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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