TURGAY ARIKAN

HATCE AKAN

ELN
KARABULUT

FATMA MERVE
GVEN
CONTENTS

1. EXECUTIVE SUMMARY.....6
2. NIKE OVERVIEW.....8
2.1. HISTORY.......8
2.2. ORIGIN OF THE NAME AND THE SWOOSH....18
2.3. ORGANIZATION CHART OF NIKE ........19
2.4. MISION AND VISION STATEMENTS OF NIKE........22
2.4.1. NIKE's VISSION.......22
2.4.2. NIKEs MISSION.........23
2.5. PRODUCTS OF NIKE ........24

2.5.1. FOR MEN AND WOMEN.......................25

2.5.2. WIND RUNNER AND SHELLS......................26
2.5.3. THISRT.........................26
2.5.4. GEAR PACKBAGES AND BAGES........26
2.6.NIKE PORTFOLIO OF BRAND..................27
2.6.1.CONVERSE.......28
2.6.2.HARLEY................28
2.6.3.JORDAN........28
2.6.4.COLLEHAN....29
2.6.5.BAUER.......29

3. EXTERNAL ANALYSIS..29
3.1. POLITICAL FORCES.29
3.2. ECONOMIC FORCES............30
3.3.SOCIAL CULTURAL FORCES......30
3.4. TECHNOLOGICAL FORCES........30
3.5. ENVIRONMENTAL FORCES.......31
3.6. LEGAL FORCES.........31
3.7. GEOPAPRICAL FORCES.......31
3.8. INTERNATIONAL FORCES.........32

3.9. EFE MATRIX......32

4. PORTERS FIVE FORCES MODEL..33
4.1. POTENTIAL ENTRANTS......34
4.2. BUYERS.34
4.3. SUBSTITUTES..........35
4.4. SUPLIERS............35
4.5. COMPETITIVE RIVARLY.........36
4.6. COMPETITIVE PROFILE MATRIX..36
4.6.1. MAJOR COMPETITIORS....36
4.6.2.COMMENT ABOUT CHART......38

5. INTERNAL ANALYSIS..41
5.1. NIKE MANAGEMENT STRUCTURE....41
5.2. MARKETING......42
5.3. R&D .........45
5.4..PRODUCTION SYSTEM....................47
5.5.OPERATION MANAGENT OF NIKE..............48
5.6. FINANCE.....48
5.7. IFE MATRIX...57
6.STRATEGY ANALYSIS (CREATE ALTERNATIVE STRATEGY)59
6.1. SWOT ANALYSIS....59

6.2. SPACE MATRIX...63

6.3. BCG MATRIX.65
6.4. INTERNAL - EXTERNAL ANLYSIS68
6.5. GRAND STRATEGY MARTIX.69
7. STRATEGY SELECTION (CHOICE) AND RECOMMENDATIONS ....70
7.1. QUANTITY STRATEGIC POSITION MATRIX.....70
7.2. FIRST RECOMMENDATION..72
7.3. SECOND RECOMMENDATION....73
7.4. THIRD RECOMMENDATION....73
8. STRATEGY IMPLEMENTATION...74

8.1. MANAGEMENT AND OPERATIONS...74

8.2. MARKETING....75
8.3. FINANCE..........76
8.4. RESEACH AND DEVELOPMENT....77
9. STRATEGY EVALUATION AND CONTROL..77
9.1. Evaluation..79
9.2. Balance score Card of Nike..80
10. CONCLUSION.....81
BIBLIOGRAPHIC..82

ABSTRACT
We analyze Blue Rbbon Sports and NIKE Company that under of its successful group
and Nke Companys products, market position, competitors, brand power , financial growth,
partnerships, organization structure , suppliers and vision & mission in this project. Also we
made up matrixes according to the general data of NIKE Company and defined our strategies.
Finally, we proposed in order to be effectively about the profitability and productivity of the
company in market.

NIKE'S EXECUTIVES
This report is an extensive research on the marketing strategies of NIKE. It covers an
extensive matrix and depicts all graphs, fact and figures of NIKE. Orgnally known as Blue
Rbbon Sports (BRS) was founded by Unversty of Oregon track athlete Phlp knght and hs
coach Bill Bowerman n January 1964.The company is headquartered near Beaverton
,Oregon, in the Portland metropolitan area, and is one of only two Fortune 500 companies
headquartered in Oregon. It is one of the world's largest suppliers of athletic shoes and
apparel[3] and a major manufacturer of sports equipment, with revenue in excess of US$24.1
billion in its fiscal year 2012 (ending May 31, 2012). As of 2012, it employed more than

44,000 people worldwide. The brand alone is valued at $10.7 billion, making it the most
valuable brand among sports businesses. In 1976, the company hired John Brown and
Partners, based in Seattle, as its first advertising agency. The following year, the agency
created the first "brand ad" for Nike, called "There is no finish line", in which no Nike
product was shown. By 1980, Nike had attained a 50% market share in the U.S. athletic shoe
market, and the company went public in December of that year.
We analyze Nikes management,financial position,marketing activity,production and
operation facility, economomic forces,research and development activity,environmental
factors.According these results,we offer to the company strategy.The External Factor

Evaluation (EFE) Matrix analysed which the company develops which opportunities in the
market the company can get and which threats the company should be avoided in the market
area. Porters 5 forces model has analysed to see how environmental forces effect the business
for doing job. and Companys competitors has been anaysed and reported in Competitive
Profile Matrix. The internal Factor Evaluation ( FE ) Matrix briefly explained that the strong
sides of internal factors that company is good and weakness sides of the company that the
company should improve internally. In formulating strategy, we formulated some strategies by
evaluating SWOT, SPACE, INTERNAL-EXTERNAL,GRAND strategy, we found out
suitable strategies to implement in QSPM for selecting and recommend main strategy. Fnally,

we analyze effectiveness of our strategy with Balance scorecard and evaluation stage. As a
result, we summarize all our stages in our Project.

NIKE OVERWIEW
NIKE HISTORY
Founded as an importer of Japanese shoes, NIKE, Inc. (Nike) has grown to be the world's
largest marketer of athletic footwear and apparel. In the United States, Nike products are sold
through about 20,000 retail accounts; worldwide, the company's products are sold in about
110 countries. Both domestically and overseas Nike operates retail stores, including
NikeTowns and factory outlets. Nearly all of the items are manufactured by independent

contractors, primarily located overseas, with Nike involved in the design, development, and
marketing. In addition to its wide range of core athletic shoes and apparel, the company also
sells Nike and Bauer brand athletic equipment, Cole Haan brand dress and casual footwear,
and the Sports Specialties line of headwear featuring licensing team logos. The company has
relied on consistent innovation in the design of its products and heavy promotion to fuel its
growth in both U.S. and foreign markets. The ubiquitous presence of the Nike brand and its
Swoosh trademark led to a backlash against the company by the late 20th century, particularly
in relation to allegations of low wages and poor working conditions at the company's Asian
contract manufacturers.

BRS Beginnings
Nike's precursor originated in 1962, a product of the imagination of Philip H. Knight, a
Stanford University business graduate who had been a member of the track team as an
undergraduate at the University of Oregon. Traveling in Japan after finishing up business
school, Knight got in touch with a Japanese firm that made athletic shoes, the Onitsuka Tiger
Co., and arranged to import some of its products to the United States on a small scale. Knight
was convinced that Japanese running shoes could become significant competitors for the
German products that then dominated the American market. In the course of setting up his
agreement with Onitsuka Tiger, Knight invented Blue Ribbon Sports to satisfy his Japanese

partner's expectations that he represented an actual company, and this hypothetical firm
eventually grew to become Nike, Inc.
At the end of 1963, Knight's arrangements in Japan came to fruition when he took
delivery of 200 pairs of Tiger athletic shoes, which he stored in his father's basement and
peddled at various track meets in the area. Knight's one-man venture became a partnership in
the following year, when his former track coach, William Bowerman, chipped in $500 to
equal Knight's investment. Bowerman had long been experimenting with modified running
shoes for his team, and he worked with runners to improve the designs of prototype Blue
Ribbon Sports (BRS) shoes. Innovation in running shoe design eventually would become a

cornerstone of the company's continued expansion and success. Bowerman's efforts first paid
off in 1968, when a shoe known as the Cortez, which he had designed, became a big seller.
BRS sold 1,300 pairs of Japanese running shoes in 1964, its first year, to gross $8,000.
By 1965 the fledgling company had acquired a full-time employee and sales had reached
$20,000. The following year, the company rented its first retail space, next to a beauty salon
in Santa Monica, California, so that its few employees could stop selling shoes out of their
cars. In 1967 with fast-growing sales, BRS expanded operations to the East Coast, opening a
distribution office in Wellesley, Massachusetts.Bowerman's innovations in running shoe
technology continued throughout this time. A shoe with the upper portion made of nylon went

into development in 1967, and the following year Bowerman and another employee came up
with the Boston shoe, which incorporated the first cushioned mid-sole throughout the entire
length of an athletic shoe.
Emergence of Nike in 1970s
By the end of the decade, Knight's venture had expanded to include several stores and
20 employees and sales were nearing $300,000. The company was poised for greater growth,
but Knight was frustrated by a lack of capital to pay for expansion. In 1971 using financing
from the Japanese trading company Nissho Iwai Corporation, BRS was able to manufacture

its own line of products overseas, through independent contractors, for import to the United
States. At this time, the company introduced its Swoosh trademark and the brand name Nike,
the Greek goddess of victory. These new symbols were initially affixed to a soccer shoe, the
first Nike product to be sold.
A year later, BRS broke with its old Japanese partner, Onitsuka Tiger, after a
disagreement over distribution, and kicked off promotion of its own products at the 1972 U.S.
Olympic Trials, the first of many marketing campaigns that would seek to attach Nike's name
and fortunes to the careers of well-known athletes. Nike shoes were geared to the serious
athlete, and their high performance carried with it a high price.

In their first year of distribution, the company's new products grossed $1.96 million and the
corporate staff swelled to 45. In addition, operations were expanded to Canada, the company's
first foreign market, which would be followed by Australia, in 1974.Bowerman continued his
innovations in running-shoe design with the introduction of the Moon shoe in 1972, which
had a waffle-like sole that had first been formed by molding rubber on a household waffle
iron. This sole increased the traction of the shoe without adding weight.
In 1974 BRS opened its first U.S. plant, in Exeter, New Hampshire. The company's
payroll swelled to 250, and worldwide sales neared $5 million by the end of 1974. This
growth was fueled in part by aggressive promotion of the Nike brand name. The company

sought to expand its visibility by having its shoes worn by prominent athletes, including
tennis players Ilie Nastase and Jimmy Connors. At the 1976 Olympic Trials these efforts
began to pay off as Nike shoes were worn by rising athletic stars.The company's growth had
truly begun to take off by this time, riding the boom in popularity of jogging that took place in
the United States in the late 1970s. BRS revenues tripled in two years to $14 million in 1976,
and then doubled in just one year to $28 million in 1977. To keep up with demand, the
company opened new factories, adding a stitching plant in Maine and additional overseas
production facilities in Taiwan and Korea. International sales were expanded when markets in
Asia were opened in 1977 and in South America the following year. European distributorships
were lined up in 1978.

Nike continued its promotional activities with the opening of Athletics West, a training
club for Olympic hopefuls in track and field, and by signing tennis player John McEnroe to an
endorsement contract. In 1978 the company changed its name to Nike, Inc. The company
expanded its line of products that year, adding athletic shoes for children.By 1979 Nike sold
almost half the running shoes bought in the United States, and the company moved into a new
world headquarters building in Beaverton, Oregon. In addition to its shoe business, the
company began to make and market a line of sports clothing, and the Nike Air shoe
cushioning device was introduced.
1980s Growth through International Expansion and Aggressive Marketing

By the start of the 1980s, Nike's combination of groundbreaking design and savvy and
aggressive marketing had allowed it to surpass the German athletic shoe company Adidas AG,
formerly the leader in U.S. sales. In December 1980, Nike went public, offering two million
shares of stock. With the revenues generated by the stock sale, the company planned
continued expansion, particularly in the European market. In the United States, plans for a
new headquarters on a large, rural campus were inaugurated, and an East Coast distribution
center in Greenland, New Hampshire, was brought on line. In addition, the company bought a
large plant in Exeter, New Hampshire, to house the Nike Sport Research and Development
Lab and also to provide for more domestic manufacturing capacity. The company had shifted

its overseas production away from Japan at this point, manufacturing nearly four-fifths of its
shoes in South Korea and Taiwan. It established factories in mainland China in 1981.
By the following year, when the jogging craze in the United States had started to
wane, half of the running shoes bought in the United States bore the Nike trademark. The
company was well insulated from the effects of a stagnating demand for running shoes,
however, since it gained a substantial share of its sales from other types of athletic shoes,
notably basketball shoes and tennis shoes. In addition, Nike benefited from strong sales of its
other product lines, which included apparel, work and leisure shoes, and children's shoes.

Given the slowing of growth in the U.S. market, however, the company turned its
attention to growth in foreign markets, inaugurating Nike International, Ltd. in 1981 to
spearhead the company's push into Europe and Japan, as well as into Asia, Latin America, and
Africa. In Europe, Nike faced stiff competition from Adidas and Puma, which had a strong
hold on the soccer market, Europe's largest athletic shoe category.
The company opened a factory in Ireland to enable it to distribute its shoes without
paying high import tariffs, and in 1981 bought out its distributors in England and Austria, to
strengthen its control over marketing and distribution of its products. In 1982 the company
outfitted Aston Villa, the winning team in the English and European Cup soccer

championships, giving a boost to promotion of its new soccer shoe. In Japan, Nike allied itself
with Nissho Iwai, the sixth largest Japanese trading company, to form Nike-Japan
Corporation. Because Nike already held a part of the low-priced athletic shoe market, the
company set its sights on the high-priced end of the scale in Japan.
By 1982 the company's line of products included more than 200 different kinds of shoes,
including the Air Force I, a basketball shoe, and its companion shoe for racquet sports, the Air
Ace, the latest models in the long line of innovative shoe designs that had pushed Nike's
earnings to an average annual increase of almost 100 percent. In addition, the company
marketed more than 200 different items of clothing. By 1983--when the company posted its

first-ever quarterly drop in earnings as the running boom peaked and went into a decline-Nike's leaders were looking to the apparel division, as well as overseas markets, for further
expansion. In foreign sales, the company had mixed results. Its operations in Japan were
almost immediately profitable, and the company quickly jumped to second place in the
Japanese market, but in Europe, Nike fared less well, losing money on its five European
subsidiaries.
Faced with an 11.5 percent drop in domestic sales of its shoes in the 1984 fiscal year,
Nike moved away from its traditional marketing strategy of support for sporting events and
athlete endorsements to a wider-reaching approach, investing more than $10 million in its first

national television and magazine advertising campaign. This followed the 'Cities Campaign,'
which used billboards and murals in nine American cities to publicize Nike products in the
period before the 1984 Olympics. Despite the strong showing of athletes wearing Nike shoes
in the 1984 Los Angeles Olympic games, Nike profits were down almost 30 percent for the
fiscal year ending in May 1984, although international sales were robust and overall sales rose
slightly. This decline was a result of aggressive price discounting on Nike products and the
increased costs associated with the company's push into foreign markets and attempts to build
up its sales of apparel.

