William GreeneBusiness Policy and StrategyProfessor DanielJanuary 20, 2015

Nike Strategic Case Analysis

Part I

Brief History of the Company

At the beginning Nike was just a two-man operation out of Oregon, whose goal was only to make a better shoe. The two men who started the business were Bill Bowerman Oregon’s track and field coach and Phil Knight an Oregon middle distance runner, originally naming the company Blue Ribbon Sports. Blue Ribbon Sports began experimenting with different methods and lighter materials, pouring liquid rubber into Bowerman’s wife’s waffle iron in turn creating the innovative waffle sole shoe. After unveiling these shoes at the 1972 Olympic games the company began to take off. Knight realized the company would need a better name to catch the public’s attention and from that NIKE was born “the Greek goddess of victory”(Nike History). Looking for a fresh symbol to go along with the companies new name Knight paid Carolyn Davidson a Portland State University graphic design student $35 to come up with the NIKE “Swoosh” logo.

From the start Nike began to endorse top athletes such as Steve Perfontaine who between 1969-1973 never lost a race on his home track of Oregon. Over the next few years many professional athletes began competing in Nike footwear such as Michael Jordan. In1984 Jordan signed an endorsement contract with the growing company and by the very next year Air Jordan’s were released with the world famous slogan “Just Do It.”(Nike History) Working with many other star athletes Nike has only moved forward in innovation and has always stayed true to Phil Knights idea of always hunting for better performing equipment for athletes.

Strategic Direction

Vision: “To carry on (Bill Bowerman’s) legacy of innovative thinking… to develop products that help athletes of every level of ability reach their potential…” (Mission/Vision)

Mission: “To bring inspiration and innovation to every athlete in the world” “If you have a body, you are an athlete.” Bill Bowerman (Mission/Vision)

Short Range Objectives: Focuses on up to 275 of increase in market share for the running fiscal year.

Long Range Objectives: Management provided a long-term revenue forecast of achieving $36 billion in revenue by 2017. This objective translates to a roughly 9% compounded annual growth rate based on Nike's $25.3 billion revenue in 2013.

Industry Environment – Porter’s Five Forces of Competition

Rivalry of Existing Competitors:

Nike’s rival companies are constantly launching new products and advertising ideas to boost their market share

Nike and its competition will constantly have price competitions, claim to have next generation product, offer products that perform better, offer higher quality, improved customer service and give a wider product selection

Buyers of the Sports apparel/equipment have little cost when switching brands Nike and Nike’s competitors will tempt companies to offer price cuts Rival’s between companies will increase when one or more competitors become

dissatisfied with their market position Some of Nikes Rival companies Rebook, Under armor, Adidas, New Balance, Puma, ect. Nike uses athlete endorsements to boost sales such as Tiger Woods, Michael Jordon,

Carmelo Anthony, Derek Jeter, Chris Paul, Ray Allen, ect. Nike also sponsors the NFL and all of their equipment (jersey, gloves, cleats, visors,

undershirts, pads, ect.) Rivalry Among Existing Competitors are HIGH due to the previous and following factors:

(Slide Share)(Daily News)o Athletic apparel/equipment is exposed to continuous changes in customer

preference and technologyo Nike needs to adapt to changes quickly to avoid losing market shareo Very intense competition with growing number of other companies offering

similar productso Nike is also facing rising competition in local marketo Customers can easily switch to the competitors offering for little to no extra

costso A vast amount of advertising and price wars

Barriers to Entry:

The Barriers of Entry into Nikes field of work are Weak to Moderate because it is not extremely hard to start a shoe company but to become a powerful company is hard because the existing market is saturated

Nike is an extremely large company and in order to compete with Nike the pool of the entry candidate would have to be massive

Nike is a large scale company that reek the benefits of cost advantages meaning outside companies must enter on large scale or accept the cost disadvantages and lower profitability

Nike has been if the sports apparel/equipment field for quite some time giving them a better understanding of how to run their company

