Agenda

Introduction
Nike overview
Internal analysis
Corporate Strategy
Resource-based and
core-competencies
Innovation and
knowledge
External analysis
 About Nike
Largest seller of athletic footwear and athletic apparel in
the world.
Design, development and worldwide marketing of
footwear apparel, equipment and accessory products.
18 000 retails in the US
Product for women, men and children
Top selling product: running, basketball, cross-training
and womens shoes
Also design sportswear for tennis, soccer, baseball, The Swoosh Nike a winged goddess
football, bicycling, volleyball, wrestling, cheerleading, 19713, capable of moving at high
aquatic activities, hiking, speed, personifying victory
represents of the
wing of the
goddess.

The headquarters of Nike in 56 % of its sales abroad

Beaverton, Oregon.
 About Nike
Main competitors

Manufacturing Footwear & Apparel Products

Sports-inspired lifestyle apparel (bags, socks,
98% outside the US: China, Vietnam, Indonesia and Thailand: 98% of
sport balls, eyewear, protective equipment, ) +
total Nike brand footwear
products under other brand names in particular
Raw materials: rubber, plastic compounds, foam cushioning materials,
markets
Owns: Converse, Hurley International, LLC, Nike
Golf (13% of total revenues, $2.5 billion

Marketing and Advertising

Significant weight on marketing

Successful and influential
athletes
Adjusting the mix of existing
product offerings, developing
new products, styles and
categories
 Famous sneakers

Nike Air Force One

Nike Air Max Nike Air Jordan

Chuck Taylor All Star

Nike 6.0

Nike + iPod
Nike Flyknit Nike Roshe Run Nike SB
 Timeline
1964: 1978: 1979 1981 1982 1984 1986 1987

Nike's Air BRS, Inc. merges The Air Force 1 Corporate Air Max shoe is
Blue Ribbon
Sports, is technology into Nike, Inc. basketball shoe revenues introduced
founded patented by officially becomes the surpass $1
Phil Knight and inventor M. becoming Nike, first using the billion for
Bill Bowerman Frank Rudy Inc. Air technology. the first time.
in Portland,
Oregon

1988: 1989 1995 1996 1997 1998 2002 2003

Hockey stars, Phil Knight and

CSR: commits Acquisition of **
including
Sergei Fedorov Nike to International sales
and Jeremy standards for its exceed USA sales.
affiliated And until 2010,
Roenick
manufacturing
facilities

2004 2005 2006 2007 2008 2009 2010 2014

Creation of Sponsor Nike introduces shoes Nike became

Exeter Brands featuring new Flywire**** Greenpeace the first
Group and Lunarlite***** finds toxic supplier
Annual revenues Annual revenue for fiscal product in worldwide for
Patent for their product
exceed $ 12.25 year 2008 (ending May 31) football,
automatic
billion of $18.6 billion, a 14% before Adidas
shoes
increase over the previous .
fiscal year
 Nikes SWOT
Strengths
Brand recognition Weaknesses
High product quality Overseas manufacturing dependency
Effective marketing strategy Decreasing US market share
Capacity of innovation High product price compared to
Strong distribution chain Adidas
Strong R&D Currency exposure
Strong customer Medium retail presence
relationship/satisfaction

Opportunities
Expansion into emerging markets
Increased demand in product
innovation
Growing segment of women athlets
Increase in the number of sports event
like Olympic, FIFA
Develop the fashion brand image
Threats
Fierce industry competition
Revenue relies on consumers
discretionary income
Economic rescission
Fluctuation in the currency
 Biggest opportunity/threat
Biggest opportunity for Nike Biggest threat for Nike
-> Non sport customers -> Competitors - developing alternative brands to take
away Nikes market share.
Financial overview
 5 Forces Analysis: US & Developed
Markets
Large amount of buyers relative to the
number of firms on this industry
Nike needs to seek continously for high
quality to keep its clients
Competitive products all compete in
diffentiations
Many online buyers are proce sensitive &
switching costs is low for the buyer
Buyers of sports footwear have changed
in the past decade
An increase in women buying the shoes
Generation Y has a different taste &
purchasing methods
Bargaining Power of Supplier
(Low)
Abundantly available raw
materials
Cheap resources-commodity
item
Sub contracts to more than 500
small scal factories
Suppliers are dependent on sport
firms
Bargaining Power of
Buyer (High)
End user brand loyalty
Price sensitivity issues
Retail and vendor
consolidations
Growing power of retail chains
Good Infrastructure
Internal Rivalry (High)
Fierce Competition
Mostly Non-Price competition
Differentiation strategy
Loyal customers (other cies)
E-commerce
Reebok, offering more choice of shoe,
introducing endorsment by sports
personalities, sponsoring sporting
leagues etc
Adidas have recovered from the
problems that plagued them, and have a
good product mix, covering a wide range
of sports
Each company has a stron brand identity
Threat of New entrants(Low)
High Barriers to Entry
Capital Intensive
Strong & well established brand name
Economies of scale
High Marketing & R&D Costs
Industry in consolidation phase
Selling footwear online is highly
competitive: barriers to enter into this e-
commerce industry are quite low
Cheap copies from the Far East
Fashion brand
Innovation and confort
Threat of Substitutes
(Low)
Other types of shoes
Other sport apparel
Buyers prepensity to substitute is low
Consumer substitues for athletic
footwear products are low
Boots, flip-flops, sandals 10
 Porters force which has the biggest
impact: Rivalry
Facing fierce competition in product
quality/technology
Price
Marketing
Capability
Celebrity endorsement
Distribution
Manufacturing.