Earnings continued to fall in the next three quarters as the company lost market share,
posting profits of only $7.8 million at the end of August 1984, a loss of $2.2 million three
months later, and another loss of $2.1 million at the end of February 1985. In response, Nike
adopted a series of measures to change its sliding course. The company cut back on the
number of shoes it had sitting in warehouses and also attempted to fine-tune its corporate
mission by cutting back on the number of products it marketed. It made plans to reduce the
line of Nike shoes by 30 percent within a year and a half. In addition, leadership at the top of
the company was streamlined, as founder Knight resumed the post of president--which he had
relinquished in 1983--in addition to his duties as chairman and chief executive officer. Overall
administrative costs were also reduced. As part of this effort, Nike also consolidated its

research and marketing branches, closing its facility in Exeter, New Hampshire, and cutting
75 of the plant's 125 employees. Overall, the company laid off about 400 workers during
1984.

Faced with shifting consumer interests (i.e., the U.S. market move from jogging to aerobics),
the company created a new products division in 1985 to help keep pace. In addition, Nike
purchased Pro-form, a small maker of weightlifting equipment, as part of its plan to profit
from all aspects of the fitness movement.

The company was restructured further at the end of 1985 when its last two U.S. factories
were closed and its previous divisions of apparel and athletic shoes were rearranged by sport.
In a move that would prove to be the key to the company's recovery, in 1985 the company
signed basketball player Michael Jordan to endorse a new version of its Air shoe, introduced
four years earlier. The new basketball shoes bore the name 'Air Jordan.'
In early 1986 Nike announced expansion into a number of new lines, including casual
apparel for women, a less expensive line of athletic shoes called Street Socks, golf shoes, and
tennis gear marketed under the name 'Wimbledon.' By mid-1986 Nike was reporting that its
earnings had begun to increase again, with sales topping $1 billion for the first time. At that

point, the company sold its 51 percent stake in Nike-Japan to its Japanese partner; six months
later, Nike laid off ten percent of its U.S. employees at all levels in a major cost-cutting
strategy.
Following these moves, Nike announced a drop in revenues and earnings in 1987, and
another round of restructuring and budget cuts ensued, as the company attempted to come to
grips with the continuing evolution of the U.S. fitness market. Only Nike's innovative Air
athletic shoes provided a bright spot in the company's otherwise erratic progress, allowing the
company to regain market share from rival Reebok International Ltd. in several areas,
including basketball and cross-training.

The following year, Nike branched out from athletic shoes, purchasing Cole Haan, a
maker of casual and dress shoes, for $80 million. Advertising heavily, the company took a
commanding lead in sales to young people to claim 23 percent of the overall athletic shoe
market. Profits rebounded to reach $100 million in 1988, as sales rose 37 percent to $1.2
billion. Later that year, Nike launched a $10 million television campaign around the theme
'Just Do It' and announced that its 1989 advertising budget would reach $45 million.
In 1989 Nike marketed several new lines of shoes and led its market with $1.7 billion in
sales, yielding profits of $167 million. The company's product innovation continued,
including the introduction of a basketball shoe with an inflatable collar around the ankle, sold

under the brand name Air Pressure. In addition, Nike continued its aggressive marketing,
using ads featuring Michael Jordan and actor-director Spike Lee, the ongoing 'Just Do It'
campaign, and the 'Bo Knows' television spots featuring athlete Bo Jackson. At the end of
1989, the company began relocation to its newly constructed headquarters campus in
Beaverton, Oregon.
Market Dominance in the Early to Mid-1990s
In 1990 the company sued two competitors for copying the patented designs of its shoes and
found itself engaged in a dispute with the U.S. Customs Service over import duties on its Air

Jordan basketball shoes. In 1990 the company's revenues hit $2 billion. The company
acquired Tetra Plastics Inc., producers of plastic film for shoe soles. That year, the company
opened NikeTown, a prototype store selling the full range of Nike products, in Portland,
Oregon.
By 1991 Nike's Visible Air shoes had enabled it to surpass its rival Reebok in the U.S.
market. In the fiscal year ending May 31, 1991, Nike sales surpassed the $3 billion mark,
fueled by record sales of 41 million pairs of Nike Air shoes and a booming international
market. Its efforts to conquer Europe had begun to bear fruit; business there grew by 100
percent that year, producing more than $1 billion in sales and gaining the second place market

share behind Adidas. Nike's U.S. shoe market had, in large part, matured, slowing to five
percent annual growth, down from 15 percent annual growth from 1980 and 1988. The
company began eyeing overseas markets and predicted ample room to grow in Europe. Nike's
U.S. rival Reebok, however, also saw potential for growth in Europe, and by 1992 European
MTV was glutted with athletic shoe advertisements as the battle for the youth market heated
up between Nike, Reebok, and their European competitors, Adidas and Puma.Nike also saw
growth potential in its women's shoe and sports apparel division. In February 1992 Nike
began a $13 million print and television advertising pitch for its women's segment, built upon
its 'Dialogue' print campaign, which had been slowly wooing 18- to 34-year-old women since
1990. Sales of Nike women's apparel lines Fitness Essentials, Elite Aerobics, Physical

Elements, and All Condition Gear increased by 25 percent in both 1990 and 1991 and jumped
by 68 percent in 1992. In July 1992 Nike opened its second NikeTown retail store in Chicago,
Illinois. Like its predecessor in Portland, the Chicago NikeTown was designed to 'combine the
fun and excitement of FAO Schwartz, the Smithsonian Institute and Disneyland in a space
that will entertain sports and fitness fans from around the world' as well as provide a highprofile retail outlet for Nike's rapidly expanding lines of footwear and clothing.
Nike celebrated its 20th anniversary in 1992, virtually debt free and with company
revenues of $3.4 billion. Gross profits jumped $100 million in that year, fueled by soaring
sales in its retail division, which expanded to include 30 Nike-owned discount outlets and the

two NikeTowns. To celebrate its anniversary, Nike brought out its old slogan 'There is no
finish line.' As if to underscore that sentiment, Nike Chairman Philip Knight announced
massive plans to remake the company with the goal of being 'the best sports and fitness
company in the world.' To fulfill that goal, the company set the ground plans for a
complicated yet innovative marketing structure seeking to make the Nike brand into a
worldwide megabrand along the lines of Coca-Cola, Pepsi, Sony, and Disney. Nike continued
expansion of its high-profile NikeTown chain, opening outlets in Atlanta, Georgia, in the
spring of 1993 and Costa Mesa, California, later that year. Also in 1993, as part of its longterm marketing strategy, Nike began an ambitious venture with Mike Ovitz's Creative Artists
Agency to organize and package sports events under the Nike name--a move that potentially

led the company into competition with sports management giants such as ProServ, IMG, and
Advantage International.
Nike also began a more controversial venture into the arena of sports agents,
negotiating contracts for basketball's Scottie Pippin, Alonzo Mourning, and others in addition
to retaining athletes such as Michael Jordan and Charles Barkley as company spokespersons.
Nike's influence in the world of sports grew to such a degree that in 1993 Sporting News
dubbed Knight the most powerful man in sports.Critics contended that Nike's influence ran
too deep, having its hand in negotiating everything in an athlete's life from investments to the
choice of an apartment. But Nike's marketing executives saw it as part of a campaign to create

an image of Nike not just as a product line but as a lifestyle, a 'Nike attitude.Nearly everyone
agreed, however, that Nike was the dominant force in athletic footwear in the early to mid1990s. The company held about 30 percent of the U.S. market by 1995, far outdistancing the
20 percent of its nearest rival, Reebok. Overseas revenues continued their steady rise,
reaching nearly $2 billion by 1995, about 40 percent of the overall total. Not content with its
leading position in athletic shoes and its growing sales of athletic apparel--which accounted
for more than 30 percent of revenues in 1996--Nike branched out into sports equipment in the
mid-1990s. In 1994 the company acquired Canstar Sports Inc., the leading maker of skates
and hockey equipment in the world, for $400 million. Canstar was renamed Bauer Nike
Hockey Inc., Bauer being

Canstar's brand name for its equipment. Two years later Bauer Nike became part of the
newly formed Nike equipment division, which aimed to extend the company into the
marketing of sport balls, protective gear, eyewear, and watches. Also during this period, Nike
signed up its next superstar spokesperson, Tiger Woods. In 1995, at the age of 20, Woods
agreed to a 20-year, $40 million endorsement contract. The golf phenom went on to win an
inordinate number of tournaments, often shattering course records, and to become only the
second golfer in history to win three 'majors' within a single year, more than validating the
blockbuster contract.
Late 1990s Slippage

For the fiscal year ending in May 1997, Nike earned a record $795.8 million on record
revenues of $9.19 billion. Overseas sales played a large role in the 42 percent increase in
revenues from 1996 to 1997. Sales in Asia increased by more than $500 million (to $1.24
billion), while European sales surged ahead by $450 million. Back home, Nike's share of the
U.S. athletic shoe market neared 50 percent. The picture at Nike soon turned sour, however, as
the Asian financial crisis that erupted in the summer of 1997 sent sneaker sales in that region
plunging. By fiscal 1999, sales in Asia had dropped to $844.5 million. Compounding the
company's troubles was a concurrent stagnation of sales in its domestic market, where the
fickle tastes of teenagers began turning away from athletic shoes to hiking boots and other
casual 'brown shoes.' As a result, overall sales for 1999 fell to $8.78 billion. Profits were

falling as well--including a net loss of $67.7 million for the fourth quarter of fiscal 1998, the
company's first reported loss in more than 13 years. The decline in net income led to a costcutting drive that included the layoff of five percent of the workforce, or 1,200 people, in
1998, and the slashing of its budget for sports star endorsements by $100 million that same
year.
Nike was also dogged throughout the late 1990s by protests and boycotts over
allegations regarding the treatment of workers at the contract factories in Asia that employed
nearly 400,000 people and that made the bulk of Nike shoes and much of its apparel. Charges
included abuse of workers, poor working conditions, low wages, and use of child labor. Nike's

initial reaction--which was highlighted by Knight's insistence that the company had little
control over its suppliers--resulted in waves of negative publicity. Protesters included church
groups, students at universities that had apparel and footwear contracts with Nike, and
socially conscious investment funds. Nike finally announced in mid-1998 a series of changes
affecting its contract workforce in Asia, including an increase in the minimum age, a
tightening of air quality standards, and a pledge to allow independent inspections of factories.
Nike nonetheless remained under pressure from activists into the 21st century. Nike, along
with McDonald's Corporation, the Coca-Cola Company, and Starbucks Corporation, among
others, also became an object of protest from those who were attacking multinational
companies that pushed global brands. This undercurrent of hostility burst into the spotlight in

late 1999 when some of the more aggressive protesters against a World Trade Organization
meeting in Seattle attempted to storm a NikeTown outlet.
Seeking to recapture the growth of the early to mid-1990s, Nike pursued a number of
new initiatives in the late 1990s. Having initially missed out on the trend toward extreme
sports (such as skateboarding, mountain biking, and snowboarding), Nike attempted to rectify
this miscue by establishing a unit called ACG&mdashort for 'all-conditions gear'--in 1998.
Two years later, the company created a new division called Techlab to market a line of sportstechnology accessories, such as a digital audio player, a high-altitude wrist compass, and a
portable heart-rate monitor. Both of these initiatives were aimed at capturingsales from the

emerging Generation Y demographic group. In early 1999 Nike began selling its shoes and
other products directly to consumers via the company web site. Nike announced in September
of that year that it would buy about ten percent of Fogdog Inc., which ran a sporting goods ecommerce site, in exchange for granting Fogdog the exclusive online rights to sell the full
Nike line. The company finally earned some good publicity in 1999 when it sponsored the
U.S. national women's soccer team that won the Women's World Cup. With its record of
innovative product design and savvy promotion and an aggressive approach to containing
costs and revitalizing sales, Nike appeared likely to stage an impressive comeback in the early
21st century.

Nike History Timeline Info

1950's

Phil Knight and Bill Bowerman meet

1960's

Blue Ribbon Sports (BRS) was made and founded by Phil Knight

The popular Cortez aka "Dope Mans" are made in Japan

1970's

The Swoosh logo is created by Carolyn Davidson for $35.00

The first Nike model shoe to hit the retail market is a soccer/football shoe

A Promo Nike Tee becomes the first apparel item

US

The famous Waffle Trainer is introduced, which becomes the best selling shoe in the

Nikes racing and training spiked shoe is made called the "Elite"

Factories for manufacturing are set up in Korea and Taiwan

For the first time Nike shoes are sold in Asia

Blue Ribbon Sports changes their company name to Nike Inc.

The first Nike running shoe with a air sole system to come out is the "Tailwind"

World Headquarters are opened in Beaverton, Oregon

1980's

Nike talks with the P.R. of China so they can produce shoes there

Nike shoes become Canadas top seller

Nike shoes are now produced in 11 countries

The famous "NIKE AIR" Air Force 1 and Air Ace make their introduction

Over 200 shoes are now in Nikes footwear line

The first high performance kids running shoe is called the "Destiny"

The Air Jordan makes its way to Nike footwear line up

The Sock Racer comes out and is part of the Dynamic-Fit technology

The first Air Max

The first Cross Trainer

The famous "Just Do It" slogan comes to life

The first model to combine the footbridge device and Air Sole is the Air Stab

Spike Lees "Mars Blackmon" character helps promote the third style of Air Jordan

Bo Jacksons "Bo Knows" commercials include the "Just Do It" slogan

Nike moves to a new World Campus in Beaverton

1990's

The new World Campus sits on 74 acres with 570,000 square feet.

In Portland, Oregon the first Nike Town opens

The intro of the Air Huarache running shoe

The intro of the Air Mowabb

Nike Town opens in Chicago

Charles Barkley first signature shoe is introduced

The intro of the Run Walk shoe

Nike Town opens in Atlanta and Orange County

The intro of dual pressure cushioning in the Air Max

Nike gets distribution rights in Korea and Japan

The intro of Zoom Air technology

Nike Town New York opens

The Air Penny comes to life

2000's

2000: The National Football League declines to renew its exclusive

apparel licensing arrangement with Nike.

2001: Nike opens its first Nike Goddess store, a unit targeting women, in Newport
Beach, CA.

2003: Nike purchases Converse Inc. for $ 305 million.

2008 :Nike acquired sports apparel supplier Umbro,

2009: Air Jordan Shoe

2010: Nike Future Sole Design Competition.

Origin of the Name and the Swoosh

Nike is the Ancient Greek goddess of victory

It is one of the most recognized symbols in the world The Swoosh. Simple. Fluid.
.Fast
Evolution of the Swoosh Logo

BOARD OF DIRECTORS

Philip H. Knight:Chairman of the Board of Directors

Mr. Knight, 71, a director since 1968, is Chairman of the Board of
Directors of NIKE. Mr. Knight is a co-founder of the Company and,
except for the period from June 1983 through September 1984, served
as its President from 1968 to 1990, and from June 2000 to 2004. Prior
to 1968, Mr. Knight was a certified public accountant with Price
Waterhouse and Coopers & Lybrand and was an Assistant Professor of
Business Administration at Portland State University.

