nike analysis

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Page 1: Nike analysis
Page 2: Nike analysis
Page 3: Nike analysis

History• Founded 1962• Bowerman & Knight• Blue Ribbon > Nike > Nike• Simply Number ONE!• Presence in 120 Countries

Page 4: Nike analysis

Input Stage

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IFEKey Internal Factor Weight Rating WS

Strengths      

Most dominant player in global market (50% market share),in footwear >$84.

0.12 3 0.36

Jordan (2nd Largest), 10.8% of US shoe market. 0.12 4 0.48

75% for Basketball, 86.5% for >$100. 0.07 3 0.21

Revenue Increase 2.9% in 2009. 0.07 3 0.21

25,000 Retail Accounts in USA and more than 27000 outside US.

0.11 4 0.44

Internet based customization through web site www.nikebiz.

0.1 4 0.4

Nike has five wholly owned subsidiaries. 0.07 3 0.21

Weaknesses      

Net Income Reduce 21% in 2009 0.1 1 0.1

Allmost 99% Manufacturing Outsourced out side USA 0.12 1 0.12

Sales are heavily concentrated in the youth and young adult market 12 to 24 year old age bracket.

0.12 2 0.24

Totals 1   2.77

Page 6: Nike analysis

EFEKey External Factor Weight Rating WS

Opportunity      

Making shoes for 35+ and under 12 age braket 0.1 1 0.1

Younger consumers are less price sensitive. 0.1 4 0.4

Growing Market 0.11 3 0.33

WTO (Outsourcing, Other Markets) 0.1 3 0.3

Internet, Altering Sales Model (18% growth expected by 2012)

0.1 3 0.3

       

Threat      

Foreign exchange rate fluctuations. 0.08 2 0.16

After age 40 consumers do not pay more than $35 to $40. 0.09 2 0.18

Strong Competition 0.12 3 0.36

Addidass strong in (Europe & China) Beijing 2008 games. 0.07 2 0.14

Global Recession 0.13 2 0.26

Totals 1   2.53

Page 7: Nike analysis

Nike Adidas PumaCritical Success Factors Weight Rating score Rating score Rating score

Advertising 0.14 4 0.56 4 0.56 3 0.42Product Quality 0.14 3 0.42 3 0.42 2 0.28Price competitiveness 0.11 3 0.33 3 0.33 2 0.22Management 0.08 4 0.32 2 0.16 2 0.16Financial Position 0.07 4 0.28 2 0.14 2 0.14Customer Loyalty 0.12 4 0.48 3 0.36 2 0.24Global Expansion 0.07 4 0.28 3 0.21 3 0.21Market Share 0.13 4 0.52 3 0.39 2 0.26Technology 0.14 3 0.42 2 0.28 2 0.28 Total 1.00 3.61 2.85 2.21

Competitive Profile Matrix (CPM)

Page 8: Nike analysis

Matching Stage

Page 9: Nike analysis

Strength Weakness

Opportunity Threats

Page 10: Nike analysis

1. Most dominant player in global market (50% market share),in footwear >$84.

2. Jordan (2nd Largest), 10.8% of US shoe market.

3. 75% for Basketball, 86.5% for >$100.4. Revenue Increase 2.9% in 2009. 5. 25,000 Retail Accounts in USA and more

than 27000 outside USA.6. Internet based customization through web

site www.nikebiz.com.7. Nike has five wholly owned subsidiaries.

1. Most dominant player in global market (50% market share),in footwear >$84.

2. Jordan (2nd Largest), 10.8% of US shoe market.

3. 75% for Basketball, 86.5% for >$100.4. Revenue Incr- ease 2.9% in

2009

Strength

Page 11: Nike analysis

Weakness

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1. Net Income Reduce 21% in 2009.2. Allmost 99% Manufacturing

Outsourced out side USA.3. sales are heavily concentrated in the

youth and young adult market 12 to 24 year old age bracket.

Weakness

Page 13: Nike analysis

Opportunity

Page 14: Nike analysis

Opportunity

1. Making shoes for 35+ and under 12 age bracket.

2. Younger consumers are less price sensitive.3. Growing Market.4. WTO (Outsourcing, Other Market).5. Internet, Altering Sales Model (18% growth

expected by 2012).

Page 15: Nike analysis

Threats

Page 16: Nike analysis

Threats

1. Foreign exchange rate fluctuations.2. After age 40 consumers do not pay more

than $35 to $40.3. Strong Competition.

4. strong in (Europe & China) Beijing 2008 games.

5. Global Recession.

Page 17: Nike analysis

SO Strategies

1. S7,O5 increase marketing and sales through internet.

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WO Strategies

2. W3,O1 make specific products for children and older people.

Page 19: Nike analysis

ST Strategies

3. S1,S3,W3,W4 develop low price quality products.

Page 20: Nike analysis

WT Strategies

4. W1,W2,T1 outsourcing out side the USA sho- uld be cut down to almost 50% because almost 50% sales comes from USA which will reduce foreign exchange risk.