Industry rapidly changing, even if its at its maturity stage

Market experiencing a slowdown in sales because products have achieved acceptance by buyers
-> Difficult to sustain its competitive advantage
-> Need to develop new products with higher quality than its competitors
NIKE invests heavily in R&D to offer innovative products and services in order to stay consumers
first choice.
 Industry life cycle

Nike is in the stage at which the efficiency of dominant business model

provides the company competitive advantage over the competition

Factors
Strong Product Awareness
Barrier of New entry
Share market
Quality of product
Strategy
 NIKE corporate strategy
Focus on innovation and emphasis on
their research and development in order to be:

Profitable in the long run.

Reduce or eliminate athletes injury.
Help in athletic performance and maximize comfort.

Dermesropian, Drage, Grigaite and Lopez

(2004,p.15)
 NIKE COMPETITIVE STRATEGIES
Nike has a combination of two strategies:

Best cost provider strategy.

(by outsourcing and most of their products are manufactured
outside the United States ,and by economic of scale)

Broad differentiation strategy.

Nike emphasize on key elements such as design of products ,
High quality products, brand advertising and product development
Nike differentiates its products for athletics in three ways:
Firstly, it manufactures for three different segments of people: men, women and
children.
Secondly, differentiates it products by offering a variety of accessories and apparels
like gym bags, gloves and skates.
Thirdly, Nike has the licensees to manufacture and sell Nike brand products aside from
athletic products like school supplies, electronic media devices and timepieces.

Dermesropian, Drage, Grigaite and Lopez

(2004,p.15)
NIKE COMPETITIVE STRATEGIES
 NIKE Competitive Advantage
Technology in Products Historically had some of the most
cutting-edge products on the market. E.g. Nike + iPod
This technology allows consumers to connect their iPod devices to
sensors inside the shoes to record time, distance, pace, and calories
burned.

Manufacturing Skills:
Use of low cost contract manufacturers,
based outside USA, outsourcing to Asia).
Massive economic of scale.
Economic of scope and customization
 NIKE Competitive Advantage
Strength of patents

Nike Air
Nike Zoom
Nike Air Max
Nike Shox.

Marketing

Nike work very hard in their marketing strategies and which one of the
primary reasons behind its success, they do a large campaigns
associated with sport stars Such as, Michael Jordan and Rafael Nadal.
BCG Analysis
Air Jordan: shoes and athletic clothing
designed and produced only for Michael Jordan,
and released for public consumption in 2001.
Converse: Nike subsidiary primarily consist of
life style footwear and sport wear.
Cole Haan: Nike subsidiary markets
and distributes luxury items such as shoes,
handbags and coats.
Athletic Electronics:
Stopwatches, Headsets , etc

ADIDAS BCG
 NIKE Business units and synergies
Knowledge sharing and
synergies between Nike
business units among
the value chain function
to obtain economies of
scope that increase
profitability.
Nike relies heavily on
application of IT to
support synergy among
value chain.
NIKE Business units and synergies

ELECTRONICs
CONVERSE NIKEiD

NIKE LIFE STYLE

 Value chain Analysis
IT system across supply chain
E-commerce infrastructure
Strong financial position & CSR
Firm Infrastructure Emprowement of top management
Support Activities
Great financial discipline with low debt
Strong brand, product, marketplace solution, delivery and
support
Effective compliance process through strategic knowledge and
verification