MARK PARK:President & Chief Executive Officer, NIKE,

Inc.
Mr. Parker has been President and Chief Executive Officer
and a director since 2006. He has been employed by NIKE since
1979 with primary responsibilities in product research, design
and development, marketing, and brand management. Mr. Parker
was appointed divisional Vice President in charge of
development in 1987, corporate Vice President in 1989, General
Manager in 1993, Vice President of Global Footwear in 1998,
and President of the NIKE Brand in 2001. In addition to helping
lead the continued growth of the Nike brand, Parker is
responsible for the growth of NIKE, Inc.'s global business
portfolio, which includes Converse Inc., and Hurley
International LL

David J. Ayre :Vice President, Global Human Resources

Mr. Ayre, 50, joined NIKE as Vice President, Global Human
Resources in July 2007.Prior to joining NIKE, he held a
number of senior human resource positions with PepsiCo,
Inc. since 1990, most recently as head of Talent and
Performance Rewards.

Donald W. Blair :Vice President and Chief Financial Officer

Mr. Blair, 52, joined NIKE in November 1999. Prior to joining
NIKE, he held a number of financial management positions with
PepsiCo, Inc., including Vice President, Finance of PepsiCola
Asia, Vice President, Planning of PepsiCos Pizza Hut Division,
and Senior Vice President, Finance of The Pepsi Bottling Group,
Inc. Prior to joining PepsiCo, Mr. Blair was a certified public
accountant with Deloitte, Haskins, and Sells

Charles D. Denson:President of the NIKE Brand

Mr. Denson, 54, has been employed by NIKE since 1979.
Mr. Denson held several management positions within the
Company, including his appointments as Director of USA
Apparel Sales in 1994, divisional Vice President, U.S.
Sales in 1994,divisional Vice President European Sales in
1997, divisional Vice President and General Manager,
NIKE Europe in 1998, Vice President and General
Manager of NIKE USA in 2000, and President of the
NIKE Brand in 2001.

Gary M. DeStefano :President, Global Operations

Mr. DeStefano, 53, has been employed by NIKE since 1982,
with primary responsibilities in sales and regional
administration. Mr. DeStefano was appointed Director of
Domestic Sales in 1990, divisional Vice President in charge of
domestic sales in 1992, Vice President of Global Sales in 1996,
Vice President and General Manager of Asia Pacific in 1997,
President of USA Operations in 2001, and President of Global
Operations in 2006.

TREVOR EDWARD: As President of the NIKE Brand

Edwards is responsible for leading all category and

geographic business units, the Jordan Brand and Action
Sports, which includes Hurley International LLC, Digital
Sport and brand management throughout the world as well
as leading NIKE's wholesale, retail and e-commerce
operations.Edwards was previously Global Brand &
Category Management Executive Vice President, where he
was responsible for helping to drive the NIKE Brand growth

Jeanne P. Jackson :President, Direct to Consumer

Ms. Jackson, 58, served as a member of the NIKE, Inc. Board of
Directors from 2001 through March 2009, when she resigned
from our Board and was appointed President, Direct to Consumer.
She is founder and CEO of MSP Capital, a private investment
company. Ms. Jackson was CEO of Walmart.com from March
2000 to January 2002. She was with Gap, Inc., as President and
CEO of Banana Republic from 1995 to 2000, also serving as CEO
of Gap, Inc. Direct from 1998 to 2000. Since 1978, she has held
various retail management positions with Victorias Secret, The
Walt Disney Company, Saks Fifth Avenue, and Federated
Department Stores. Ms. Jackson is the past President of the
United States Ski and Snowboard Foundation Board of Trustees,
and is a director of McDonalds Corporation. She is a former
director of Nordstrom, Inc., and Harrahs Entertainment, Inc.

Mission Statement
Nike aims to lead in corporate citizenship through proactive programs that reflect caring
for the world family of Nike, our teammates, our consumers, and those who provide services
to Nike.Nike is the "largest seller of athletic footwear and athletic apparel in the world.
Performance and reliability of shoes, apparel, and equipment, new product development,
price, product identity through marketing and promotion, and customer support and service
are
important
aspects
of
competition
in
the
athletic
footwear,
apparel, and equipment industry. We believe we are competitive in all of these areas."

PROPOSED MISSION
The company aims to " lead in corporate citizenship through proactive programs that
reflect caring for the world family of Nike, our teammates, our consumers, and those who
provide services to Nike." To continue to offer quality products with increasing growth in the
industry and expanding globally. Our mission has always been to provide a competitive edge
by developing the most technological products. Keeping in mind fair labor practices in all our
suppliers factories, while maintaining a competitive advantage, with the shareholders

interests, and company profits in mind. We also believe our employees are one of our most
important assets. To increase the responsibility towards the environment by evaluating the
impact of day to day operation and attempts to change operations that have a negative impact.
Vision Statement
To bring inspiration and innovation to every athlete in the world. To equip every athlete
with products that combine performance, quality, and fashion.
PROPOSED VISION

Continue to bring inspiration to present and future athletes, while maintaining the
company's standard of quality for its products.

Nike future plan

During its investor meeting in New York, the Company announced a revenue target of
$27 billion by the end of fiscal 2018 based on growth expectations across its portfolio, which
includes the NIKE Brand, Cole Haan, Converse, Hurley, Jordan Brand, NIKE Golf and
Umbro. Additionally, the Company believes it can generate over $12 billion of cumulative
free cash flow from operations through 2018. Both goals extend NIKE, Inc.s long-term

financial model of high single-digit revenue growth, mid-teens earnings per share growth, and
expanding returns on capital.
Nike expects to Increase its future orders for delivery.Nike will continue to focus their
resources on those investments that drive sustainable and profitable growth. Nike anticipate
its gross margins in fiscal 2011 may be negatively impacted by macroeconomic factors
including changes in currency exchange rates and rising costs for product input costs. Nike
expect demand creation will increase at a slightly slower rate than revenues, with spending
weighted toward the first quarter driven by key events including the 2010 World Cup. The
company anticipate operating overhead will grow at a mid singledigit rate, with faster

growth in the first half of the fiscal year, driven by increased investments in NIKEowned
retail business.
PRODUCTS
Nike produces a wide range of sports equipment. Their first products were track running
shoes. They currently also make shoes, jerseys, shorts, base layers etc. for a wide range of
sports including track & field, baseball, ice hockey, tennis, Association football, lacrosse,
basketball and cricket. The most recent additions to their line are the Nike 6.0 and Nike SB
shoes, designed for skateboarding. Nike has recently introduced cricket shoes, called Air
Zoom Yorker, designed to be 30% lighter than their competitors'. In 2008, Nike introduced the

Air Jordan XX3, a high performance basketball shoe designed with the environment in
mind.Nike positions its products in such a way as to try to appeal to a "youthful....materialistic
crowd". It is positioned as a premium performance brand. However, it also engineers shoes
and apparel for discount stores like Wal-Mart under the Starter brand. Nike sells an
assortment of products, including shoes and a pararel for sports activities like association
football, basketball, running, combat sports, tennis, American football, athletics, golf and
cross training for men, women, and children. Nike also sells shoes for outdoor activities such
as tennis, golf, skateboarding, association football, baseball, American football, cycling,
volleyball, wrestling, cheerleading, aquatic activities, auto racing and other athletic and
recreational uses. Nike is well known and popular in Youth culture, Chav Culture and Hip hop

culture as they supply urban fashion clothing. Nike recently teamed up with Apple Inc. to
produce the Nike+ product which monitors a runner's performance radio device in the shoe
which links to the iPod nano. While the product generates useful statistics, it has been
criticized by researchers who were able to identify users'R F I D devices from 60 feet (18 m)
away using small, concealable intelligence motes in a wireless sensor network.
In 2004, they launched the SPARQ Training Program/Division. It is currently the premier
training program in the U.S. In the video game Gran Turismo 4 there is a car by Nike called
the NikeOne 2022, designed by Phil Frank.

For Men and Women: Shoes

The Nike Air Force, now known as the Air
Force 1 (or AF1 or AF-1) athletic shoe is a
product of Nike, Inc. created by designer
Bruce Kilgore. This was the first basketball
shoe to use the Nike Air technology. This
shoe is offered in low, mid and high top.

Nike Max is a line of shoes first released by

Nike in 1987. The shoe was originally
designed by Tinker Hatfield, who started out
working for Nike as an architect designing
shops and offices; he also designed the Air
Jordan shoe

The shoe is given a simple outer design that

consists of the Nike Swoosh symbol across
the sides of the shoe and a streak across the
lower portion of the outer sole. Leather was
the first material used to construction the
shoe

Nike designers began a mission to re-craft iconic

sports apparel in the most technical materials they
could find. The ubiquitous American varsity jacket was
an obvious choice for the experiment that would
become Nike Sportswear. Raiding the All Conditions
Gear (ACG) innovation cache, they found fabrics,
laminates, and bonding methods that could brave nasty
weather but still look fresh.

The Nike Checkered Flash Men's Running Jacket offers

ultra-lightweight weather protection and reflectivity for
comfort and visibility on cool, low-light runs. The Nike
Checkered Flash Men's Running Jacket offers ultralightweight weather protection and reflectivity for
comfort and visibility on cool, low-light runs.

Wind runners and shells

t-shirt:

The Nike Checkered Flash Men's

Running Jacket offers ultra-lightweight weather
protection and reflectivity for comfort and
visibility on cool, low-light runs. Rib crew neck
with interior taping for durability and comfort.
Screen print at front for style. Regular fit that's
not too slim, not too loose.

Gear Backpacks, bags

With a cushioned shoulder strap and waterresistant bottom, the Nike Team Training Max
Air (Medium) Duffel Bag provides lightweight
shock absorption and keeps gear dry in wet
conditions. Adjustable shoulder strap with Max
Air unit for shock absorption and custom
cushioning. Dual-zip main compartment for
secure, spacious storage. Ventilated shoe
compartment for versatile storage. The Nike
Team Training Gym Sack helps you organize
your gear with an interior divider and bonded zip
pocket. Water-resistant fabric with a PU-coated
bottom keeps your essentials dry and secure.

NIKE PORTFOLIO OF BRANDS

Converse Inc., established in 1908 and based in North Andover, Massachusetts, has
built a reputation as Americas Original Sports Company and has been associated with a
rich heritage of legendary shoes such as the Chuck Taylor All Star shoe, the Jack Purcell
shoe and the One Star shoe. Today, Converse offers a diverse portfolio including premium
lifestyle men's and women's footwear and apparel. Converse product is sold globally by
retailers in over 160 countries and through more than 79 company-owned retail locations in
the U.S.

Headquartered in Costa Mesa, California, Hurley International LLC designs and distributes a
line of action sports apparel for surfing, skateboarding and youth lifestyle apparel and
footwear under the Hurley brand name. For more information on Hurley and the company's
latest collections, please visit Hurley.com.

A division of NIKE, Inc., Jordan Brand is a premium brand of footwear, apparel and
accessories inspired by the dynamic legacy, vision and direct involvement of Michael Jordan.
The Jordan Brand made its debut in 1997 and has grown into a complete collection of
performance and lifestyle products.

Cole Haan, based in Maine, sells dress and casual footwear and accessories for men and
women under the brand names of Cole Haan, g Series, and Bragano.

Nike Bauer Hockey, based in New Hampshire, manufactures and distributes hockey ice
skates, apparel and equipment, as well as equipment for in-line skating, and street and roller
hockey.
EXTERNAL ANALYSIS
POLITICAL FORCES:
Striking dock workers
Political unrest in the production countries
Terrorism in the home country

The government must create economic policies that will foster the growth of
businesses. Nike, fortunately, has been helped by the US policies which enable it to
advance its products. The support accorded to Nike by the US government, particularly in
the general macroeconomic stability, low interest rates, stable currency conditions and the
international competitiveness of the tax system, form the foundation critical to Nikes
growth.
ECONOMIC FORCES:
Slow down in the economy

 Reduction in consumer confidence

Barriers of entry to the EU
Contract manufacturing
In economy, the biggest threat for Nike would be economic recession. During
recession, Nikes growth will be adversely affected. The US economy is experiencing
a downturn right now. Consumer purchases are slowing down. Currently, Nike's
feeling the pinch of the economic recession. The Asian economic crisis also affects

Nike since its goods are manufactured in Asia. The labor costs and material prices are
going up. Nike's growth is not just affected by the local economy but also in the
international economy. A weak Euro and an Asian recession could mean weak sales
for Nike.
SOCIAL CULTURAL FORCES:
Brand conscious consumers
Change in buying habits in younger people
Generation Y prefers other types of footwear

 Increase in the female share of the market

Corporate social responsibility
People are more health conscious nowadays. Diet and health are getting more prominence.
Consequently, more and more people are joining fitness clubs. There is an accompanying
demand for fitness products particularly exercise apparel, shoes and equipment. Nike is at the
forefront of this surge in demand as people are looking for sports shoes, apparel and
equipment.Nike, however, failed to foresee problems brought about by a sweatshop expose
pertaining to labor and factory conditions at production locations in Asia. This caused bad

publicity and declining sales as society and consumers demand more socially responsible
companies.
TECHNOLOGICAL FORCES:
Speed of change of product
Design Ability
Speed of News reporting

Nike uses IT in its marketing information systems very effectively. Nike applies
marketing information systems to the economics of innovation, segmentation and
differentiation for most of its businesses. Nikes leadership status owes in large part to the
use of extremely valuable Information Technology, and applying it to every aspect of the
product from development to distribution. Nike introduced Nike Shox, which
revolutionized the cushioning foam used in shoes Nike also collaborated with Apple and
is launching new apparel and footwear that will easily carry the consumers iPod .Product
innovation is an ongoing process and is vital to stay ahead of competition Companies in
this industry invest money in R&D to keep up with the new demands of todays athletes.

Nike employs many specialists including engineers, athletes, biomechanics, and industrial
designers to work together in the design process.
ENVIRONMENTAL FORCES:
Re use a shoe
Sustainability philosophy
Climate impact

Environmental consciousness has a strong presence in Western Europe and Japan, as well as
in the United States. Currently, Nike has been pursuing product sustainability for more
than a decade. From increasing the use of water-based solvents in footwear manufacturing and
working to keep greenhouse gas emissions in check, to supporting organic cotton and turning
old shoes into new sports surfaces, Nikes commitment to sustainability is part of our
Considered ethos (What led us to Nike Considered). It can be said then that Nike does not
suffer environmental issues.
LEGAL FORCES:

Threaten action by underage workforce

Poor employment record
Corporate social responsibility
Contract manufacturing and copying of product (intellectual property)
Trade agreements

Without proper management leading and planning in the Nike Corporation, the company
would have suffered from the child labor issue. Nike has made a true bounce-back from the
negative media attention, and continues to be successful due to their strong business ethic
philosophy.

GEOPAPHICAL FORCES:
- Production is outsourced to plants in Asia, Latin America, and Africa
- This reduces costs because labor is cheaper
-Puts sources of production closer to where they will be sold
Firms who outsource lose the ability to closely monitor product quality and working
conditions .Although some people find this unethical, firms cannot afford to keep production

close to home and still compete on profit margins.Plants are also located in many different
countries, rather than being concentrated in one area .