Nike’s cost advantages stem from partnership with best and cheapest suppliers, lower fixed costs, and a better learning/ experience curve effect that better their cost advantages

Nike has an extremely loyal following with it customers (I only buy Nike equipment for football)

New entrants wouldn’t be able to match the amount of money Nike has invested New companies would have to build a network of distributers, retailers and secure retail

space on shelves, which Nike has already done New companies would have to overcome the tariffs and trade restrictions around the

world, which Nike has already done. Threats of New Entrants are LOW due to the previous and following factors: (Slide

Share)(Daily News)o Have a very loyal customer base o Looked at as a fashion brand by younger generationso Popular in both sport and non-sport populationo Hire a large amount of celebrities to sponsor their brando Offer extremely powerful, high quality goodso A leader in the sporting apparel/equipment fieldo New entrants would need a vast amount of money to enter into the field of

sports apparel/equipment

Power of Substitutes:

Nike is an athletic apparel/ equipment company made to enhance athletic performance Nike is also a company that makes clothes that fit the athletic lifestyle (Winter Sports,

Summer Sports, Swimming, Skiing, Ect.) No substitute can be created for these sporting events Threat of Substitutes are LOW due to the previous and following factors: (Slide Share)

(Daily News)o No substitute can replace a cleat for running on turf or grasso No substitute can be created to replace a jacket to keep you warm in cold

weathero For example a person would not buy a pair of boots in order to play a football

game o For example a person would not buy a bathing to stay warm while skiing o No substitute could replace what Nike is doing because it is not feasible

POWER of buyers:

Due to the may alternative in the sports apparel/ equipment buyers have many different alternatives

Due to Nikes high prices the sensitivity of buyers will not allow Nike to raise prices without losing volume or unit sales

The individual buyer such as you or I do not have much bargaining leverage when buying Nike footwear/apparel/equipment

Large retail chains have a considerable amount of negation leverage when buying Nike’s goods to sell in their store (Dicks, Sports Authority, NFL, Macy’s, Bass Pro Shops, Ect.)

Many major retail stores will only sell two or three of the top competing brands Bargaining Power of Buyers are HIGH due to the previous and following factors: (Slide

Share)(Daily News)o Many other options in sports wear at lower priceso The price of Nike is high compared to other brands (Adidas)o Continuous need to develop new, high quality products that are better than

competitorso Customers are very price sensitive in athletic apparel/equipment fieldo High number of buyers opposed to number of firms in industryo Large volume purchases of Nike apparel/equipment are important

POWER of suppliers:

The suppliers to Nike do not have sufficient power to influence the terms/conditions of their supply

If the price of a supplier go up Nike is able to switch to another supplier without a high cost

Nike’s suppliers rely on Nike and have low bargaining power leverage The raw materials Nike is looking for are a commodity and readily available from many

suppliers Bargaining Power of Suppliers are LOW due to the previous and following factors: (Slide

Share)(Daily News)o The main raw materials needed for Nike are leather, rubber, and cottono These raw materials are readily available in the market and not hard to come byo There are many suppliers of these raw materialso The individual supplier need Nike more than Nike needs the individual suppliero Nike has a high advantage over the supplierso Cost of switching from one supplier to another supplier is very inexpensive and

easy to do

SWOT Analysis

Financial

Strengths Nike currently has 47 percent of the footwear industry market shares From 2010 to 2012 Nike Brand footwear fiscal has increased by $3,094,000 From 2010 to 2012 Nike Brand apparel fiscal has increased by $1,296,000 Nike has an average price earning Ratio of 28.3 while the industry’s average price

earning ratio is 27.4 Nike has a .9 higher Price Earning Ration than the industry average Nike has an price to sale of 2.76 while the industry average is 2.31 Nike has a .45 higher price to sale than industry average Nike has a net profit margin of 10.10 while the industry average is 8.82 Nike has a 1.28 higher net profit margin than the industry average Nike has a return on assets of 15.60 while the industry average of return on assets is

