Nike Case Study Analysis

By Ahmed Samir Haitham Salah Magdy Essmat Magdy Mohamed Sherif

Nike Over View

• Nike is the Ancient Greek goddess of victory “It is one of the most recognized symbols in the world – The Swoosh. Simple. Fluid. Fast.”

• Nike is the world’s largest designer, marketer, and distributor of sports-related apparel, equipment , accessories, athletic footwear and athletic apparel.

• Nike was founded in 1964 by Bill Bowerman and Phil Knight and opened its first store in Santa Monica, California, in 1966.

• The company introduced its Nike brand of shoes in 1972.

• The company officially renamed itself Nike in 1978.

• BY 1980, the company had reached a 50% market share in the U.S athletic shoe market and had become a publicly traded company.

• By 1985 new era by introduction of a Michael Jordan-endorsed basketball shoe. By end of 1988 Nike to the top of industry.

• By 1988 started to began diversify with purchase Cole Haan shoes and aquire other brands “

Nike Over View cont.

Bauer in 1995, Hurley in 2002, Converse in 2003, Starter in 2004, Umbro in 2008

Nike Categories Structure

Footwear Apparel Equipment's

- Running - Training - Basketball - Soccer - Urban wear

- Shirts - Bags - Accessories - Running Short - Baseball Caps

- Socks - Sports ball - Eyewear - Golf clubs - Baseball bats - gloves

• HQ: Beaverton, Oregon, in Washington County. • On 71 hectare, 17 buildings, and houses 600

employees • Inside U.S , Nike has 3 significant distribution and

service facilities:

- Memphis - Tennessee - Wilsonville

Nike Over View cont.

The current vision of Nike

To bring inspiration and innovation to every

athlete in the world

Seizing the future athletic with brands represent performance, quality, and fashionable sports

product.

The Proposed vision of Nike

The current Nike’s Mission

Nike’s mission is to carry on Bowerman’s legacy of innovative thinking, develop products that help athletes of every level of ability reach their full potential, and to create business opportunities that set Nike apart from the competition and provide value for their shareholders

1. Customers

2. Products or services

3. Markets

4. Technology.

5. Concern for survival, growth, and profitability

6. Philosophy

7. Self-concept

8. Concern for public image

9. Concern for employees

The Proposed Nike’s Mission

At Nike, we desire to deliver superior products to customers and athletes that are both safe and dependable (1, 2 and 6). Our well trained employees and experienced executives will ensure a competitive advantage for our markets, growth for the company, and profits for our shareholders (5). Our commitment to social responsibility and the communities in which we operate will ensure business relationships and alliances for the future and a perception of concern with our stakeholders (6, 8). We will continue to utilize innovation and technology to provide our employees with the best possible work environment while adapting to the many changes in the global market (3, 4, 7, and 9).

External Assessment Opportunities

• Should strive to penetrate the new regions that have higher rate of growth such as “Brazil, Eastern Europe, India, and China”

• New production line for protective or safety footwear.

• Pursue the government to establish Anti-dumping duties on Chinese products.

• Internet website.

• New production line for fashionable footwear to attract new consumers.

• New era to concentrate on children from 3 to 12 years old.

Threats

• Competition in athletic footwear and apparel is fierce.

• Main competitor is Adidas, Reebok, Taylor Made, and Rockport.

• Adidas contracts with Chinese basketball superstar to produce basketball shoes.

• A new competitor who's sell the footwear for leisure and fashion.

• The competitors expand their categories and countries with deepen their relationships with customers.

• Consumer shifting to fashionable footwear.

Competitive Profile Matrix (CPM)

RatingWeighted

ScoreRating

Weighted

ScoreRating

Weighted

Score

0.0 to 1.0 1 to 4 1 to 4 1 to 4

Advertising 0.1 2 0.2 3 0.3 3 0.3

Product Quality 0.08 4 0.32 3 0.24 2 0.16

Price Competitiveness 0.08 2 0.16 3 0.24 1 0.08

Management 0.06 3 0.18 3 0.18 2 0.12

Financial Position 0.08 4 0.32 3 0.24 1 0.08

Customer Loyalty 0.05 3 0.15 2 0.1 1 0.05

Global Expansion 0.05 3 0.15 3 0.15 2 0.1

Market Share 0.08 4 0.32 2 0.16 1 0.08

Technology 0.09 4 0.36 3 0.27 1 0.09

Brand Recognition 0.1 4 0.4 4 0.4 3 0.3

Portfolio Diversification 0.08 3 0.24 4 0.32 2 0.16

Product Positioning 0.09 3 0.27 3 0.27 1 0.09

Research & Development 0.06 4 0.24 3 0.18 1 0.06

Totals 1 3.31 3.05 1.67

NIKE ADIDAS PUMA

WeightsCritical Success factors

External Factor Evaluation (EFE) Matrix Weight Rate Score

1

Should strive to penetrate the new regions that have

higher rate of growth such as “Brazil, Eastern Europe,

India, and China” 0.1 4 0.4

2 New production line for protective or safety footwear. 0.1 2 0.2

3Pursue the government to establish Anti-dumping

duties on Chinese products. 0.05 1 0.05

4 Internet website. 0.05 1 0.05

5New production line for fashionable footwear to attract

new consumers. 0.1 2 0.2

6New era to concentrate on children from 3 to 12 years

old. 0.15 4 0.6

1 Competition in athletic footwear and apparel is fierce. 0.05 2 0.1

2Main competitor is Adidas, Reebok, TaylorMade, and

Rockport. 0.05 3 0.15

3Adidas contracts with Chinese basketball superstar to

produce basketball shoes. 0.1 2 0.2

4A new competitor who's sell the footwear for leisure

and fashion. 0.05 2 0.1

5The competitors expand their categories and countries

with deepen their relationships with customers.0.1 1 0.1

6 Consumer shifting to fashionable footwear. 0.1 1 0.1

1 2.25

Opportunities

Threats

Total Score

Nike’s revenues trend vs competitors

Positioning Map

High Quality

Low Price High Price

Low Quality

Nike is take a leading in producing high quality products with higher price than Adidas and Puma