INTERNATIONAL FORCES:
The demographic environment tells marketers who can be potential customer in terms of
size, density, location, age, sex, race, occupation, and other statistics. Changes can result in

significant opportunities and threats presenting themselves to the organization and major
trends for marketers include worldwide explosive population growth (Kotler and Armstrong).
All of these can provide Nike with the tools and assets it needs to promote its products in
different areas of the world and gain a bigger share of the market globally. The industry has
realized the influence of womens sport players and is preparing to accommodate such an
increase and as women increase their consumption the younger generation is decreasing
because of the popularity of other footwear.

EFE MATRIX
External Opportunities

Weig
ht

Rati
ng

Weight
Score

3.
Growing segment of the female
athletes.

0.12

0.48

4.
International expansion into emerging
markets e.g. India

0.12

0.48

5.
Additional marketing of existing
products to appeal to new demographic
groups.
6.
Develop new alliances with companies
that are respected regarding social
responsibility.

0.07

0.14

0.08

0.16

7.
Brand reorganization by market
regions

0.08

0.16

0.14

0.56

External Threats
1.

High competitive industry

3.
Production of counterfeit goods, and
generic products.

0.10

0.30

4.
Negative public perception created by
environmental, child labor, contracted
manufacturing issues, and sponsored
athletes.

0.10

0.30

5.
International currency changes could
decrease profits.

0.12

0.36

6.
Federal Trade regulations in dealing
with foreign manufactures.

0.07

0.14

Totals

1.00

3.08

PORTERS FIVE FORCES MODEL:

POTENTIAL ENTRANTS:
Other sportswear manufacturers expanding their portfolio

 Cheap copies from the Far East

Threats of New Entrants: (Low)
Barriers to entry in the athletic footwear industry are high due to several factors.
It is as very capital intensive industry. Even though it would not be difficult for a new
company to obtain the raw materials and the labor needed to produce shoes, there is
almost no chance for them to gain popularity in such a mature industry with some of
the strongest brand names in the world. Brand loyalty is extremely strong and it would
be very hard for a new entrant to steal loyal customers from the already existent
players. Economies of scale play a huge role as well and the bigger players have an
advantage of producing the products at a lower price than compared with newer

entrants. As the output is bigger and the fixed costs of factories, machinery, marketing
and R&D will be decreased per unit. Both marketing and R&D constitute high costs
and since new entrants will not be able to take advantage of the economies of scale
they will be less competitive.
The industry itself is in a consolidation phase and only the big ones will survive.
The large companies are strategically and constantly acquiring smaller companies.
Some of the most popular acquisitions include Reebok by Adidas, Converse by Nike,
Saucony by Stride Rite, etc. Small companies are bought before they become a threat
to the bigger ones and before they have a chance to gain market share. In other words,

it is impossible to grow in this industry because someone will take over your
company.
BUYERS:

The buyers of sports footwear have changed in the past decade.

There has been and increase in women purchasing the shoes,
Generation Y has a different tastes and purchasing methods
Customers more affected by price
Buyer Power: (Very High)

 The buyers for this industry are retailers and end users.
The footwear retailers, i.e. Footlocker, Wal-Mart, range in sizes. However, the top
25
retailers account for two-thirds of the sales of athletic footwear- approximately
$15 billion in value. New retailers are entering the market, such as big box stores
and vendors that open their own stores. The lack of concentration among buyers
brings down the margins and gives the power to the vendors. Retailers also have no
power in determining the design of the product. Therefore the big footwear
manufacturers generally dictate the price of their shoes.

In order to gain more power buyer companies have started merging- Footlocker Foot
Action, Sport Authority- Gart. This consolidation will transfer some of the power
from the big players because in order to be industry leaders they will need these wellrecognized retailers as well. Growing margins suggest that buyer power has been
increasing.The end user of the industry is also considered a buyer and he has
unlimited power.Every company is fighting for the loyalty of the end user through
constant innovations and brand management. However, if the user is dissatisfied, he
can easily switch the brand to another one.
SUBSTITUTES:

 Substitutes for athletic shoes are shoes in another category.

When required for professional use there is no substitute goods, but as a fashion item
there are many other goods that could be purchased.
Substitutes: (Low)
Lifestyle athletic shoes sales, for instance are growing at the fastest annual
rate and Puma is undoubtedly the leader in this segment- with more than 50%
sales growth.
First, in the sports industry, other types of apparel could also be seen as a substitute,
in
terms of building image and style.Second, in the same product category, other

types of shoes are also substitutes, such as

slippers, heels, boots, flip-flops, etc.
Even though sneakers are still the most popular type of footwear in the
world. Companies such as Steve Madden and Sketchers are also seen as threats.
Steve
Maddens thick high heeled shoes19 are very popular and since thick heels
are considered a more comfortable version among women they could be a substitute
for sneakers. Sketchers introduced non-athletic heel-less shoes also called sneaker
mules20 These shoes, first gained popularity in Europe but now are also becoming
popular in the United States.
SUPLIERS:

-Using production facilities in the Far East has give Nike economies of scale. Although there
are now problems arising from these factories, they are switching to making there own goods,
labour and political unrest causes delays in manufacturing and shipping of the goods,
-Supplier Power: (Low)
-The suppliers do not have the power to bargain the price of their product, since there are
numerous suppliers.
There has been some standardization of production in the industry due to growing
concerns of labor practices of the suppliers and manufacturers. These practices have

been damaging the image of some companies including Nike.Therefore, the big
companies prefer to work only with approved manufacturers and suppliers that are
known to follow these labor standards. Both Adidas and Nike have created a system to
ensure that all the high quality of the product, the working conditions, and the
distribution are at high standards.
COMPETITIVE RIVARLY:
Reebok, offering more choice of shoe, introducing endorsement by
sports personalities, sponsoring sporting leagues

 Adidas have recovered from the problems that plagued them, and have
a good product mix, covering a wide range of sports.
In order to stay competitive and have presence in all sectors, many mergers and
acquisitions, i.e. Adidas and Reebok, are taking place and the market is going towards
consolidation. As a result, maintaining a single brand image for companies like Nike
becomes really a tough ask.In general, with three out of five forces being high,
emerging market does not look like a favorable environment. However, on continuous
marketing an educating effort, this market might be transferred into a growth region
for all companies.

COMPETITIVE PROFILE MATRIX

MAJOR COMPETITORS:
ADIDAS:
Adidas was founded in 1924 in Germany by two bothers Adi and Rudolf Dassler. The
company was first named Dassler shoes and later became Adidas. By the Dassler shoes being
seen in the Olympics this really helped the company get its name known. However, in 1948
Rudolf Dassler leaves to start his own company which is now known as Puma. Once Rudolf

left his brother came up with the famous three stripes logo and changed the name to
Adidas.The 3 stripes were created to keep the foot stable, but ended up being the logo.
Throughout the years Adidas was seen in the Olympics, and it was the leading brand making
their shoes highly sought after by Olympic athletes. In 1978, Adi Dassler passed at age 78 and
his wife Kathe ran the company. Six years later Kathe passed and the company was left for
their son Horst Dassler to run, and three years later Horst passed at age 51. After Horsts death
Adidas ran into some major financial problems, and later Bernard Tapie comes to make an
attempt to save the company. Well to be HONEST, later down the road a hip-hop group
named Run-DMC came and put Adidas on another level just like Jordan did for Nike, and the
rest is HISTORY! They even made a song called "My Adidas", and it was a hit all around the

world. After Run-DMC came to Adidas they even had their own signature line. Run DMC is
still making Adidas money today just like Jordan is still making Nike tons of money......these
guys are true legends to the "Shoe Game".Adidas has worked with many famous people and
has a signature shoe line for Stan Smith, Kevin Garnett, Tracy McGrady aka TMAC, Missy
Elliot, and many others.
REEBOK:
In 1958 one the owners grandsons started a companion company to what they were doing,
he decided to call it Reebok after the African Gazelle. After a number of years the company
produced a trainers under the Reebok name and presented it at an international trade show. At

the show which is 1979, a American sports distributor picked up the trainer and took it back to
the US to be sold. He took it back and got the licence to sell it, which at the time became the
most expensive trainer on the market at $60 for a pair. The 1980s saw the introduction of
womens athletic trainers for aerobic dance, the trainer was released and called freestyle. The
end of the 80s also saw the introduction of Reeboks design innovation with the Pump trainer,
which is still available today. The 90s saw the transition of Reebok going over to focusing on
sports and fitness, trying to get involved in the major sports around the world, from football,
track and field, baseball and other sports.The new millennium saw an exclusive partnership
deal struck between Reebok and the NFL to produce, sell and market licensed NFL products.
The following year then saw a similar agreement signed between Reebok and the NBA which

increased the market value of Reebok. Over the next decade Reebok collaborated with Jay-Z
and 50 Cent in the production of their successful branded products, but also branch out further
to sports like the NHL to go along with the already signed deals with the NFL and NBA.In
2006, Reebok was acquired by Adidas which saw two big sporting goods manufactures to
merge to create a giant. The merger has seen the Reebok brand more easily available in other
countries but also helps to produce the same quality of goods.

NIKE

ADIDAS

REEBOOK

CRITICAL
SUCCESS
FACTORS

WEIG
HTS

RATI
NG

W.SC
ORES

RATIN
G

W.SC
ORES

RATING W.SCO
RES

Domestic
factor
positioning

0.1

0.4

0.2

0.3

Internatonal
market
positioning

0.1

0.4

0.3

0.3

Consumer
loyalty

0.08

0.24

0.24

0.24

Brand
recognition

0.1

0.4

0.4

0.4

Price
competivene
ss

0.09

0.27

0.27

0.36

Product
Quality

0.07

0.28

0.28

0.21

Relationship
with supliers
and
manufacture
s

0.07

0.21

0.28

0.21

Product R&D 0.1

0.4

0.3

0.3

Product
diversty

0.4

0.3

0.2

0.1

Financial
positioning

0.07

0.21

0.21

0.14

Marketing
organitation
al

0.08

0.32

0.32

0.24

Organitation
al structure

0.04

TOTAL

0.12

2.85

0.12

2.72

0.12

2.42

COMMENT ABOUT CHARTS

Nike is widely recognized as the market leader in the sports apparel industry by virtue of its
market share, profitability and global reach.Its exceptional knowledge of its customers and
their motivations, marketing, design and development of new products and its supply chain
management have blended together into a unique strategic knowledge which constitutes its
core competencies and its ;
Technology in Products


Nike has historically had some of the most cutting-edge products on the market.For
example, Nike teamed up with Apple and launched the Nike + iPod line of products.This
technology allows consumers to connect their iPod devices to sensors inside the shoes to
record time, distance, pace, and calories burned.
Manufacturing Skills
Due to cheap labor in foreign countries, Nike outsources virtually all production to other
areas of the world.This behavior has become an industry standard, with all major competitors

also outsourcing production.Consequently, no competitor has a major advantage in

manufacturing.
Strength of Patents

One of Nikes most revolutionary technologies comes through its footwear

cushioning.The cushioning systems in a shoe serve to distribute pressure evenly among the
foot, absorb shock, and deliver comfort to the user.

Nike has patents on four cushioning technologies:

 Nike Air: Nike Air Max is a line of shoes first released by Nike, Inc. in 1987. The shoe
was originally designed by Tinker Hatfield, who started out working for Nike as an
architect designing shops and offices; he also designed the Air Jordan shoe

 Nike Zoom: Nike Zoom cushioning is part of the Nike Air family, andlike its
siblingsits lightweight and durable. Because Nike Zoom cushioning is incredibly
thin, it brings the foot closer to the ground and enhances stability, especially during
quick cuts and multi-directional movements.After impact, the tightly stretched fibers
inside the pressurized air unit quickly bounce back into shape, providing a superresponsive feel and improved awareness of the surface youre playing on.

 Nike Air Max:

Max Air is part of the Nike Air family and designed to provide
maximum impact protection during repetitive landings.Shoes with Max Air feature
less midsole material and larger-volume airbags for lighter weight and maximum
cushioning you can see.

 Nike Shox : Nike Shox technology is a revolution in cushioning and impact

protection. Nike Shox technology provides an optimal environment for cushioning, a
slower rate of impact loading (helping reduce the risk of impact-related injuries) and a
uniquely responsive feel.The highly resilient foam in Nike Shox columns is made of
energy-efficient material that enhances durability and spring.


Although some of Nikes earlier patents are beginning to expire, they still hold patents
on the newer technologies.In the past, competitors have tried to match rival Nikes cushioning
systems, but none have matched their success.
Economies of Scale

Nike is the single largest producer of athletic footwear and apparel, allowing them
large cost advantages over competition.Larger companies tend to have major economies of
scale over smaller companies in areas such as distribution and marketing.Nike is so large that
many of the companys suppliers depend on Nike to remain in business.

 Application of Information Technology

Being such a large corporation, Nike relies heavily on IT in order to manage its supply
chains.Nike admits that it is at serious risk if a breakdown were to happen in these systems,
resulting in bad effects on their business and financial condition This puts them at a
disadvantage against some of their smaller competitors, who do not rely so heavily on IT .The
very fact that they are such a large company makes them more likely to have these problem.

INTERNAL ANALYSIS

NIKE MANAGEMENT STRUCTURE

Nike management structure is composed of a matrix organizational structure commonly
known as a flat organizational structure. Nike is one of the few companies that has been able
to apply this model effectively.The Compensation Committee is responsible for overseeing
the performance evaluation of the CEO. The Compensation Committee considers (1)
achievement against approved financial performance measures and targets (such as revenue,
net income, and earnings per share), and (2) other factors such as leadership, achievement of
strategic goals, market position, and brand strength, which are signals of Company success.

The Compensation Committee endeavors to reflect the CEOs performance in the CEOs
compensation. The Board plans for succession of the CEO and certain other senior
management positions in order to assure the orderly functioning and transition of the
management of the Company, in the event of emergency or retirement of the CEO. As part of
this process, the Chairs of the Nominating and Corporate Governance Committee and the
Compensation Committee, in consultation with the CEO, assess management needs and
abilities in the event a transition becomes necessary.A strategic plan is something that a
company needs in order to succeed at anything. Nike needs to develop this plan and move
forward from this fiscal year in 2010. The manager of Nike needs to set goals and determine

the best way to achieve them.Core values upon the crew at Nike and ask the question: What
does this organization stand for? A revamp of all of this is need if Nike is to make sales
revenue increase in 2010. A core value that can be put into the Nike Company is telling the
employers that they need to be winners, as opposed to heroes. A SWOT analysis could be
created for Nike by a manager and the employees will read it and will see an assessment of
how the company is doing in terms of strengths, weaknesses, opportunities, and threats. These
will keep the companies employees on its toes.Functional organization is something that Nike
might want to take into consideration when thinking about a change in their organization.
They can cluster groups together who are alike and who can compatibly plan and keep the

company in its prime.Directing is providing focus and direction to others within the Nike
Company and the managerial can take directing and use it to their advantage.With Nikes
board being an extremely experienced and thoughtful board they can take a lot of ideas from
each other. Even the other employees such as middle managers and low level managers can
give input into the companies managerial such as marketing in other companies and making
sure the quality of Nikes product is better than its competitors. Phil Knight can set high, yet
achievable goals for his employees to look forward to. He could improve his company by
using the principle of leverage. Phil Knight could use new technologies in sneakers, apparel,
and sports equipment to successfully manage his company. He can use networking by

socializing with companies he could cooperate with such as he has done with Apple in the
past to increase revenue.