12.00 Nikes return on assets is 3.6 higher than the industry average Nike has a return on investments of 23.40 while the industry average is 17.40 Nikes return on investments is 5.6 higher than the industry average Nike has a revenue per employee of $526,708 while the industry average is $407,979

revenue per employee Nike has a $118,732 higher revenue per employee than the industrial average Nike has a net income per employee of $52,973 while the company average is $35,868

net income per employee Nike has a $17,105 net income per employee higher than the industry average Nike has a 4.00 industry turnover while the industry average is 3.60 inventory turnover Nike has a .40 higher inventory turnover than the industry average Nike has a 1.60 asset turnover while the industry average is 1.40 Nike has a .20 higher asset turnover than the industry average

Weaknesses Profit margin for Nike has decreased form 24 percent in 2010 to 22.6 percent in 2012

totaling a drop of 1.4 percent profit margin Nikes five year growth rate is 9.23 percent while the industry’s growth rate is 11.57

percent Nike has a 2.34 percent lower growth rate that the industry average Nike has a 1.20 percent dividend yield while the industry average is 1.60 percent Nike has a .40 percent lower dividend yield than industry average Nike has a 29 payout ratio while the industry average is 30 payout ratio Nike has 1 lower payout ratio than industry average Nike has a gross margin of 47.40 percent while the industry average is 47.60 percent Nike has a gross margin that is .20 percent lower than the industry average Nike has a receivable turnover of 8.90 while the industry turnover is 9.90 Nike has 1 receivable turnover less than the company average

Marketing

Strengths The company has well known athletes endorsing the product Uses well known sports to help promote the product (NFL) Has created an extremely strong brand loyalty One of the strongest marketing campaign’s of any company The logo itself is powerful enough to be presented without the companies name The benefits of Nike are easily identifiable in turn selling themselves The company really and truly believed in the product it was selling Nike put the interests of the buyers first Offers and markets its products worldwide Nike is able to influence the sports and fitness preferences through aggressive

marketingWeaknesses

If an athlete they sign to an endorsement deal creates a bad image for themselves, which creates a bad image for the company

The cost of paying the athlete they are endorsing rising even more than it already has (Nearly $2.7 billion, which is 11 percent of Nike’s sales)

Operations

Strengths Nike is committed to innovation therefor allowing the company to maintain pricing

power in years to come Production of Nikes goods is located wherever the most cost effective location is (Does

not own any physical manufacturing plants) Nike employees over 30,000 workers world wide Nike owns its own chain of retail stores and factory outlets The company is a very professionally competitive company Nike is known for creating very high quality products Known for having an extremely strong, highly functioning distribution chain

Weaknesses The majority of Nikes profits are dependent on footwear production and sales Extremely dependent on the companies supply chain (Raw martials to manufactures,

manufactures to warehouses, and warehouses to retail stores/ company stores) A large portion of the companies sales come from selling its product to large retail

stores, in turn forcing Nike to sell its product at lower wholesale prices The company is extremely dependent on overseas manufacturing having no factories in

the United States The prices of Nike are higher than that of Adidas, Rebook, ect. Exposed to the international nature of trade, meaning buying or selling in different

currencies could result in buying or selling at a loss The cost of raw materials is on the rise The market for athletic apparel, equipment, footwear and accessories is only getting

more competitive with new emerging companies

Need to expand its base of retail stores and factory stores

Human Resources

Strengths The company has very strong customer relationships and strives to satisfy all its

customers Nike knows its potential and in turn inspires its employees to realize their own potential The company is committed to growing the potential of its workers by building leadership

capability linked to strategic priorities Focused on improving the talent of leaders through deliberate leader development Nike truly believes in building and empowering the winning teams

Weaknesses Nike could work on becoming more environmentally aware by boosting economy,

encouraging recycling, and possibly using recycled goods in their own production. Need to work on reducing the controversy in their trade production Nike has been accused of having very poor working conditions in contracted factories

overseas Nike has also been accused of using sweatshops to exploit the cheap workforce

overseas The company has been caught violating over-time laws and minimum wage laws in

