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INTRODUCTION
Type: Public (NYSE: NKE) in NASDAQ market Founded : January 25, 1962 as Blue Ribbon Sports 1978 as Nike, Inc. Founders :WilliamJ. "Bill" Bowerman Philip H. Knight NIKE Headquarters: Washington County, Oregon, United States (Near Beaver ton, Oregon) Area served: Global Key people :Philip H. Knight (Chairman) Mark Parker (CEO &President)
INTRODUCTION
Employees: 32800 (2009), 35000(2010) , Subsidiaries: Cole Haan,Hurley International, Converse Inc. and Umbro. Industry :Sportswear, Sports Equipment, Athletic shoes ,Apparel ,Sports equipment Accessories Website: www.nike.com
1962: Phillip Knight, Stanford University, Blue Ribbon Sports 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 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. 2008 :Nike acquired sports appar el supplier Umbro, 2009: Air Jordan Shoe 2010: Nike Future Sole Design Competition
FINANCIAL ANALYSIS
ACCOUNTING POLICIES
Management Estimates The preparation of financial statements in conformity with generally accepted accounting principles Recognition of Revenues Wholesale revenues are recognized when title passes and the risks and rewards of ownership have passed to the customer, based on the terms of sale. Shipping and Handling Costs Shipping and handling costs are expensed as incurred and included in cost of sales. Advertising and Promotion Advertising production costs are expensed the first time the advertisement is run. Media (TV and print) placement costs are expensed in the month the advertising appears.
FINANCIAL ANALYSIS
Cash and Equivalents Cash and equivalents represent cash and shortterm, highly liquid investments with maturities of three months or less at date of purchase.
Inventory Valuation Inventories are stated at lower of cost or market and valued on a firstin, firstout (FIFO) or moving average cost basis. Property, Plant and Equipment and Depreciation Property, plant and equipment are recorded at cost. Depreciation for financial reporting purposes is determined on a straightline basis.
FINANCIAL STATEMENTS
16,000.00 14,000.00 12,000.00 10,000.00 8,000.00 6,000.00 4,000.00 2,000.00 0.00 NET INCOME 2008 2009 2010
TOTAL ASSETS
TOTAL LIABILITIES
TOTAL EQUITY
FINANCIAL STATEMENTS
STATEMENT OF CASH FLOW
3,500.00
3,000.00 2,500.00
2,000.00 Axis Title 1,500.00 1,000.00 500.00 0.00 -500.00 -1,000.00 -1,500.00 2008 2009 2010 cash from operating 1,936.30 1,736.10 3,164.20 cash from investing -489.8 -798.1 -1,267.50 cash from financing -1,226.10 -733.9 -1,061.20
FINANCIAL ANALYSIS
FINANCIAL ANALYSIS
FINANCIAL ANALYSIS
FINANCIAL ANALYSIS
FINANCIAL ANALYSIS
STOCK HISTORY
RATIO ANALYSIS
INDUSTRY ANALYSIS
Sportswear, and sports accessories & footwear industries Since the 2003 athletic footwear industry has begun to enter the high-cost, highgrowth "double high" development mode. In 2010, the United States athletic apparel market become the worlds largest Sportswear market.
Competition
ADIDAS AG: 2009 revenues - $13.8
billion. It competes in the overall sporting goods market.
Competition
PESTEL ANALYSIS
POLITICAL
Political unrest in the production countries
ECONOMIC
Barriers of entry to the EU economic recession The labor costs and material prices are going up
Social
Increase in the female share of the market demand for fitness products
PESTEL ANALYSIS
Technological
Design Ability Speed of change of product Specialist employees
Environmental
Legal
child labor issue Unsafe working conditions Laws protecting copying products
Re use a shoe
Climate impact
Sustainability philosophy
PESTEL ANALYSIS
Geography
Production in Asia, Latin America and Africa
International
More demand on products Support athletic women Bigger share of the market globally
Porters 5 forces
Customers more affected by price There has been and increase in women purchasing the shoes The buyers for this industry are retailers and end users.
Porters 5 forces
Substitutes (HIGH)
They are an attractive alternative product or service,
which customers can easily shift to if there are low switching costs The availability of substitutes invites customers to make price, quality and performance comparisons
Suppliers (LOW)
The suppliers do not have the power to bargain the
price of their product, since there are numerous suppliers. Using production facilities in the Far East has give Nike economies of scale.
