Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
2003
Dustin Nadeau, Donatas Sumyla,
David Deprey and Jaime
Rodriguez
Bus 411, May 2006
Case-Study Overview
Internal: Analysis
History, Nike overview, Key Facts, SWOT Matrix
Our Brands and Stock Information SPACE
Nike Actual & Proposed Vision
and Mission BCG
Economic Performance IE matrix
Evolution of Financial Ratios Grand Strategy Matrix
Strengths and weaknesses QSPM
Analysis: IFE Possible strategies: Matrix
External: Analysis
Industry overview and comparison Decisions
of financial ratios
Why our decision?
Manufacturing
Strategic implementation
Opportunities and threats
Analysis: EFE
Actions
Competitors Evaluation Procedure
Market Share Current Update
Analysis: CPM
History
1962: Phillip Knight, a Stanford University business graduate and
former member of the track team, arranges to import athletic shoes
from Japan and sell them in the U.S.. Knight created Blue Ribbon
Sports as a cover name for his small-scale shoe-selling operations
1964: William Bowerman becomes a partner by matching Knight's
investment of $500.
1965: Hires a full time employee, and annual sales reach $2,000.
1966: Blue Ribbon Sports, also known as BRS, rents its first retail
space; employees can now stop selling shoes from their cars.
1969: It now has several stores and 20 employees; sales are close to
$300,000.
1971: Nike, capitalizing on the Greek goddess of victory. The first Nike
product sold with the new symbol is a soccer shoe.
1970 1975: Steve Prefontaine was turned to the University of
Oregon by Bill Bowerman and wore Nike products.
History
1976: The popularity of jogging increases revenue to $14 million.
1978: The company changes its name to Nike.
1980: Nike goes public, offering 2 million shares of stock.
1990: Nike files suit against competitors for copying the patented
designs of its shoes, and also engaged in a dispute with the U.S.
Customs Service over import duties on its Air Jordan basketball
shoes.
1997: Feb., Stocks reaches a high of $76 per share.
1998: Sept., Stocks tumbles to $31 per share.
2000: The National Football League declines to renew its exclusive
apparel licensing arrangement with Nike.
2001: Nike opens its first Nike Goddess store, a unit targeting women,
in Newport Beach, CA.
2003: Nike purchases Converse Inc. for $ 305 million.
Origin of the Name and the
Swoosh
Nike is the Ancient Greek goddess of victory
It is one of the most recognized symbols in the
world The Swoosh. Simple. Fluid. Fast.
active females
Growing international presence
Superior research and development Poor employment practices at
department their international manufacturing
Strong financial returns sites giving a bad reputation
Strong sense of culture in the working
environment Heavy dependency on footwear
Great celebrity spokespersons sales
Automatic replenishment system Issues with Footlocker
Successful experience being competitive
Nike doesnt own any factories
Successful marketing campaigns
IFE Matrix
Industry Overview
Athletic footwear manufactures captured nearly one-third of the total
footwear market in the early 1970s.
Over a span of more than 25 years, American consumers spent $300 billion
on 7.5 billion pairs of athletic shoes.
Reebok international Ltd. and Adidas became $ 3.5 Billion companies, while
Nike Inc. became the first ever $ 9.5 Billion company.
By 1996 the number of establishments had dropped to about 52, with 12
factories closing since 1995.
China's imports increase by 6 percent to 1.26 billion pairs in 2003 .
Brazil's share increased 2.3 percent to 83.5 million pairs in 2003.
Vietnam's share jumped 91.9 percent to 23.5 million pairs in 2003.
The US markets continue to be dominated by imports from countries with
low-cost labor.
From 1997 to 2001, the value of industry shipments declined from $ 219.6
million to $106.5 million.
U.S. shoe manufacturing plants declined by 775 between 1967 and 2001,
the number of new plants opening dwindled to nearly zero.
Key Ratios: Overall Comparison
(2006)
Key Ratios: Overall Comparison
(2006)
Key Ratios: Overall Comparison
(2006)
Manufacturing: Nationality of
Contract Suppliers
External Opportunities and
Threats
OPPORTUNITIES: THREATS:
Customer use of companys Competitors which copy company's
products change from athletic business model (high value branded
purpose to a fashion item product manufactured at a low cost)
Development of international trade Reebok's strong presence with 204
(GAAT and NAFTA) factory direct stores
Generation Y children (born between Adidas-Salomon AG, top European
1979 and 1994) will reach 60 million competitor
General demand for The impact of foreign currency
clothing/footwear for leisure activities fluctuation and interest rates, and
continues to increase political instability
Growing e-commerces positive Labor and political unrest in the
effect since one of companys suppliers countries
competitive advantages is Internet Cost orientated customers vs
sales companys higher-end market.
Women demand for athletic footwear
and clothing is increasing significantly
EFE Matrix
Athletic Shoe Market Share
(2000)
Competitive Profile Matrix (CPM)
SWOT Analysis
SPACE Matrix
* Y axis: - Financial Strength: +4
- Environmental Stability: -1 => Y coordinate: +3 STRATEGY: AGRESSIVE
* X axis: - Competitive Advantage: -2 => X coordinate: +3
- Industry Strength: +5
Business Structure
Operating Segments: Operating Regions:
Footwear US
Apparel Europe, Middle
Equipment East and Africa
(EMEA)
Asia Pacific
Americas
BCG Matrix
Question marks
Stars
Cash-Cow Dogs
IE Matrix
The Grand Strategy Matrix
Potential Strategies:
- Market Development
- Market Penetration
- Product Development
- Backward Integration
- Forward Integration
- Concentric
Diversification
Matrix Analysis
QSPM
Decisions
Alternative:
Keep expanding into current and future foreign markets by being
aggressive and the worldwide leader of the footwear industry
Accelerate funding for numerous marketing campaigns in order to get to
specific markets or customer groups
Focus on improving working conditions and human rights at
international manufacturer centers and at the same time increasing their
productivity
Implement product diversification with companys newest technologies
so resulting increased earnings could be reinvested into R&D plans
Why this strategy?
U.S. Women: Prefer fashion, not footwear, they
prefer clothing, we must create a shopping style
based in athletic shopping.
U.S. Kids: E-commerce, influenced by
innovation and design, not only comfort or sports
We need to consolidate US sales compared to
international sales and international competitors
Difficult to expand towards other sports or
population segments
Implementation
Actions:
Women:
Open 25 specific stores specialized only for women
Increase R&D expenses by 7% in women products
Increase Marketing expenses by 10%, designing a specific
campaign for women using female endorsements
Create a new logo for women market which would be associated
with fashion trends and introduce new products
Kids:
Increase R&D expenses by 7% in kids products
Increase Marketing expenses by 10%, designing a specific
campaign for kids
Introduce more soccer and basketball products targeting potential
youth market
Research in international market to find out what are the new
trends related with women and kids products (Long-term)
Showing Cost: EPS-EBIT Analysis
Evaluations
Nike annual financial reports
Sales and profits reports (on-line and off-line) based
on Women stores and Kids products
Frequent management meetings between VP
Global Brand Management (US), VP Global
Footwear, VP Global Apparel, and VP Subsidiaries
and New Business Development
Evaluation reports
Update: 2004-2006
2004: Nike introduces Swift technology.
Nike Swift increases track times by up to 1.13%.
Football (soccer) wear becomes #1 in Europe.
Nike SHOX footwear introduced in other footwear types and continues to boom.