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INTRODUCTION

International marketing refers to the practices of the principles of marketing in more than one country (Papadopoulos and Heslop, 2014). This is the marketing on international scales reconciling of commercial advantage of the international operational similarities, differences and opportunities for achieving the overall objectives, The assignment below is based on Nike, Inc. which is one of the biggest multinational corporations of the world headquartered near Beaverton, Oregon. The firm deals with foot wears, equipments, apparels and accessories globally. The assignment undertakes a critical understanding of global environment's nature, major trends, social and cultural conventions  affecting global decisions and critically evaluated market entry process of Nike,

TASK 1

P1.Evaluation of how drivers of globalisation could help Nike, Inc. expand in the new market

Nike, Inc. is a globally acknowledged firm having already established in various countries in the past. With effective marketing strategies and top quality products, it has captured the market of many countries successfully and drove out its competitors. Globalisation has its impact on the world lately, and in UK, drivers of globalisation could help the firm to expand itself in the country. These drivers of globalisation are mentioned below:

  • International Trade:

The exchange of goods and services, and capital between countries can be termed as international trade (Hakansson, 2015). These trades are very essential for accelerating a country's polity, economy and society. Currently, after the events of Brexit, the economy of UK has experienced instability in their economy. This can be an advantage for Nike as it can contribute towards stabilizing the economy of the country by increasing trade of its products and services within the nation.

  • Telecommunication:

This refers to the transmit of messages, signals, signs, images, etc. through electromagnetic systems like optical, radio, cellphones, etc. This is one of the major drivers of globalisation and has made huge advancements lately. Majority of UK's population rely on texting and social media. This can be a success factor for Nike's expansion because people's expectations from the firm and their feedbacks can be easily acquired by the company.

  • Technological advancements:

Technology is witnessing advancements almost daily. In this era of cutting edge competition, technology is the main weapon company used against each other to gain a competitive edge in the market (Knight, 2015). Nike is known to have always inclined itself towards using the latest technologies to produce effective products for its customers. With current technological trends like Augmented Reality (AR) and Virtual Reality (VR), Nike can help its customers to visualise their products before purchasing which would be very effective factor to boost its sales in the country.

P2. Nature of global environment

For any business organisation, it is necessary to analyse the nature of global environment before expanding its business operations in any other country. Nike, Inc. must focus on these factors before expanding its activities in UK. These factors are mentioned below.

  • Political:

To the back end of a firm, the political factors of a country play an important part. The changes in a company's production and its profitability heavily depends on the political scenario of a country. These factors include the rules and regulations imposed by the government which, if favourable for the firm, can be a prime factor success. The political scenario of UK is uncertain currently, which can be a threat for Nike. This is because changing political scenario would denote changing rules imposed for companies. These regulations might not be in the favour of the firm, resulting in less sales.

  • Economical:

On economic scale, economy of a country decides the potential of brands to perform in their nation (Samiee, Chabowski and Hult, 2015). Post Brexit, UK has experienced a downfall in the value of pound. This had a direct impact on the sales of Nike. However, Nike can use this as an advantage too. EU's external tariff revenue is majorly through the shoes and clothing products. Tariffs are imposed on trainer imports including from firms like Nike. After coming out the Union, UK might decrease this tariff and as a result, Nike trainers would sell out at a cheaper price. This would increase its sales in the UK market. Moreover, with increase in profits, the firm would increase the amount of corporation tax paid. This can be a contributing factor towards the increase in UK's GDP and general tax.

 

  • Social:

The social and cultural conventions of a nation is equally important for a firm if it needs to acquire an international market. These factors help the firms to determine customers' behaviours, the latest trends and their expectation from the firm (Skarmeas, Zeriti and Baltas, 2016). In UK, customers are becoming more brand conscious and are also inclining towards fitness. This can be an advantage for Nike to influence the customers by providing comfortable yet stylish products in the market. This would also help the firm to address Athleisure, another widespread trend amongst the youth. Moreover, marketing strategies of the firm can easily influence the behaviour of the people. Nike must include major football players from UK like Wayne Rooney and Steven Gerrard in their advertisements which would emotionally connect the people from the brand.

  • Technological:

On the technological out-front, Nike has always been a global leader and always has worked towards modifying their technological strategies to effectively reach more customers. In UK, the trend amongst people is to be updated with the technological advancements happening all around them (Hoppner and Griffith, 2015). With rising dependencies on AR, VR and AI; Nike can focus more on producing its technological products and sell them in UK markets. This would allow the firm to gain a wide range of customers and it could easily expand its business in the country.

Nike Inc., PROFITABILITY RATIOS

 

 

 

Particulars

May 31, 2018

May 31, 2017

 

 

 

Return on Sales

 

 

Gross profit margin

43.84%

44.58%

Operating profit margin

12.21%

13.83%

Net profit margin

5.31%

12.34%

 

 

 

Return on Investment

 

 

Return on equity (ROE)

19.70%

34.17%

Return on assets (ROA)

8.58%

18.23%

Source: Based on data from Nike Inc. Annual Reports

 

According to the mentioned ratio, there has been a decline in the profit margin of Nike, Inc. within one year. Nike must focus on implementing effective marketing campaigns and should focus on staying away from controversies to reinstate its market position. To increase its profitability it should keep producing high quality products for people of every age, which would also help the firm to increase its customer base.

P3. Target markets for Nike within the UK

Nike is a global brand with customers all around the world. The company has been able to achieve massive success in its markets and is continue to penetrate new markets to expand its business operations and satisfy new customers. The segmentation of its potential target markets is mentioned below:

  • Geographical: United Kingdom
  • Demographical: Age- Above 15 and below 45; Income- Above 15,000; Family size- 2-4
  • Psycho-graphical: Belonging to any social class, with a maintained lifestyle.

