the maintenance and use of sustainable materials like recycled polyester, better cotton and ocean plastic (Bain, 2018. It has been working towards the reduction in the amount of energy that it consumes, as well as, ensuring that it is clean energy that will lower the amount of waste that is released into the atmosphere. The workers and the wider population is of utmost importance to the organization for they form the market for its commodities (Penney, 2017). They are usually empowered to realize their life goals and enable them to make better life decisions. Ensuring that they are healthy and happy is crucial in realizing the goals and objectives set by the business. Offering them better wages and ensuring that there is life-work balance are some of the issues that Adidas ensure that they are observed when dealing with the workforce.

References

Bain, M. (2018). The top-selling sneaker of 2017 is one your mom probably loves. Quartzy. Retrieved from https://qz.com/quartzy/1201343/nike-vs-adidas-the-most-popular-sneakers-of-2017/

Carroll, C. (2017). Adidas Surpasses Jordan Brand, but Nike Remains America's Most Popular Sneaker. Sports Illustrated. Retrieved from https://www.si.com/nba/2017/09/19/adidas-jordan-brand-nike-market-share

Chin, K. (2018). Nike is 'back in business' - and threatening to reclaim its sneaker crown from Adidas. Business Insider Nordic. Retrieved from https://nordic.businessinsider.com/nike-stock-price-back-in-business-on-verge-of-reclaiming-sneaker-crown/

Penney, J. (2017). Adidas targets US market share of 15-20 percent: paper. Reuters. Retrieved from https://www.reuters.com/article/us-adidas-outlook/adidas-targets-us-market-share-of-15-20-percent-paper-idUSKBN1F20HQ

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Decision Making in a Business: The Sneaker Market in the United States Paper Example. (2022, Sep 22). Retrieved from https://proessays.net/essays/decision-making-in-a-business-the-sneaker-market-in-the-united-states-paper-example

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