Strong management team Great management and efficient corporate strategy globally
Global learning & staff training Blend of new hires and promotion
HR Management Excellent employee relationship High ethical values among employees
Minimum hierarchy concept Well monitored labor audit add brand audits
Research and product dvp: Great product technology like Motion Analysis, metabolic
Technology leading edge in technology dvpt rate, blood work
Development Product improvment Air-sole technology expert
Ability to change
Long-term and trusting relationship with suppliers
Localised and bulk procurement
Procurement Just in time strategy as finished goods are shipped as soon as they are ready for sale
Buffer and safety stock in hand

Primary Activities
Inbound Outbound Marketing&
Operations Service
logisitcs logistics Sales
Low production costs Outsourcing manufacturing Strong control over global High brand recognition and Customer care
Locally purchase most raw and assembly distribution channel reputation Pre-sales & after
materials in bulk Design (R&D) Just in time delivery Scale advantage sales services
Specialised materials Technological innovation Good supplier relation Price leadership and value Use of IT to improve
importantion Effective supply chain Ability of forward based pricing strategy customer service
Local logistics providers management integration First mover advantage in e- (touch screen)
Inventory control and reduced Heavy investment in R&D Use of strong servers to commerce in the industry Increased customer
inventory risk Quality control support and manage Agressive marketing satisfaction
Focus on product design Low and no packing options supply chain projects Celebrety endorsement Customization
marketing and product Nike personals to assist High allocation on marketing
technology factory management budget
Nike IHM specialized in rubber, No heavy metal, glue or Strong customer base
foam and raw material solvent used Diversity of products offered
online
 Resource-based view
NIKE Business units and synergies

and core competencies

ELECTRONICs
CONVERSE COLE HAAN

NIKE LIFE STYLE

 NIKE Resource Based-View
Tangible resources
Physical assets- land, buildings (858 Stores worldwide, research
centers, HQ, distribution facilities), machinery, equipment;

Financial assets- strong financial position (constant growth); ROI,

ROA is higher than industrys average;

Technological resources- patents (Nike Air, Nike Zoom, Nike Air

Max, Nike Shox), trademarks (Swoosh), contracts with sport legends
to promote their brand;

Organizational resources- big and loyal customer base, effective

distribution network and control system over the Supply Chain
(teaming with Hewlett-Packard to supply hardware, software and
consulting services to host the worldwide Nike Supply Chain (NSC)
project)
 NIKE Resource based-view
Intangible resources

Human resources- 56.500 employees worldwide, powerful

research team (specialists such as bio mechanics, industrial
designers, and exercise physiologists).

Innovation resources- knowledge transfer, integrated research

laboratories, dynamic technological innovation design,
exclusive worldwide patents, an online website ideal for
customization (customer-designer).

Reputation resources- brand name, identifiable distinctive

trademarks (Just Do It), logos (Swoosh logo).
 NIKE Resource based-view
Organizational capabilities

A streamlined management structure => cost

effectiveness
Human resource management strategy focused on
training (training programs with contract manufacturers)
Good inventory management
Distinctive customer service (NikeSupport, best e-
commerce experience)
Product design capabilities (perfect combination of
performance, comfort and fashion)
 NIKE Core Competencies
CREATING BRAND THROUGH PAST EXPERIENCE

Strong MARKETING strategy

distinctive competence, especially in consumer brand awareness and brand
power
involvement of world top-class athletes and sportsmen in advertising campaigns -
Edorsment effect
centring on the brand image: a distinctive logo (the Swoosh ) and the advertising
slogan "Just Do It => Image differentiation

Extensive R&D capabilities

innovative product design (focus on technology & innovation)
main focus is on new product development (updating shoe models every six
months, in order to maintain a high speed to the market).
Comfort and performance - Nike has pioneered four shoe-cushioning systems
that reduce shock, distribute pressure, protect from impact and offer comfort.

provide value and benefits to Nikes consumers, not easy to imitate, can
be leveraged widely to most of their products and markets
 NIKE Core Competencies
Extensive SCM (supply-chain management) capabilities

strongly connected with the previous core competences all

Nike competitors have outsourced in Asia

BUT, Nike outperforms its rivals with its unique business

model in which its brand name dominates, suggesting high
quality and stylish sports footwear

Nike makes use of suppliers anywhere in the world (global

sourcing). They have 715 contract factories and 984.136
contract workers in 44 countries. Most of the facilities are
located in China, Thailand, Indonesia, Malaysia, Vietnam,
Turkey, Sri Lanka, Cambodia, Taiwan, El Salvador, Mexico,
India and Israel.
Source: http://manufacturingmap.nikeinc.com/
 Core Competencies
NIKE vs Adidas
Product innovation => strong brand
based on high quality, innovative
products
Marketing & Distribution
Customer focus
Supply chain

