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Nike Case Study Analysis
By Ahmed Samir Haitham Salah Magdy Essmat Magdy Mohamed Sherif
Nike Over View
• Nike is the Ancient Greek goddess of victory “It is one of the most recognized symbols in the world – The Swoosh. Simple. Fluid. Fast.”
• Nike is the world’s largest designer, marketer, and distributor of sports-related apparel, equipment , accessories, athletic footwear and athletic apparel.
• Nike was founded in 1964 by Bill Bowerman and Phil Knight and opened its first store in Santa Monica, California, in 1966.
• The company introduced its Nike brand of shoes in 1972.
• The company officially renamed itself Nike in 1978.
• BY 1980, the company had reached a 50% market share in the U.S athletic shoe market and had become a publicly traded company.
• By 1985 new era by introduction of a Michael Jordan-endorsed basketball shoe. By end of 1988 Nike to the top of industry.
• By 1988 started to began diversify with purchase Cole Haan shoes and aquire other brands “
Nike Over View cont.
Bauer in 1995, Hurley in 2002, Converse in 2003, Starter in 2004, Umbro in 2008
Nike Categories Structure
Footwear Apparel Equipment's
- Running - Training - Basketball - Soccer - Urban wear
- Shirts - Bags - Accessories - Running Short - Baseball Caps
- Socks - Sports ball - Eyewear - Golf clubs - Baseball bats - gloves
• HQ: Beaverton, Oregon, in Washington County. • On 71 hectare, 17 buildings, and houses 600
employees • Inside U.S , Nike has 3 significant distribution and
service facilities:
- Memphis - Tennessee - Wilsonville
Nike Over View cont.
The current vision of Nike
To bring inspiration and innovation to every
athlete in the world
Seizing the future athletic with brands represent performance, quality, and fashionable sports
product.
The Proposed vision of Nike
The current Nike’s Mission
Nike’s mission is to carry on Bowerman’s legacy of innovative thinking, develop products that help athletes of every level of ability reach their full potential, and to create business opportunities that set Nike apart from the competition and provide value for their shareholders
1. Customers
2. Products or services
3. Markets
4. Technology.
5. Concern for survival, growth, and profitability
6. Philosophy
7. Self-concept
8. Concern for public image
9. Concern for employees
The Proposed Nike’s Mission
At Nike, we desire to deliver superior products to customers and athletes that are both safe and dependable (1, 2 and 6). Our well trained employees and experienced executives will ensure a competitive advantage for our markets, growth for the company, and profits for our shareholders (5). Our commitment to social responsibility and the communities in which we operate will ensure business relationships and alliances for the future and a perception of concern with our stakeholders (6, 8). We will continue to utilize innovation and technology to provide our employees with the best possible work environment while adapting to the many changes in the global market (3, 4, 7, and 9).
External Assessment Opportunities
• Should strive to penetrate the new regions that have higher rate of growth such as “Brazil, Eastern Europe, India, and China”
• New production line for protective or safety footwear.
• Pursue the government to establish Anti-dumping duties on Chinese products.
• Internet website.
• New production line for fashionable footwear to attract new consumers.
• New era to concentrate on children from 3 to 12 years old.
Threats
• Competition in athletic footwear and apparel is fierce.
• Main competitor is Adidas, Reebok, Taylor Made, and Rockport.
• Adidas contracts with Chinese basketball superstar to produce basketball shoes.
• A new competitor who's sell the footwear for leisure and fashion.
• The competitors expand their categories and countries with deepen their relationships with customers.
• Consumer shifting to fashionable footwear.
Competitive Profile Matrix (CPM)
RatingWeighted
ScoreRating
Weighted
ScoreRating
Weighted
Score
0.0 to 1.0 1 to 4 1 to 4 1 to 4
Advertising 0.1 2 0.2 3 0.3 3 0.3
Product Quality 0.08 4 0.32 3 0.24 2 0.16
Price Competitiveness 0.08 2 0.16 3 0.24 1 0.08
Management 0.06 3 0.18 3 0.18 2 0.12
Financial Position 0.08 4 0.32 3 0.24 1 0.08
Customer Loyalty 0.05 3 0.15 2 0.1 1 0.05
Global Expansion 0.05 3 0.15 3 0.15 2 0.1
Market Share 0.08 4 0.32 2 0.16 1 0.08
Technology 0.09 4 0.36 3 0.27 1 0.09
Brand Recognition 0.1 4 0.4 4 0.4 3 0.3
Portfolio Diversification 0.08 3 0.24 4 0.32 2 0.16
Product Positioning 0.09 3 0.27 3 0.27 1 0.09
Research & Development 0.06 4 0.24 3 0.18 1 0.06
Totals 1 3.31 3.05 1.67
NIKE ADIDAS PUMA
WeightsCritical Success factors
External Factor Evaluation (EFE) Matrix Weight Rate Score
1
Should strive to penetrate the new regions that have
higher rate of growth such as “Brazil, Eastern Europe,
India, and China” 0.1 4 0.4
2 New production line for protective or safety footwear. 0.1 2 0.2
3Pursue the government to establish Anti-dumping
duties on Chinese products. 0.05 1 0.05
4 Internet website. 0.05 1 0.05
5New production line for fashionable footwear to attract
new consumers. 0.1 2 0.2
6New era to concentrate on children from 3 to 12 years
old. 0.15 4 0.6
1 Competition in athletic footwear and apparel is fierce. 0.05 2 0.1
2Main competitor is Adidas, Reebok, TaylorMade, and
Rockport. 0.05 3 0.15
3Adidas contracts with Chinese basketball superstar to
produce basketball shoes. 0.1 2 0.2
4A new competitor who's sell the footwear for leisure
and fashion. 0.05 2 0.1
5The competitors expand their categories and countries
with deepen their relationships with customers.0.1 1 0.1
6 Consumer shifting to fashionable footwear. 0.1 1 0.1
1 2.25
Opportunities
Threats
Total Score
Nike’s revenues trend vs competitors
Positioning Map
High Quality
Low Price High Price
Low Quality
Nike is take a leading in producing high quality products with higher price than Adidas and Puma
