Nike

Zeeshan SoriaRyanMikeHenry

About NikeNike, inc is an American multinational corporation that designs, develops,

markets and sells footwear, apparel, and equipment, accessories and services

Founded: January 25, 1964Founders: Bill Bowerman, Phil KnightHeadquarters: Beaverton, OregonCEO: Mark Parker

Stock price: NKE (NYSE)$102.44 +0.99 (+0.98%) - May 08, 2015

Subsidiaries: Converse, Hurley International

% ChangeNIKE 58.18

Adidas -23.18

Under Armour 164.26

Core Competency“Nike is a marketing company, and the product is the most

important marketing tool” - Phil Knight

Nike’s core competency lies in the area marketing; branding

Strong brand power

Consumer brand awareness

HistoryNike’s roots go back to a company called Blue Ribbon Sports, founded by

former University of Oregon runner Phil Knight and his former track coach Bill Bowerman in 1962

“ Our success. in the early days anybody with gluepot and a pair of scissors could get into the shoe business, so the way to stay ahead was through product innovation. We happened to be great at it” - Phil Knight

Then in the mid-1980s, Nike lost its footing, and the company was forced to make a subtle but important shift. Instead of putting the product on center stage, it put the consumer in the spotlight and the brand under a microscope—in short, it learned to be marketing oriented. Since then, Nike has resumed its domination of the athletic shoe industry- HBR

Marketing Strategy“Focusing solely on the product was a great way for a brand to start, but it just wasn’t enough” - Phil Knight

Wieden & Kennedy- Ad AgencyCreate emotional ties with the buying publicPlayer and team sponsors

Brand PowerNike is a champion brand builder. Its advertising slogans—“Bo Knows,” “Just Do It,”

“There Is No Finish Line”—have moved beyond advertising into popular expression. Its athletic footwear and clothing have become a piece of Americana. Its brand name is as well-known around the world as IBM and Coke- HBR

● Ranked 35th most powerful brand in the world and 1st in apparel. Adidas is ranked 185th and 5th in apparel. - Brandirectory.com

● 21st in Forbes’ World’s most valuable brands.

● Forbes #1 Most Valuable Sports Brand in 2014

- Brand value in 2014: 19 Billion

- Nike commands 62% of the U.S. athletic footwear market, including the Jordan brand, and its market share rose 100 basis points in August

Porter’s 5 Forces:Competitive Rivalry Within The Industry

(Medium to High)• Competition is intense

• Innovation is key

• Nike has a strong brand image

Porter’s 5 Forces:Bargaining Power Of Suppliers

(Low to Medium)• Suppliers are outside of America

• High switching costs

• Nike has bargaining power

Porter’s 5 Forces:Bargaining Power Of Customers

(Low to Medium)• Wholesale (80.6%) and direct-to-consumer channels (18.9%)

• End user is forced to pay the price that Nike sets

Porter’s 5 Forces:Threat Of New Entrants

(Low to Medium)

• High barriers to entry – starting capital

• Internet is becoming prominent

Porter’s 5 Forces:Threat Of Substitute Products

(Low to Medium)

• Worldwide demand expected to grow

• Threat from the rise of counterfeit products

Strengths● Competitive● Sponsors the most professional athletes● Market share● Strong cash flow● NikeID● Direct to consumer, Nike Stores, Nike Town● Nike outlet stores● Innovation’s such as the Flyknit fabric, Free, Air Max● Market variety

○ Nike Snowboarding, Nike Surf, Nike Optics, Nike Fuelband● League contract with the NFL

Weaknesses● Large Competitors● The price of their products exceeds the value● High advertising costs: $2.7 billion in 2013● Largely reliant on footwear products● History unethical business practices

○ Time laws, Wages, Child labor, Poor working conditions● Endorsement costs● Not the leading brand in all sports: Hockey, Baseball, Soccer, Rugby,

Crossfit, Volleyball, Cricket

Opportunities● Favorable industry trends(running is growing, people are becoming more

active)● Expansion of outlet, or “factory store” to create profit off unused product● Expansion to cover sports in which nike is not dominant

○ Hockey, Baseball, Soccer, Rugby, Crossfit, Volleyball, Cricket● Takeover the NBA contract, which expires with Adidas after this season● Reducing the unethical or questionable business practices● Continuing to develop as a fashion brand, not just an athletic brand● Developing more of an international brand

○ FIFA World Cup, Olympics

Threats● Developing companies

○ Under Armor, Skechers, ● China’s moderate economic slowdown● Maintaining the eco-friendly reputation● Consumers price sensitivity● Further unethical or questionable business practices● Economic threats, recession

Value Disciplines -Nike Product Leadership is characterized by its products - that are best in the market and highly valued by customers.

- Nike provides encouragement innovation - a culture that fosters experimentation and service improvement. -Also throughout the years they have created risk oriented management style that allows the enterprise to take risks.Example: They have developed adequate tools for dealing with the problems of complexity and uncertainty.-Moreover, Nike is also capable of delivering products on time and providing exceptional service.

Sustainable Business Development -Nike has maintained product leadership globally. Their commitment to sustainable business development is the main focus.

-The leaders in the company recognize the interconnection between the sustainability, brand enhancement, capital efficiency and profitability. These are the four pillars of Nike growth strategy.

-Nike appeals to those who look for the latest and best products.

-Because of these qualities they have been able to maintain their dominance in Product Leadership.

Triple Bottom LineWhat makes up the triple bottom line?

It captures the social, economic and environment, the people, planet and profit.

Historical, Nike was to known to be the leading corporations committing human rights violations in their factories. Therefore, Nike needed to make it clear to consumers they were taking action and developing a plan to become more socially responsible by improving conditions in their factories.

Today, Nike has been working hard to provide its workers with rightful and empowering opportunities. Nike’s vision of sustainability remains the same: “To bring people, planet and profits into balance”

People In becoming a more responsible company, Nike is currently trying to follow the “Triple Bottom Line" , the

idea that the impact of a company on people and the planet is just as important, if not more important,

than profit.

Nike has provided a code of conduct on labor standards and working conditions in their contract factories.

Names and addresses of more than 700 contract factories worldwide producing Nike-branded products are

listed on the company’s website.

Nike made an increasingly aggressive effort to establish a strong commitment toward social responsibility

through its business practices. With the introduction of its new line of footwear, “Considered,” Nike has

combined social responsibility with a commitment to sustainability without compromising the quality of

the product.

Planet

The footwear line “Considered” was Developed at Nike’s headquarters

Nike reduced the energy used for transportation and lessened climate change impacts

The manufacturing process minimizes solvent use by more than 80% in comparison with Nike’s typical products. The organic solvents have been switched with water-based chemicals that are not harmful.

Leather comes from a tannery that recycles wastewater to guarantee that toxins are kept out of the environment, and the leather is colored using vegetable-based dyes.

Profit

Nike’s yearly profit $13.86 billion

Future Strategic DirectionNike-“To become the leading athletic brand in the world”

Our Recommendations:Improve the working environments to change the production stigmaDevelop products of quality rather than just a quality brand nameExpand the brand recognition to unchartered marketsContinue to expand the sustainability strategyTake over the NBA contract after this season

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