NIKE

INTRODUCTION:

Nike is engaged in the design, development and worldwide marketing of footwear, apparel,

equipment and accessory products. It sells its products to around 18000 retail accounts in the

United States and through a mix of independent distributors, licenses and subsidiaries in

nearly 200 countries. Nike is the largest seller of athletic footwear and athletic apparel in the

world.

The company creates designs for men, women and children. The top selling product category

includes running, basketball, children’s, cross-training and women’s shoes. It also designs

shoes for outdoor activities like tennis, golf, soccer, baseball, football, hiking and other

athletic and recreational uses.

VISION:

“Bring inspiration and innovation to every athlete in the world.”

MISSION:

As the largest seller of athletic footwear and athletic apparel in the world (2, 3), we create

products for consumers and athletics (1) who enjoy having quality products that are high

performance and reliable such as shoes, apparel, and technologically advanced equipment)

(4). Our dedicated employees (9) continuously work on developing new products, price, and

product identity through marketing and promotion (7). The company aims to lead in

corporate citizenship (8) through proactive programs that reflect caring for the world family

of Nike (6) and by ensuring continuous growth and profitability to our investors and

stakeholders (5).

1. Customer

2. Products or services

3. Markets

4. Technology

5. Concern for survival, profitability, growth

6. Philosophy

7. Self-concept

8. Concern for public image

9. Concern for employees

SWOT ANALYSIS:

OPPORTUNITIES:

1. Younger consumers are less price sensitive and generally spend more on casual and

athletic footwear than older consumers

2. Most footwear companies have outsourced their production abroad in order to

maintain lower cost and R&D expenses

3. US footwear imports totaled 2.36 billion pairs in 2007, or roughly 7.9 pairs per capita

which is was up 0.4 percent from 2006

4. North American Free Trade Agreement (NAFTA) and the World Trade Organization

(WTO), both helped eliminate quotas and tariff barriers for foreign footwear

manufacturers to ship their goods

5. The Internet allows footwear companies to pursue a direct to consumer sales channel

6. Sales of apparel, accessories, and footwear on the Internet has been growing at a

double digit pace, considerably faster than more traditional sales models such as retail

stores

7. Internet sales of apparel, accessories, and footwear could reach 18 percent of category

sales by 2012

8. Companies that added a Web-based sales strategy are able to customize footwear and

other merchandise directly to the customer’s needs and taste, are enable to achieve

considerably better pricing as well as “deepening” the emotional bond consumers

have with the brand

THREATS:

1. After the age of 40, the typical consumer is not willing to pay more than $35 to $40

per pair for athletic footwear

2. Competition is strong among athletic footwear and apparel from off brand companies

3. Fluctuation of foreign currency impacts the cost of importing goods to the U.S.

4. Increase in unemployment has impacted the household income which may result in

spending less on brand name

5. Barrier to entry is low

6. Level of inventory is increasing in many retail stores due weak economy

STRENGTHS:

1. Nike is the dominant competitor for athletic footwear priced above $60 per pair,

holding better than a 50 percent market share for athletic footwear priced $85 per pair

or higher

2. Nike characterizes its organization as a collaborative matrix organization

3. The Jordan brand has a 10.8 percent share of the overall U.S. shoe market, which

makes it the second biggest brand in the country and more than twice the size of

Adidas’ share

4. Three out of every four pairs of basketball shoes sold in this country are Jordan, while

86.5 percent of all basketball shoes sold over $100 are Jordan

5. Nike’s 2009 revenues increased 2.9 percent to $19.1 billion

6. Inside the United States, Nike has three significant distribution and customer service

facilities

7. Nike estimates that they sell products to more than 25,000 retail accounts in the

United States and more than 27,000 retail accounts, including Nike-owned stores and

a mix of independent distributors and licensees outside the United States

8. The company’s Internet Web site, www.nikebiz.com, allows customers to design and

purchase Nike products directly from the company

9. Nike has five wholly owned subsidiaries: Cole Haan, Converse, Hurley International,

NIKE Golf, and Umbro Ltd

WEAKNESS:

1. Nike’s 2009 net income decreased 21 percent to $1.48 billion

2. Almost all of Nike’s footwear is manufactured outside the United States by

independent contractors

3. In fiscal 2008, contract manufacturers in China, Vietnam, Indonesia, and Thailand

manufactured 99 percent of Nike’s footwear worldwide

4. Because Nike competes primarily in athletic footwear, apparel and related sporting

equipment, its sales are heavily concentrated in the youth and young adult market

5. Accounts payable has increased by almost $1.0 billion in 2009

6. Negative publicity and boycotting of the Nike products due to outsourcing jobs

overseas and the use of child labor in such factories

STAGE I: THE INPUT STAGE

EXTERNAL FACTOR MATRIX (EFE) MATRIX:

EFE (External Factor Evaluation) matrix is the strategic tool used to evaluate

external environment or macro environment of the firm include economic, social,

technological, government, political, legal and competitive information.