Internal Assessment Growth trend in total Revenues

2007 2008 2009

U.S 6131 6414 6542

EMEA 4764 5629 5512

Asia 2295 2887 3322

Americas 966 1164 1284

0

1000

2000

3000

4000

5000

6000

7000

In M

illio

n

Total growth

4%

Internal Assessment Cont. Growth trend in Pre-Tax Income

2007 2008 2009

Americas 199 242 274

Asia 515 694 853

EMEA 1050 1281 1316

U.S 1386 1402 1337

0

500

1000

1500

2000

2500

3000

3500

4000

In m

illio

n

Total growth

4%

Internal Assessment Strengths

1. Nike is the world’s largest sports apparel producer.

2. Nike’s U.S retail stores about 338 outlets, and 336 outside U.S.

3. International branch offices in 52 countries.

4. Fiscal May 31, 2009 revenues increased 2.9% to $19.1 billion

5. The company’s website allows consumers purchase directly from Nike.

6. Customization availability 7. Strong in Marketing and R&D 8. Diverse portfolio 9. Customer loyalty 10. Strong financial position 11. Strong international presence 12. Nike doesn’t own any factories

Weakness

• Nike’s fiscal May 31, 2009 net income decreased 21% to $1.48 billion.

• Only concentrate in youth and young adult market, from 12to24 years old age.

• Lack of stores serving females.

• Heavy dependency on footwear sales.

Internal Factor Evaluation (IFE) Matrix Weight Rate Score

1Nike is the world’s largest sports apparel

producer.0.08 4 0.32

2Nike’s U.S retail stores about 338 outlets, and

336 outlets outside U.S.0.05 3 0.15

3 International branch offices in 52 countries. 0.05 4 0.2

4Fiscal May 31, 2009 revenues increased 2.9% to

$19.1 billion0.05 3 0.15

5The company’s website allows consumers

purchase directly from Nike.0.05 4 0.2

6 Customization availability 0.02 4 0.08

7 Strong in Marketing and R&D 0.08 4 0.32

8 Diverse portfolio 0.08 4 0.32

9 Customer loyalty 0.02 4 0.08

10 Strong financial position 0.05 3 0.15

11 Strong international presence 0.05 4 0.2

12 Nike doesn’t own any factories 0.05 3 0.15

1Nike’s fiscal May 31, 2009 net income decreased

21% to $1.48 billion.0.1 1 0.1

2Only concentrate in youth and young adult market,

from 12to24 years old age.0.15 1 0.15

3 Lack of stores serving females. 0.05 1 0.05

4 Heavy dependency on footwear sales. 0.07 1 0.07

1 2.69

Strenghts

Weaknesses

Total Score

SWOT Matrix SO Strategies

- With some of the most recognizable and followed athletes globally, expanding into places like India and forming alliances with different kinds of sports leagues will be a valuable strategy to expand.

- With strong international precense should used to attract a new segment like kids and women.

WO Strategies

- With the concept to increase the consumer attractiveness should pay more attention to the new era of considerable in fashionable footwear.

ST Strategies

- Should apply CRM system to sustain the numbers of consumers and go through product development and market development against its competitors in new markets

WT Strategies

- Should pay more attention to the Chinese market to and make a join venture with some suppliers could offer good quality raw material against the severe competition.

Space Matrix FS Financial Strengths 15

ROI 2

Leverage 2

Liquidity 4

Working Capital 4

Cash Flow 3

ES Environmental Stability -10

Business Risk -3

Technological Changes -2

Price range of competitors -1

Competitive pressure -2

Barriers to entry -2

CA Competitive advantage -10

Market Share -3

Product Quality -2

Customer loyality -2

control over suppliers and distributors -3

IS Industry Strength 11

Growth Potential 4

Profit Potential 3

Financial Stability 2

Easy to entery market 2

FS Average + ES Average 1

IS average + CA average 0.25

Total 1.25

Financial Strengths

Competitive

advantage

Environmental Stability

Industry

Strength +6 +5 +4 +3 +2 +1

Conservative Aggressive

Competitive Defensive

+1

+2

+3

+4

+5

+6

-2 -3 -4 -5 -1 -6

-6

-5

-4

-3

-2

-1

Nike

Market Penetration Market Development Product Development Diversification Backward, Forward,

Horizontal Integration

Matrix Analysis Alternative Strategies SWOT SPACE EFE BCG Count

Forward Integration YES YES YES YES 4

Backward Integration YES YES YES YES 4

Horizontal Integration YES YES YES YES 4

Market Penetration YES YES YES YES 4

Market Development YES YES YES YES 4

Product Development YES YES YES YES 4

Related Diversification YES YES YES YES 4

Unrelated Diversification 0

Joint Venture YES YES 2

Retrenchment 0

Divestiture 0

Liquidation 0

Recommendation • The Strategic Position and Action Evaluation (SPACE) Matrix below

indicates whether aggressive, conservative, defensive, or competitive strategies are most appropriate.

• Based on SWOT matrix, CPM, and Space matrix, we conclude that Nike should pursue some different strategies to sustain its competitive advantage and maintain or grow its market share.

• Spend more on R&D to discover new areas for kids and women.

• To create sportswear that would incorporate recycled material.

• To develop new alliances with companies which are well respected regarding social responsibility.

• To invest in additional marketing of existing products that will appeal to new demographic groups.

• To promote products as fashion wear, not just sportswear.

Thank You