Core skills setting Nike and Adidas apart from the competition:
- marketing, distribution and technological expertise
- outsourcing capacity => gaining efficiencies like shifting of risk, reduced capital
requirements, lower wages, ability to focus on valuable core competences

Main difference: Nike consistent brand image; aggressive but

integrated marketing model (including social media Run For),
different markets (identifying markets with more growth potential),
integration of sustainability in companys operations
"Nike is talking to the right people, instead of the most people
Joseph Jaffe, president of Jaffe, marketing consulting firm
 Resources + Competences =
Sustainable Competitive Advantage
Imitability innovative product quality, inventory
management&turnover
Value brand recognition experience & know-how, use of resources
& capability to exploit new market opportunities, effective in-store
operations
Rarity brand recognition, product quality
Non substitutable - product features and performance (hard to
duplicate, neither matched in short-term)

Competitive superiority Nike is positioned ahead its competitors

in many ranks
Resources and activities with great potential for competitive
advantage are internalized, while lower value-adding activities
are outsourced => focus more extensively on market research and
R&D
"They have so many resources and such clarity of vision
"They've had a laser focus
Matt Powell, footwear analyst at SportsOneSource
 Criteria for Sustainable Competitive Advantage
Is a resource or capability
Valuable? Rare? Difficult Without Implications for
to Substitutes Competitiveness?
Imitate? ?

1. Outsourcing Yes No No No Competitive parity

and cost
efficiency
2. Reputation Yes Yes No Yes Sustainable CA
and brand
recognition
3. Human Yes No Yes No Temporary CA
resources
4. Innovative Yes Yes Yes Yes Sustainable CA
Product&Desig
n
5. Marketing Yes No No Yes Temporary CA
6. Effective in- Yes No Yes No Temporary CA
store operations
 Criteria for Sustainable Competitive Advantage
Is a resource or capability
Knowledge and Innovation
Valuable? Rare? Difficult
to
Without
Substitutes
Implications for
Competitiveness?
Imitate? ?

1. Outsourcing Yes No No No Competitive parity

and cost
efficiency
2. Reputation Yes Yes No Yes Sustainable CA
and brand
recognition
3. Human Yes No Yes No Temporary CA
resources
4. Innovative Yes Yes Yes Yes Sustainable CA
Product&Desig
n
5. Marketing Yes No No Yes Temporary CA
6. Effective in- Yes No Yes No Temporary CA
store operations
 Concept of design Innovation
The main 5 concepts of Design innovation:
- Learning by doing
- Keeping the balance
- Design as direction
- Abandon the past and embrace the future
(ex. Flyknit technology)
- Staying focused on beauty and athletic
products
The Nike Sport Research Lab (NSRL)
- Established in Exeter (1980)
- athletes, scientists, engineers and designers
converge to develop the key performance
- focus is on biomechanics, physiology, perception
and athletic performance
- 3D motion capture and environmental chambers to
collect the data
- analysis and insights that provide the foundation
for innovative Nike product
 Examples of Innovative products 1/2
The FuelBand, a $150 electronic bracelet
measures movements throughout
the day, whether you play tennis, jog, or just
walk to work. The device won raves for its
elegant design and a clean interface that lets
users track activity with simple color cues
(red for inactive; green if you've achieved your daily
goal).

The Flyknit Racer

featherlight shoes that feel more like a sock atop a
sole.
Created from knit threading rather than multiple
layers of fabric, it required a complete rethink of Nike's
manufacturing process.
Examples of Innovative products 1/2
Nike with Apple: The Nike+ package: pair of specially
designed Nike+ running, an Ipod nano, and a Nike + iPod
sport kit.
Sensor: iPod tells the distance, pace, and calories burned via
voice feedback that adjusts music volume as it plays

Design your own shoes

Pre-defined designs. Customer can choose their own colors
and mascots to create shoes. Screen technology in store

