Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
– 2009
Case Notes Prepared by: Dr. Mernoush Banton
Case Author: Randy Harris
A. Case Abstract
As the largest seller of athletic footwear and athletic apparel in the world (2, 3), we
create products for consumers and athletes (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
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. U.S. footwear imports totaled 2.36 billion pairs in 2007, or roughly 7.9 pairs
per capita which 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 able to achieve considerably better pricing, as well as “deepening” the
emotional bond consumers have with the brand
1. After the age of 40, the typical consumer is not willing to pay more than
US$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 to weak economy
Opportunities
1. Younger consumers are less price sensitive and 0.08 3 0.24
generally spend more on casual and athletic
footwear than older consumers
2. Most footwear companies have outsourced their 0.07 4 0.28
production abroad in order to maintain lower cost
and R&D expenses
3. U.S. footwear imports totaled 2.36 billion pairs in 0.07 3 0.21
2007, or roughly 7.9 pairs per capita which was
up 0.4 percent from 2006
4. North American Free Trade Agreement (NAFTA) 0.06 4 0.24
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 0.07 4 0.28
pursue a direct to consumer sales channel
Threats
1. After the age of 40, the typical consumer is not 0.07 3 0.21
willing to pay more than US$35 to $40 per pair
for athletic footwear
2. Competition is strong among athletic footwear 0.08 2 0.16
and apparel from off brand companies
3. Fluctuation of foreign currency impacts the cost 0.06 2 0.12
of importing goods to the U.S.
4. Increase in unemployment has impacted the 0.09 3 0.27
household income which may result in spending
less on brand name
5. Barrier to entry is low 0.06 2 0.12
Positioning Map
Nike
Adidas
Puma
Customer Loyalty
(Low)
E. Internal Audit
Strengths
1. Nike is the dominant competitor for athletic footwear priced above US$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 the United States are
Jordan, while 86.5 percent of all basketball shoes sold over US$100 are
Jordan
5. Nike’s 2009 revenues increased 2.9 percent to US$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 website, 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
Net Profit
Avg P/E Price/ Sales Price/ Book
Margin (%)
05/09 17.80 1.46 3.19 7.8
05/08 16.40 1.85 4.29 10.1
05/07 16.10 1.77 4.05 9.1
05/06 16.00 1.42 3.27 9.3
05/05 18.00 1.62 3.80 8.8
05/04 18.40 1.57 3.91 7.7
05/03 17.20 1.40 3.70 6.9
05/02 21.30 1.48 3.73 6.8
05/01 20.10 1.18 3.16 6.2
05/00 23.00 1.33 3.69 6.4
Strengths
1. Nike is the dominant competitor for athletic 0.08 4 0.32
footwear priced above US$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 0.02 3 0.06
collaborative matrix organization
3. The Jordan brand has a 10.8 percent share of 0.06 4 0.24
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 0.08 4 0.32
shoes sold in the United States are Jordan,
while 86.5 percent of all basketball shoes sold
over US$100 are Jordan
5. Nike's 2009 revenues increased 2.9 percent to 0.09 4 0.36
US$19.1 billion
F. SWOT Strategies
Strengths Weaknesses
1. Nike is the dominant 1. Nike’s 2009 net income
competitor for athletic decreased 21 percent
footwear priced above to US$1.48 billion
US$60 per pair, 2. Almost all of Nike’s
holding better than a footwear is
50 percent market manufactured outside
share for athletic the United States by
footwear priced $85 independent
per pair or higher contractors
2. Nike characterizes its 3. In fiscal 2008, contract
organization as a manufacturers in
collaborative matrix China, Vietnam,
organization Indonesia, and
3. The Jordan brand has a Thailand manufactured
10.8 percent share of 99 percent of Nike’s
the overall U.S. shoe footwear worldwide
market, which makes it 4. Because Nike competes
the second biggest primarily in athletic
brand in the country footwear, apparel and
and more than twice related sporting
the size of Adidas’ equipment, its sales
share are heavily
4. Three out of every four concentrated in the
pairs of basketball youth and young adult
shoes sold in the market
United States are 5. Accounts payable has
Jordan, while 86.5 increased by almost
percent of all US$1.0 billion in 2009
basketball shoes sold 6. Negative publicity and
over US$100 are boycotting of the Nike
Jordan products due to
5. Nike’s 2009 revenues outsourcing jobs
increased 2.9 percent overseas and the use
to US$19.1 billion of child labor in such
G. SPACE Matrix
FS
Conservative Aggressive
7
CS IS
-7 -6 -5 -4 -3 -2 -1 1 2 3 4 5 6 7
-1
-2
-3
-4
-5
-6
-7
Defensive Competitive
ES
Strong
Weak
Competitive
Competitive
Position
Position
Quadrant IV
Quadrant III Slow Market Growth
1. Market development
2. Market penetration
3. Product development
4. Forward integration
5. Backward integration
6. Horizontal integration
7. Related diversification
High
3.0 to 3.99
IV IV VI
VII VIII IX
Low
1.0 to 1.99
Acquire a
Increase less
advertising expensive
and brand of
promotion accessories
through and
social sportswear
networking and promote
such as them as an
Twitter and off brand of
Facebook Nike
Key Factors Weight AS TAS AS TAS
Opportunities
1. Younger consumers are less price 0.08 1 0.08 4 0.32
sensitive and generally spend more on
casual and athletic footwear than older
consumers
2. Most footwear companies have 0.07 --- --- --- ---
outsourced their production abroad in
order to maintain lower cost and R&D
expenses
3. U.S. footwear imports totaled 2.36 billion 0.07 --- --- --- ---
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 0.06 2 0.12 3 0.18
(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 0.07 --- --- --- ---
to pursue a direct to consumer sales
channel
6. Sales of apparel, accessories, and 0.08 2 0.16 4 0.32
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, 0.07 4 0.28 1 0.07
and footwear could reach 18 percent of
category sales by 2012
8. Companies that added a web-based sales 0.06 4 0.24 1 0.06
strategy are able to customize footwear
and other merchandise directly to the
customer's needs and taste, are able to
achieve considerably better pricing, as
well as "deepening" the emotional bond
consumers have with the brand
K. 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.
Analysts expect that Nike will be able to boast of its strong earnings, growing gross
margins, lean inventories and all-important futures orders. The company has
booming international business, especially its China expansion plans, as well as the
2010 World Cup, where Nike is sponsoring nine teams. And investors may find out
what management has planned for that US$7 a share in net cash on the balance
sheets. (www.CNBC.com)
Nike unveiled its supercharged Nike Elite Series football boots providing new levels of
performance. Nike’s Mercurial Vapor SuperFly II, CTR360 Maestri, Total90 Laser III
and Tiempo Legend III all feature new performance uppers to improve on-field
visibility and a reengineered outsole to deliver lightweight performance for every
style of player. Nike designers have reduced the weight of each boot so players can
perform at their best. Lightweight construction, intricate engineering, carbon-
enforced strength and high contrast colors distinguish the boots. The high contrast
colors (Metallic Mach Purple and Total Orange) are engineered together for enhanced
visibility. For a footballer this unique combination is designed to increase visual
performance enabling them to quickly spot their teammates and execute a game-
changing pass. (www.finance.yahoo.com)