Andrew Schrelber, Jeffery Llera, Marquis Soloman, Sharonda Rogers & Naomi Steverson

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Table of ContentsExecutive Summary:....................................................................................................................................3

Existing mission statement:.........................................................................................................................5

Objectives:...................................................................................................................................................5

Strategies:....................................................................................................................................................6

New Nike Mission Statement:.....................................................................................................................6

Alternative Strategies:.................................................................................................................................7

Specific strategies and long-term objectives:..............................................................................................8

Forecasted Ratios:.....................................................................................................................................10

Pro-Formal Financial Statements:.............................................................................................................12

Exhibits:.....................................................................................................................................................14

Space Matrix:.........................................................................................................................................14

BCG Matrix:...........................................................................................................................................15

IE Matrix:...............................................................................................................................................15

Competitive Profile Matrix:...................................................................................................................16

EFE Matrix:............................................................................................................................................16

IFE Matrix:.............................................................................................................................................17

Misc. Exhibits:........................................................................................................................................17

References:................................................................................................................................................20

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Executive Summary:“Nike is the world’s largest designer, marketer, and distributor of athletic footwear and

athletic apparel” (David, 2010). How did it get to this point? Nike was founded in 1964 as Blue

Ribbon Sports by Bill Bowerman and Phil Knight. Bill Bowerman was the track and field coach

at the University of Oregon. He was a great coach who was constantly seeking ways to give his

athletes an advantage. Phil Knight was a middle-distance runner who ended up attending the

University of Oregon and competing for Bowerman’s track program. Because of their desire for

innovation in running shoes, they teamed up and the company opened its first store in 1966. In

1972, they introduced the Nike brand of shoes and they officially renamed the company Nike in

1978.

Entering in to the 1980s, Nike was on a roll. They had reached a 50 percent market share

in the U.S. athletic shoe market and were a publicly traded company. However, due to some

miscalculations, they slipped from their position as industry leader. Luckily, they were able to

get back to the top of the industry by 1988 because of the introduction of a Michael Jordan-

endorsed basketball shoe. Since that time, Nike has continued to grow and diversify with the

purchase of Cole Haan shoes, Bauer, Hurley, Converse, Starter, and Umbro Ltd. (David, 2010).

In 2009, the Nike brand, Jordan, topped $1 billion in annual revenue. With this number

of sales, the Jordan brand makes up about 5 percent of the company’s overall revenues. The

Jordan brand is the second biggest brand in the country and is over twice the size of the Adidas’

share. In 2009, Nike’s revenues increased 2.9 percent which brought them to $19.1 billion.

However, the net income decreased to $1.48 billion which is down 21 percent (David, 2010). In

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order to remain the world’s largest company of athletic footwear and athletic apparel, Nike needs

to analyze their external/internal environment and be aware of changes that need to take place.

NIKE’s athletic footwear products are designed primarily for specific athletic use,

although a large percentage of the products are worn for casual or leisure purposes. Nike place

considerable emphasis on high quality construction and innovation in products designed for men,

women and children. Running, training, basketball, soccer, sport−inspired casual shoes, and

kids’ shoes are currently our top−selling footwear categories and Nike expects them to continue

to lead in product sales in the near future. Nike also market footwear designed for aquatic

activities, baseball, cheerleading, football, golf, lacrosse, outdoor activities, skateboarding,

tennis, volleyball, walking, wrestling, and other athletic and recreational uses (Annual Report,

2010).

Nike sells sports apparel and accessories covering most of the above categories,

sports−inspired lifestyle apparel, as well as athletic bags and accessory items. NIKE apparel and

accessories feature the same trademarks and are sold through the same marketing and

distribution channels. Nike often market footwear, apparel and accessories in “collections” of

similar design or for specific purposes. They also market apparel with licensed college and

professional team and league logos (Annual Report, 2010).