The organization we selected is a leading Footwear brand “Nike”. Matrix is as follows

Key External Factors Weight Rating Weighted

Score

Opportunities

1. Younger consumers are less price sensitive and generally

spend more on casual and athletic footwear than older

consumers

0.08 3 0.24

2. Most footwear companies have outsourced their production

abroad in order to maintain lower cost and R&D expenses

0.07 4 0.28

3. US footwear imports totaled 2.36 billion pairs in 2007, or

roughly 7.9 pairs per capita which is was up 0.4 percent

from 2006

0.07 3 0.21

4. North American Free Trade Agreement (NAFTA) and the

World Trade Organization (WTO), both helped eliminate

quotas and tariff barriers for foreign footwear

manufacturers to ship their goods

0.06 4 0.24

5. The Internet allows footwear companies to pursue a direct

to consumer sales channel

0.07 4 0.28

6. Sales of apparel, accessories, and footwear on the Internet

has been growing at a double digit pace, considerably faster

than more traditional sales models such as retail stores

0.08 3 0.24

7. Internet sales of apparel, accessories, and footwear could

reach 18 percent of category sales by 2012

0.07 4 0.28

8. Companies that added a Web-based sales strategy are able

to customize footwear and other merchandise directly to the

customer's needs and taste, are enable to achieve

considerably better pricing as well as "deepening" the

emotional bond consumers have with the brand

0.06 3 0.18

Threats

1. After the age of 40, the typical consumer is not willing to

pay more than $35 to $40 per pair for athletic footwear

0.07 3 0.21

2. Competition is strong among athletic footwear and apparel

from off brand companies

0.08 2 0.16

3. Fluctuation of foreign currency impacts the cost of

importing goods to the U.S.

0.06 2 0.12

4. Increase in unemployment has impacted the household

income which may result in spending less on brand name

0.09 3 0.27

5. Barrier to entry is low 0.06 2 0.12

6. Level of inventory is increasing in many retail stores due

weak economy

0.08 2 0.16

Total 1.00 2.99

The total of EFE matrix is 2.99, which is more than average. So, it shows that Nike

performing up to the mark to avail the opportunities and avoid the threats from the market.

INTERNAL FACTOR EVALUATION (IFE) MATRIX:

IFE (Internal Factor Evaluation) matrix is the strategic tool used to evaluate the company’s

internal strength and weakness to identify the company’s abilities against the competitors to

win the business game.

The organization we selected is a leading Footwear brand “Nike”. Matrix is as follows

Key Internal Factors Weight Rating Weighted Score

Strengths

1. Nike is the dominant competitor for athletic footwear

priced above $60 per pair, holding better than a 50

percent market share for athletic footwear priced $85

per pair or higher

0.08 4 0.32

2. Nike characterizes its organization as a collaborative

matrix organization

0.02 3 0.06

3. The Jordan brand has a 10.8 percent share of the

overall U.S. shoe market, which makes it the second

biggest brand in the country and more than twice the

size of Adidas' share

0.06 4 0.24

4. Three out of every four pairs of basketball shoes sold

in this country are Jordan, while 86.5 percent of all

basketball shoes sold over $100 are Jordan

0.08 4 0.32

5. Nike's 2009 revenues increased 2.9 percent to $19.1

billion

0.09 4 0.36

6. Inside the United States, Nike has three significant

distribution and customer service facilities

0.05 3 0.15

7. Nike estimates that they sell products to more than

25,000 retail accounts in the United States and more

than 27,000 retail accounts, including Nike-owned

stores and a mix of independent distributors and

licensees outside the United States

0.04 3 0.12

8. The company's Internet Web site, www.nikebiz.com,

allows customers to design and purchase Nike

products directly from the company

0.07 4 0.28

9. Nike has five wholly owned subsidiaries: Cole Haan,

Converse, Hurley International, NIKE Golf, and

Umbro Ltd

0.07 3 0.21

Weaknesses

1. Nike's 2009 net income decreased 21 percent to $1.48

billion

0.07 2 0.14

2. Almost all of Nike's footwear is manufactured outside

the United States by independent contractors

0.08 1 0.08

3. In fiscal 2008, contract manufacturers in China,

Vietnam, Indonesia, and Thailand manufactured 99

percent of Nike's footwear worldwide

0.06 1 0.06

4. Because Nike competes primarily in athletic footwear,

apparel and related sporting equipment, its sales are

heavily concentrated in the youth and young adult

market.

