Business and the Business Environment Sample
Unit 1: Business and the Business Environment
Assignment 1 Industry Analysis Factsheets
Introduction
The sports industry is one of the most versatile industries that has originations operating in various sub-sectors that are linked with the manufacturing of sports equipment, fitness products, sportswear, medicines, and many more. The global market size of the sports goods manufacturing industry was worth $170.94 billion as of 2021 and is expected to grow at a CAGR of 6.6% thus taking the current market value up to an estimated $267.61 billion (Fortune Business Insights, 2021). The sports industry can be divided and subcategories into different segments that perform different functions and thus collectively help to keep the global sports industry running.
Figure 1: Sectors and Subsectors of the sports Industry
(Source: Nauright et al. 2020)
The above representation reflects the sectors and sub-sectors of the sports Industry and thus it can be seen that most of the revenue is made by commercial and public originations that hold sports events, facilities and manufacture goods and equipment. Thus, the following study would shed light on the Commercial sub-category of the sports Industry where global companies like Adidas, Nike, Puma, and others compete fiercely utilising various marketing and product development strategies.
Industry analysis
Implicating from the above findings the commercial sports sector is mainly dominated by a handful of organisations that predominantly rule the sports products and equipment manufacturing industry. The following figure, therefore, verifies this as Sports apparel and Footwear comprise 98% of the entire market (Fortune business insights, 2021). Thus, companies like Nike, Adidas, Puma are the ones whose primary product offerings include Sports apparel and footwear.
Figure 2: Global product market share of Sports goods
(Source: Fortune business insights, 2021)
Nike
It started its operations back in 1964 it specialises in the manufacturing of sports apparel, athletic footwear, accessories, and sports equipment. The organisation achieved the 89th position in the list of Fortune 500 companies when the brand value of the organisation reached $29.6 billion in 2017 (Fortune, 2018). The organisations exceeded $34 billion in terms of brand value which has made Nike the most valuable sports brand in the industry but has dropped to $30 billion as of 2021 (Statista, 2021).
Figure 3: The brand value of Nike over the years
(Source: Statista, 2021)
Among the major products sold by Nike, the sum of the most popular brands among sports enthusiasts includes Nike Pro, Air Jordan, Air force 1, Nike blazers, Nike dunk, Air Max, Nike CR7, and many more (Nike, 2022). The brand value of Nike is so popular among consumers that in some cases limited edition products when sold in aftermarket receive price tags that are twice more than the original selling price. Moreover, there is a considerable number of consumers present in the market for whom the products sold by Nike are a form of collectable which further increases the value of these shoes and apparel sold by Nike.
Nike is one of the largest organisations operating in the sports goods manufacturing industry and Assam 2020 organisation had 75,400 employees in the global context (Statista, 2021). Moreover, the organisation is also present in 170 countries and owns more than 12 brands that cater to approximately 30 different segments in the consumer lifestyle and the major sports sector (Nike, 2022).
The organization’s mission, vision and value include the creation of inspiration among athletes around the world through product innovation (Refer to appendix 1). Another significant aspect of the organisation that reflects its contribution to society and the stakeholders in the sustainable strategy that Nike has adopted in product development and operations. The organisation believes that by achieving sustainability they can create change in the global market, especially in the sports industry.
Puma
Established in 1948 Puma which is a German sports manufacturing industry has significantly grown over the years. As of 2019, the organisation’s overall brand value was over 4 million and was also selected in the list of Forbes Fab 40 companies (Forbes, 2019). The major shareholders in the organisation are the Groupe Artemis and Kering who hold 29% and 9.8% of the organisation respectively (Puma, 2018).
The organisation operates in over 120 countries and is also the employer of 14,374 individuals across the global market (Statista, 2021). The major products and services offered by the organisation include sports apparel, sports equipment, and sports shoes that are designed for men women and children of different ages. However, in terms of products the footwear segment of the organisation is the most profitable segment which accounts for 45% of the organisation’s sales which is estimated at 2.4 billion as of 2020 (Statista, 2020). The mission and vision of the organisation aim to be “Forever Faster” which indicates the organisation is objective of being the fastest organisation in the athletic market (Puma, 2022).
Adidas
Adidas which is another major sports equipment and goods manufacturing brand in the global market has a close connection with humour discussed above. Adidas and tumour were a single organisational before they decided to split and the organisation was established in 1948 the same here as Puma. To establish a presence in the sports industry organisation has invested extensively into different sectors and is also 8.3% owner of Bayern Munich which is a German football club. The organisation also owns another popular sports brand Reebok which also operates globally.