MARKETING
Significant role for the competition of market share in the footwear industry plays marketing
in order to strengthen the brand image, develop product identity and expand customer loyalty.
Competition between players is n o n - p r I c e but rather based on differentiation in brand
image and product innovations. Therefore, substantial investments in marketing campaigns
are required. Nike invests annually between 11% and 13% of revenue in marketing. Nike

focuses all of their attention on the

Athlete, but delivers much more than
shoes; they deliver all the surrounding
products that the Athlete needs for
experience. It is part and parcel of what
makes Nike such a great consumerfocused brand.

Marketing Mix
1. Product:
Nike offers a wide range of shoe, apparel and equipment products, all of which are currently
its top-selling product categories. Nike started selling sports apparel, athletic bags and
accessory items in 1979. Their brand Cole Haan carries a line of dress and casual footwear
and accessories for men, women and children. They also market head gear under the brand
name Sports Specialties, through NikeTeam manufactures and distributes ice skates, skate
blades, in-roller skates, protective gear, hockey sticks and hockey jerseys and accessories.

2. Price:
Nikes pricing is designed to be competitive to the other fashion Shoe retailer. The pricing is
based on the basis of premium segment as target customers. Nike as a brand commands high
premiums. Nikes pricing strategy makes use of vertical integration in pricing wherein they
own participants at differing channel levels or take part in more than one channel level
operations. This can control costs and influence product pricing.
3. Place:

Nike shoes are carried by multi-brand stores and the exclusive Nike stores across the globe.
Nike sells its product to about 20,000 retail accounts in the U.S. and in almost 200 countries
around the world. In the international markets, Nike sells its products through independent
distributors, licensees and subsidiaries. The company has production facilities in Asia and
customer service and other operational units worldwide.

4. Promotion:

Promotion is largely dependent on finding accessible store locations. It also avails of targeted
advertising in the newspaper and creating strategic alliances. Nike has a number of famous
athletes that serve as brand ambassadors such as the Brazilian Soccer Team (especially
Ronaldo, Renaldo, and Roberto Carlos), Lebron James and Jermane ONeal for basketball,
Lance Armstrong for cycling, and Tiger Woods for Golf. Nike also sponsors events such as
Hoop It Up and The Golden West Invitational. Nikes brand images, the Nike name and the
trademark swoosh; make it one of the most recognizable brands in the world. Nikes brand
power is one reason for its high revenues. Nikes quality products, loyal customer base and its
great marketing techniques all contribute to make the shoe empire a huge success.

Market Share

Nike was the clear market leader, with 31% of the global athletic footwear market in 2007.
Looking at the market in the United States, Europe, or Asia reveals a similar picture: Nike's
market share in these regions hovers around 36%, followed by Adidas at 20%, with Puma and
New Balance as distant third and fourth.

The market for athletic apparel is both larger--$49.5 billion in 2005--and more diffuse; the top
five firms control only 27% of the market. Nike is, however, also the global leader in apparel,
with a 7% market share in 2007.
NIKE RESEARCH AND DEVELOPMENT
Product Research and Development
Nike believe our research and development efforts are a key factor in our past and future
success. Technical innovation in the design of footwear, apparel, and athletic equipment

receive continued emphasis as NIKE strives to produce products that help to reduce injury,
enhance athletic performance and maximize comfort.
In addition to NIKEs own staff of specialists in the areas of biomechanics, chemistry,
exercise physiology, engineering, industrial design and related fields, we also utilize research
committees and advisory boards made up of athletes, coaches, trainers, equipment managers,
orthopedists, podiatrists and other experts who consult with us and review designs, materials
and concepts for product improvement. Employee athletes, athletes engaged under sports
marketing contracts and other athletes wear-test and evaluate products during the design and

development process. The Nike Sports Research Laboratory (NSRL) is located on the Nike
campus in Portland, Oregon in the United States of America. The research and development
(R&D) centre's role is to identify the physiological needs of athletes. The NSRL works
directly with Nike's design teams and has established partnerships with major universities
throughout Asia, Europe and North America.

Nikes Research Program

Nike has been in the Research & Development in the market for quite a long time. The
research that it has been carrying out relates to the earlier STP analysis which allows Nike to
create a market for its products. Also Nike has a history of constantly innovating new
products and attain the first-in-the-market advantage and charge a premium price. Nike
spends a lot out of its revenue into R & D of new products and designs to constantly stay
ahead of the competition. Nike conducts both qualitative and quantitative research
forgathering vital information for its products and new launches. The qualitative research
refers to the consumer purchasing behavior like why, how, what do they decide on the basis of
Nikes image as well as products. The quantitative research deals with what are the results of
the company i.e. revenue against cost and other financial analysis .Nike indulges into research

analysis of consumer markets as well as competitors analysis and thus understanding the
consumer behavior and their buying pattern. Nike does extensive research in the attitudes and
tastes and preferences and their changing pattern by having questionnaires filled up by its
customers online as well as personally. It also indulges into personal interviews with its
valued-customers to make some necessary changes that they might require. This is how the
company came to be recognized as a high valued by its customers and thus attain maximum
loyalty. Also the company came up with the idea of customization of their products online
through this type of research itself which has yielded high results. Nike products undergo a
rigorous testing process that covers a huge variety of testing surfaces (regular basketball hard
wood, soccer turf, a running track, and endless outdoor testing on various terrain), and takes

into account four major factors, geography, gender, age, and skill level as well as profession.
All of this combined with the results of about a dozen other tests are use to develop new, userfriendly products like the Nike Shox, Nike Air, and other Nike basketball and running shoes.
This is mainly because Nike needs to constantly be aware of the changes in the consumer
buying behavior which can only be done through various researches. Nike has an
underground research lab full of evil geniuses toiling to create the newest and most advanced
designs and technology in the sneaker business. Its true that Nikes research lab has grown up
considerably from its early days with Bill Bowerman and a waffle iron to create the Nike
Waffle Racer. Today, it commands approximately 13,000 square feet containing some state-ofthe-art research equipment.

Research is primarily divided into three parts:

Biomechanics
How the body moves.
Physiology
How the body works, especially under stress.

Sensory/Perception
The evaluation of how a product works, feels, and wears; how a person feels when wearing
the shoes.
The Nike Sports Research Laboratory is located on the Nike campus in Portland, Oregon in
the United States of America. Nikes research team has spent more than 16 years dreaming,
researching, developing and testing the possibility of attaching springs to the bottom of an
athletes foot. Nike Shox, the most acclaimed technological development makes the dream a

reality (Nike). Therefore, by advancing in technology, Nike holds a competitive edge in the
market.
PRODUCTION SYSTEM
Location of Facilities
Nikes facilities are located throughout Asia and South America. The locations are
geographically dispersed which works well in our mission to be a truly global company. The
production facilities are located close to raw materials and cheap labor sources. They have
been strategically placed in their locations for just this purpose. In general, the facilities are

located further from most customers, resulting in higher distribution costs. However, the cost
savings due to the placement of our production facilities allows for cheaper production of our
products despite the higher costs of transporting our products. As Nike continues to expand in
the global economy and increase its market throughout the world, these dispersed facilities
will prove to be beneficial.
Newness of Facilities
Our facilities abroad have attracted bad publicity in recent years. Though our facilities
comply with local labor standards, generally, they have not met U.S. standards. We want to be

a leader and set a responsible corporate example for other businesses to follow. As part of
Nikes new labor initiative, we commit to:
o Expanding our current independent monitoring programs to include nongovernmental organizations, foundations and educational institutions. We want
to make summaries of their findings public;
o Adopting U.S. Occupational Safety and Health Administration (OSHA) indoor
air quality standards for all footwear factories;

o Funding university research and open forums to explore issues related to global
manufacturing and responsible business practices such as independent
monitoring and air quality standards.
While establishing these policies is a step in the right direction for Nike, the difficult task at
hand will be the implementation of the aforementioned goals to ensure the success of the
program.

OPERATION MANAGEMENT OF NIKE

Nike's Operations management concerned about forecasting, controlling, designing,

operating, and scheduling business operations in the production of Nike foot ware. Its
excellent management that has been developed and ameliorated during the long term
operation has enabled that business operations to be efficient and at the same time using as
few resources as required. It is also effective in terms of satisfying customer demands, and
thus it has become one of the key issue that Nike develop prosperously despite the fierce
competitions with other foot ware giants such as Adidas, Reebok, Puma, etc. The operation
management system includes manufacturing and production systems, equipment maintenance
management, production control, industrial labor relations and skilled trades supervision,

strategic manufacturing policy, systems analysis, productivity analysis and cost control, and
materials
planning.
Nike started with dispersed production strategy as it is too small to construct its own
production line and cannot support to recruit a large number of staff as well, especially in
USA.. Every thing has both sides, and such strategy become its superiority in later time. It
invited European designers to design for Nike sport shoes, then produce them through Asian
manufacturers. It was its utmost objective to minimize its cost at that time in order to survive.
The management strategy had been successful, and has greatly reduced the production cost.
Nike had no more than 48 staff in 1972, compared with 3000 in Adidas at that time. However,

the sales volume has increased nearly 1000 times during 12 years based on such operation
management, from 1 million to 10 milliard dollar. The forward-looking operation
management strategy had been an effective support for the brand to become the biggest foot
ware company in USA.

FINANCIAL STATEMENTS

NIKE, Inc.
CONSOLIDATED STATEMENTS OF INCOME
For the period ended May 31, 2013

THREE MONTHS ENDED

(Dollars in
millions, except

5/31/20
13

5/31/20
12

%
Chang
e

TWELVE MONTHS ENDED

5/31/20
13

5/31/20
12

%
Chang
e

per share data)

Income from
continuing
operations:
Revenues

6,697

6,236

25,313

23,331

Cost of sales

3,757

3,567

14,279

13,183

Gross profit

2,940

2,669

10

11,034

10,148

Gross magrin

43.9

Demand

642

42.8

735

43.6

2,745

43.5

2,607

creation
expense

13

Operating
overhead
expense

1,380

1,161

19

5,035

4,458

1
3

Total selling and

administrative
expense

2,022

1,896

7,780

7,065

1
0

% of revenue

30.2

Interest expense

30.4

30.7

30.3

(3

(income), net
Other expense
(income), net

13

37

6
5

(15

Income before
income taxes

902

735

2
3

Income taxes

206

176

17

Effective tax
rate

22.8

23.9

54

3,272

3,025

808

756

24.7

25.0

NET INCOME
FROM
CONTINUING
OPERATIONS

696

NET (LOSS)
INCOME
FROM
DISCONTINU
ED
OPERATIONS

(28

NET INCOME

668

2
5

559

(10

549

2
2

2,464

2,269

21

(46

2,485

2,223

1
2

Earnings per
share from
continuing
operations:
Basic earnings
per common
share

0.78

0.61

2
8

2.75

2.47

11

Diluted earnings
per common
share

0.76

0.60

27

2.69

2.42

11

Earnings per

share from
discontinued
operations:
Basic earnings
per common
share

(0.03

(0.01

0.02

(0.05

Diluted earnings
per common
share

(0.03

(0.01

0.02

(0.05

Weighted
Average

Common Shares
Outstanding:
Basic

892.6

916.3

897.3

920.0

Diluted

913.4

936.3

916.4

939.6

Dividends
declared per
common share

NIKE, Inc.

0.21

0.18

0.81

0.70

CONSOLIDATED BALANCE SHEETS

As of May 31, 2013

(Dollars in millions)

May 31,

May 31,

2013

2012

% Change

ASSETS
Current assets:
Cash and equivalents
Short-term investments

3,337
2,628

2,317

44

1,440

83

Accounts receivable, net

3,117

3,132

Inventories

3,434

3,222

Deferred income taxes

308

262

18

Prepaid expenses and other current assets

802

857

-6

615

-100

Total current assets

13,626

11,845

15

Property, plant and equipment

5,500

5,057

Less accumulated depreciation

3,048

2,848

Property, plant and equipment, net

2,452

2,209

11

Assets of discontinued operations

Identifiable intangible assets, net

382

370

Goodwill

131

131

Deferred income taxes and other assets

993

910

TOTAL ASSETS

17,584

15,465

14

57

49

16

121

108

12

1,646

1,549

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Current portion of long-term debt
Notes payable
Accounts payable

Accrued liabilities

1,986

1,941

Income taxes payable

98

65

51

Liabilities of discontinued operations

18

170

-89

Total current liabilities

3,926

3,882

Long-term debt

1,210

228

431

Deferred income taxes and other liabilities

1,292

974

33

11,156

10,381

15,465

14

Redeemable preferred stock

Shareholders' equity
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

17,584

NIKE, Inc.
DIVISIONAL REVENUES1
For the period ended May 31, 2013

%
Chang
e

%
Chang
e

Exclud
ing

Exclud
ing

Curre
ncy

5/31/
2012

Chan
ge

Chang
es 2

1,668

616

22

THREE MONTHS ENDED

(Dollar
s in
million
s)

5/31/
2013

Curre
ncy

5/31/
2012

Chan
ge

Chang
es 2

5,887

1
4

14

2,482

22

TWELVE MONTHS ENDED

5/31/
2013

North
Ameri
ca
Footwe
ar
Appare

1,793
748

6,687
3,028

Equip
ment

173

140

2
4

24

672

470

4
3

43

Total

2,714

2,424

1
2

12

10,387

8,839

1
8

18

695

651

2,646

2,526

10

Weste
rn
Europ
e
Footwe
ar

Appare
l

280

332

1
6

15

1,261

1,377

-4

Equip
ment

49

56

1
3

10

221

241

-3

Total

1,024

1,039

-1

4,128

4,144

Centr
al &
Easter
n
Europ
e

Footwe
ar

223

195

1
4

15

714

671

11

Appare
l

113

111

483

441

1
0

14

Equip
ment

25

24

90

88

Total

361

330

11

1,287

1,200

12

403

402

-1

1,493

1,518

-3

Great
er
China
Footwe

ar

Appare
l

231

230

-1

829

896

-9

Equip
ment

35

35

-2

131

125

Total

669

667

-1

2,453

2,539

-5

120

128

10

429

439

Japan
Footwe
ar

Appare
l

77

91

1
5

301

325

-1

Equip
ment

17

22

2
3

-9

61

71

1
4

-9

Total

214

241

1
1

791

835

Emer
ging
Marke
ts

Footwe
ar

658

607

14

2,570

2,387

15

Appare
l

239

213

1
2

18

918

815

1
3

19

Equip
ment

63

50

2
6

32

230

209

1
0

17

Total

960

870

1
0

16

3,718

3,411

16

33

27

2
2

16

117

111

Global
Brand
Divisi
ons3

Total
NIKE
Brand

5,975

5,598

22,88
1

21,079

11

Other
Busine
sses4

732

663

1
0

11

2,500

2,298

Corpor
ate5

(10

Total
NIKE,
Inc.
Reven
ues

6,697

(25
$

6,236

(68
%

25,313

(46
$

23,331

11

From
Conti
nuing
Opera
tions

Total
NIKE
Brand
Footwe
ar
Appare

3,892
1,688

3,651

1,593

14,539
6,820

13,428

11

6,336

10

l
Equip
ment

362

327

1
1

13

1,405

1,204

1
7

2
0

Global
Brand
Divisio
ns3

33

27

2
2

16

117

111

NIKE, Inc.

