NIKE: Meeting a Business Challenge

Phil Knight’s company was facing a formidable challenge launched by an upstart company in a newly emerging market segment. Aerobic exercise and the new world of athletic shoe fashion that it helped create were quite a departure from the millions of high performance athetic shoes sold by Nike each year.Reebok’s chairman, Paul Fireman, was among the first to spot the trend, and he had his designers create a uniqe shoe for aerobic workouts.But even Fireman wasn’t prepared for what happened next. As running and sport shoes become a fashionable footwear, Reebok’s sales shot past those of it competitor.

The result was that Nike slipped into the runner up position in 1986 and knight new he had to act.Using marketing research, Nike marketers learn more about customer needs. To boost Nike’s appeal, the company introduce the stylish accents and colors. Now the company could compete more effectively against Reebok and L.A. Gear, both successful in combination fashion and active footwear.

But Nike and the industry was built on performance, and that remained a high priority for many customers. Knight poured money into research and development, resulting in the new Nike Air Technology. Soon, many shoes featured Nike Air, and the firm built a special model with a small window on each side of the heel, revealing the air sac inside. Shoe stores were encourage to show this visible air model to help sell all the shoes in the Nike line.

Knight has always been adept at exploiting advertising. Even before Reebok stole the show with aerobics shoes, Knight was using aggressive marketing and advertising approaches to keep the public’s feet in Nike shoes. For the 1984 Olympics in Los Angeles, the company brought out the daring new billboard ad campaign, featuring colourful, dramatic pictures of athletes performing at their peak. The Nike name and logo appeared only in one corner, without any headline or sales massage. In race with Reebok, this award winning olympics series was followed by other high profile ad campaigns, including “Just Do It”, running from 1989 to 1990.

Japan’s Banking Empire: Changing Strategies to Retain World Lender Leadership

Not one Japanese Bank was listed among the world’s top five banks in 1980. But by 1988 the top 12 banks were all japanese (ranked by deposits). The largest Japanese banks grew not only domestically but internationally, opening branches in United States, in Europe, and throughout Asia. Now winds of change are blowing, and Japanese banks are facing an end to their expansionist day.

Japanese banks were able to expand during the 1980s because the country’s economy was growing rapidly, financed by a hight rate of domestic savings and a low rate of interest (which was deliberately kept low by the goverment to fuel industrial development). Japanese banks were so pofitable that they invest heavily in domestic and foreign real estate and in the securities of Japanese corporations, which also own large amounts of real estate. Moreover, their high-flying success allowed them to persue a long term strategy of gaining market share in foreign markets. This was particularly true in the United States, where interest charged on commercial loans was much higher and, therfore, less competitive than the rates offered by Japanese banks.

But the 1980s came to an end, and so did the easy profits for Japanese banks. Early 1990 brought a wave a changes that are still sweeping across the Japanese banking industry:

- A dramatic devaluation of Japanese securities and the beginning of what appears to be a long

term slide in domestic real estate

- A drop in value of foreign real estate holdings held by Japanese banks.

- A gradual deregulation of both the Japanese Banking and Japanese interest rate

- A requirements for all Japanese banks to have enough capital on hand to cover 8 percent of

risk-adjusted assets.

Because of such market and regulatory changes, the profits of Japanese banks are being squeezed by falling asset values, corporate clients who are finding competitive loan rates overseas, retail clients who are saving less than in the past, and increased reserve requirements. Thus, Japanese banks have changed their business strategies from gaining long term market share and asset growth to a shorter-term concern for profit. And this shift has caused the Japanese banking industry to undergo its own consolidation.

The rest of the world’s banking community is wary, even when it might be expected to rejoice: Larger Japanese banks will likely be even more fear some competitors. An eye-opening example came in late 1989, when the largest bank merger in history was announced. Mitsui and Tiyo Kobe banks agreed to create a second largest bank in the world, with $348 billion in assets, $9.02 billion in capital, and 611 branches worldwide.

Resource:

Business Today