In terms of products and services, the organisation has 500 factories that operate independently and manufacturing production services in 55 countries around the world (Forest 500, 2022). The organisation is also present in the markets of 160 countries thereby making it a strong competitor of Nike in the global market (Adidas group, 2022).
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As of 2020 reorganization employed 62,285 employees across the world and has also achieved the title of the largest company in terms of sportswear manufacturing and the second position in the global context right after Nike (Statista, 2021).
Analysis of Nike
Based on the above analysis it can be clearly identified that Nike is one of the most valuable, profitable, and largest organisations in the sports & athletic manufacturing industry.
Figure 7: Organisational Structure of Nike
(Source: HRM online, 2019)
Just like any other global organisation the organisational structure and division of different departments, is quite diverse and as reflected by the CEO of the organisation it can be described as a top-down traditional hierarchical structure. However, it has also been seen that the organisation is quite flexible in changing the structure of the organisation as and whenever required to ensure optimal resource utilisation (HRM online, 2019). The different departments operating under Nike work in total synchronisation to achieve the business objectives and the ability to replicate which has been the key strategy behind their growth and development (Posbergh et al. 2022).
In terms of business performance, it has been seen that as of 2021 the revenue of the organisation in the fourth quarter reached up to $12.3 billion which is an increase of approximately 96% compared to 2020 and an increase of 21% compared to 2019 (Nike, 2021). The organisation was not quite successful in 2020 mostly due to the emergence of the covid-19 pandemic however the business performance of Nike in 2021 reflected organisations revival in the sports goods manufacturing industry. As for the financial performance of Nike, it has been seen that the revenue of Nike increased by 19% which approximately stands at $44.5 billion (Nike, 2021). Not only that but the sales in Q4 also increased by 73% which is a significant growth compared to the lack of sales it incurred in 2020.
In terms of markets, the North American market of it was found to be the most profitable with revenues exceeding 141% compared to 2020 and 21% compared to 2019 (Nike, 2021). A significant achievement of the organization in 2021 was the increase in the revenue of Converse which is another brand operating and then it achieved $526 million indicating a growth of 85% in the markets of Europe and North America (Nike, 2021).
In terms of technology, the organisation is working on wearable technology where Nike sees an opportunity for growth (TechCrunch, 2019). The wearable industry is expected to grow at a CAGR of 13.8% and by 2028 the overall market value has the potential to exceed $118 billion (Business wire, 2022).
Conclusion
Based on the above analysis it can be seen that there are various sports good manufacturing organisations operating in the global market however and it is significantly the largest and most valuable organisation among all. The organisation has been successfully reviving its position in the market after the drop in sales in 2020. The reason behind the organisation’s access can be directly linked to the organisational structure where different departments such as marketing PR r n d and finance work together to achieve their goals collectively. Another significant attribute of the organisation’s structure is the ability to replicate and flexibly change according to the requirements in the market. Such abilities of Nike have not only helped them in developing new products and services but has also allowed the company to utilise its existing resources in the most effective manner.
Assignment 1: References
Adidas group, 2022. GLOBAL FACTORY LISTS. [Online]. Available at: <https://www.adidas-group.com/en/sustainability/managing-sustainability/human-rights/supply-chain-structure/#:~:text=adidas%20has%20outsourced%20most%20of,in%20more%20than%2055%20countries> [Accessed on 19 February 2022]
Business wire, 2022. Global Wearable Technology Market Trends & Analysis Report 2021-2028: Adoption of Fitness Trackers and Health-based Wearables is Anticipated to Propel Growth. [Online]. Available at: <https://www.businesswire.com/news/home/20220104005806/en/Global-Wearable-Technology-Market-Trends-Analysis-Report-2021-2028-Adoption-of-Fitness-Trackers-and-Health-based-Wearables-is-Anticipated-to-Propel-Growth—ResearchAndMarkets.com#:~:text=The%20global%20wearable%20technology%20market,13.8%25%20from%202021%20to%202028.> [Accessed on 19 February 2022]
Forbes, 2019. The Forbes Fab 40: Puma Debuts On 2019 List Of The World’s Most Valuable Sports Brands. [Online]. Available at: <https://www.forbes.com/sites/mikeozanian/2019/10/16/the-forbes-fab-40-puma-debuts-on-2019-list-of-the-worlds-most-valuable-sports-brands/#:~:text=This%20year%2C%20Puma%20makes%20the,is%20worth%E2%80%94of%20%244%20billion> [Accessed on 19 February 2022]
Forest 500, 2022.