Vietnam Contractor factories using child labor because it a cheaper workforce

Legal/Political

Opportunities Lower interest rates in less successful countries outside the United States can cause

higher product return The competitiveness of the international tax system Lowering of minimum wage laws in countries Nike manufactures its products in

Threats Increase of tariffs creating higher prices of products due to shipping cost Increases in minimum wage laws in countries Nike manufactures its products Increase on enforcing labor laws in countries Nike manufactures its goods in

Demographic

Opportunities By targeting the younger age groups Nike has allowed itself to become established in

every day live (15-40) Selling Nikes products to both men and women has proven successful for the company Looking to target more active teens who are into being athletic also people who have a

fashionable taste

Offer Nikes products in higher income areas in order to sell its products at top pricesThreats

Older age groups are not into the sporty look of Nike therefor may not buy its product (40+)

Offering Nikes products in low income rural areas may force the to sell products at lower prices or not at all

Some countries in the world are not as into sports as other counties

Emerging Markets

Opportunities Along with being a sports apparel, equipment, footwear and accessories brand Nike can

also become a fashion brand Nike could expand the market they sell to by creating a sunglass or jewelry section Move more into the technology side of sports equipment and build upon NIKE+ by

creating more wearable technology Also could begin to create more equipment along the lines of pitching machines,

football shooters, football helmets, football shoulder pads, ect. Threats

Unsuccessful campaigns could result in large loss of money and wasted time on unsatisfactory goods

Creating a faulty item could give Nike a bad name hurting there image of offering only the highest quality goods

Environmental

Opportunities Nike could begin to increase its energy efficiently, the reuse and recycling of products Nike could look into creating sustainable products The changing climate creates new needs for different types of clothing By focusing on helping the environment Nike could drawn in more customers who focus

on helping the environment (creating a new demographic) Nike could create more fashion savvy clothing Looking to break into middle to lower end markets instead of strictly focusing on high

end marketsThreats

Natural disasters could hinder Nikes extremely complex supply chain, in turn this could result in loss of profits

Natural disasters could result in loss of life which could mean loss of profit in that specific area

Destruction of factories, cotton farms and ect by natural disasters could very well result in higher prices for Nike

Social Responsibility/Ethics

Opportunities By contracting work to these poor countries it is possible for Nike to give themselves a

good name by helping that poor countries economy Could offer housing to the workers in the factories they are contracting, giving Nike a

good name Making sure work in these countries is fare, in turn giving Nike a good name Offering to help the economy of the towns the factories are located in Contracting factories in the United States in order to help Nikes home economy

Threats Nike’s contractors have treating their employees badly and been accused of hitting,

hurting, or mentally attacking workers. Nike has used sweatshops in countries overseas in order to keep prices down The company has been accused of using contractors who are paying the employees

under minimum wage One contractor of Nike forced women workers to run until they passed out because

they did not wear the right shoes to work Nike’s contractors have been using children in factories to pay them less money to work By contracting work overseas it hurts the United States culture and takes away jobs of

the American people Moving from place to place wherever the cheapest work is, in turn hurting the economy

they are leaving, putting people out of jobs.

Global Economy

Opportunities Nike could start to focus on International expansion and reaching out to countries it

never has before Some countries that Nike is located have not been hit by the recession like the united

states has, could more heavily target those areas Nike could start to create an ever stronger and more advanced global reorganization

programThreats

In the past ten years there has been a rise in the economic recession, this creates less disposable income

The amount of Nikes goods that customers are purchasing is slowing down The changing and instability of foreign currency and exchange rates may result in losses

for Nike

Part IIStrategic Alternatives

Strategic Alternative 1: Financial- Nike needs to work on increasing/bettering the companies Profit Margin, Five Year Growth Rate, Dividend Yield, Payout Ratio, Gross Margin, and Receivable Margin

Pros: Nikes Profit Margin has dropped 1.4 percent in the past 2 years (2010 to 2012)

by increasing Nikes Profit Margin it would increase the companies revenue, meaning more profit for Nike.

