Nike: Corporate Strategy

Competitiveness and External Factors Analysis of Nike

© Yusskei, http://yusskei.net

Contents1. Introduction2. Company profile3. Competitiveness analysis

3-1. Porter’s Five Forces3-2. Porter’s Generic Strategies3-3. Ansoff Matrix3-4. Product Life Cycle

4. External factors analysis4-1. Social4-2. Technological4-3. Environmental

5. Conclusion6. References

1© Yusskei, http://yusskei.net

1. Introduction

Purpose of this Presentation

1. To analyse Nike’s core competences and competitiveness by using models and frameworks.

2. To identify and explain three external business environment factors which will impact on Nike’s competitiveness over the next five years.

To hypothesise three external business environment factors that will impact on Nike’s core competencies and competitiveness over the next five years.

Objectives


2. Company ProfileNike, Inc.The leading company in the world sportswear industry

3

Design, development, marketing and sales of

Adapted from: FY2012 Annual Report (Nike Inc, 2012) and FY2014 Annual Report (Nike Inc, 2014a)

1968Established in Oregon, US 56,500

employees in52countries

45Madein

countries bymanufacturers 190

Soldin

countries byretailers, Nike stores and online


Stable finance: Growing revenue and net incomeRevenue ($ billion)

Net Income ($ billion)

13.7

27.8

2.7

1.2

Adapted from: Nike, Inc. Ten Year Financial History (Nike Inc., 2014b)4© Yusskei, http://yusskei.net

4. External Factors Analysis

Legal

Political

Economic

Technological

Social

Environmental

• Direct impact on competitiveness

• Certainty to occur• Longevity: Over 5 years

Source: Adapted from; Johnson et al. (2011) Exploring strategy: text & cases, 9th ed., Harlow: Pearson Education Limited


4-1. Social Factor`

Consumer Trend:•“Because NIKE is a consumer products company, the relative popularity of various sports and fitness activities and changing design trends affect the demand for our products”

Nike, Inc. (2014a: 48)

Consumer trend in sport and fashion will impact on Nike’s competitivenessSince a trend is ever-changing, Nike will fail unless it catches the current trend and supplies innovative products.

Social Factor:•Changing culture and demographics (Johnson et al., 2011), income, education, life-style changes, attitudes to work and leisure (Bowman and Faulkner, 1997).


Sport Participation TrendIndividual and team sports have dropped while outdoor and fitness sports have grown in the US.

(The Sports and Fitness Industry Association, 2013)Adapted from: 2013 Sports, Fitness, and Leisure Activities Topline Participation Report


Among the key sports in which Nike has invested, only running, yoga and ice hokey have been growing in the US.

(The Sports and Fitness Industry Association, 2013)Adapted from: 2013 Sports, Fitness, and Leisure Activities Topline Participation Report

Sports Participation (million people) and Growth Rate 2008 to 2012

Tennis, -4%

Baseball, -16%Football, -7%

Basketball, -9%Yoga, +32%

Running, +25%

Ice Hokey, +26%

Skateboarding, -23%American Football, -20%


Sportswear TrendYoga trend has boosted the “activewear” market in the US.Activewear:•Clothes that combine sportswear and everyday apparel, functionality and fashionability (Burn-Callander, 2015).•Predominantly women’s wear, e.g. leggings (Rizzo, 2015).

Market:•$33.7 billion market with 7% growth (NPD Group, 2014),•Outpacing the sportswear market’s rate, 6% (Euromonitor International, 2014).•Lululemon Athletica and Athleta founded in 1998, then Nike and Adidas have followed since 2004 (Sherman, 2014).•Nike aims $2 billion sales increase in women’s wear, to $7 billion, by 2017 worldwide (Paton, 2014).


Consumer attitude changes:“Wearing gym clothes beyond the gym”“This is not a fashion trend, it’s a lifestyle trend” (Sherman, 2014)

La Mariposa (2014) 25© Yusskei, http://yusskei.net


Business

Nike: Corporate Strategy