% Change
Excluding
Currency

FISCAL YEAR ENDED

SUPPLEMENTAL NIKE BRAND REVENUE DETAILS1

5/31/2013

5/31/2012

% Change

Changes 2

(Dollars in millions)

NIKE Brand Revenues by:

Sales to Wholesale Customers
Sales Direct to Consumers
Global Brand Divisions

18,438

17,438

4,326

3,530

23

24

117

111

Total NIKE Brand Revenues as Reported

22,881

21,079

11

18,438

17,438

1,986

23

25

19,424

10

NIKE Brand Revenues on a Wholesale Equivalent Basis: 3

Sales to Wholesale Customers
Sales from our Wholesale Operations to Direct to Consumer Operations
NIKE Brand Wholesale Equivalent Revenues

NIKE Brand Wholesale Equivalent Revenues by Category: 3

2,450
$

20,888

Running

4,274

3,696

16

18

Basketball

2,627

2,169

21

22

Football (Soccer)

1,931

1,862

Mens Training

2,380

2,064

15

17

Womens Training

1,067

1,011

495

497

5,637

5,741

-2

2,477

2,384

19,424

10

Action Sports
Sportswear
Others

Total NIKE Brand Wholesale Equivalent Revenues

20,888

NIKE, Inc.
% Change
Excluding
Currency

FISCAL YEAR ENDED

SUPPLEMENTAL OTHER BUSINESSES REVENUE DETAILS

5/31/2013

5/31/2012

% Change

Changes 1

(Dollars in millions)
Other Businesses:
Converse

1,449

1,324

NIKE Golf

791

726

10

Hurley

260

248

2,298

Total Revenues for Other Businesses

NIKE, Inc.
EARNINGS BEFORE INTEREST AND TAXES1,2
For the period ended May 31, 2013

2,500

THREE MONTHS ENDED

(Dollars in
millions)
North
America

5/31/201
3
$

723

5/31/201
2
$

TWELVE MONTHS ENDED

Chang
e

562

29

5/31/201
3
$

2,534

5/31/201
2
$

%
Chang
e

2,030

25

Western
Europe

135

133

640

597

Central &
Eastern
Europe

84

71

18

259

234

11

Greater

242

247

-2

809

911

-11

China
Japan

42

43

-2

133

136

-2

Emerging
Markets

262

201

30

1,011

853

19

Global
Brand
Divisions3

(373

-5

(1,396

16

TOTAL
NIKE
BRAND

1,115

903

23

3,990

3,561

12

127

105

21

456

385

18

Other

(354

(1,200

Businesses4
Corporate5
TOTAL
EARNING
S BEFORE
INTEREST
AND
TAXES

(337

905

(272

736

24

23

(1,177

3,269

(917

3,029

28

NIKE, Inc.
NIKE BRAND REPORTED FUTURES GROWTH BY GEOGRAPHY1
As of May 31, 2013

Reported Futures Orders

Excluding Currency Changes 2

North America

12

12

Western Europe

Central & Eastern Europe

14

12

Greater China

Japan

-17

Emerging Markets

12

12

Total NIKE Brand Reported Futures

FINANCIAL RATIOS
Price Ratios

Company

Industry

S&P 500

Current P/E Ratio

21.6

20.5

21.3

P/E Ratio 5-Year High

NA

13.2

12.5

P/E Ratio 5-Year Low

NA

1.7

2.2

Price/Sales Ratio

2.11

2.59

2.14

Price/Book Value

4.24

5.46

3.54

Price/Cash Flow Ratio

17.90

17.20

12.90

The company high P\E ratio shows that investors are expecting higher earnings growth in the future <

1.1%>

Profit Margins %

Company

Industry

S&P 500

Gross Margin

46.5

51.8

39.5

Pre-Tax Margin

13.4

18.2

16.8

Net Profit Margin

10.1

12.6

12.2

5Yr Gross Margin (5-Year Avg.)

44.9

51.6

38.3

5Yr PreTax Margin (5-Year Avg.)

12.8

18.0

15.8

5Yr Net Profit Margin (5-Year Avg.)

9.3

12.1

11.2

Also compared to the industry Nike has lower gross margin <5.3%> and lower
net profit margin.

Financial Condition

Company

Industry

S&P 500

Debt/Equity Ratio

0.06

0.06

1.07

Current Ratio

3.4

3.2

1.4

Quick Ratio

2.6

2.3

0.9

Interest Coverage

648.7

441.4

37.8

Leverage Ratio

1.5

1.5

3.1

Book Value/Share

20.21

14.97

23.78

Nike has slightly higher current ratio than industry <0.2%>, it means that the
company has liquidity than can cover the debts.

Also, higher quick ratio refers Nike higher ability to meet its short term
obligations.
Nike have the same leverage ratio compared to industry, it means that Nike
have normal ability to cover its debts throw assets.
Investment Returns %

Company

Industry

S&P 500

Return On Equity

20.8

26.3

25.4

Return On Assets

14.3

17.4

8.0

Return On Capital

18.4

22.2

10.5

Return On Equity (5-Year Avg.)

21.7

24.7

16.4

Return On Assets (5-Year Avg.)

14.1

16.8

7.8

Return On Capital (5-Year Avg.)

18.8

21.5

10.5

Lower ROA<3.1%> reflects that managers dont use its assets efficient.
Lower ROE<5.5%> indicates that company dont generate its profit throw the equity.

Management Efficiency

Company

Industry

S&P 500

Income/Employee

56,765

108,278

102,166

Revenue/Employee

563,677

696,031

926,601

Receivable Turnover

6.9

13.2

17.0

Inventory Turnover

4.6

3.9

10.8

Asset Turnover

1.4

1.4

0.8

Nike low R turnover reflects how ineffective receivables are collected.

Also low I turnover shows how ineffective the company inventory sold during the period.

NIKE and competitors ratios

Direct Competitor Comparison

NKE

ADDYY.PK

PVT1

PVT2

Industry

Market Cap:

41.07B

13.71B

N/A

N/A

380.26M

Employees:

34,400

42,659

4,0001

9,5031

1.21K

Qtrly Rev Growth

(yoy):

7.80%

20.10%

N/A

N/A

9.20%

Revenue (ttm):

19.39B

15.75B

1.64B1

3.53B2

486.15M

Gross Margin (ttm):

46.51%

47.79%

N/A

N/A

40.15%

2.94B

1.61B

N/A

N/A

46.45M

13.23%

8.01%

N/A

N/A

9.94%

EBITDA (ttm):
Operating Margin
(ttm):

Net Income (ttm):

1.95B

791.64M

N/A

180.40M2

N/A

EPS (ttm):

3.96

1.89

N/A

N/A

1.38

P/E (ttm):

21.70

17.32

N/A

N/A

16.35

PEG (5 yr expected):

1.80

3.14

N/A

N/A

1.00

P/S (ttm):

2.11

0.88

N/A

N/A

0.79

INTERNAL FACTOR EVALUATION

STRENGTHS:

Strong brand recognition

Internet sales

Growing international presence

Superior research and development department

Strong financial returns

Strong sense of culture in the working environment

Great celebrity spokespersons

Automatic replenishment system

Successful experience being competitive

Nike doesnt own any factories

Successful marketing campaigns

WEAKNESSES:

Lack of stores catering to the active females

Poor employment practices at their international manufacturing sites giving a bad

reputation

Heavy dependency on footwear sales

Issues with Footlocker

INTERNAL FACTOR EVALUATION MATRIX

Key Internal Factors

1.
2.
3.
4.
5.
6.
7.

INTERNAL STRENGTHS
Strong brand recognition
Successful marketing campaigns
Superior research and development
department
Great celebrity spokespersons
Internet sales
Growing international presence
Successful experience being competitive

Weight
s

Ratin
g

Weighted
Score

0.12
0.1
0.1

4
4
4

0.48
0.4
0.4

0.08
0.07
0.07
0.06

3
3
3
4

0.24
0.21
0.21
0.24

INTERNAL WEAKNESSES
1.
2.
3.
4.

Poor employment practices at their

international manufacturing sit
Lack of stores catering to the active
females
Heavy dependency on footwear sales
Issues with footlocker
TOTALS

0.15

0.3

0.1

0.2

0.1
0.05
1

2
2

0.2
0.1
2.98

STRATEGY ANALYSIS (CREATIVE ALTERNATIVE STRATEGIES)

SWOT ANALYSIS

NIKE should use result of the SWOT matrix analysis to make strategic planning . SWOT
does not show how to achieve a competitive advantage because capabilities, threats, and
strategies change, the dynamic of a competitive enviroment may not be revealed in a single
matrix. SWOT analysis may lead the firm to overemphasize a single internal or external factor
in formulating strategies. There are interrelationships among the key internal and external
factors that SWOT does not reveal that may be important in devising strategies.
STRENGTHS

Nike has a strong global brand which everyone will know by its logo. The logo itself needs to
be presented without the name and everyone will know what it is, that is how powerful the
brand is. Some companies require their names to be present but in this case that is not true.
This is garnered a long term customer loyalty base where the products are synonymous with
high quality clothing and fitness trainers. The power of the brand is also evident in the fact
that Nike has well known athletes and other celebrities which will put further backing to the
brand if it is deemed to be cool to wear. Athletes like LeBron James, Roger Federer and
others such as Andrew Luck where each of these people represent a different sport from
basketball to tennis to American football respectively. They promote the company by wearing
Nike branded clothes from head to toe to more recently wrist in the form of the Nike

FuelBand. The company is a clothing brand and there is little to innovate in. However, Nike
has managed to find ways to innovate their products and to provide a range for various
different price points to cater for different demographics. This shows that the company is
versatile in its product offering, whilst also remaining relevant as the industry leader. The new
Flyknit running shoes, the FuelBand wristband and the Dri-Fit clothing technology are all
innovative and are applicable to different products. The Flyknit trainers are very unique where
they allow the runner to have a bare foot feel experience, while the FuelBand moves into the
new market of wearable technology with a focus on keeping active. The FuelBand allows the
user to connect it to their smartphones and to compete against their friends to give a
competitive side to always moving and being active.

WEAKNESSES
Due to the strong brand, the company can be seen as exploitative and greedy. The company
can stick their logo on a plain white t-shirt and sell it for over triple the manufacturing cost,
not to mention the fact that the company has had problems in the past with its manufacturing
processes. The high mark up on the basic products allows the company to generate large
levels of profits which can be a seen as unethical, but they do operate as a for profit company.
The supply chain is the most important aspect of Nikes business model, as they need to
ensure that they have a solid supply chain from sourcing raw materials to manufacturing and
to delivery logistics. Each of these areas creates a cost for the company, much like any other,

and they could try to squeeze their factory workers with lower wages and/or bad working
conditions. Due to the strong brand, the company can be seen as exploitative and greedy. The
company can stick their logo on a plain white t-shirt and sell it for over triple the
manufacturing cost, not to mention the fact that the company has had problems in the past
with its manufacturing processes. The high mark up on the basic products allows the company
to generate large levels of profits which can be a seen as unethical, but they do operate as a for
profit company. The supply chain is the most important aspect of Nikes business model, as
they need to ensure that they have a solid supply chain from sourcing raw materials to
manufacturing and to delivery logistics. Each of these areas creates a cost for the company,

much like any other, and they could try to squeeze their factory workers with lower wages
and/or bad working conditions.
OPPORTUNITIES
Technology is moving very quickly, and the industry is coming up with new different form
factors of usable technology. Mobile phones became smartphones, CDs became MP3 players
and VHS became Blu-Ray discs. Nike has dabbed its hand in technology when it created
Nike+ with a collaboration with Apple where is was sold as a smartphone feature to track
running distances and calories burned. Nike had then moved onto making its own wearable

fitness technology with a fitness watch, the FuelBand and with a game with the Kinect camera
for Xbox 360. Nike could look at investing into more of these types of wearable technology
so that they technology is already placed in smartphones. This would be an excellent way to
create licensing revenue as well as having a wider reach of consumers.
There are various different types of shoes that Nike offer and the products are seemed to be
blurring into other product ranges. Within the Nike Free range, there is Freerun 3.0, Freerun
5.0, Freerun+ 2ID, FlyKnit, FlyKnit Lunar1 +ID and it can be confusing when picking a
running shoe. There are only slight differences in the product but the differences can be hard
to understand when there is no expanded explanation. The only way in which a consumer can

understand these differences is to spend time reading each one and comparing it, or physically
going to a Nike store and getting a sales person to assist, and there is no guarantee that the
sales person knows everything. Nike could try and streamline the naming of some of their
products within certain ranges. This will allow the company to maximise the customers
understanding of the products on offer and the features they represent.
THREATS
For large multinational corporations, the profit generated from different countries is a great
way to continue operating when the domestic market is reaching saturation. The main risk

with this is currency fluctuations and how a massive change in the foreign and domestic
currency will make any profits overseas can turn it into a loss. Companies have had to create
finance divisions specifically to manage their currency risk, most likely using a combination
of forward contracts, futures contracts and call/put options. The recent decline in the Indian
Rupee shows how the company can benefit from drops in foreign currencies where the goods
that Nike will ship to other countries will be even cheaper. The main problem with any
currencies changing would be domestic currency for Nike which will be the US Dollar. The
US Federal Reserve choosing to continue its asset purchase scheme has allowed the US
Dollar to strengthen stock markets to be more risk taking and choose the US market to invest
in and the Federal Reserve seems to be continuing asset purchases for the foreseeable future.

The recent collapse of a Bangladesh clothing manufacturing factory caused major publicity
problems for fashion retailers. The collapse brought to light the bad working conditions and
the major problem of cutting corners in countries where building legislations are sometimes
ignored, especially in the case of the Bangladeshi factory. Nike has had problems with their
factories which they have actively and vocally created internal codes of conduct to address
concerns of the public. When it comes to the problems of the collapse, the developed world
would find it ways to boycott a company is there are seen to be unethical. Nike could find
difficulties domestically if they encounter problems with sales if they have any problems with
their factories.