Nike sell a line of performance equipment under the NIKE Brand name, including bags,

socks, sport balls, eyewear, timepieces, electronic devices, bats, gloves, protective equipment,

golf clubs, and other equipment designed for sports activities. They also sell small amounts of

various plastic products to other manufacturers through their wholly−owned subsidiary, NIKE

IHM, Inc (Annual Report, 2010).

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In addition to the products they sell directly to customers, they have entered into license

agreements that permit unaffiliated parties to manufacture and sell certain apparel, electronic

devices and other equipment designed for sports activities (Annual Report, 2010).

The wholly−owned subsidiary, Cole Haan (“Cole Haan”), headquartered in Yarmouth, Maine,

designs and distributes dress and casual footwear, apparel and accessories for men and women

under the Cole Haan® trademark (Annual Report, 2010).

Existing mission statement:Nike’s current mission statement is “to bring inspiration and innovation to every athlete

in the world” (David, 2010). Their inspiration comes from co-founder Bill Bowerman’s

innovative thinking. They seek to carry on his legacy by striving to create products that allow

athletes to reach their potential no matter their ability. They also strive to set themselves apart

from the competition and look for opportunities that allow them to do so (David, 2010).

Objectives:Nike’s focus has always been on innovation. Currently, they are looking to transition

their business into one that is more sustainable. Their desire is to bring people, planet, and

profits into balance for lasting success. They realize that to remain the leading athletic brand in

the world in the future, they have to deliver their products in a more sustainable way. Nike is

seeing the impact that the strain on natural and human resources could have on their company.

Their choice is to move fast now and seize the opportunities of a future sustainable economy

rather than wait and be forced to shift. (Corporate Responsibility Report, 2009)

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Strategies:Nike’s strategies are based on three principles: “pursuing the greatest growth

opportunities, leveraging Nike resources and capabilities, and serving customers with premium

products and experiences” (David, 2010). Nike has done several things to help get them on the

right track towards sustainability. They became chair of the World Economic Forum’s

Consumer Industries Working Group on Sustainable Consumption. By doing this, Nike is

hoping to collaborate with others on how to transition to a sustainable economy as quickly and

smoothly as possible. Nike has also tested the real business impact and explored how their

consumer brand would thrive in a sustainable economy. Nike also helped launch the

GreenXChange which is an organization that is dedicated to sharing patents and ideas that can

help companies reduce their environmental impacts (Annual Report, 2010).

New Nike Mission Statement:Nikes existing mission statement is “to bring inspiration and innovation to every athlete in the

world.   If you have a body, you are an athlete.” This statement enforces their brands ability to

reach out to not only athletes but also none athletes as well. The problem however lies with the

introduction of several new players in the sports wear market. In order to better show innovation

using technology and superior quality to the customer the new mission statement should be

“Bring innovation using excellent products regardless of athletic ability. If you have a body, you

are an athlete.”

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Alternative Strategies:One alternative strategy for Nike would be to expand their target market. Currently, they

are focused mainly on 12- to 24-year-olds. With the trend towards a healthier lifestyle, they

could appeal to an older target market with products more focused on walking/jogging and

exercising. The downside of this strategy could be in the marketing. If the Nike brand becomes

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Strengths

Strongest brand name and logo in its industry

Dominates athletic shoe market by owning an estimated 37% of worldwide sale

Diverse athletic product line which encompasses nearly every competitive sport

Marketing with Star Power (ex. LeBron James, Tiger Woods, Michael Jordan, & Mia Hamm)

Cheap production the cost through outsourcing

Appeals to younger age group with more expendable income

Limited Overall Competition

Weaknesses

Negative press in regards to foreign labor issues in its contracted production plants

Legal & Civil issues with Nike endorsed athletes (Michael Vick, Kobi Bryant, & Barry Bonds)

Foreign operations may be limited in corporate oversight

High prices for footwear & apparel

Opportunities

High Performance Sports Wear (ex Under Armour)

Aging Baby-Boomer market (lower priced footwear, geriatric footwear and apparel)

Chinese Market (increasing Western Influence)

Racing Apparel

Threats

Counterfeit Products Upcoming companies with

specialized products (ex. Under Armour)

Complacency as Global Leader in athletic apparel and footwear

Outsourcing and rising shipping cost that may be passed onto the consumer

Nike, Inc. (SWOT Analysis)

too popular among the older population, then the younger generation may not desire the products

as they do now.

