Question

Explore the overall market for Nike: a) Discuss the market share of Nike and its top competitors by providing details on current percentages for each firm and describing the trend over time. You might consider presenting the data graphically. b) Analyze the barriers to entry in this market to illustrate the potential for new competition and its impact on Nike's future in the market. c) Describe the market structure for Nike and analyze how this affects the Nike's ability to influence the market.

Data can be retrieved from websites.

Answer 1

Nike's market share stands at about 27.4% in 2019. It is ahead of it's competitors like Adidas . Nike is the most valuable sports brand worldwide. Nike's market capitalization as of July 2019 is $140 billions and that of it's nearest compititor Adidas is $65 billions.

But the market trend also shows that Nike has roughly added $6.7 billion to total revenue since 2015 , whereas Adidas has been able to add roughly 7 billion to total revenue.  

If we analyse the market trend further than in 2013 Nike had nearly 59% of the sneaker market share while it's competitor Adidas had 10% of it.

B) There are high barriers to entry in this market. This makes it difficult for the new players to be the next Nike. Some of the most important barriers to entry are :

Brand loyalty is extremely high. Also , Economiesof scale and scope restricts entry for small players as the industry is dominated by few large players who reap huge benefits. Economies of scale include advertising and marketing costs , R&D and umberalla branding. Thus it's effect on Nike's future is positive. As these high barriers to the industry benefits the large conglomerates like Nike. As the huge benefits of economies of scale and volumanious production are available to it.

C) Nike is an Oligopoly. There are multiple producers creating the same type of product. It is very difficult for the new players to enter the market due to the high barriers to the entry. Hence Nike can be called monopolistically competitive. Hence, Nike has great influence over the market. It specially has lot of price setting power.