STRENGHTS
Worlds leading brand
for sports shoes and
apparel
Launched many other
products in collaboration
with companies e.g.
launched music player,
watches etc

WEAKNESSES

In Vietnam the
company faced
allegations of labor and
wage laws with
employees
In Cambodia and

OPPORTUNITIES

SO STRATEGIES

WO STRATEGIES

Product expansion in areas

Promote nternatonal

like more concentration in

sunglasses, sportswear etc.
which gives high profit

Sales as nternatonal
trade develops(S1 S3
S4 O3)

Market products create

more products and more
stores to and for women
and men(W1 O5 O7)

Can open their stores in tier

2 cities in emerging economies

Increase promoton of

Develop beter

SPACE MATRIX
Financial
Strenght
1
2

Liquidity
Leverage

Rating is 1(worst) 6
(best)

Rat
ing
s
6,0
6,0

3 Working Capital
4 Return on Assets
5 Return on Equity
6 Price per Earnings
7 Earning per Share
Industury
Rating is 1(worst) 6
Strenght
(best)
1 Profit Potential
2 Extent Leveraged
3 Economies of Scale
4 Growth Potential

6,0
4,0
4,0
6,0
5,0
37,
0
6,0
5,0
5,0
5,0

5 Financial Stability
6 Resource Utilization
7 Diverse Portfolio
Environmental
Rating is -1(best) -6
Stability
(worst)
1 Price Range of Competing Products
2 Competitive Pressure
3 Ease of Exit from Market
4 Succesful and Recognized Advertising
5 Endorsement Agreements
6 Price Elasticity Demand

6,0
5,0
5,0
37,
0
-2,0
-2,0
-1,0
-1,0
-1,0
-1,0

7 Risk Involved in Business

Competitive
Rating is -1 (best) -6
Advantage
(worst)
1 Market Share
2 Global Presence
3 Strong Investor Reputation
4 Technological Innovation
5 Product Life Cycle
6 Customer Loyalty
7 Control over Supplier and Distributors

-1,0
-9,0
-1,0
-1,0
-1,0
-1,0
-2,0
-1,0
-3,0
-

10,
0

ES average

-1,29

CA average

-1,43

IS average

5,29

FS average

5,29

X coordinate

3,86

Y coordinate

4,00

Strategy
>>>

Agressiv
e

NIKE IS AGGRESSIVE..
-Backward,forward,horizantal integration
-Market penetration
-Product development
-Diversification(Reletad or Unrelated)
Suggested Strategies After analyzing the SPACE Matrix, we can clearly see that NIKE exists
in the aggressive quadrant. This means that it is in an excellent position to use its internal

strengths, to take advantage of external opportunities, to overcome internal weaknesses and

avoid external threats.Different strategies can be conducted upon this analysis, such as market
penetration, market development, product development, diversification and backward,
forward, horizontal integration.In this case we are going to suggest two intensive strategies,
product development and market penetration.

BCG MATRIX
This study aims on analyzing the products and services offered by NIKE. The BCG matrix
approach is based on the product lifecycle concepts which can be utilized to identify what

priorities should begiven in the product portfolio of a business level. To make sure that the
company is creating long-term value, an industry should have a portfolio of products which
contains both high-growth products in need of cash inputs aswell as low-growth products
which establishes a lot of profit or cash.BCG matrix relies on 2 dimensions: market growth
and market share. The basic notion behind it is that the higher the market share of a specific
product has or the faster the products marketability grows, the better it is for the industry.
Placing appropriate products in the BCG matrix, results in 4categories, in the business
portfolio of an industry. The four categories include the Stars, cash cows, dogs, question
marks. Each of these categories has their own measurement.

First, the stars are considered as those products which have high market growth and market
share. The stars products use large amounts of cash and considered to have competitive
position in the business which results in generating more profit. The stars products
arefrequently noted as rough in balance on net cash flow. But if needed, any attempt should be
created to hold market share to avoid becoming cash cow.
The second category is Cash cows which are commonly considered to have low growth
with high market share. Here in, the profits and generation of cash are considered high but
because of the low market growth, the investment required should be low.It is said that cash
cows should keep the profit high and is noted to be the foundation of the company.

The last category is question markets which is high growth with low market share.
Question marks products are considered to be the worst cash features of all, because high
demands make it to have low returns due to low market share. Here in, if the company would
not be able to solve the issue of question market products, these may be able to absorb great
amount of cash and may result from stopping dogs to grow.Accordingly, BCG matrix
approach can help the business companies tounderstand a frequently made approach mistake.
Boston Consulting GroupMatrix is a tool used for product portfolio planning 2005). This tool
has two controlling elements which includes market growth relative market share. In this
manner, the current situation NIKE in the standpoint of the market environment will be
analyzed using this marketing tool. This analysis will give emphasis on the product and

service portfolio of NIKE. Thus, the product and services that the company offers will be
analyzed using thefollowing figure.It can be said that NIKE products and business portfolio
can be divided infour major products or services; each service operates in accordance with its
functions along with the products and services in different areas especially made as a
distinction of each division. The NIKE analysis will be based in assessment of the services
offered by the company.
Next category is Dogs which is low market growth and share.Itsnot that an industry should
avoid or reduce the number of dogs products in the industry.In addition, the company is also
recommended to beware of the expensive turn around plans.

BCG MATRIX
Net Sales

Pre-Tax
Income

% Sales

%
Op. Market
Income
Share
Position

Indus
try
Grow
t Rate

US

$
4,658

$
957

44%

50%

2%

Europe,Middle East and $

Africa
3,241

$
533

30%

28%

0,92

8%

Asia Pacific

$
295

13%

16%

8%

$
1,358

Americas

$
527

96

5%

5%

Other

$
911

19

9%

1%

Total Nike

$
10,695

$
1900

100%

100%

Stars

20
Marks

Question

15
16%

5%

10

28%
1

0,8
50%

1%
0,6

-20

5
0

0,4

0,2

-5
-10

Cash- Cow

-15

Dogs

Relative Market Share(X)

US
OTHER

EMEA

ASIA PASIFIC

AMERICAS

This strategy is totally based on the market share of the product and the growth of the market.
It is a typical strategy where the companies should have products with high growth in large
markets and also products that have low growth but can generate more cash for the company.

Based on such combinations of this matrix, there are four dimensions for this model based on
which the companies can understand how much cash is being generated and consumed. There
are four categories that a company can divide its products based on the BCG Growth matrix.
They are cash cows, stars, problem child and dog.
Cash Cows: In NIKE, the different kinds of products that are sold on the brand name of
adidas are the cash cows for the company. The reason behind this is that these are widely used
by people and reasonable profit is generated from these products. By selling such products,
NIKE is able to generate more cash for the company and this can be used either for the
development of new products or investment can be done in some other business area.

The main financial pillars for the company are NIKE products which are the cash cows and so
the revenue generated from these cash cows is very crucial for the company to sustain.
Star: Stars are such kind of products that generate enough amount of revenue for the
company, but at the same time these products need more cash to maintain its position in the
market.
Question Mark (or Problem Child) : Such products are made available in high markets and
the market share is very less. They require lot of funds to improve their market share and it is
uncertain whether they will grow or not. As the markets are growing phenomenally, NIKE has
few problem Childs and these can be ignored by the company.

Dogs :These are products that have fewer shares in the market and also have a very slow
growth rate. The products dont consume lot of investment and they dont generate huge
revenue for the companies.

INTERNAL EXTERNAL ANALYSIS

Weak 1-1.99

GRAND STRATEGY MATRIX

o
o
o
o
o
o
o

Market Development
Market Penetration
Product Development
Forward Integration
Backward Integration
Horizontal Integration
Related Diversification

STRATEGY SELECTION (CHOICE) AND

RECOMMENDATIONS)
(QSPM) QUANTITATIVE STRATEGIC MATRIX

Key factors

Exte
rnal

We
igh
t

Market
Expansio
n

Prod/Recy
cle/Materi
als

Add. Sports
Accessories

A
S

A
S

AS

1
to

TAS

1
to

TAS

1 to 4

TAS

Create products from recycled

materials

0.1

0.3

0.2

0.4

Promotion as a fashionable
wear, not just sportswear.

0.0
7

0.21

0.07

0.14

Growing segment of the female

athletes

0.0
8

International expansion into

emerging markets - India

0.1
2

0.48

0.24

0.12

Add. marketing of existing prod

- appeal to new groups

0.1

0.3

0.2

0.4

New alliances with co.

respected for social
responsibility

0.0
6

0.18

0.12

0.06

Brand reorganization by market

0.0

0.24

0.06

0.12

regions

High competitive industry

0.0
8

0.32

0.24

0.16

Failure to respond to market

trends in timely manner

0.0
6

Negative public perception

0.0
6

Federal Trade regulations with

foreign manufactures

0.0
8

0.32

0.32

0.16

International currency changes

could decrease profits

0.0
7

0.14

0.32

0.21

Production of counterfeit
goods, and generic products

0.0
6

0.18

0.12

0.06

total should be 1.0

Inte
rnal

1
to
4

1
to
4

1 to 4

Recognized brand name

Swoosh is ubiquitous

0.1

0.4

0.3

0.2

Strong in research and

0.0

0.36

0.18

0.27

development/innovation

Strong marketing
campaign/sponsors top athletes

0.0
8

0.16

0.08

0.24

Diverse portfolio

0.0
9

0.09

0.27

0.18

Successful advertising
campaigns

0.0
7

0.07

0.14

0.21

Customer loyalty

0.0
7

0.21

0.14

0.07

Strong financial position

0.0
8

0.16

0.24

0.32

Strong international presence

0.0
8

0.32

0.24

0.08

Products are highly priced

0.0
6

0.06

0.12

0.18

Revenues still mostly

dependent upon footwear sales

0.0
5

0.15

0.1

0.05

Violations for wages and child

labor in manuf. countries

0.0
6

Little control over quality of

prod. from 3rd party contract.

0.0
6

0.12

0.18

0.06

Anti-globalization groups

0.0
5

Price sensitivity of products

total
should
be 1.0

0.0
6

0.18

0.12

0.06
0

4.95

3.75

FIRST RECOMMENDATION: Product Development

We provide comprehensive consulting services from idea to product launch.NIKE by the

sport works with start-ups as well as established companies, utilizing virtually all disciplines
required to bring a new product to market. Some of these disciplines include:

Market research and focus groups

Marketing communication
Public relations
Sales and sales coaching
Industrial design
Mechanical design

Mechanical fabrication
Short-run manufacturing
High-volume manufacturing
Plastics tooling and production
Application software development
Funding sources

Your creative idea infused with our strategic expertise will maximize the success of your
product in the marketplace.

SECOND RECOMMENDATION:Market Development

A company follows a market development strategy for a current brand when it expands the
potential market through new users or new uses. New users can be found in new geographic
segments, new demographic segments, new institutional segments or new psychographic
segments. Another way is to expand sales through new uses for the product.
The key difference between this growth strategy and market penetration is that the
definition of the target market must change. In other words, the market potential must

increase through this strategy, whereas the market size is "fixed" with a market penetration
strategy.

THIRD RECOMMENDATION :Market Penetraton

A market development strategy targets non-buying customers in currently targeted
segments. It also targets new customers in new segments. Market development strategy
entails expanding the potential market through new users or new uses. New users can be
defined as: new geographic segments, new demographic segments, new institutional segments
or new psychographic segments. Another way is to expand sales through new uses for the
product. Penetration is a measure of brand or category popularity. It is defined as the number

of people who buy a specific brand or a category of goods at least once in a given period,
divided by the size of the relevant market population.

STRATEGY IMPLEMENTATION
As we can realize that our market area is quite well, we are sells our product over 200
countries and we already reach our target market area ,after now we have to work on to
increase our market share ,sales and profit so that we have to create new and additional
strategy to insert our current strategy.

MANAGEMENT AND OPERATION

Nike manufactures all of its footwear from outside United States. Nike has contract suppliers
in China, Vietnam, Indonesia and Thailand15. These countries accounted for 36%, 36%, 22%
and 6% of total NIKE brand footwear respectively. Nike also has manufacturing agreements
with independent factories in Argentina, Brazil, India, and Mexico to manufacture footwear
for sale primarily within these countries. Primary reason for this is that it is cheaper to
manufacture in South East Asia and transport it to USA and Europe, regardless of the
transportation and tariff costs involved.
The sweat shop debacle in late 1990s has led Nike to form a distinctive strategy to provide a
good working environment for employees. They have several internal guidelines and

compliance standards apart from state laws for ensuring proper working conditions for all
workers in its contracted supplier factories. Due to the magnitude of Nike and their number of
stores and manufacturing plants throughout the world, Nike has taken the time to recognize
the importance of each individual and what they can contribute to the team. For this reason,
Nike does not call its employees, employees but rather team members because each part of
the team has something to add to the business.
They have also admitted that they have a very large array of workers and this brings many
diverse cultures and points of views together. According to one of its statement, diversity and
inclusion is a crucial factor in Nikes diplomacy in their many locations and globally. In

identifying the differences they have set apart the opportunities to better understand how their
teams will work together and what adversity they may face because of this. In order to strive
to reach this mission they have put into action these strategies:
Cultivate diversity and inclusion to develop world-class, high-performing teams
Ignite change and inspire critical conversations around diversity, inclusion and innovation
Create venues and environments for open dialogue, diverse opinions and a multitude of
perspectives

All of the above will in future venture apply and assist them in working more efficiently and
having more satisfied employees for longer periods of time.

MARKETING
Nikes strategy was to create dominant presence in media. Nike created media
presence in several trend setting United States cities. TV ads linking Nike to a city were used,
but real drivers were huge oversized billboards and murals on buildings that blanketed cities
with messages featuring key Nike-sponsored athletes, not products. The company focuses its
marketing on celebrity endorsement, i.e. athletes in basketball, golf, soccer, and tennis. Lately,

Nike has also began to sponsor big sporting events so as to create huge awareness and brand
following. In 2008, Nike spent significant amount on advertising in the Beijing 2008
Olympics and the Football Championship. After the recent Tiger Woods scandal Nike plans
on revisiting it celebrity endorsement strategy. It can be noted that the swoosh logo is one of
the most famous in the world due to these huge advertising efforts.
Nikes strategy in this front is to develop a premium brand associated with high quality
product that satisfies customer needs. Nikes brand is associated with an aggressive attitude
portrayed by, you dont win silver, you lose gold,12 which clearly suggests that winning is

vital. The Nike customer associated the Nike brand with being the American way: Being
individual and aggressive like Michael Jordan and John McEnroe.
Nike built its brand around sports, attitude and lifestyle. Nike backed this strategy with
marketing campaigns like Just do it and with the companies front athletes like Michael
Jordan and Tiger Woods.

FINANCE
Nikes strategy in early 2000s was to develop, flag ship stores, Nike Town shops in
bigger cities, first national, and then abroad. Nike was the first company to establish flagship
stores and it turned out to be a sensation. There are independent small retail stores that sell
Nike products all around the world as well. Also, on seeing the potential of the low price
market, Nike took efforts in 2005 to tap in to the low price segment by striking a deal with big
retail discount stores like Walmart and rolled out starter shoes at a cheaper price, competing

with private label brands. However, to avoid brand dilution, Nike did not use the swoosh logo
in these shoes. Currently, Nike has a high quality website and uses it as an online selling
channel. N i k e I d14, a part of the website allows a customer to customize his own shoes and
buy it. The website is available in 14 languages and is different according to the country
requirements.