Another strategy would be to create a line that is less expensive. Nike’s footwear is

currently priced above $60 per pair, so there are a lot of consumers that cannot purchase the

brand. Nike could become even more popular if it were available to a larger group of people.

The downside is that it could lose some of its prestige if it were to decrease in price. The reason

people are willing to pay such high prices for their footwear is because they believe it to be the

“best.” This view could change if the price was to drop and more people were able to purchase

the brand.

Specific strategies and long-term objectives:In order for Nike to remain competitive, they will have to continue to look outside the

box in order to remain relevant in the sports industry. In the past Nike enjoyed relative market

domination with their line of sports focused clothing and apparel. Unfortunately, the sports

appeal market has seen an increase in companies attempting to steal a piece of the pie away from

Nike. Companies like Under Armor, Sole, Callaway and Columbia has recently introduced

products in direct competition with Nike. With these new companies, interring the market Nike

will begin to struggle to remain relevant in the future. Nike must look at their long-term

objective and strategies if the organization wishes to remain the market leader.

One way of doing this is by looking to new avenues not only sell it products but become

know as a brand that sells upscale clothing as well. This can be established by looking at Nikes

sportswear apparels versatility. This means what other ways Nike can sell its products like

business suits and eveningwear besides the typical polo shirt. This strategy would not only allow

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the Nike brand to reach those customers that do not necessarily wear sports apparel. This would

also have the added affect of increased sales to those customers who are loyal to the brand.

In order to make this happen Nike should look into working with leaders in the fashion

industry. Stylist like Ana Kalaw, Bea Constantino, Mariane Perez, Ram de Vera, and Rachelle

Que all have the understanding of a wide range of clothing types. Their skill set should be

considered vital to any long-term objective for the organization. These stylists have the ability to

take the Nike sports apparel and add the latest design and innovations. The result should be a

range of products that can be instantly recognizable as Nike but updated to high levels of style.

These products were born from sports but pushed to the edge of both business and club wear

fashion. By introducing these new lines, Nike will tap into future sources of revenue and will

better be able to remain the leader in its market.

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Forecasted Ratios:

Current Ratio Current assets 10,959,200 3.26Current Liabilities 3,364,200

Quick Ratio Current assets minus inventory10,959,200 -

2,040,800 2.65Current Liability 3,364,200

Debt-to-Total-Assets Ratio Total debt 4,665,300 0.32Total assets 14,419,300

Debt-to-Equity Ratio Total debt 4,665,300 0.48Total stockholders' equity 9,754,000

Long-Term Debt-Equity Ratio Long-Term debt 445,800 0.05Total stockholders' equity 9,754,000

Gross Profit Margin Sales minus cost of goods sold19,014,000 - 10,213,600 46.28%

Sales 19,014,000.0

Operating Profit Margin Earnings before interest and taxes 2,516,900.0 13.24%Sales 19,014,000.0

Net Profit Margin Net income 1,906,700.0 10.03%Sales 19,014,000.0

Return on Total Assets (ROA) Net income 1,906,700 13.22%Total assets 14,419,300

Return on Stockholders' Equity (ROE) Net income 1,906,700 19.55%

Total stockholders' equity 9,754,000.0

Earnings per share (EPS) Net income 1,906,700 3.86# of shares of common stock

outstanding 493,900

Sales Annual percentage growth in total sales 8,800,400.0 1%8,604,400.0

Net Income Annual percentage growth in profits 1,906,700.00 28%1,486,700.00

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Earnings Per Share Annual percentage growth in EPS 3.86 27%3.03

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Pro-Formal Financial Statements:Nike's Income Statement

