Footwear industry is among those few industries around the globe that seems to be profitable and has better future ahead in the international market. A lot of multinational companies under this industry have been extensively searching for countries to off shore their product lines to have competitive advantage and utilize available resources from other countries like for the case of Nike wherein this company have been establishing manufacturing plants in China due to cheap labor cost of Chinese workers. Nike Incorporated
At present, Nike still dominates the industry not only of footwear production but also other sportswear and sports paraphernalia with around 39 percent of market share internationally. Nike is an American based company located in Beaverton, Oregon having around 30,200 employees around the globe as of January 2008. Moreover, Nike has been enjoying for the past years improving profitability and last year the company accounted around 16 billion USD of revenue and net income of around 1. 5 billion USD.
Adidas Limited AG On the other hand, Adidas has around 15 percent market share internationally and the second largest footwear producer around the globe next to Nike. Adidas is a German based company and employs around 27,000 workers around the globe with annual revenue of more than 10 billion euro and annual net profit of 483 million euro as of 2006. Adidas does not only produce footwear to the market but also sports accessories and equipment just like Nike. Reebok International Limited Reebok is a British based footwear manufacturing company with 11 percent of the total international market share and now a subsidiary of Adidas since 2006.
Reebok specializes in the production of sportswear and sports accessories and acquired by Adidas for 8 billion USD and the third largest producer of footwear in the international market. In other words, the three major producers of footwear in the market is accounted for around 65 percent of the total supply of footwear in the international market while the remaining 35 percent will come from small footwear producers of every countries around the globe (Athletic Footwear Industry Analysis 2008: 5).
Moreover, most of the target-customers of these industries are middle aged people engaged in sports since most of the footwear being produced in the market is sports shoes. The profitability of footwear industry lies on the seasons especially during upcoming national tournaments (Manhardt 2006: 5). This is how the three top footwear producers make most of their profit–producing more and spends more on advertising when there is say national soccer game in Paris.
Sponsorship on major sport team or sport icon helps footwear companies to incur higher sales. During off-peak season, Adidas, Nike and Reebok make profit through their footwear other than sport shoes. Nike concentrate more on catering the American market while Adidas on the Europe. It is only through product differentiation the said above major footwear producers attain more customers on their side.