Globalization is the system of interaction among the countries of the world in order to develop the global economy. Globalization has set in motion a process of far reaching change that is affecting everyone. Now the world has become more interconnected than ever before supported by more open policies and new technology. Hence it aims to expand the business worldwide and was effectuated by the facilitation of global communications due to technological advancements, and socioeconomic, political and environmental developments.
Globalization is affecting the world both positively and negatively. In positive sense, aims at standardizing international policies and laws whereas breaking down of ...view middle of the document...
Nike is the largest seller of athletic footwear and athletic apparel in the world.
Due to globalized economy, firstly they got an opportunity of Lower import tariffs/duties and easy access to cheap labor and raw material. Now world is integrated into an open economy which has benefited this industry in sourcing cheap labor from other countries because people can freely move from one country to another. Secondly, are facing worldwide threats and challenges in way of increased competition from Asia. The biggest threat for Nike is the inevitable stiff competition from other sports brand especially Adidas.
The total worth of the athletic apparel and footwear market is estimated at over 58 billion US dollars — of which the sportswear apparel sector forms a much larger part than the athletic footwear sector. NIKE spends a substantial amount on advertising but this is not an idle waste of funds, rather NIKE is recognized not only for the quality of its advertising but also its ability to reach consumers and garner support and interest in its products. When competition is strong, differentiation of products and the establishment of loyalty and interest in a product are factors that set a company apart from its competitors and NIKE is able to continuously generate customer awareness and foster interest in its products through effective advertising and marketing.
The Nike has high sales growth compared to others in the sports apparel industry due to large market share after globalization. The sales of Nike brand increased from $13,739.70 million dollars in 2005 to $19014 million dollars in 2010. Its operating profit margin is also more than 5, which reflects profitability and effective performance. The footwear industry currently consists of 100 manufacturers and records over $2 billion sales annually. Nike secured an extremely large share in global footwear market: approximately 16% of 2009.
Nike’s success and increase in revenue over the years has allowed it to structure a large amount of budget towards marketing, averaging 11-13%. In 2008, Nike’s marketing budget was 12.4% of its annual revenues. Earlier in 90’s Nike faced a decline in sales and profits but now it has a...