ActualPERIOD ENDING 31-May-10 31-May-09Total Revenue $ 19,014,000 $ 19,176,100 1% decreaseCost of Revenue 10,213,600 10,571,700 Gross Profit 8,800,400 8,604,400

Operating Expenses Research Development Selling General and Administrative 6,326,400 6,149,600 Non Recurring - 596,300 OthersTotal Operating Expenses

Operating Income or Loss 2,474,000 1,858,500 Income from Continuing OperationsTotal Other Income/Expenses Net (42,900) 98,000 Earnings before Interest and taxes 2,516,900 1,956,500 Interest ExpenseIncome Before Tax 2,516,900 1,956,500 Income Tax Expense 610,200 469,800 Minority InterestNet Income from Continuing Ops 1,906,700 1,486,700 Non-recurring EventsDiscontinued OperationsExtraordinary ItemsEffect of Accounting ChangesOther Items

(Annual Report, 2010)

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Income from Continuing OperationsTotal Other Income/Expenses Net (42,900) 98,000 Earnings before Interest and taxes 2,516,900 1,956,500 Interest ExpenseIncome Before Tax 2,516,900 1,956,500 Income Tax Expense 610,200 469,800 Minority InterestNet Income from Continuing Ops 1,906,700 1,486,700 Non-recurring EventsDiscontinued OperationsExtraordinary ItemsEffect of Accounting ChangesOther Items

Net Income 1,906,700 1,486,700 28.2% increase

Nike's Balance SheetActual

PERIOD ENDING 31-May-10 31-May-09Assets

Current AssetsCash and Cash Equivalents $ 3,079,100 $ 2,291,100 Short Term Investments 2,066,800 1,164,000 Net Receivables 2,898,600 3,156,300 8% decreaseInventory 2,040,800 2,357,000 13% decreaseOther Current Assets 873,900 765,600

Total Current Assets 10,959,200 9,734,000 Long Term Investments - - Property Plant and Equipment 1,931,900 1,957,700 Goodwill 187,600 193,500 Intangible Assets 467,000 467,400 Accumulated Amortization - - Other Assets - - Deferred Long Term Asset Charges 873,600 897,000 Total Assets 14,419,300 13,249,600 LiabilitiesCurrent Liabilities

Accounts Payable 3,356,800 3,245,000 Short/Current Long Term Debt 7,400 32,000 Other Current Liabilities - -

Total Current Liabilities 3,364,200 3,277,000

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Exhibits:

Space Matrix:

Nike SPACEMatrix

Conservative FS Aggressive +6

+5 +4 (3.3,4.4)

+3

+2

+1 CA IS -6 -5 -4 -3 -2 -1 0 +1 +2 +3 +4 +5 +6 -1

-2

-3

-4

-5

-6 Defensive ES Competitive

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BCG Matrix:(Based on the information available, the plots suggest Nike take an “Aggressive” strategic approach)

IE

Matrix: THE IFE TOTAL WEIGHTED SCORES

Strong Average Weak 3.0 to 4.0 2.0 to 2.99 1.0 to 1.99

4.0 3.0 2.0 1.0

3.0

2.0

1.0

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I II III

IV V VI

VII VIII IX

INTERNAL STRATEGIC POSITION EXTERNAL STRATEGIC POSITION

Axis X (3.3)Financial Strength (FS) + 5.14 Environmental Stability (ES) -1.87Return on Assets 6 Technological changes -2Leverage 5 Rate of inflation -4Liquidity 6 Demand variability -2Working capital 6 Price range of competing products -3Cash flow 6 Barriers to entry into market -1Ease of exit from market 3 Competitive pressure -1Risk involved in business 4 Price elasticity of demand -2 Axis Y (4.4)Competitive Advantage (CA) -1.57 Industry Strength (IS ) +6.00Market share -1 Growth potential 6Product quality-1 Profit potential 6Product life cycle-3 Financial stability 6 Customer loyalty-1 Technological know-how 6Competition's capacity utilization-3 Resource utilization 6Technological know-how-1 Capital intensity 6Control over suppliers and distributors-1 Ease of entry into market 6