Adidas Group. [Online]. Available at: <https://forest500.org/rankings/companies/adidas-group> [Accessed on 19 February 2022]
Fortune business insights, 2021. The global sportswear market is projected to grow from $170.94 billion in 2021 to $267.61 billion in 2028 at a CAGR of 6.6% in forecast period, 2021-2028. [Online]. Available at: <https://www.fortunebusinessinsights.com/sportswear-market-102571#:~:text=KEY%20MARKET%20INSIGHTS&text=The%20market%20is%20projected%20to,once%20the%20pandemic%20is%20over> [Accessed on 19 February 2022]
Fortune, 2018. Fortune 500 Companies 2018: Who Made the List. [Online]. Available at: <https://fortune.com/company/search/?fortune500> [Accessed on 19 February 2022]
HRM online, 2019. Structure is key to creating a successful flat organisation. [Online]. Available at: <https://www.hrmonline.com.au/workforce-planning/creating-successful-flat-organisation/> [Accessed on 19 February 2022]
Nauright, J., Zipp, S. and Kim, Y.H., 2020. The sports world in the era of COVID-19. Sport in Society, 23(11), pp.1703-1706.
Nike, 2021. NIKE, INC. REPORTS FISCAL 2021 FOURTH QUARTER AND FULL YEAR RESULTS. [Online]. Available at: <https://investors.nike.com/investors/news-events-and-reports/investor-news/investor-news-details/2021/NIKE-Inc.-Reports-Fiscal-2021-Fourth-Quarter-and-Full-Year-Results/default.aspx#:~:text=BEAVERTON%2C%20Ore.,the%20fourth%20quarter%20of%202019.> [Accessed on 19 February 2022]
Nike, 2022. Cristiano Ronaldo (16). [Online]. Available at: <https://www.nike.com/gb/w?q=Cristiano%20Ronaldo&vst=Cristiano%20Ronaldo> [Accessed on 19 February 2022]
Nike, 2022. Nike Inc. A growth company. [Online]. Available at: <https://media.corporate-ir.net/media_files/IROL/10/100529/nike-gs09/global.html#:~:text=Today%20we’re%20a%20diversified,major%20sports%20and%20consumer%20lifestyles.> [Accessed on 19 February 2022]
Posbergh, A., Andrews, D.L. and Clevenger, S.M., 2022. “Willpower knows no obstacles”: Examining Neoliberal Postfeminist Messaging in Nike’s Transnational Advertisements for Women. Communication & Sport, p.21674795211063537.
Puma, 2018. Puma welcomes planned Change in Ownership Structure. [Online]. Available at: <http://about.puma.com/en/newsroom/corporate-news/2018/january/PUMA-welcomes-planned-Change-in-Ownership-Structure> [Accessed on 19 February 2022]
Puma, 2022. Puma Mission and Vision Statements Analysis. [Online]. Available at: <https://mission-statement.com/puma/> [Accessed on 19 February 2022]
Statista, 2020. Puma – Statistics & Facts. [Online]. Available at: <https://www.statista.com/topics/1360/puma/> [Accessed on 19 February 2022]
Statista, 2021. Brand value of the sports company Nike worldwide from 2016 to 2021(in million U.S. dollars). [Online]. Available at: <https://www.statista.com/statistics/632210/nike-brand-value/> [Accessed on 19 February 2022]
Statista, 2021. Number of employees of Nike worldwide from 2009 to 2021 [Online]. Available at: <https://www.statista.com/statistics/243199/number-of-employees-of-nike-worldwide/> [Accessed on 19 February 2022]
Statista, 2021. Number of employees of the adidas Group worldwide from 2000 to 2020. [Online]. Available at: <https://www.statista.com/statistics/268427/number-of-employees-of-the-adidas-group-worldwide-since-2000/> [Accessed on 19 February 2022]
Statista, 2021. Puma’s number of employees worldwide from 1993 to 2020*. [Online]. Available at: <https://www.statista.com/statistics/268475/number-of-employees-of-puma-worldwide-since-1993/> [Accessed on 19 February 2022]
TechCrunch, 2019. With new Fit technology, Nike calls itself a tech company. [Online]. Available at: <https://techcrunch.com/2019/05/09/with-new-fit-technology-nike-calls-itself-a-tech-company/> [Accessed on 19 February 2022]
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