Porters 5 forces
Competitive Rivalry(HIGH)
Reebok, offering more choice of shoe Acquisition between Adidas and Rebook
COMPANY STRUCTURE
Philip H. Knight (Chairman of the Board of Directors( Mark G. Parker (President and Chief Executive Officer(
COMPANY STRUCTURE
Nikes mission statement is: Nike aims to lead in corporate citizenship through proactive programs that reflect caring for the world family of Nike, our teammates, our consumers, and those who provide services to Nike Its vision statement is: To bring inspiration and innovation to every athlete in the world (If you have a body, you are an athlete)
PRODUCTS
Baseball equipments Running shoe
AIR MAX
T-shirts ,hoodies
PRODUCTS
Outfits Golf equipments
Footballs
Weaknesses
reported to have applied child labor in Pakistan Accusations of poor conditions in the work place. History of violations of over time laws Searching for cheap labor income of the business is still heavily dependent upon its share of the footwear
Threats
currency value fluctuations that can lead to losses Competition is strong among athletic footwear Managing the financial conditions in the economy Maintaining the reputation of being eco-friendly.
COMPETITIVE ADVANTAGE
Technology in Products Nike technology allows consumers to connect their iPod devices to sensors inside the shoes to record time, distance, pace, and calories burned. Manufacturing Skills Due to cheap labor in foreign countries, Nike outsources virtually all production to other areas of the world.
COMPETITIVE ADVANTAGE
Strength of Patents One of Nikes most revolutionary technologies comes through its footwear cushioning. Competitors have tried to match rival Nikes cushioning systems, but none have matched their success Economies of Scale Nike is the single largest producer of athletic footwear and apparel, allowing them large cost advantages over competition.
Nike challenges Tightening competition growth of Adidas, New Balance, Marketing expenditures are growing steadily. Losing market share in China Nikes premium and high quality brand image doesnt sync with the expectations of the customer Nike is heavily dependent on information technology systems across its supply chain
Nike success Nike shoes and other accessories have also become the favorite fashion products for teenagers. Nike is known around the world for being one of the iconic brands The Nike Air Max 2010 has been a great success for Nike The Global 100 Most Sustainable Corporations in the World one of the Worlds Most Ethical Companies In 2009 NIKE, Inc. scored the highest in nonprofit organization Climate Counts annual rankings.
R&D
Nike has an underground research lab full of geniuses toiling to create the newest and most advanced designs and technology in the sneaker business Research is primarily divided into three parts: Biomechanics How the body moves. Physiology How the body works, especially under stress. Sensory/Perception The evaluation of how a product works, feels, and wears; how a person feels when wearing the shoes.
R&D
The research and development (R&D) centre's role is to identify the physiological needs of athletes
Nike spends a lot out of its revenue into R & D of new products and designs to constantly stay ahead of the competition.
NIKE STRATEGIES
Segmentation Strategy:
High, medium and low income levels that can be clubbed with here lifestyles of high, medium and low end customers.
Target Market:
The company has targeted the market of highend, high income level between the age of 16-55
NIKE STRATEGIES
Marketing Strategy:
Nike focuses all of their attention on the Athlete, but delivers much more than shoes; they deliver all the surrounding products that the Athlete needs for experience. It is part and parcel of what makes Nike such a great consumerfocused brand.
Organizational Strategy:
With over 35,000 employees worldwide, the company was organized into departments by both geographic divisions and product categories, which created overlapping management responsibilities and a fluid leadership structure
NIKE STRATEGIES
Advertising strategy: The company focuses its marketing on celebrity endorsement, i.e. athletes in basketball, golf, soccer, and tennis. Lately, Nike has also began to sponsor big sporting events so as to create huge awareness and brand following
FUTURE PLAN
Nike expects to Increase its future orders for delivery. Nike will continue to focus their resources on those investments that drive sustainable and profitable growth. The Company announced plans to grow the NIKE Brand in all six of its geographies the Company outlined plans to open approximately 250300 new NIKE-branded stores worldwide over the next five years Increasing dividends within a target calendar year payout range of 25-35% of trailing four quarter earnings per share Nike expected to have Return on Invested Capital of 25%
Our Recommendation
Improve its marketing plan including advertising. SIMPLFY ITS WEB SITE Focus on setting up a reliable Information system Nike should focus more on its labor working conditions and wages Increase its market share in the middle-east. Increase its acquisition due to increasing the threat from adidas and rebook merger.