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strategic management
NIKEjust do it!
A.RAMYA
II-MBA
MTWU
Internal and External Assessment
S1 Business Prasetiya Mulya Business School
Undergraduate Degree
Indonesia
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Company Profile
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Visi
To bring inspiration and innovation to every athlete
MisiNike is the largest seller of athletic footwear and athletic apparel in the
world. Performance and reliability of shoes, apparel, and equipment, new
product development, price, product identity through marketing and promotion,
and customer support and service are important aspects of competition in the
athletic footwear, apparel, and equipment industry We believe we are
competitive in all these areas. The company 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.
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Marketing
Target Market Male and Female; 18 34 y.o.
Positioning High performance shoes designed with hi-tech
features
Have many brands and products model for each type of
consumers.
Have high allocation of advertising budget for endorser
contract, TVC, print ads, and sponsorship activities.
Have top endorsers that are the champion in their sports areas.
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Distribution
Nike has worldwide distribution line
Nike has good distribution line to retailer
Nike has new ordering system, named Futures Ordering
Program
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Research & Development
Nike has NSRL (Nike Sport Research Laboratory) and APE
(Advanced Product Engineering) which cooperated indeveloping and executing idea
Nike did direct research to the athlete by accompanying their
daily activities to find the best suitable product
Nike always developing superior technology to compete with
others
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Management Style / Culture
Knight as CEO Nike, is an former athlete of long distance run
Nike working culture is established as camaraderie and
cooperative culture.
Factory design in Oregon is especially designed to create
natural circumstances and equipped with complete sport
facilities.
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Social Responsibility
Nike placed VP for social responsibility in 1998
Nike joined Fair Labour Association (FLA) and Global Alliance
for Workforce and Communities (GAWC)
Nike funded many NGO such as WWF, etc.
Nike do public relation activities to keep the companys image
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Finance / Accounting
Nike has healthy financial situation
Sumber: Nike 2003 Form 10-K, p.37 (data diolah)
But, Profit margin is lower than
Gross Profit margin
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The External Assessment
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Economic forces
EU is changing into one currency.
USA economic growth is in slow growth because of WTC.
Contract manufacturing is chosen by many athletic shoes
company.
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Social forces
Since 70-s, customer is more brand-minded.
Sport Consumer preferences is changing into more fashion-oriented.
Young consumer is believed much in advertising promotion and
use internet as the primary sources of information.
Buying motives of young consumer is dominated for leisure
activity
Since 90-s, womans consumer dominated the athletic shoe
market because of the changing lifestyle.
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Political forces
World is entering global trade climate with NAFTA and GATT
There is anti-dumping regulation existed in EU
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Technology forces
Nike has integrated technology system to develop their product
Nike always adopted latest technology for their product and
matched with their vision
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Competitive forces
Competition is more tight with the coming of Reebok and
Adidas
Competition is happened around the world, globally, not locally
Athletic shoe trend is going to be fashion-oriented
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Five forces (Porter)
Bargaining to :
Supplier
High
Buyer High
New Entrant Low
Substitution Low
Conclusion:
Internal Rivalry High (Oligopoly)
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Conclusion
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SWOT analysis
Strength(s)
High brand awareness
Highest market share
Worldwide distribution line
Integrated and future R&D
Better working culture
Healthiness of financial condition
Weakness(es)
Bad social issues, such as children labor,
sexual harassment, etc
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SWOT analysis (lanjutan)
Opportunity(ies)
Total of athletic shoe sales in US is
increasing in 2002
Fashion trend
Domination of womans consumer
Global and Free Market
Threat(s)
US economic growth is decreasing
More newcomers
Close competitor, such as Rbk And Adidas
are more aggresive
Anti-dumping regulation in EU
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Generic Strategies Nike uses network structure
Nike implemented Differentiation Strategies
Detail Strategies Finance Keep the financial ratio in standard
Marketing use endorser in every sport
Higher allocation of marketing budget
Operation Centralization of R&D in Oregon
application of NSRL
HR Network Structure
Athlete management
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Problem(s) :
1. Manufacturing ethics
Social issues about labor exploitation
2. Law suits
3. High endorsement fees paid to athletes
High SA Expenses (selling and administrative)
Based on the analysis of Nike I/S, the growth of SA expense in 2002 -2003 is
not comparable (11.2%) with the growth of the sales (8.1%).
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Measure Performance
Nike has good position in market
Financial liquidity is good
Primary threats is coming from:
Contracted manufacturing(labor)
Long-term endorser usage
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Conclusion
There is a changing behaviour of the consumer in athletic shoe.
They are moving from sportswear to fashion-sportswear.Unfortunately, Nike is still using the endorser that is not
fashionable, even though they are the champion in their area. It
was proven by the highest growth of SA expense in 2002-2003.
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Recommendation
Try to generate sales from SA expense, by:
Flexible endorser contract (not in long term)
Lifestyle consideration in choosing the endorser
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End
by: Kelly [email protected] Mulya Business School
mailto:[email protected]:[email protected]