Nikes Five Year Growth Rate is 2.34 percent lower than the industry’s average Five Year Growth Rate. By increasing Nikes Five Year Growth Rate the company would be able to sell more product in turn creating more profit for Nike.

Nikes Dividend Yield is .40 percent lower than the industry’s average Dividend Yield. By increasing Nikes Dividend Yield the company would make itself much more appealing to investors which in theory would bring in a higher number of investors/ influence more money to be invested in Nike.

Nikes Payout Ratio is 1 lower than the industry’s average Payout Ratio. By increasing Nikes Payout Ratio the company would make itself much more appealing to investors which in theory would bring in a higher number of investors/ influence more money to be invested in Nike.

Nikes Gross Margin is .20 percent lower than the industry’s average Gross Margin. By increasing Nikes Gross Margin the company would increase the amount of profit it makes on ever product sold.

Nikes Receivable Turnover is 1 lower than the industry’s average Receivable Turnover. By increasing Nikes Receivable Turnover it would make the company more efficient on extending credit and collecting debt.

Cons: By focusing a high amount of attention and manpower to improve Nikes Profit

Margin, Five Year Growth Rate, Dividend Yield, Payout Ratio, Gross Margin, or Receivable Turnover it may allow other aspects of the company to decease I effectiveness.

Many of Nikes financial weaknesses are not significantly lower than the industry average, which may make it not worth it to direct a high amount of attention on said issue.

Time and funds could be wasted on trying to increase a financial situation creating an even higher loss in profit than anticipated

Strategic Alternative 2: Marketing- Nike could work on bettering its Marketing Strategy.Pros:

Over 11 percent of Nikes sales are used in order to endorse athletes or sports. By decreasing this number a company would make it possible to increase its profit.

By not signing as many athlete endorsements it lessens the odds of signing an athlete who could create a bad image for the company.

Cons: By decreasing the amount of money spent on athlete endorsements Nike could

potentially become less popular in the publics eye. These athletes most likely will be sign an endorsement with another rival

company, which will create more publicity and popularity for rival company. If a potential bad image endorsement athlete turns himself around creating good

publicity for themselves Nike could miss out on opportunity to capitalize on situation that could give the company a good image/ more publicity.

Strategic Alternative 3: Operations- Nike could work on bettering its Operations Strategy.Pros:

By creating a higher want for Nikes apparel, equipment and accessories it could lessen the companies high dependencies on footwear production and sales.

By opening its own production factory’s Nike would not have to depend on contractors overseas to produce the companies products.

Nike could open many more of its own retail stores and factory outlets to allow them a higher profit on each item sold, this would lessen dependencies on large retail stores and keep them from selling a majority amount of goods at wholesale price.

Lowering the cost of Nikes goods sold allowing more people to buy a larger quantity of Nikes products.

By lessening the amount of international trade Nike would expose itself less to the nature of international trade. His means lessening the odds of buying or selling products at a loss due to difference in currencies.

Cons: By creating more of a want for apparel, equipment or accessories it could lessen

the want for Nike footwear, in turn hurting sales and profit. By opening Nikes own factories overseas companies creates a higher

responsibility and workload on Nike. Also Nike is dependent on moving to wherever the cheapest cost of labor it but by opening its own factories the company is stuck in one area, which could result in less profit due to higher cost of making products.

If Nike were to open more retail stores and factory outlets it would create more overhead and responsibility for the company. If these retail stores and factory outlets were not successful it would hurt Nike financially.

By lowering the cost of goods sold it could hurt Nikes profit along with making them look like a lower quality brand. One of Nikes main focuses is being a premium brand.

International trade accounts for about 59 percent of Nikes sales therefor would greatly reduce profit.

Strategic Alternative 4: Human Resources- Nike could work on bettering its Human Resources Strategy.

Pros: By becoming more environmentally aware by boosting economy, encouraging

recycling and using recycled goods in their own products the company would give themselves a better image in the publics eye.

