Nike
Profile
 It is the world's leading supplier of athletic shoes and
apparel and a major manufacturer of sports equipment with
revenue in excess of $19.2 billion USD in 2009.
 it employed over 33,000 people world-wide.
 Nike is the only Fortune 500 companies in sports apparel
industries, headquartered in the state of Oregon.
 The company was founded in 1962 as Blue Ribbon Sports.
 The company takes its name from Nike, the Greek goddess
of victory.
 Nike markets its products under its own brand as well as
Nike Golf, Nike Pro, Nike+, Air Jordan, Nike Skateboarding,
Team Starter, and subsidiaries including Cole Haan, Hurley
International, Umbro and Converse. Nike also owned Bauer
Hockey (later renamed Nike Bauer).
Profile
 In addition to manufacturing sportswear and equipment,
the company operates retail stores under the name
Niketown. Nike sponsors many high profile athletes and
sports teams around the world, with the highly recognized
trademarks of "Just do it" and the Swoosh logo.
 Their products are made for men, women, and children of
all ages.
 The company presently sells roughly 300 models of
athletic shoes in 900 styles for 25 different sports.
 Nike's target market for their shoes is males and females
between 18 and 35 years old.
 March 3, 2008 – NIKE completed the acquisition of Umbro
Ltd. which Umbro shareholders accepted on January 31,
2008 for approximately $565 million.
Phillip Knight, a Stanford University
business graduate and former member of the
track team, arranges to import athletic shoes
from Japan and sell them in the U.S..
1962:
1964: William Bowerman becomes a partner by
matching Knight's investment of $500.
1969: It now has several stores and
employees; sales are close to $300,000.
20
1971: Nike, capitalizing on the Greek goddess
of victory. The first Nike product sold with the
new symbol is a soccer shoe.(Creation of the
swoosh logo)
1978: The company changes its name to Nike.
1980: Nike goes public, offering shares of stock.
1990: Nike files suit against competitors for
copying the patented designs of its shoes, and also
engaged in a dispute with the U.S. Customs Service
over import duties on its Air Jordan basketball
shoes.
2001: Nike opens its first Nike Goddess store, a
unit targeting women, in Newport Beach, CA.
2003: Nike purchases Converse Inc.

Problems in mid 1980s:
1.
2.
3.
Demographic changes
- baby boomers pushed into their late forties & felt less like running.
Market for running shoes become highly segmented (mature
market)
-many different models for every nuisance of customer need.
Competition
-Reebok create new market orientations to sell sneakers based on
fashion rather than performance
Results from the problem
1.
2.
1984- Nike’s unit sales decreased 17%
- market share declined 31% to 24%
1987- have only 18.6 % share of shoes market
Action taken
1.
2.
3.
Introduced technological features to enhance shoes performance.
Use of celebrities as spokesperson. Air Jordan was a major hit.
Using advertising as marketing strategy
Challenge in late 1990s
1) Shoe market had changed
-younger customer favors of hiking boots & more casual
footwear.
-teens began participating in nontraditional ‘extreme’
sport.
NIKE responded by introducing ACG (all-condition gear)
2) Controversy surrounding its overseas labour practices
-Nike being accused of utilizing sweatshop labour in
developed nations. Protest sprang.
NIKE created corporate & social responsibility department.
Problem in 2000
1) Involved in squabbles with 2 large universities
over those school’s endorsement of the Worker
Right Consortium.
(1997)
Why?
- Establishing a separate division called ACG
(all-condition gear), designed a line of shoes
and apparel that bears the distinctive ACG logo
rather than the familiar Nike swoosh.
STRATEGIC THINKING
PURPOSE: is to carry on his legacy of
innovative
thinking,
whether
to
develop products that help athletes of
every level of ability reach their
potential, or to create business
opportunities that set Nike apart from
the competition and provide value for
our shareholders.
MISSION: “To bring inspiration and innovation
to every athlete in the world”
VISION: “Innovate for better world”
Unleashing potential through sport. In the last two
years, Nike has invested $100 million worldwide in
community-based sports initiatives. By 2011, NIKE
is expected to invest another $315 million. These
investments will be used to give excluded youth
around the world the chance to play because as
access to sport can enhance their lives.
Nike will provide products, resurface playing fields,
support community-based programs, and help young
people create their own communities. This is all will
be the NIKE “Let Me Play
VALUE: Three core values of the
company
are
honesty,
competitiveness,
and
teamwork.
Despite its size, Nike operates with a
minimum of hierarchy. As a result,
there is a lot of collaboration and
consensus
decision-making.
Commonly held values are imperative
in such a matrix organization.
INTERNAL ENVIRONMENTS
STRENGTHS
Strong management team and good corporate
strategy in
both North American and overseas
markets.
First mover advantage in e-commerce.
Brand recognition and reputation.
Diversity and variety in products offered on the web
(footwear, apparel, sporting equipment, etc.)
Strong control over its own distribution channel.
Strong customer base.
Strong financial position with minimal long term
debts.
Innovative designs in footwear enabling consumers
to design their own shoes online.
Diversity and variety in products offered on the web.
Emerging brand name.
WEAKNESSES
Negative image portrayed by poor working conditions in its
overseas factories.
E-commerce is limited to USA.
The direct sale to consumers is creating conflicts with its
own resellers.