Out of these segments,  the firm must target the customers with age between 15 to 40 years. Nike's a sports brand and the target market would constitute students, professionals and business persons who usually adopt the culture to stay fit and maintain a healthy lifestyle (Eteokleous, Leonidou and Katsikeas, 2016). Nike must focus its marketing strategies towards this target market and should emphasize on influencing more customers of this market to adopt fitness in their routines by developing personal and interactive advertisements that deal with people who want to pursue such lifestyle. This would help the company to boost up its sales and increase its customer base in UK.

TASK 2

P4. Global international strategy for Nike

For any organisation, it is essential to implement effective strategies to capture global markets. Each country and its markets are different and in it is very complex for companies to satisfy all the customers available in these markets. Thus, the companies need to formulate plans and modify their products according to their markets in different nations (Kazimoto, 2014).

For Nike, it is crucial to determine needs of their target markets and produce diversified products to satisfy such needs. This is a very complex task as the demands and the needs of the customers tend to vary from time to time. To simplify this, and to grow in global markets, the one global international strategy most appropriate for Nike is NikeID. This strategy allows the customers to customize their shoes according to their own preferences. This strategy would allow the customers to choose and design the pattern, colour combinations, shoelaces, etc. according to their culture and their preferences. This would allow the firm to regain their customers' trust. And with more drifting of the population towards technology, this would be an interactive and outstanding approach to reach the customers globally.

Moreover, this strategy would cut the cost of research some extent as the customers would themselves produce the type of shoe they'd want to wear. This can be a great advantage for the firm to stand out in the market and gain a competitive edge. Applying these strategies would bring out new ideas straight from the market and they can produce segments which surely be profitable for the company.

P5. International market entry strategy that would help the firm to grow in UK market

An organisation can set up an overseas market in a number of ways. Every market entry has its imitations and thus, firms should adopt different entry strategies which suits best for the kind of market they want to penetrate. There are many factors that determine the entry strategy of a firm, such as, tariff rates, transportation costs, marketing costs, etc. An entry strategy must be well implemented so that the sales in these markets would offset the cost incurred due to these factors. Some of these market entry strategies are described below:

  • Direct Exporting: It refers to selling the firm's products directly into the market chosen. Companies hire sales agents to represent them in their chosen market after establishing a sales programme. If the hired agents are effective, the firms would be successful in selling their products in these chosen market.
  • Franchising: Another effective way to enter the markets is through franchising which allows the firm to expand its business by granting an individual or a group the authority to run a business by selling products or services under the firm's business format. Many global companies have adopted this option to expand their business in global markets.
  • Licensing: This is referred to transferring the rights from a company to other to use its products and services. Usually firms who want to enter other markets provide these rights to a firm which already has a large share in the chosen marketing. It can be both for production as well as for marketing.

Out of these three options, the best strategy for Nike to enter a new market is Franchising. Because franchising suits best to the firms which are have already established themselves as a brand. However, franchising has some benefits as well as some drawbacks which are as follows:

ADVANTAGES:

  • The research work and the funding of outlets will be handled by the franchisees. This would help the firm save the extra cost or acquisition of funds from banks.
  • It can be a major source of additional income for Nike as the franchisees are bound to pay royalties for the franchise.
  • The franchises can each be customized effectively and easily according to the needs and preferences of their target markets.

DISADVANTAGES:

  • It takes a lot of efforts for a company to establish a franchises. It needs a heavy investment of money as well as time for the development of these franchises. Also, there are numerous legal documentation that are required to be developed, thus adding to the cost.
  • If in case Nike comes in a disagreement with one or more of its franchisees in UK, the legal action will be very costly for the firm, also it would disrupt its reputation in the market because of such controversies.
  • Franchisees are mostly independent, which means that the firm might not be able to regulate the working of these outlets.

CONCLUSION

Thus, from the above report, it is concluded that firms must concentrate on the nature of the global environment. This requires a detailed analysis of the overall environmental factors of the country, as well as its social and cultural conventions and current trends that influence the population of that country. Proper segmentation and targeting must be done by companies to select their target markets on whom they want to imply their market strategies. It is also necessary for firms to develop global international strategies to enter successfully in foreign markets. Largely, a critical evaluation must be done before implementing the market entry strategies to enter a specific market.

REFERENCES

  • Eteokleous, P.P., Leonidou, L.C. and Katsikeas, C.S., 2016. Corporate social responsibility in international marketing: review, assessment, and future research. International Marketing Review. 33(4). pp.580-624.
  • Hakansson, H., 2015. Industrial Technological Development (Routledge Revivals): A Network Approach. Routledge.
  • Hoppner, J.J. and Griffith, D.A., 2015. Looking back to move forward: a review of the evolution of research in international marketing channels. Journal of Retailing. 91(4). pp.610-626.
  • Kazimoto, P., 2014. Assessment of challenges facing small and medium enterprises towards International Marketing Standards: a Case Study of Arusha Region Tanzania.
  • Knight, J., 2015. Five myths about internationalization. International higher education, (62).
  • Papadopoulos, N. and Heslop, L.A., 2014. Product-country images: Impact and role in international marketing. Routledge.
  • Samiee, S., Chabowski, B.R. and Hult, G.T.M., 2015. International relationship marketing: Intellectual foundations and avenues for further research. Journal of International Marketing. 23(4). pp.1-21.
  • Skarmeas, D., Zeriti, A. and Baltas, G., 2016. Relationship value: Drivers and outcomes in international marketing channels.Journal of international marketing. 24(1). pp.22-40.

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