0.08 1 0.08

5. Accounts payable has increased by almost $1.0 billion

in 2009

0.08 2 0.16

6. Negative publicity and boycotting of the Nike

products due to outsourcing jobs overseas and the use

of child labor in such factories

0.07 1 0.07

Total 1.00 2.65

The total score for IFE matrix is greater than average score which indicate that the company

has major focuses on its strengths and is in ability to overcome the weakness

COMPETITIVE PROFILE MATRIX (CPM):

CRITICAL SUCCESS FACTOR:

Following are some critical Success factors

Price Competitiveness

Global Expansion

Organizational Structure

Technology

Product Safety

Advertisement

Product Quality

Product Image

Financial Position

Nike Adidas Puma

Critical Success Factors Weight Rating

Weighted

Score Rating

Weighted

Score Rating

Weighted

Score

Price competitiveness 0.10 3 0.30 2 0.20 1 0.10

Global Expansion 0.07 4 0.28 3 0.21 2 0.14

Organizational Structure 0.04 3 0.12 1 0.04 1 0.04

Technology 0.09 3 0.27 1 0.09 2 0.18

Product Safety 0.15 2 0.30 3 0.45 4 0.60

Customer Loyalty 0.09 4 0.36 3 0.27 2 0.18

Market Share 0.09 4 0.36 3 0.27 2 0.18

Advertising 0.12 4 0.48 3 0.36 2 0.24

Product Quality 0.12 3 0.36 2 0.24 1 0.12

Product Image 0.07 4 0.28 3 0.21 2 0.14

Financial Position 0.06 4 0.24 3 0.18 2 0.12

Total 1.00 3.35 2.52 2.04

STAGE II: THE MATCHING STAGE

SWOT Matrix:

Strengths Weaknesses

1. Nike is the dominant

competitor for athletic

footwear priced above $60

per pair, holding better

than a 50 percent market

share for athletic footwear

priced $85 per pair or

higher

2. Nike characterizes its

organization as a

collaborative matrix

organization

3. The Jordan brand has a

10.8 percent share of the

overall U.S. shoe market,

which makes it the second

biggest brand in the

country and more than

twice the size of Adidas’

share

4. Three out of every four

pairs of basketball shoes

sold in this country are

Jordan, while 86.5 percent

of all basketball shoes sold

over $100 are Jordan

5. Nike’s 2009 revenues

increased 2.9 percent to

$19.1 billion

6. Inside the United States,

Nike has three significant

distribution and customer

service facilities

7. Nike estimates that they

sell products to more than

25,000 retail accounts in

the United States and more

than 27,000 retail

accounts, including Nike-

owned stores and a mix of

independent distributors

1. Nike’s 2009 net income

decreased 21 percent to

$1.48 billion

2. Almost all of Nike’s

footwear is manufactured

outside the United States

by independent contractors

3. In fiscal 2008, contract

manufacturers in China,

Vietnam, Indonesia, and

Thailand manufactured 99

percent of Nike’s footwear

worldwide

4. Because Nike competes

primarily in athletic

footwear, apparel and

related sporting

equipment, its sales are

heavily concentrated in the

youth and young adult

market

5. Accounts payable has

increased by almost $1.0

billion in 2009

6. Negative publicity and

boycotting of the Nike

products due to

outsourcing jobs overseas

and the use of child labor

in such factories

and licensees outside the

United States

8. The company’s Internet

Web site,

www.nikebiz.com, allows

customers to design and

purchase Nike products

directly from the company

9. Nike has five wholly

owned subsidiaries: Cole

Haan, Converse, Hurley

International, NIKE Golf,

and Umbro Ltd

Opportunities S-O Strategies

W-O Strategies

1. Younger consumers are

less price sensitive and

generally spend more on

casual and athletic

footwear than older

consumers

2. Most footwear companies

have outsourced their

production abroad in order

to maintain lower cost and

R&D expenses

3. US footwear imports

totaled 2.36 billion pairs in

2007, or roughly 7.9 pairs

per capita which is was up

0.4 percent from 2006

4. North American Free

Trade Agreement

(NAFTA) and the World

Trade Organization

(WTO), both helped

eliminate quotas and tariff

barriers for foreign

footwear manufacturers to

ship their goods

5. The Internet allows

footwear companies to

pursue a direct to

consumer sales channel

6. Sales of apparel,

accessories, and footwear

on the Internet has been

1. Expand into international

market more where the

economy is stronger (S1,

S3, S4, S7, O1)