Currently available supply chain, manufacturing, and
fulfilment technologies aren't known for its research easily
integrated
with
online
build-to-order
systems
and
development leading to innovative designs.
The e-commerce is limited to USA, however, has planned to
expand to Canada and international in the near future.
Online customer service not "helpful" or easy to find.
ALIGNING THE 7 S’
STRUCTURE: Matrix-structure.
STAFFING: Mix of new hires and promotions.
SHARED VALUES: Balance of individualistic atmosphere
and structure of matrix. Calculated risk taking.
SYSTEMS:
Encourages work ethics.
SKILLS: Financially disciplined.
STYLE: Empowerment of top management.
STRATEGY:
acquisitions.
Diversify
business
portfolio
with
new
EXTERNAL ENVIRONMENTS
OPPORTUNITIES
Increasing demand in the industry for products available online.
Increase female participation in athletics.
New technology and innovation to stay on top of market needs.
Expand e-commerce to global markets.
Possibility of outsourcing the web development and e-commerce to
a third party developer.
Growing interest in the sport of Basketball. Partnering up with
other retailers to sell basketball footwear and apparel.
Growing reputation in non-basketball sports will boost e-business.
E-commerce will reduce the cost of goods.
Collaborate with other online retailers to offer Adidas products.
THREATS
Negative image due to "sweatshops".
Economic downturn in North America and Asian Countries.
Increase in the price of providing technological solutions (ecommerce).
Strong competition from some of its major challengers in all
branches of the business.
Increase in the Price of Raw materials.
Nike's strong
industry.
reputation
in
the
footwear
and
apparel
Continuing challenges in import/export duties.
Threats to free trade and foreign currency fluctuations.
Possibility of distress from growing beyond its capabilities.
PORTER'S FIVE FORCES
BARGAINING POWER OF BUYERS - HIGH
•Consumer’s participation in improving conditions in LDCs.
•Segmented buyers
•High price points surveys show people are willing to pay more.
•People do not usually do what they say.
BARGAINING POWER OF SUPPLIERS - LOW
•Really powerful suppliers. One company is producing 40% of
worldwide shoes.
•How can you impose your standards on them? What about the
other companies?
•They can forward integrate, they have the technology
BARRIERS TO ENTRY - LOW (NEW ENTRANTS)
• Competing shoes and new companies coming in.
RIVALRY AMONG EXISTING COMPETITORS - HIGH
• Competitors are doing the same thing. Low production
cost / High marketing.
THREATS OF SUBSTITUTES – LOW
Advantages NIKE have
 COSTS
 SPEED
 DIVERSITY OF SUPPLIERS
 NIKE'S WORLDWIDE SUPPLY-CHAIN PROJECT
 ADDING VALUE FOR THE CUSTOMER
COSTS
 Outsource non-core activities
 Allows Nike to focus on their core competencies of: Product Design,
Marketing , AIR SOLE Technology
 Having a virtual relationship with suppliers and the companies who
assemble Nike products allows them to: Reduce administrative costs,
Payroll costs.
 Switch to companies that provide low labor costs and a quality
product.
SPEED
 Having a virtual supply chain, Nike can increase the speed their
product flows through the supply chain.
 Send new designs to suppliers who produce shoe parts.
 Suppliers send these shoe parts to the assembly companies.
 Ship the finished products to distributors worldwide.
 This allows them cut down on the amount of time required from
the initial design, to production and then distribution.
DIVERSITY OF SUPPLIERS
A VSC allows a company to search for and use a wider range of suppliers.
Although geography may separate them they can still communicate
electronically.
Having multiple suppliers that you can trust allows you to avoid
emergencies in your supply chain.
With more suppliers available a company is more flexible.
ADDING VALUE FOR THE CUSTOMER
Nike now provides customized shoes for customers. (Websites)
A company called Planar has installed touch-screen systems in Nike Stores
to allow customers to build their own shoes.
By combining technology with customized service Nike has created an
instant ordering system while providing more services for their customers.
 Employed many athletes as its spokesperson
 Nike has a number of famous athletes that serve




as brand ambassadors such as the Brazilian
Soccer Team (especially Ronaldino, Renaldo, and
Roberto Carlos), David Beckham, Cristiano
Renaldo etc.,
Tennis players like Roger Fedrer, Rafael Nadal,
Sharapova, William sisters etc.,
Lebron James and Jermane O’Neal, Michael
Jodan for basketball,
Lance Armstrong for cycling, and
Tiger
Woods
for
Golf.
Advertising Strategy
Designed to make a connection to the
consumer
Seldom pitch the product directly or talk about
product attributes
Sometimes don’t even mention the company’s
nam, featuring instead only the swoosh logo
Seek to portray the core values of sport
Collaboration ads with another strong branded
product, such as Apple iPod
Balance sheet pattern
 Out of 100%, 53.8% goes to cost of sells.
 And 32.2% goes to selling and administrative exp.
 From the remaining 14%, 24.7% deducted as income
tax.
 So profit margins are 10.57% as per last result
declared.
(Source: ICFAI journal)
Bibliography
• http://invest.nike.com/phoenix.zhtml?c=100529&p=irolnewsArticle&ID=1336485&highlight=
• http://www.nikebiz.com/?sitesrc=USLP
• http://corporate-marketingbranding.suite101.com/article.cfm/audit_on_nikes_marketing_str
ategies#ixzz0T42n2mQd
• ICFAi journals
• www.Scribd.com