Productivity, capacity utilization 6

High

3.0 to 4.0

EFE Medium

TOTAL 2.0 to 2.99

WEIGHTED

SCORES

Low

1.0 to 1.99

Segment Revenue %Revenue $Profit %Profits IFE Scores EFE Scores1 $9.5 50% $4.4 50 3.6 3.22 $4.7 25% $2.2 25 2.1 3.5

3 $2.3 12.5% $1.1 12.5 3.1 2.1 4 $2.3 12.5% $1.1 12.5 1.8 2.5 Total $19.1 100% $8.8 100%

Competitive Profile Matrix: Nike Adidas Puma

Critical Success Factors Weight Rating Score Rating Score Rating Score

Advertising 0.20 3 0.60 3 0.60 2 0.40 Product Quality 0.20 3 0.60 2 0.40 2 0.40Price Competitiveness 0.10 2 0.30 2 0.20 1 0.10Management 0.10 3 0.30 2 0.20 3 0.30Financial Position 0.10 3 0.30 2 0.20 2 0.20 Customer Loyalty 0.10 3 0.30 3 0.30 3 0.30Global Expansion 0.15 2 0.30 2 0.60 2 0.30Market Share 0.05 3 0.15 2 0.10 2 0.10Total 1.00 2.85 2.60 2.10

EFE Matrix:Key External Factors Weight Rating Weighted

Score

Opportunities

1. Nike is a fashion brand .05 2 .102. Develop products such as sport wear, sunglasses .08 2 .163. Athletic shoes has become very popular worldwide .08 2 .164. 86.5% of all basketball shoes sold over $100

Are Jordan .07 3 .215. New designs, market, and sell three main categories:

Footwear, apparel, and equipment .04 1 .046. The Jordan brand has a 10.8 percent share of the

Overall Shoe market .05 2 .107. Five wholly owned subsidiaries .04 2 .088. International Markets .06 2 .12

Threats

9. Competition .09 2 .1810. Consumers may lean toward discounted items .07 2 .1411. Consumers may look for new or different products .08 2 .1612. Cutbacks in consumer spending .10 3 .3013. Counterfeit products .08 2 .1614. Nike has reached a level of maturity .05 1 .0515. Out sourcing and rising of shipping cost .06 2 .12

TOTAL 1.00 2.08

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IFE Matrix:Key Internal Factors Weight Rating Weighted

Score

Strengths

1. World’s largest designer of athletic footwear .10 4 .402. Annual Revenue of $19.8 billion .07 3 .213. Financial Strength and business scale .08 3 .244. Services 52 countries around the world .06 1 .065. More than 25,000 retail accounts in the

United States .08 3 .246. Footwear accounted for 69.5 percent of sales .06 2 .127. Nike is leading in athletic footwear, with 37

Percent of worldwide sales .06 2 .158. Global competitive advantage .05 1 .059. Internet sales growing at a double digit pace .06 2 .12

Weaknesses

10. Competition from Adidas and Puma .09 3 .27 11. The retail sector is very price sensitive .07 2 .1412. High prices of footwear .05 1 .0513. Foreign labor issues about production .06 2 .1214. Higher quantity results to higher prices .07 3 .2115. Legal and Civil issues with endorsed athletes .04 2 .08

TOTAL 1.00 2.46

Misc. Exhibits:

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References:

Annual Report. (2010). Retrieved August 15, 2010, from Nike, Inc.: http://media.corporate-ir.net/media_files/IROL/10/100529/nike-ar-20100804/docs/NIKE_2010_10-K.pdf

Corporate Responsibility Report. (2009). Retrieved August 15, 2010, from Nike, Inc.: http://www.nikebiz.com/crreport/content/pdf/documents/full-report.pdf

David, F. R. (2010). Strategic Management, Concept and Cases (13th ed.). Upper Saddle River, New Jersey: Pearson Prentice Hall.

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