2. Increase advertising and

promotion through social

networking such as

Twitter and Facebook (S8,

O1, O5, O7)

1. Develop new products for

small kids based on

cartoon characters (W4,

O1, O3)

2. Sponsor more athletics

programs, mostly for

young generation (W1,

W4, W6, O1, O2, O3)

growing at a double digit

pace, considerably faster

than more traditional sales

models such as retail

stores

7. Internet sales of apparel,

accessories, and footwear

could reach 18 percent of

category sales by 2012

8. Companies that added a

Web-based sales strategy

are able to customize

footwear and other

merchandise directly to the

customer’s needs and

taste, are enable to achieve

considerably better pricing

as well as “deepening” the

emotional bond consumers

have with the brand

Threats S-T Strategies

W-T Strategies

1. After the age of 40, the

typical consumer is not

willing to pay more than

$35 to $40 per pair for

athletic footwear

2. Competition is strong

among athletic footwear

and apparel from off brand

companies

3. Fluctuation of foreign

currency impacts the cost

of importing goods to the

U.S.

4. Increase in unemployment

has impacted the

household income which

may result in spending less

on brand name

5. Barrier to entry is low

6. Level of inventory is

increasing in many retail

stores due weak economy

1. Develop a new moderately

priced product line (S1,

S2, S3, S4, T2, T4, T6)

2. Expand distribution by

selling to stores other than

their own retailers (S7, T2)

1. Make low priced footwear

made in the US and

promote it as “Made in

America” (W2, W6, T2,

T3, T4, T6)

2. Acquire a less expensive

brand of accessories and

sportswear and promote

them as an off brand of

Nike (W4, W6, T1, T4,

T6)

SPACE MATRIX:

Financial Stability (FS) Environmental Stability (ES)

Return on Investment 4 Unemployment -4

Leverage 5 Technological Changes -4

Liquidity 3 Price Elasticity of Demand -5

Working Capital 3 Competitive Pressure -5

Cash Flow 4 Barriers to Entry -5

Financial Stability (FS) Average

3.8 Environmental Stability (ES) Average -4.6

Competitive Stability (CS) Industry Stability (IS)

Market Share -1 Growth Potential 5

Product Quality -2 Financial Stability 4

Customer Loyalty -3 Ease of Market Entry 1

Competition’s Capacity Utilization -1 Resource Utilization 3

Technological Know-How -4 Profit Potential 4

Competitive Stability (CS) Average

-2.2 Industry Stability (IS) Average

3.4

X-axis; IS+CA= (3.4) + (-2.2) = 1.4

Y-axis: FS + ES= (3.8) + (-4.6) = -0.8

FS

CS

ES

IS 6 5 4 3 2 1

Conservative Aggressive

Competitive Defensive

1

2

3

4

5

6

7 -2 -3 -4 -5 -7 -1 -6

7

-7

-6

-5

-4

-3

-2

-1

BCG MATRIX:

1. Market development

2. Market penetration

3. Product development

4. Forward integration

5. Backward integration

6. Horizontal integration

NIKE

INTERNAL EXTERNAL MATRIX:

Strong

3.0 to 4.0

Average

2.0 to 2.99

Weak

1.0 to 1.99

High

3.0 to 3.99

I

II

III

Medium

2.0 to 2.99

IV

IV

Nike, Inc

VI

Low

1.0 to 1.99

VII VIII IX

The EFE

Total

Weighted

Score

GRAND STRATEGY MATRIX:

1. Market development

2. Market penetration

3. Product development

4. Forward integration

5. Backward integration

6. Horizontal integration

7. Related diversification

Weak

Competitive

Position

Quadrant II Quadrant I

Quadrant IV Quadrant III

Strong

Competitive

Position

Rapid Market Growth

Slow Market Growth

STAGE III: DECISION STAGE

QSPM:

Key Factors Weight AS TAS AS TAS

Opportunities

1. Younger consumers are less price sensitive

and generally spend more on casual and

athletic footwear than older consumers

0.08 1 0.08 4 0.32

2. Most footwear companies have outsourced

their production abroad in order to maintain

lower cost and R&D expenses

0.07 --- --- --- ---

3. US footwear imports totaled 2.36 billion

pairs in 2007, or roughly 7.9 pairs per capita

which is was up 0.4 percent from 2006

0.07 --- --- --- ---

4. North American Free Trade Agreement

(NAFTA) and the World Trade

Organization (WTO), both helped eliminate

quotas and tariff barriers for foreign

footwear manufacturers to ship their goods

0.06 2 0.12 3 0.18

5. The Internet allows footwear companies to

pursue a direct to consumer sales channel

0.07 --- --- --- ---

6. Sales of apparel, accessories, and footwear

on the Internet has been growing at a double

digit pace, considerably faster than more

traditional sales models such as retail stores

0.08 2 0.16 4 0.32

7. Internet sales of apparel, accessories, and

footwear could reach 18 percent of category

sales by 2012

0.07 4 0.28 1 0.07

8. Companies that added a Web-based sales

strategy are able to customize footwear and

other merchandise directly to the customer's

needs and taste, are enable to achieve

considerably better pricing as well as

"deepening" the emotional bond consumers

have with the brand

0.06 4 0.24 1 0.06

Threats

1. After the age of 40, the typical consumer is

not willing to pay more than $35 to $40 per

pair for athletic footwear

0.07 1 0.07 4 0.28

2. Competition is strong among athletic

footwear and apparel from off brand

companies

0.08 --- --- --- ---

3. Fluctuation of foreign currency impacts the

cost of importing goods to the U.S.

0.06 --- --- --- ---

4. Increase in unemployment has impacted the

household income which may result in

spending less on brand name

0.09 1 0.09 3 0.27

5. Barrier to entry is low 0.06 --- --- --- ---

6. Level of inventory is increasing in many

retail stores due weak economy

0.08 4 0.32 2 0.16

TOTAL 1.00 1.36 1.66

Strengths

1. Nike is the dominant competitor for athletic

footwear priced above $60 per pair, holding

better than a 50 percent market share for

athletic footwear priced $85 per pair or

higher

0.08 --- --- --- ---

2. Nike characterizes its organization as a

collaborative matrix organization

0.02 --- --- --- ---

3. The Jordan brand has a 10.8 percent share

of the overall U.S. shoe market, which

makes it the second biggest brand in the

country and more than twice the size of

Adidas' share

0.06 3 0.18 1 0.06

4. Three out of every four pairs of basketball

shoes sold in this country are Jordan, while

86.5 percent of all basketball shoes sold

over $100 are Jordan

0.08 3 0.24 1 0.08

5. Nike's 2009 revenues increased 2.9 percent

to $19.1 billion

0.09 --- --- --- ---

6. Inside the United States, Nike has three

significant distribution and customer service

facilities

0.05 --- --- --- ---

7. Nike estimates that they sell products to

more than 25,000 retail accounts in the

United States and more than 27,000 retail

accounts, including Nike-owned stores and

a mix of independent distributors and

licensees outside the United States

0.04 3 0.12 4 0.16

8. The company's Internet Web site,

www.nikebiz.com, allows customers to

design and purchase Nike products directly

from the company

0.07 4 0.28 1 0.07

9. Nike has five wholly owned subsidiaries:

Cole Haan, Converse, Hurley International,

NIKE Golf, and Umbro Ltd

0.07 1 0.07 3 0.21

Weaknesses

1. Nike's 2009 net income decreased 21

percent to $1.48 billion

0.07 1 0.07 3 0.21

2. Almost all of Nike's footwear is

manufactured outside the United States by

independent contractors

0.08 --- --- --- ---

3. In fiscal 2008, contract manufacturers in

China, Vietnam, Indonesia, and Thailand

manufactured 99 percent of Nike's footwear

worldwide

0.06 --- --- --- ---

4. Because Nike competes primarily in athletic

footwear, apparel and related sporting

equipment, its sales are heavily concentrated

in the youth and young adult market

0.08 1 0.08 3 0.24

5. Accounts payable has increased by almost

$1.0 billion in 2009

0.08 --- --- --- ---

6. Negative publicity and boycotting of the

Nike products due to outsourcing jobs

overseas and the use of child labor in such

factories

0.07 --- --- --- ---

SUBTOTAL 1.00 1.04 1.03

SUM TOTAL ATTRACTIVENESS SCORE 2.4 2.69

Recommendations

Acquire a company who manufactures and sells less expensive products than Nike. The

company should have established distribution and retail shelf space with non-competing

product lines. It would be ideal if the company is a U.S. based corporation with domestic

manufacturing facilities.