Nike could work on bettering the working conditions of the contractor’s factories overseas in order to give the public a reason to believe Nike is trying to help less fortunate countries.

Nike could make sure that the contractors are paying each and every employee a fair wage and make sure they are not running a sweatshop, again giving Nike a good image in the public eye.

Nike could inspect each of the contractor’s factories and make sure none of them are using child laborers, this will make Nike look good in the public eye.

Nike could make amends not to ever treat any person who works for Nike or one of their contractors unfairly again and make a statement saying so to the public, giving them good publicity.

Cons: By trying to boost economy, encouraging recycling and using recycled goods it

could cost a great deal of money hurting Nikes profits. If Nike bettered the conditions of the contractors factories and prices rose in that

specific area they could have wasted time and money on a factory they my not use in the future.

By paying each of the employees a fair price the cost of the products would rise creating less profit for Nike.

If Nike were caught using a contractor who treated its employees unfairly after making a statement they would never do so it could hurt the companies image extremely badly.

Strategic Alternative 5: Demographic- Nike could work on bettering its Demographic Strategy. Pros:

By appealing to each and every age demographic Nike could help create more brand awareness along with selling more products.

By selling is products at lower prices in more rural areas the company could increase its profit.

By offering Nike to countries who have not been introduced to sportswear they could create a new market in said demographic

Cons: Trying to implement Nike into older Demographics who are uninterested could

result in less wasted time and money.

Selling products at lower process in rural areas could result in a loss of profit for Nike.

If the country Nike is trying emerge its product into is uninterested then it could result in wasted time and money for Nike.

Strategic Alternative 6: Emerging Markets- Nike could work on bettering its Emerging Markets Strategy.

Pros: By breaking into emerging markets such as wearable technology (Nike+) could

result in large amount of profit and successful. By offering Nike Jewelry or Sunglasses the company could break into new

Markets By offering new equipment items such as Football Helmets, Football shoulder

pads, pitching machines, football shooters, ect they could make more items to sell creating more profit

Cons: If wearable technology were not in high demand or a undesirable market Nike

could be threatened with wasted time and money. People may not want to buy Jewelry or Sunglasses made by Nike because they

do not feel it will be of great quality because of newness. If an item such as helmet, shoulder pad, pitching machine or football shooter

were faulty it could give Nike a bad image and take away from Nike only offering the highest of quality goods.

Also if these items were unwanted or undesirable they could result in wasted time and money for Nike.

Strategic Alternative 7: Environmental- Nike could work on bettering its Environmental Strategy.

Pros: By becoming more energy efficient and reusing recycled material Nike could do

its part in helping the environment while also giving the company a good image. By looking into creating more sustainable products Nike would be helping in

improving the environment.

Cons: Trying to create more energy efficient production, using recycling materials and

creating more sustainable products will cost Nike more money because it is more expensive.

Strategic Alternative 8: Social Responsibility/Ethics- Nike could work on bettering its Social Responsibility/Ethics Strategy.

Pros:

By offering work in poor countries Nike could give themselves a good name because they are offering work to that countries poor economy

By offering fair wages, good working conditions and abiding by the countries laws Nike would be in good ethical standing.

Offering the workers in the factories housing with running water and good living conditions would help Nike become more socially responsible

Contracting a few factories in the United States in order to help the economy the company is based out of.

Vowing to never use contractors who mistreat its workers

Cons: By offering housing in these poor countries it would cost Nike a great deal of

money also if they changed factories time and money would have been wasted. Nike has always used foreign countries to create its products so even if they

began to offer better conditions it may be overlooked by public By offering fair wages, good working conditions and abiding by all of said

countries laws the price of products would most likely rise Contracting countries in the United States to help the companies home economy

would cost Nike significantly more money that contracting overseas. If caught using contractors who mistreat workers then it could give Nike

extremely bad image.

