Environmental Scan Paper

Nike, Adidas and Under Armour Environmental Scan
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Nike, Adidas and Under Armour Environmental Scan
The success of a business venture is heavily reliant on both internal and external factors of the business. Internal environment relates to the factors inside the company that will influence its performance. In most cases, these factors are easily manageable within the firm. These factors are therefore essential for success because of its ease of manipulation. (“Strategic Planning: What are the basics of environmental scanning?”, 2012) The external environment encompasses factors outside the jurisdiction of the business whose influence affects the performance of the business. The organization has limited or absolutely no control over these factors. These factors are adequately analyzed using the PESTEL business theory. An important point where internal and external factors intersect allowing a business to influence the external environment is a competitive advantage. According to Porter’s five forces, a firm’s competitive advantage may be affected by bargaining power of suppliers, competitive rivalry, and bargaining power of consumers, the threat of new entrants and threat of substitute products or services. (Arline, 2015) Through proper manipulation of these factors, a company can leverage itself advantageously within a particular market segment. This paper will review three apparel firms; Nike, Under Armour and Adidas to evaluate their internal and external environments and how each manipulates these factors to compete effectively against the other two rivals.

Nike, Adidas, and Under Armour represent the largest companies in the sports apparel industry in the US and probably around the globe. Since the companies occupy the same niche, it is vital for each of them to participate aggressively in the manipulation of the internal environment so as to increase individual market share. Of the three Nike is the by far the largest comp[any and has always led the global market. Although the gap is still wide, the other two companies are steadily edging into its market share. While Adidas and Under Armour market shares are soaring, Nike’s segment seems to have stagnates. While the smaller two companies need strategies to increase the market share, Nike requires similar efforts to revitalize its desirability in new markets.
Nike Inc.
Being the largest of the three, Nike stands to lose more in the case of eventual balancing of markets. Among the current external factors that work for Nike is the current vast market share. This is highly favored by the public awareness of the brand. The majority of the average population still recognize Nike as the de facto sporting gear company .this means that Nike does not have to spend as much as the other companies on product marketing. The financial strength of the company is magnanimous compared to the other companies. This makes it easy for them to implement progressive trends. Technology is also an external force that has helped to propel Nike forward. With the help of its financial strength, Nike can employ the best technology to its advantage. However, this has been marked as a potential disadvantage for Nike. Since its relatively older that a company such as Under Armour, research has shown that it is more likely to be slower in adapting to newer technology. This means that younger companies are proceeding to produce better products in areas that were traditionally inherent to Nike. (Mahdi, Abbas, & Mazar, 2015) Social factors are an advantage for Nike. More people are brand-minded. Many Americans are keen to defend the brand they prefer in each sector. There is unending social media raw between consumers of opponent brands such as iPhone v Samsung, Coca-Cola v Pepsi and so on. When it comes to apparel, such consumer loyalty serves to the benefits companies with already established market share such as Nike.
One of the internal things working for Nike is its management style. Despite his long experience in footwear design having joined Nike in 1979, Mark Parker was formally a track runner. His opinion is, therefore, essential to athletes who are looking for professional help on which shoes are suitable for sporting. (Mahdi, Abbas, & Mazar, 2015) Corporate social responsibility within Nike also propels its image in the global market. Nike funds many NGO’s that participate in the improvement of community projects such as WWF. In the recent past, Nike’s reputation was marred by reports of human exploitation in factories situated in emerging economies. Unlike other stakeholders in the fashion industry that respond to such accusations defensively and spend a fortune in cover up, Nike responded by rectifying the challenges and joining various labor associations that ensure fair treatment of employees across the globe. This restored consumer confidence and even won the enthusiasm of skeptics. Nike invests in broad distribution channels bringing the product close to the people. Albeit slower than its opponents, Nike has established an extensive research and development department in the Nike Sports Research Laboratory and Advanced Product Engineering which ensure the continuous customer satisfaction.
Adidas
Adidas focus on innovation as its propelling factor. A few years ago, the company has mishaps in its design and market share value fell under that of Under Armour Company. This led to an even more active research and development which has seen an over 21% growth in the previous year. Producing very high quality of products means that the company can price its products competitively and still attract considerable market share. Economic and political tendencies have been a significant trading advantage for Adidas. Adidas in a German company and therefore it can operate with simpler terms across the European Union members as opposed to Nike which is an American company. The company also maintains higher differentiation market strategy. (Mahdi, Abbas, & Mazar, 2015) By incorporating affiliate companies such as Reebok, the company can penetrate wider markets and ensure perennial sustainability. In distribution, Adidas has two separate departments to cater for the unique needs of wholesale and retail consumers. This encourages businesses to select this manufacturer for starting up a trade venture. Besides, Adidas has intensified e-commerce. This is more appealing to younger consumers who will ensure continuity of the company’s success.
Under Armour
Started in 1996 Under Armour is a relatively new entrant. Its success has been unprecedented since no entrant had successfully made its entry in sports apparel industry for longer than two decades. While Under Armour is relatively small in comparison to the other two, its robust growth rate makes it a worth case to study. The primary strategy employed is innovation. (Christine, 2016) Under Armour aims to attract younger consumers that do not have an already formed loyalty to the older manufacturers. This is an appropriate move because modern consumers are rapidly moving from a brand-oriented mentality to focus on a fashion-oriented mentality. Younger consumers are less loyal to the brand and are more informed on available options. This is probably the reason why the brand can penetrate such a monopolized industry. It young age make is more open to newer technologies since it does not have an established method of operations. It is more highly flexible and therefore easier to fit into modern management and operation techniques. Its marketing strategies have been vigorous and efficient in securing a rapidly growing consumer base. (Christine, 2016) In a special way, Under Armour maintains an auto competitive advantage by maintaining a favorable relationship with professional sporting companies.

References
Arline, K. (2015). Porter’s Five Forces: Analyzing the Competition. Business News Daily. Retrieved 4 October 2016, from http://www.businessnewsdaily.com/5446-porters-five-forces.html
Christine, K. (2016). Under Armour’s Case Analysis Introduction. Academia.edu. Retrieved 4 October 2016, from http://www.academia.edu/6698817/Under_Armours_Case_Analysis_Introduction
Mahdi, H., Abbas, M., & Mazar, T. (2015). A Comparative Analysis of Strategies and Business Models of Nike, Inc. and Adidas Group with special reference to Competitive Advantage in the context of a Dynamic and Competitive Environment. International Journal Of Business Management And Economic Research(IJBMER), 6(3), 167-177. Retrieved from http://www.ijbmer.com/docs/volumes/vol6issue3/ijbmer2015060302.pdf
Strategic Planning: What are the basics of environmental scanning?. (2012). SHRM. Retrieved 4 October 2016, from https://www.shrm.org/resourcesandtools/tools-and-samples/hr-qa/pages/cms_021670.aspx