RESEARCH AND DEVELOPMENT

Nike manufactures all of its footwear from outside United States. Nike has contract
suppliers in China, Vietnam, Indonesia and Thailand15. These countries accounted for 36%,
36%, 22% and 6% of total NIKE brand footwear respectively. Nike also has manufacturing
agreements with independent factories in Argentina, Brazil, India, and Mexico to manufacture
footwear for sale primarily within these countries. Primary reason for this is that it is cheaper
to manufacture in South East Asia and transport it to USA and Europe, regardless of the
transportation and tariff costs involved. With over 21,000 employees worldwide, the company
was organized into departments by both geographic divisions and product categories, which

created overlapping management responsibilities and a fluid leadership structure. For

example, a footwear manager in Europe answered to both the Vice President of Footwear and
the Vice President of Europe. However, there was no formal communication link between the
regional vice presidents (those in the United States, Europe, Asia-Pacific, and Latin America)
and the product vice presidents (footwear, apparel, equipment).

STRATEGY EVALUATION AND CONTROL

The aim of this project is to evaluate Nike Inc.s marketing Strategy. In this project we do
an analysis of the Nikes external environment and research about its competitors. We then
evaluate the Nikes sales and profit trend along with its market share. An internal assessment
of Nike is also covered in this project. We then see on what basis Nike has divided its various
market segments and who are its target market. The positioning strategy has also been
discussed briefly. We then take a look at the Marketing Mix of Nike, i.e., the 4Ps of
marketing.

On the basis of the above information collected through the duration of the project we could
conclude that if Nike would like to uphold its position as the market leader in the athletic
footwear market, then it has to provide its customer base with new and innovative products.
Nike Inc. is the worlds leading supplier of athletic shoes and apparel and a major
manufacturer of sports equipment with revenue of more than $19 billion in 2009.
The company was created in 1962 as Blue Ribbon Sports by Bill Bowerman and Philip
Knight and officially became Nike Inc. in 1978. The company takes its name from Nike, the
Greek Goddess of victory. Nike owns the subsidiaries Cole Haan, Hurley International,
Umbro and Converse. Nike sponsors many high profile athletes and sports team around the
world, with the very recognized trademarks Just Do It and the logo SWOOSH.

THE MARKET ENVIRONMENT

Geographical Market
Nikes geographic market is spread throughout the globe. In March 2009, Nike announced
its plan to reorganize its global business in order to bring goods closer to the consumers as
well as to reduce management overlap. Following this plan Nike then decided to develop its
market share in North America, Western Europe, Eastern/Central Europe, Greater China,
Japan and Emerging Markets.
Main Business
Nike Inc. specializes in footwear, apparel, equipment and accessory products for men,
women and children. The company offers footwear for football, basketball, golf, sport-

inspired casual shoes, kids shoes and other athletic and recreational purposes. The company
also markets sports apparel and accessories, along with sports inspired apparel and athletic
bags. Nike also offers performance equipments which include bags, sport balls, eyewear,
electronic devices, and other equipments designed for sports activities under the brand name
NIKE.
Political
The support accorded to Nike by the US government, particularly in the general
macroeconomic stability, low-interest rates, stable currency conditions and the international
competitiveness of the tax system, form the foundation critical to Nikes growth.

Nikes main production faculties lie in the Asian countries where political unrest prevails. The
rise and fall of governments results in change in policies relating to employment laws, trade
restrictions, etc. This political unrest may affect Nike.
Economic
The economic downturn has resulted in the slowdown in sales. This will affect the growth of
Nike. Also, labor cost and raw materials prices are increasing, which will affect the profit
margin of the company.
Nike deals in different currencies for trading purpose. Hence, costs and margins are not stable
over long periods of time due to changing exchange rates.
Social

People today prefer to buy products which have brand value associated with them. They
now want fashion-oriented products for leisure activity instead of sports activities. There are
also an increasing number of women consumers in the market due to changing lifestyle and
trends.
The bad publicity due the poor labor and factory conditions in Asian Countries resulted in
decline in sales as society wants socially responsible firms.
Technological
Nike has integrated technology to develop its products fast. Nike always adopts latest
technology for its product manufacturing and development.
Environment/Green

Nike makes every attempt to reduce the impact of each of its products on the environment
from design to manufacturing, and ultimate disposal. Nike shoes produce solid waste. The
largest of these by weight is cured rubber used in shoes soling. Nike employees engineered a
creative way to keep it out of landfills and convert it into more outsoles, called REGRIND.
THE COMPETITION
Main Competitors
Nikes main competition comes from Adidas AG along with companies such as Puma AG,
New Balance, etc. Due to Nikes brand awareness, its competitors have to put in more effort
to sell their products & new entrants in the industry should have huge amount of capital to

invest in advertising to create brand awareness. This restricts the amount of entrants in the
market.
Sales & Profit Trend
We can see that from the year 2006 to 2008 both Adidas and Puma have growing sales &
profits. But in 2009 both companies saw a drop in sales & profits. This may be due to the
footwear market is saturated & there is high competition where companies are striving for
maximum market share &/or to maintain their existing market share.
Market Share

Adidas Group & Reebok together hold 22 percent of the market share, followed by Puma 7
percent and New Balance 6 percent. Since the athletic footwear market is saturated, there may
be a possibility that the companys market share erodes.
Target Market
All the companies in the athletic footwear market are targeting the same type of consumer
those who are interested in sports like the aspiring athletes, teams, individual athletes, etc.,
along with the urban youth.
THE COMPANY
Sales & Profit Trend

Nikes revenue and net income are constantly growing from the year 2005. This shows that
Nike has a strong grip on its market share. Consumers like Nikes innovative new products
and are willing to pay a higher price than its competitors.
Market Share
Nike is the market leader in the athletic footwear industry with a 31 percent market share.
This shows that Nike with its strong research and development and extensive product range
along with the marketing expertise have captured the consumers preferences.
Business Sector

Nike is part of the Consumer Goods sector which mostly consists of Fast Moving
Consumer Goods such as dairy products, farm products, etc. In this sector, Nike belongs to
the Textile-Apparel, Footwear and Accessories Industry.
Project Focus
Nikes focus is on product development & providing its customer with innovative &
compelling products. The introduction of Nike+iPod establishes this fact that Nike wants to
cater the customer need for new & innovative products. Nike also lays heavy emphasis on
maintaining its Brand name & value in the market. Hence, it invests large amounts of money
in research & development of its products so that it can maintain its position as the market
leader.

NIKES MARKETING STRATEGY

Segmentation & Targeting
Nikes target market for its shoes, clothes and other accessories are males and females
between the age of 13 and 35 years. Nike segments its markets on the basis of age, gender,
geographic locations, psychographic, and benefits sought.
On the basis of age, Nike targets a variety of age groups from young adolescent to middleaged adults. Nike has different advertisements for men and women of every race and
nationality separately. Nike now is focusing on targeting more on women and Generation Y.
Also teams of any sport are targeted by Nike.

Nikes aim is to push its products in countries that apply to certain sports, which are
popular in that particular country. For example, Products relating to Rugby are advertised
more frequently in Europe when compared to U.S., as Rugby is popular in Europe.
Nike promotes a positive and confidant attitude and targets people who want to attain that
attitude. It also is targeted towards customers who are interested in athletics.
On the basis of benefits sought, Nike provides shoes, apparel and equipment for a variety of
sports all over the world. It also offers products to many different people who have different
tastes, interests and needs. This can be seen from the fact that Nike has a website where
consumers can design their shoes according to their requirements and tastes.
Positioning

Nike promotes products that ooze with style, attitude and self-confidence. This message is
clear in Nikes tagline Just Do It or If you have a body, you are an athlete which is shown
in many advertisements of Nike. The former message of Nike has been used since 1989, when
it was first introduced and the latter was developed by Bill Bowerman when Nike first started.
This message clearly defines Nikes image which is a positive and self-confident nature.
Porters Generic Strategy (Differentiation/Low Cost Leadership/Focus)
Since the footwear market is highly competitive, companies are striving to provide the best
possible deals to the consumers. This means that they are trying to cut down costs. Since Nike
outsources its manufacturing to other countries, it doesnt have any capital tied up in

machinery, equipment or factories. This means it doesnt have any expenses that may arise out
of maintenance of any of the above.
Nike also lays heavy emphasis on Differentiation and continually strives to innovate and
develop its products. The introduction of Nike+iPod sports kit in the year 2008. This enables
runners to log and monitor their runs via iTunes and the Nike+ website.
Growth Strategy
On May 5th, 2010 Nike revealed its Global Growth Strategy to achieve sustainable, longterm growth across its global portfolio of brands. With a revenue target of $27 billion by the
year 2015, Nike outlined each and every category of their product line from Nike SB to
Womens Training and hoped to reach that goal through a consumer-focused strategy. The

company also expects to generate over $12 billion of cumulative free cash flow from
operations through 2015. Both goals extend NIKE Inc.s long term financial model of high
single-digit revenue growth, mid-teens earnings per share growth and expanding returns on
capital.
NIKE INC.S MARKETING MIX
Marketing Mix
Product Mix
Nikes product range includes an assortment of goods which include shoes and apparel for
sports activities such as Basketball, Football, Athletics, Golf, Cross training, etc., for men,
women as well as children.

Product Life Cycle

The athletic footwear industry and Nike Inc. are both at the maturity stage of the Product
Life Cycle. Nikes revenue and net income are constantly increasing at almost the same pace
for the last 5 years. But in the year 2009, we can see that the rate of growth in revenue and net
income has decreased due to saturation and high competition in the market. Nike can maintain
its revenue, net income and market share in the footwear market by introducing new
innovative products to keep the consumer base captivated, expansion into new market like
India and China and use extensive marketing of the product to continue its demand in the
market.

Since Nike is the market leader in the footwear market, it is safe to say that it is established
within its market segments. The market for footwear is saturated with high competition. This
places Nike in the Cash Cows category. Being in the cash cows category means that Nike has
to maintain its sales and hold its position of a market leader in the market. To do this Nike has
to spend a lot of money in research and development to provide customers with fresh and
original products to keep them loyal to the brand Nike.Since the athletic footwear market is
saturated with no scope for much growth in the market Nike can choose from either Market
Development or Diversification Strategies. If Nike opts for Market Development it means that
Nike will focus on the emerging markets such as India, China, etc. with its existing products.

If Nike opts for Diversification then it would have to focus on new markets with new and
innovative products.
Price Mix
Nike Inc. applies a premium pricing strategy. This strategy implies the product to be priced
higher than that of the competitor based on the quality of the product. Some critics and people
claim that the prices of Nikes product are high. However, the company owners and
employees argue that these prices reflect the quality of the product. This strategy seems to be
working as consumers who purchase Nike products are ready for their prices.
Place Mix

Nike products are available in multi-brand stores along with the exclusive Nike stores
across the globe. Nike sells its products to more than 20,000 retailers in the U.S. and in
approximately 200 countries in the world. Along with this Nike has its own Niketown
stores.Nike also sells its products through its official website, where people can also
customize and design their shoes according to their preferences and directly delivers these
from the manufacturer to their house.
Nike sells its products in the international markets through independent distributors, licensees
& subsidiaries.
Promotion Mix

Nike reinvests around 12 percent of their revenue into marketing, which includes
advertising, endorsements and sponsorship deals.Nike advertises it products through print
media, television and billboards and posters. Apart from this Nike has a number of celebrity
athletes like Cristiano Rolando for soccer, Tiger Woods for golf, etc., and professional teams
like Manchester United to focus attention on their products.
Nike also has several websites for individual sports such as nikebasketball.com,
nikefootball.com and nikegolf.com.
EVALUATION OF COMPANYS STRATEGIES AND TACTICS
Evaluation of Nike Inc.s Current Position & Evidence of Success & Prospects of Future
Growth/Success

We can see that Nikes Earnings per Share (EPS) and Return on Invested Capital has gone
down. This may be due to the reduction in Earnings before Interest and Tax (EBIT) due to fall
in revenue Hence, we can say that Nike has to maintain its position in its existing market and
grow in the new markets to increase or maintain its EPS and Return on Invested Capital. If
Nike wants to maintain its market leadership it has to focus its strategies on product
development to provide its loyal customer base with new, captivating and innovative
products. Along with product development, Nike also has to penetrate new & emerging
market like India and China if it wishes to grow be number one in its industry.
Time and again Nike has proven to be the best when it comes to satisfying consumers
needs. Nike provides people with innovative and original products that others in the industry

are not able to provide, thus upholding its position as market leader in the athletic footwear
market. This gives Nike a competitive advantage over its competitors, which provides Nike
with opportunities which Nike has used to its maximum. With its Marketing mix, Nike has
been able to create an all around dominant strategic plan. Nike has shown that they are a true
force to be reckoned.

BALANCE SCORECARD

Area of
Objectives

Measure

Time
Expectation

Primary
Responsibility

Customer and
online surveys

Quarterly

Managers/
Marketing

Customers
1. Customer
satisfaction

2. Customer
Loyalty

Product and
purchasing
reviews.
Memberships and
number of
returning and
new customers.

Quarterly

Marketing

3. Accessibility

Open more stores

in various
countries.

BiannuallyAnnually

Marketing

Increase in
productivity,
employee

Quarterly

CEO

Managers/Empl
oyees
1. Improve
working
conditions

surveys.
2. Improve
employee
training
Community/Soc
ial
Responsibility

Increase in
productivity and
overall operating
efficiency

Quarterly

Human Resources

1. Business
Ethics

Endorse positive
role model
athlete`s.
Increase
promotion of
sports and
wellness.

Annually

CEO

2.
Environmentall
y Friendly

Recycle
materials,
improve

Biannually

CEO

reputation and
customer
perspective.
3. Community
involvement

Run local sports

camps,
community/ city
events- increase
customer
awareness.

Biannually

Regional Managers

Operations/
Processes
1. Improve
Brand Image

Increase in sales
and customer
recommendation
s.

Quarterly

CEO

2. Product
Innovation

Number of new
stores, products

Quarterly

CEO/ Marketing

and marketing
3. Market
Penetration

Number of stores
and sales in new/
other countries

Annually

Marketing

Decrease in
production
expenses.

Annually

CFO

Financial
1. Reduce Cost
of production

2. Increase
Revenue

Increase in
annual sales

CONCLUSION

Annually

CFO

NIKE Company has still well position on market and our increasing will regularly and we
will be best largest sports wear and shoes manufacturer.
We are already implement our current strategy of focusing strategy and diversification
strategy .But with some little bit focus on different conjectures.
We have recommended some strategies NIKE. They are Advertisng, Brandng, Sellng,
Manufacturng, Organzatonal and Human Resource Management Strategy.We have chosen
one of them and it is Advertisement and Brandng Strategy.We think that if we are change our
advertisement shape and tend to make a advertisement which touching the community values,
we will get much more sales and revenue from this market.

BIBLIOGRAPHIC
1-) www.nike.com
2-) www.slideshare.net

3-) www.wikinvest.com/stock/Nike
4-) www.assignmentstudio.net
5-)www.wikipedia.org/wiki/Nike
6-) www.financeyahoo.com
7-) www.google.com

8-) www.newyorktimes.com
9-) www.dailymarkets.com/stock/2010/09/22/earnings-previewnike-inc/
10-) condor.depaul.edu/aalmaney/StrategicAnalysisofNike.htm