Industry 44 Company B (Board of Directors)
David Busch: Expected Graduation May 2011, Human Resource Concentration
Erica Murray: Expected Graduation December 2010, Marketing Concentration
5-Forces Analysis
Competitive
Forces
Power of Threat
Reason
Suppliers
High
In Year 17, wholesale demand and private
label demand exceeded suppliers capacity
in every geographic location.
Buyers
High
Buyers can choose among more than two
sellers
Substitutes
Low
Customers are not willing to use products
from another industry; no real substitutes
Rivalry
High
In year 17, there are several competitors
roughly the same size (For example,
Company A, Company B, and Company D
all control around 12% of the wholesale
market share in North America)
Threat to Entry
Low
No evidence from the BSG to suggest new
companies entering the market; No
immediate threat from other companies
illustrated through the strategic group map
2 LOW Forces: Expected profitability on business average on all
KSF will be about equal to cost of capital
Company Position
Year 17 North America
Company B offers a wide range of models, with a competitive price
and an average S/Q rating of 6.
Key Success Factors

Business Strategy Game
 S/Q Rating
 Inventory Turnover
 Celebrity Appeal

Real Footwear Industry
 Fashion Design and Technology
 Manufacturing Efficiency: Nike Strategy
 Celebrity Appeal
Strength Assessment Critique
North America Wholesale Segment Year 17
Key Success
Factor
Company
Score
Industry
Average
Strength
Assessmen
t Score
S/Q Rating
7
6
5
Inventory
Turnover
12.59
26.24
3
Celebrity
Appeal
265
111
5
Industry 43B is well below the industry average for inventory
turnover. As board of directors, we believe top management
should be more efficient in controlling inventory and ensuring
customers can purchase the latest styles of shoes. However,
we do support industry 43B’s commitment to increase the
number of retailer outlets utilized in order to increase brand
recognition and loyalty.
Market Share Trend Critique
20
18
16
Market Share %
14
12
North America
Europe Africa
10
Asia Pacific
8
Latin America
6
4
2
0
Year 11
Year 12
Year 13
Year 14
Year 15
Year 16
Year 17
Market share is continuing to decrease in all four geographic
locations. We agree with shareholders, and believe top
management should focus on recapturing market share by
increasing celebrity appeal.
Financial Performance Critique
30
25
20
EPS
15
ROE
Net Profit
10
5
0
Year 11
Year 12
Year 13
Year 14
Year 15
Year 16
Year 17
Net profit as a % on net revenue
EPS, ROE, and net profit declined to a minimum in Year 15. Top
management increased those numbers in Year 16. However, levels
decreased again in year 17. As with shareholders, we believe top
management needs to produce more consistent results for EPS, ROE,
and net profit.
Recommendations for Top
Management
To create and sustain competitive
advantage in relationship with…


Customers: Top management should work to
reduce production costs and manage inventory
turnover more efficiently, while continuing to offer a
wide range of models with a high S/Q rating.
Shareholders: Top management should focus on
recapturing their lost market share by increasing
celebrity appeal and improving their financial
performance to imitate peak years by continuing to
maintain high stock prices and offering increased
dividends.
Citation

Cite: Jannarone, John. “Nike Strategy Leaves It Room to
Run.” Wall Street Journal (eastern Edition) 16 Mar. 2010:
C.10. Web. 2010 Sep
20.<http://proquest%20.umi%20.com/pqdlink%20?did=1983
416321%20&Fmt=7%20&clientId=15092%20&RQT=309%2
0&VName=PQD>.