Page 21: Nike analysis

Internal Strategic Position

External Strategic Position

Sr. No. Financial Position (FP) Rating Sr. No. Stability Position (SP) Rating

1Return on Investment declined by 26% 4 1Technological Changes: e.g. If Nike has Shox, Adidas has Adidas 1 and Reebok has Pump 2 created by NASA

-4

2Stronge Leverage Position i.e. 3% 7 2Avg Rate of Inflation: 2007: 2.8%, 2008: 3.8%, 2009: -0.4%

-3

3Liquidity ratio increased by 11% 6 3Demand Variability: a surging demand was witnessed for performance athletic apparels and footwear due to the increasing number of athletes and the growing health awareness

-2

4Working Capital ratio is 71% of total assets 6 4Price Range of Competing Products

-3

5Inventory was Turned over by 8 times only 5 5Barriers To Entry Into Market: Threat of new entrants based on first-mover advantage is minimal: -3

6Earnings Per Share declined by 19 % 4 6Competitive Pressure: Highly saturated and challenging industry: -3

7Price to Earning Ratio showing increase of 24% 6 7Ease of Exit From Market -2

8Cash Flow from operations decreased by 10.3% 4 8Risk Involved In Business -242 -22

Sr. No. Competitive Position (CP) Rating Sr. No. Industry Position (IP) Rating

1Nike is enjoying more than 50% market share -1 1

Growth Potential : Global sports footwear: * 46.8% volume growth from 05-10 and 2.1% from 09-10 * 46.7% value growth from 05-10 and 3.3% from 09-10

6

2

manufacture wherever they can produce high quality product at the lowest possible price. If prices rise, and products can be made more cheaply elsewhere (to the same or better specification), Nike will move production.

-2 2Profit Potential: Sports Footwear and apperal industry is highly profitable industry 5

3

In the apparel marketplace, Nike is apioneer in product lifecycle management(PLM). The company traces much of its PLMsuccess to a major focus on processreengineering.

-3 3Financial Stability: Players are financialy stronge 4

4Customer Loyalty -2 4Extent Leveraged: use of financial leverage is high in others. i.e adidas debt ratio 50% 4

5Capacity Utilization: outsourced all production operations like Nike does and hence have the flexibility of increasing or decreasing capacity at will. -3 5Resource Utilization 3

6Technological Know How: e.g. Nike + iPod Sport Kit, Many Nike shoes use a cushioning technology called "AIR.", Nike Shox technology, Hyperfuse construction delivers Superior breathability

-1 6Productivity, Capacity Utilization 3

7

Control Over Suppliers: NIKE can better plan with its material vendors; control excessive overtime. Hold lean manufacturingprocesses to ensure cost control and improve labor standardsrequired materials delivered on-time during the production process;

-2 7

-14 25

Space Matrix

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Strategic Position And Action Evaluation (SPACE) Matrix

(Book Illustration for better understanding)

Page 23: Nike analysis

Grand Strategy Mix (GSM)

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Selection Stage

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S7,O5 increase marketing and sales through internet.

S1,S3,W3,W4 develope low price

quality products.

W3,O1 make

specific products for

children and older peaple.

Key Factors weight AS TAS AS TAS AS TASOpportunities

1 Making shoes for 35+ and under 12 age braket. 0.1 - - -2 Younger consumers are less price sensitive. 0.1 - - -3 Growing Market 0.11 - - -4 WTO (Outsourcing, Other Market). 0.1 4 0.4 3 0.3 2 0.2

5Internet, Altering Sales Model (18% growth expected by

2012) 0.1 4 0.4 3 0.3 2 0.2

Threats1 Foreign exchange rate fluctuations. 0.08 - - -2 After age 40 consumers do not pay more than $35 to $40 0.09 3 0.27 4 0.36 2 0.183 Strong Competition. 0.12 3 0.36 4 0.48 2 0.244 Adidas strong in (Europe & China) Beijing 2008 games. 0.07 - - -5 Global Recession. 0.13 3 0.39 4 0.52 2 0.26

1Strengths

1Most dominant player in global market (50% market

share),in footwear >$84. 0.12 4 0.48 1 0.12 1 0.122 Jordan (2nd Largest), 10.8% of US shoe market. 0.12 4 0.48 1 0.12 2 0.243 75% for Basketball, 86.5% for >$100. 0.07 4 0.28 1 0.07 2 0.144 Revenue Increase 2.9% in 2009. 0.07 - - -

525,000 Retail Accounts in USA and more than 27000 outside

USA. 0.11 4 0.44 2 0.22 3 0.33

6Internet based customization through web site

www.nikebiz.com. 0.1 4 0.4 3 0.3 2 0.27 Nike has five wholly owned subsidiaries. 0.07 - - -

Weaknesses1 Net Income Reduce 21% in 2009. 0.1 1 0.1 4 0.4 3 0.32 Allmost 99% Manufacturing Outsourced out side USA. 0.12 1 0.12 4 0.48 1 0.12

3sales are heavily concentrated in the youth and young adult

market 12 to 24 year old age bracket. 0.12 1 0.12 1 0.12 4 0.481 4.24 3.79 3.01

QSPM

Page 26: Nike analysis

SuggestionsConclusion        

FP Average 5.25  IP Average 3.571

CP Average -2  SP Average -2.75         

 

Directional Vector Co ordinates:      

    X axis: 1.571 

    Y axis: 2.5 

Page 27: Nike analysis

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