Part IIIStrategic Recommendations

1. Strategic Alternative 3- Operations- Implement Over Time

2. Strategic Alternative 8- Social Responsibility/Ethics- Implement Immediately

Part IV Implementation of Strategic Recommendations

1. Strategic Alternative 3- Operations- Implement Over Time

The best way for Nike to stay as successful as the company has been is to make some changes to its operations. As you can see in Strategic Alternative 3 Nike is heavily reliant on its sales of footwear. Nike is extremely reliant on large retail stores such as Dicks’s, Sports Authority, and other companies to sell its brand. Also Nike does not own any of its own production factories overseas, the company contracts out 97 percent of production.

In order to raise Nikes Apparel sales the company should sponsor more events such as outfitting the entire Olympic Events, Outfitting the entire men’s and women’s FIFA World Cup Event, and as they have already done with the NFL, work getting the getting the sportswear contract to sponsor the MLB, NBA and NHL. By doing this the company will be able to make a much higher number of sales because sportswear is always in high demand. The money would

have to be taken from the marketing department, which is already stretched thin spending 2.7 billion dollars a year on endorsements. In order to create more money to get these contracts Nike would have to cut out a large amount of endorsements with individual athletes. This would give Nike the necessary funds it would need to pursue MBL, NBA and NHL sportswear contracts. The executive, marketing, operations and financial team will all have to work together on implementing these goals for Nike. Nike will need to look at how successful its contract with the NFL has been. From information gathered through study of Nikes affiliation with NFL the company can choose what will best interest itself and move accordingly.

By opening up Nikes own production factories overseas the company would be able to cut out and problems created with contractors overseas. Nike could do this by buying existing factories from said contractors and run the factories exactly how it wants them running. Nike could afford to do this because it would be using the money they pay these factory to make its clothing and put it towards buying the factory itself. Then the only costs affiliated with production would be paying workers, machine breakdowns and utility costs of running factories. The executives along with the operation team would be implementing the new change to running factories. Nike would want to start with preliminary by only buying one or a small group of factories. Then the company would want to monitor its progress and pay close attention to the ongoing issues and successes with owning the factory. Lastly Nike is going to want to recalculate the cost and see if owning the factories itself it making or losing the company money.

Nikes needs to find a way to bypass the large retail stores and sell its products directly to the customer itself. Nike does have retail stores and factory outlets but only a small amount that does no amount to a large number of its sales. By opening a high amount of retail and factory outlet stores Nike would be able to sell to customers without having to sell at wholesale prices, in turn creating more profit for Nike. This would also allow Nike to sell to customers at a lower price than the outlet stores because the company is only paying for production costs. This money would come from the sales they make on its online stores as well as its sales to large retail stores. Executives along with the marketing and operations teams will do the implementing. Marketing will play a major role because people need to know that Nike now has many stores open and not to go to major retail stores to get Nike products. The only way to tell this is going to work is by opening a high volume of stores located in busy areas and see how successful the turnout is. Nike could stick to only opening stores in cities to guarantee a high volume of foot traffic in that area.

2. Strategic Alternative 4: Human Resources- Implement Immediately

Another great way for Nike to become more successful as a company is to make some great changes and become more socially responsible. In order to do this they must try to help the economy they are working in, encourage recycling and also use-recycled goods in the companies own products. Also what goes along with social responsibility is bettering the working conditions of the factories, making sure everyone is receiving a fair wage and making sure none of the contractors Nike is using have children working in the factories. Nike must make sure they will never use sweat factories again.

The best way for Nike to become more environmentally aware is using recycled goods in its own products along with making sure they encourage the public to recycle as well. Also wherever Nike is located they must work on boosting the economy and try to help the local people. Nike could run advertisements stating they are selling a line of clothing that is 100 percent made out of recycled clothing. By doing this they are both promoting recycling along with helping out the environment itself. Also in order to boost the economy Nike could state that they are creating jobs in poor countries in order to help the local people and also sell clothing where part of the proceeds help to boost economy by donations. The money will first come from the sales of regular apparel, equipment, footwear and accessories. Also once the recycled line begins selling the profits from the products (more expensive than regular products) will help support the production. To boost the economy the money will first come from sales of regular apparel, equipment, footwear and accessories. Once the economy boosting line begins selling the profits from the products (more expensive than regular products) will help to support the production. The human resources team along with the marketing team will do the implementing. Nike will start on a small scale and test the waters of the market. If successful the company will begin to expand but only if it is cost effective.