Internal Assessment Growth trend in total Revenues
2007 2008 2009
U.S 6131 6414 6542
EMEA 4764 5629 5512
Asia 2295 2887 3322
Americas 966 1164 1284
0
1000
2000
3000
4000
5000
6000
7000
In M
illio
n
Total growth
4%
Internal Assessment Cont. Growth trend in Pre-Tax Income
2007 2008 2009
Americas 199 242 274
Asia 515 694 853
EMEA 1050 1281 1316
U.S 1386 1402 1337
0
500
1000
1500
2000
2500
3000
3500
4000
In m
illio
n
Total growth
4%
Internal Assessment Strengths
1. Nike is the world’s largest sports apparel producer.
2. Nike’s U.S retail stores about 338 outlets, and 336 outside U.S.
3. International branch offices in 52 countries.
4. Fiscal May 31, 2009 revenues increased 2.9% to $19.1 billion
5. The company’s website allows consumers purchase directly from Nike.
6. Customization availability 7. Strong in Marketing and R&D 8. Diverse portfolio 9. Customer loyalty 10. Strong financial position 11. Strong international presence 12. Nike doesn’t own any factories
Weakness
• Nike’s fiscal May 31, 2009 net income decreased 21% to $1.48 billion.
• Only concentrate in youth and young adult market, from 12to24 years old age.
• Lack of stores serving females.
• Heavy dependency on footwear sales.
Internal Factor Evaluation (IFE) Matrix Weight Rate Score
1Nike is the world’s largest sports apparel
producer.0.08 4 0.32
2Nike’s U.S retail stores about 338 outlets, and
336 outlets outside U.S.0.05 3 0.15
3 International branch offices in 52 countries. 0.05 4 0.2
4Fiscal May 31, 2009 revenues increased 2.9% to
$19.1 billion0.05 3 0.15
5The company’s website allows consumers
purchase directly from Nike.0.05 4 0.2
6 Customization availability 0.02 4 0.08
7 Strong in Marketing and R&D 0.08 4 0.32
8 Diverse portfolio 0.08 4 0.32
9 Customer loyalty 0.02 4 0.08
10 Strong financial position 0.05 3 0.15
11 Strong international presence 0.05 4 0.2
12 Nike doesn’t own any factories 0.05 3 0.15
1Nike’s fiscal May 31, 2009 net income decreased
21% to $1.48 billion.0.1 1 0.1
2Only concentrate in youth and young adult market,
from 12to24 years old age.0.15 1 0.15
3 Lack of stores serving females. 0.05 1 0.05
4 Heavy dependency on footwear sales. 0.07 1 0.07
1 2.69
Strenghts
Weaknesses
Total Score
SWOT Matrix SO Strategies
- With some of the most recognizable and followed athletes globally, expanding into places like India and forming alliances with different kinds of sports leagues will be a valuable strategy to expand.
- With strong international precense should used to attract a new segment like kids and women.
WO Strategies
- With the concept to increase the consumer attractiveness should pay more attention to the new era of considerable in fashionable footwear.
ST Strategies
- Should apply CRM system to sustain the numbers of consumers and go through product development and market development against its competitors in new markets
WT Strategies
- Should pay more attention to the Chinese market to and make a join venture with some suppliers could offer good quality raw material against the severe competition.
Space Matrix FS Financial Strengths 15
ROI 2
Leverage 2
Liquidity 4
Working Capital 4
Cash Flow 3
ES Environmental Stability -10
Business Risk -3
Technological Changes -2
Price range of competitors -1
Competitive pressure -2
Barriers to entry -2
CA Competitive advantage -10
Market Share -3
Product Quality -2
Customer loyality -2
control over suppliers and distributors -3
IS Industry Strength 11
Growth Potential 4
Profit Potential 3
Financial Stability 2
Easy to entery market 2
FS Average + ES Average 1
IS average + CA average 0.25
Total 1.25
Financial Strengths
Competitive
advantage
Environmental Stability
Industry
Strength +6 +5 +4 +3 +2 +1
Conservative Aggressive
Competitive Defensive
+1
+2
+3
+4
+5
+6
-2 -3 -4 -5 -1 -6
-6
-5
-4
-3
-2
-1
Nike
Market Penetration Market Development Product Development Diversification Backward, Forward,
Horizontal Integration
Matrix Analysis Alternative Strategies SWOT SPACE EFE BCG Count
Forward Integration YES YES YES YES 4
Backward Integration YES YES YES YES 4
Horizontal Integration YES YES YES YES 4
Market Penetration YES YES YES YES 4
Market Development YES YES YES YES 4
Product Development YES YES YES YES 4
Related Diversification YES YES YES YES 4
Unrelated Diversification 0
Joint Venture YES YES 2
Retrenchment 0
Divestiture 0
Liquidation 0
Recommendation • The Strategic Position and Action Evaluation (SPACE) Matrix below
indicates whether aggressive, conservative, defensive, or competitive strategies are most appropriate.
• Based on SWOT matrix, CPM, and Space matrix, we conclude that Nike should pursue some different strategies to sustain its competitive advantage and maintain or grow its market share.
• Spend more on R&D to discover new areas for kids and women.
• To create sportswear that would incorporate recycled material.
• To develop new alliances with companies which are well respected regarding social responsibility.
• To invest in additional marketing of existing products that will appeal to new demographic groups.
• To promote products as fashion wear, not just sportswear.
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