Nike self lacing automatic shoes: Coming up with the new

automatic self lacing sneakers. It provides a set of straps
thant can be automatically opened and closed to switch
between a loosened and tightened position.
Patent in 2009
 Process Innovation to maintain sustainability
Penalties and Incentives: The Manufacturing
Index
-The MI provides a consistent framework for
measuring performance across Nikes
supply chain
- The index is used to monitor, measure,
and reward suppliers on quality, on-time
delivery, cost, and sustainability performance.
- Each of the four categories are awarded a
score between 0 and 100, putting them in a
gold, silver, bronze, yellow or red category.
- Aim is to change supplier behavior for the
better.
 Innovation in Adidas
Sustainability:
- DryDye technology is a polyester fabric dyeing process that uses no
water, 50% fewer chemicals and 50% less energy than the
traditional fabric dyeing process
- In apparel, Adidas produced a full running line featuring t-shirts,
tanks, tights, skirts and shorts with 95% pattern efficiency (only 5%
waste).
Usage of the powerful communication tool in its supply chain, to be
closer to factory workers and to really hear from them directly.
Example: Pilot project: As part of the project, workers mobile
numbers are anonymously gathered so factory management can
send out group texts reminding workers of safety issues
or letting them know about changes in policy.
 Strategic Knowledge
Management
Nike spends enormous sums on continuous
strategic knowledge development and innovation
The knowledge areas: buying behavior, product design and
development, marketing, supply chain management.
Each of these knowledge areas is a highly complex
combination of tacit and explicit knowledge relating to
customers, design, marketing and supply chain management
Nikes leaders encourage its employees to think creatively
and there is a strong but informal team-based work ethic
Design teams work in informal and picturesque surroundings
to develop new concepts and products
Laboratories and test tracks to test out new products are also
located onsite.
Global Organizational structure

Portland, Oregon (USA)

In charge of U.S, the Americas and
Asia Pacific
Regional headquarters is located in the
Netherlands and is responsible for
27 countries in the EMEA region
Subsidiaries enjoy some autonomy
within clearly set boundaries

*Nike was able to communicate and control the Corporate Strategic Plan throughout
the Global organization
Organizational Structure in
Regional headquarters
EXTERNAL ANALYSIS

POLITICAL
Positive US government policies that foster
business growth
Political unrest in outsources manufacturers,
nations such as Vietnam, Indonesia, and
Thailand
Potential risk of terrorism
Favorable foreign nations relationship
Risk of diverse tariffs and non-tariffs, law and
regulations between countries
Adverse Trade Protection in global business
affects sales and service
Opportunities
Macroeconomic stability, low interest rates,
stable currency conditions and the international
competitiveness of the tax system
TECHNOLOGICAL
Lean manufacturing because of technological
advances
Up-to-date technology adoption
Speed of technology transfer, and speed of
change of product
High rate of technological obsolescence
Internet and information technology systems
development
Innovative and technically superior products
Opportunities: Use of IT in marketing
information system
Scientific research in product quality &
innovation
PESTEL
ECONOMICAL
Global Economic downturn affects consumer
purchases
Reduced consumer confidence
Risk of currency exchange rates, and interest rates
Economic benefits from low cost outsources
manufactures
Increasing material prices and labor costs in the
production countries because of gradual increase
of living standards
International expansion, building upon its strong
global brand recognition
Strong economic conditions in other countries
ECOLOGICAL
Growing popularity of green products
Challenges of tackling climate change
Waste disposal, recycle and reuse policies
adoption
Sustainability philosophy by using natural
materials
Reduce energy consumption
SOCIAL
Consumers are becoming brand conscious
Change in lifestyle health awareness,
sport participation on the rise: higher
demand for sport products
Consumer conscious in CSR
Change in buying habits in youth
Increasing market share of female
customers
Diversity of consumer preferences and
demands
LEGAL
Risk of legal violation in terms of human
rights, environmental issues
Risk of contract manufacturers copying of
product (intellectual property rights)
Corporate social responsibility beyond legal
obligation
Trade agreements to safeguard for
business operation
 References
http://www.nikebiz.com
http://www.nikeresponsibility.com
http://www.dailyfinance.com/quote/nyse/nike/nke/financial-ratios
http://www.businessinsider.com/adidas-shows-soccer-is-overrated-2014-8
https://econsultancy.com/blog/65598-nike-vs-adidas-which-provides-the-best-ecommerce-experience
http://repucom.net/media/nike-vs-adidas
http://www.statista.com/statistics/250287/total-number-of-nike-retail-stores-worldwide/
http://www.statista.com/statistics/243199/number-of-employees-of-nike-worldwide/
http://es.scribd.com/doc/29013150/Nike-VS-Adidas
http://www.nikeresponsibility.com/report/uploads/files/Nike_FY05_06_CR_Report_China.pdf
http://www.nike.com/
http://investors.nikeinc.com/files/doc_financials/AnnualReports/2014/index.html
http://lostlagoon.info//7PCS%20Making%20and%20Doing%20Know
http://epub.wu.ac.at/3791/1/Nike__WU-CaseSeries.pdf
http://www.nikeresponsibility.com/how/products/energy_co2
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Dermesropian, Drage, Grigaite and Lopez (2004,p.15)