In order to work on bettering the conditions of the factories Nike would need to demand that each and every contractor that would like to work for Nike has to pass inspection of its facility. If that said factory does not pass inspection or ever falls below the standard Nike has set then it gives Nike the right to terminate the contract in nothing is done to fix it. No money is needed for this because Nike could just find another factory that would pass inspection. The Human resources team, the executive team and the operations team would all be involved on implementing these rules. Nike would have to look at each and every one of its contractor’s factories and depict weather the factory passes inspection. If the factory fails Nike would have to give them X amount of days to fix what is wrong with said facility. Once X amount of days has been reached and if problem has not been fixed Nike has the right to terminate the contract.

The best way for Nike to make sure that each and every worker is being paid a fair wage is by looking over the records of payments or interviewing each worker and asking how much they are making. By doing this they would find out if the company is baying each employee a fair wage or not. The money for this would be coming out of sales of the products Nike is selling because if wages go up so does the cost of production. If the cost of production goes up the price of Nikes products will need to rise. The money would be coming from the rise if cost of products. The human resource team along with the operations team will be implementing that each worker is being paid a fare wage. If it is found out a factory is not paying workers a fair wage then that Nike will give the company X amount of days to fix the problem. It the problem is not fixed by the stated time then Nike has the right to terminate the contract with said factory.

By Nike going into each of the factories they contract work to they could inspect each of the facility and make sure that none of the factories are using child labor. This would only cost the company the price of getting an inspection team to the different facilities. The human resource team would be the ones implementing the rules of the child labor laws. If a factory is caught using child labor Nike would either give them the option to stop right at that time or loss the contract.

Part V – Bibliography Brief History of Nike

http://blog.needsupply.com/2013/08/01/nike-a-short-history/

Short Range Objectives

http://www.mba-tutorials.com/marketing/1409-nike-marketing-plan.html

Long Range Objectives

http://www.fool.com/investing/general/2013/10/20/nikes-2017-objectives-36-billion-in-revenue.aspx

Porters Five Forces

http://blog.needsupply.com/2013/08/01/nike-a-short-history/ (Nike History)

http://www.slideshare.net/divya-mishra/nike-competitive-advantages (Slide Share)

http://www.businessnewsdaily.com/5446-porters-five-forces.html (Daily News)

http://www.bizjournals.com/columbus/print-edition/2013/09/06/just-do-it---defining-your-companys.html?page=all (Mission/Vision)

S.W.O.T Analysis/ Strategic Alternatives

http://condor.depaul.edu/aalmaney/StrategicAnalysisofNike.htm

http://www.dailyfinance.com/quote/NYSE/nike/NKE/financial-ratios?source=itxwebtxt0000007 (Financial)

http://www.valueline.com/Stocks/Highlight.aspx?id=15623#.VLWcnGTF_oE

http://coschedule.com/blog/nike-marketing-strategy/ (Marketing)

http://www.nikebiz.com/crreport/content/people-and-culture/6-2-0-human-resources.php?cat=human-resources (HR)

http://www.slideshare.net/divya-mishra/nike-competitive-advantages

http://techanalysisblogger.com/2013/09/19/nike-swot-analysis/

http://www.marketingteacher.com/nike-swot/

http://www.valueline.com/Stocks/Highlight.aspx?id=15623#.VLWcnGTF_oE

http://www.quality-assurance-solutions.com/swot-analysis-nike.html

http://condor.depaul.edu/aalmaney/StrategicAnalysisofNike.htm

Implementation of Strategic Recontamination

http://docs.oracle.com/cd/E52390_01/fscm92pbr3/eng/fscm/sqsy/task_DefiningControlProcedures-9f42eb.html