NIKE Strategic Group1

8/10/2019 NIKE Strategic Group1

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PRESENTED BY:-

AKRITI NANDAAKASH BASHADEEPIKA N.DIVYA SINGH

PRITI JAISWAL1


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Major publicly traded clothing, footwear,sportswear, and equipment supplier based in the

United States Headquartered near Beaverton, Oregon, in

the Portland metropolitan area

Revenue in excess of US$19 billion in its fiscal year2010

Employs more than 34,400 people worldwide as of

May 2010 2


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Shoes Running Basketball Soccer Sport-inspired urban

shoes

Childrens shoes

Miscellaneous Bags Socks Sports balls Eyewear Timepieces

Apparels Bats Gloves Protective equipments

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Originally known as Blue Ribbon Sports (BRS)

Founded by University of Oregon track athlete Philip

Knight and his coach Bill Bowerman in January 1964 Initially operated as a distributor for Japanese shoe

maker Onitsuka Tiger (now ASICS)

Launched its own line of shoes branded as Nike in 1971

.The Swoosh was first used by Nike on June 18, 1971,

and was registered with the U.S. Patent and Trademark

Office on January 22, 1974 4


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Internal Rivalry (Low)

Fierce Competition

Mature Industry

Mostly Non-Price competition

Differentiation strategy

Industry in consolidation phase

Threat of New entrants(Low)

High Barriers to Entry

Capital Intensive

Strong Brand Following

Economies of scale

High Marketing & R&D Costs

Industry in consolidation phase

Bargaining Power of

Buyer (Low)End user brand loyalty

Price sensitivity issues

Retail and vendor consolidations

Growing power of retail chains

Good Infrastructure

Threat of Substitutes (Low)

Other types of shoes

Other sport apparel

Bargaining Power of Supplier(Low)

Abundantly available rawmaterials

Cheap resources-commodity item


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Internal Rivalry (High)

Fierce Competition from globalbrands

Local players with culturaladvantage

Threat of New entrants(High)

Less/Not explored Markets

Un-Sophisticated market needsLess Capital Intensive

No major brand following

Local players advantage

Bargaining Power of

Buyer (High)Consumer needs to be educated

Retailers need to be educated

High Price sensitivity

Brand image to be re-established

Lack of proper infrastructure

Threat of Substitutes (High)

Bare foot, walking with slipperse.g. India

Leather boots and slippers

Bargaining Power of Supplier(Low)

Inexpensive labor

Abundantly available rawmaterials

Cheap resources-commodity item

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Infrastructure: free space, good roads, joggingparks

Sports equipments: Backpack, balls, bats, rackets, etc.

Partnerships with other products arewidening the domains of complementors forsportswear products. E.g. Nike+iPod Sports kit

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The company sells its products to retail accounts, through itsowned retail stores, and through a mix of independentdistributors and licensees, as well as through internet website

www.nikestore.com

It has 4 major subsidiaries:

Converse

Cole Haan Holdings

Nike Bauer Hockey

Hurley International 10


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Technology in ProductsHistorically had some of the most cutting-edgeproducts on the market. E.g. Nike + iPod

Manufacturing SkillsUse of low cost contract manufacturers, basedoutside USA, for its manufacturing

Strength of patents Nike Air

Nike Zoom

Nike Air Max

Nike Shox

Economies of scale

Application of ITNike relies heavily on IT in order to manage its supplychains

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MarketingNike is a marketing company

Research & DevelopmentNikes R & D labevaluated as far & away the best in the industry. --Large number of patents testimony to itscommitment to R & D.

Extensive SCM capabilitieshas attained

competency in leveraging low cost countries likeChina & Vietnam as its manufacturing hub. Sourcesits products from 900 factories spread across 50

countries. 12


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Nikes distinctive competency lies in the area ofmarketing, particularity in the area of consumerbrand awareness and brand power.

While the reasons that Nike is successful inmarketing products are numerous, this keydistinctive competency towers over its competitors.

As a result, Nikes market share is number-one inthe athletic footwear industry. Catch phrases like,"Just Do It," and symbols like the Nike "Swoosh,"couple with sports icons to serve as instantreminders of the Nike Empire.

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Nike brand is the most valuable among sportsbusinesses

Of the company's $18.4 billion in revenues in 2009,

90% was attributable to merchandise emblazonedwith either the Nike or Nike Golf logos.

Nikes brand value is US$ 18.6 billion in 2012,comprising more than 52% of its enterprise value*

30thmost powerful brand in the world, and thenumber one in its industry. Its nearest rival Adidas isranked at distant 135, while Reebok is ranked at 408.

* source: Brandirectory, 2012. 14


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Nikes key resource evaluated on RBV framework

he test of inimitability

: Nikes brand value cannot be duplicated or matched

in the short-term.

he test of durability: By continually investing significantly in brand building

exercise, Nike has maintained and increased its brand value. Nike spent morethan US$ 3 billion in 2010 on marketing.

he test of appropriability: Since a lot of value that Nike creates is owing to its

brand value, it derives maximum benefit from the value creation process.

he test of substitutability: Brand as a resource is intangible. The only way itcan be trumped is by creating a stronger rival brand (something that can take

years to build and leverage) or by diluting Nikes brand value

he test of competitive superiority: Forbes ranked Nike as the top-most sports

brand for a number of consecutive years. Its brand value is 10 times that ofReebok and more than 50% greater than that of Adidas. 15


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1. Athletic Footwear

54 % of total revenue

Casual Footwear Line

2. Apparel

27 % of total revenue

3. Rest

Equipment

Sports related business

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To distribute low-cost, high-quality Japanese

athletic shoes to American consumers in an attempt

to break Germanys domination of the domesticindustry

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Quality Products

Constant Innovation

Aggressive Marketing

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High-end

High Income Level between the age of 16-55

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Sports Attitude

Lifestyle

Just do it

You dont win silver,You lose gold

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Departments by both geographic divisions andproduct categories

Created overlapping management responsibilitiesand a fluid leadership structure

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Sweat Shop debacle, 1990s Diversity and Inclusion

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

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THREAT

OF HOLDUP

THREAT OFSLACK

THREAT OFSUBSTITUTIONTHREAT OF

IMITATION

ADDED VALUE

VALUEAPPROPRIATED

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Barriers to Imitation

Economies of scale

Shared distribution channels and efficient production reduces costs

Patents & copyrights

Nike has around 3775 patents in the sports shoes, apparels and theequipments domaine.g. Nike AIR technology, self lacing shoes, etc.

Innovation

Strong emphasis on R&D and product development through newdesigns(more than 300 designs a year)e.g. recycled polyester for jerseys

Brand reputation and Image

Celebrity endorsements & sponsorships of sports events 30


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Responses to substitution

Customization of footwear

Online customization of footwear

Aggressive advertising

Just Do It campaign

Mergers and Acquisition Umbro, Converse, etc.

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Responses to Holdup Multiple sourcing and Contracting

Contract suppliers in China, Vietnam, Indonesia and Thailand; Argentina,Brazil, India, and Mexico

Building relationships with complementors Tie up with Apple for the Nike + iPod sports kit

Increase Bargaining power

Just Do It advertising campaign

Forward Vertical Integration

Opened Discount stores in rural areas and flagship stores in urban areas

Building Trust

Improving working conditions through various programs

e.g. Joining FLA & GAWC, transparency through publishing monitoring resultson the website 32


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Responses to Slack

Performance based incentives

Pay dividends to the shareholders Nike encourages outsiders to become part of

board, in order to avoid bias connected with

corporate conformism

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NIKE Strategic Group1

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